## Facts

- Telenor Mobile Communications AS (Telenor) and Storm LLC (Storm) were the sole shareholders of Kyivstar G.S.M., a Ukrainian mobile telecommunications venture; Telenor held a majority stake and Storm a minority stake.
- A 2004 shareholders’ agreement governed Kyivstar’s corporate governance and included non-compete obligations.
- Telenor alleged Storm refused to participate in required governance actions (including meeting attendance, board elections, and management actions) and maintained interests in competing Ukrainian telecom operators.
- The agreement required UNCITRAL arbitration seated in New York; Telenor commenced arbitration there.
- Storm initiated multiple actions in Ukrainian courts aimed at obstructing or weakening the New York arbitration; the federal court issued anti-suit relief to prevent interference.
- An arbitral tribunal issued a final award (Aug. 1, 2007) directing Storm to take specific corporate governance actions and to divest competing holdings.
- The Southern District of New York confirmed the award and entered an order enforcing it on Nov. 2, 2007.
- Telenor asserted Storm continued to ignore the award and enforcement order; Telenor moved to hold Storm and Storm’s corporate parents (Altimo Holdings & Investments Ltd., Alpren Ltd., and Hardlake Ltd.) in civil contempt on an alter-ego theory.

## Issues

1. Whether Storm was in civil contempt of the Nov. 2, 2007 federal order enforcing the arbitral award.
2. Whether Altimo, Alpren, and Hardlake could be bound by, and held in contempt of, that order as Storm’s alter egos or instrumentalities.
3. What coercive civil sanctions were appropriate to compel compliance.

## Decision

- The court found a clear and specific enforcement order existed and that Storm violated it.
- The court held Storm was in civil contempt because Telenor proved noncompliance by clear and convincing evidence and Storm did not show reasonable, diligent efforts to comply.
- The court rejected Storm’s reliance on Ukrainian court orders as a defense, finding they did not establish factual impossibility and were part of Storm’s attempt to evade obligations it had contractually accepted and that the federal court had confirmed.
- The court pierced the corporate veil and held Altimo, Alpren, and Hardlake in civil contempt, finding Storm functioned as their instrumentality within a controlled corporate chain used to avoid compliance.
- The court imposed substantial coercive monetary sanctions, including daily fines, calibrated to induce compliance rather than punish past conduct.

## Legal Principles

- Civil contempt requires clear and convincing proof of (1) a clear and unambiguous order, (2) noncompliance, and (3) lack of reasonably diligent efforts to comply.
- Compliance is excused only by factual impossibility; asserted conflicts with foreign orders do not suffice where compliance remains feasible and the contemnor helped create the conflict.
- A court may bind nonparties and impose contempt sanctions where veil-piercing is warranted, including when a parent dominates a subsidiary and uses the corporate form to avoid legal obligations.
- Civil contempt sanctions must be coercive or compensatory rather than punitive; courts may consider the contemnor’s resources and the need for sanctions adequate to induce compliance.
- Confirmed arbitral awards may be enforced through injunctions and contempt remedies to prevent strategic noncompliance and collateral foreign attacks.

## Conclusion

The court enforced a confirmed international arbitral award through civil contempt findings against Storm and its corporate parents, concluding that foreign litigation did not excuse noncompliance, that veil-piercing was warranted to reach the controlling entities, and that substantial daily fines were necessary to coerce obedience to the federal enforcement order.


Telenor Mobile Commc’ns AS v. Storm LLC, 587 F. Supp. 2d 594 (S.D.N.Y. 2008)