Farhad Azima v. Rak Investment Authority
Opinion
Farhad Azima and the Ras Al Khaimah Investment Authority (RAKIA) were once business partners. But disagreements arose. As part of a broad settlement of their grievances with one another, they agreed to litigate all future, related claims in England. RAKIA argues that this litigation is covered by that agreement and should be dismissed so that it can instead proceed in England. We agree and reverse the district court's decision to the contrary.
I
Farhad Azima is an international businessman who resides in Missouri. 1 RAKIA is the investment and wealth fund of one of the United Arab Emirates, Ras Al Khaimah (RAK). RAK "is the sole owner of [RAKIA]," J.A. 528, and Sheikh Saud bin Saqr al Qasimi is the current ruler of RAK. Over the years, Azima and RAKIA have entered into various business deals, three of which are relevant here. In 2007, RAKIA and HeavyLift International Airlines, one of Azima's companies, created a joint venture to build and operate a flight training academy. In 2011, RAKIA paid another of Azima's companies to identify a prospective buyer for a hotel that RAKIA owned. And from mid-2015 to July 2016, Azima helped negotiate the resolution of a dispute between RAKIA and its former Chief Executive Officer, Khater Massaad.
With regard to the Massaad negotiation, by the fall of 2015, Azima had met several times with representatives of RAKIA and RAK to discuss a settlement. Negotiations appeared to be progressing, but on October 14, 2015, Sheikh Saud emailed Massaad to express his "disappointment" over information his law firm had uncovered about Massaad's actions. J.A. 419 ¶ 25. Despite this, the parties continued to work towards a settlement for several more months.
The Massaad negotiation was still underway in March 2016 when RAKIA agreed to settle Azima's claim that RAKIA owed HeavyLift money for investments *873 the company had made pursuant to their joint venture (the "Settlement Agreement"). The Agreement is brief. It lists the parties, provides that RAKIA will pay HeavyLift to resolve all claims it or Azima has against RAKIA or any other entity owned by RAK, states that the parties agree to act in good faith towards one another, and imposes conditions of confidentiality and non-disparagement. Most important for present purposes are the six "Whereas" (preamble) clauses, J.A. 603, and the final section, titled "Governing law and jurisdiction," J.A. 605. The whereas clauses summarize the respective roles of RAKIA and HeavyLift in the joint venture, the basis of HeavyLift's claim against RAKIA, and other relevant background considerations. The section of the Agreement titled "Governing law and jurisdiction" provides:
This Settlement Agreement and any dispute or claim arising out of, or in connection with, it or its subject matter or formation (including, without limitation, any contractual or non-contractual disputes, claims or obligations) is governed by and shall be construed in accordance with English law and the Parties submit to the exclusive jurisdiction of the courts of England and Wales.
J.A. 605-06. We refer to this provision as the "forum-selection clause."
Four months after executing the Settlement Agreement, the parties reached a tentative resolution in the Massaad negotiation. But when that deal later fell apart, RAKIA and its attorneys blamed Azima and threatened that he would become " 'collateral damage' in the war RAKIA intended to wage against" Massaad. J.A. 421-22 ¶ 35.
Shortly after RAKIA's threat, files from Azima's computers began to appear online, including documents, messages, contacts, and photos. Unbeknownst to Azima, on October 14, 2015-the same day Sheikh Saud expressed disappointment over Massaad's actions-Azima's U.S.-based business and personal computers were hacked and infected with software that monitored their use. When Azima realized that his computers had been compromised, he changed his passwords, increased his security protocols, and hired experts to assess the damage. Eventually, he replaced the infected computers.
The hack triggered two lawsuits. First, RAKIA sued Azima in England, claiming that some of the documents made public after the hack show that Azima committed fraud against RAKIA during the hotel deal and breached the Settlement Agreement's warranty of good faith (the "English Action"). That Action is still ongoing. As part of his defense, Azima has argued that RAKIA should not be allowed to rely on stolen documents to support its claims. Separately, Azima filed this suit alleging that, by hacking his computers, RAKIA violated the Computer Fraud and Abuse Act,
RAKIA moved to dismiss this suit on two grounds. First, as an entity of a foreign government, it claimed immunity under the Foreign Sovereign Immunities Act (FSIA),
II
Although our jurisdiction over "final decisions of the district courts" typically does not include the denial of a motion to dismiss,
United States v. Rose
,
III
A
Because "[t]here is a 'substantial presumption' in favor of a plaintiff's chosen forum," lawsuits usually proceed where they are filed.
MBI Grp., Inc. v. Credit Foncier Du Cameroun
,
A clause is applicable if its scope encompasses the dispute, which we assess using normal principles of contract interpretation. It is mandatory if it requires that litigation proceed in a specific forum. By contrast, "a permissive clause permits litigation to occur in a specified forum but does not bar litigation elsewhere."
BAE Sys. Tech. Sol. & Servs., Inc. v. Republic of Korea's Def. Acquisition Program Admin.
,
If the forum-selection clause does not meet these criteria, we use the typical
forum non conveniens
analysis, and the defendant must show that the case can and should proceed elsewhere, meaning another forum is (1) "available and adequate" to litigate the plaintiff's claims and, (2) "upon a weighing of public and private interests, the strongly preferred location for the litigation."
MBI Grp.
,
That leaves only one question: can the plaintiff show that the public interest associated with litigating elsewhere outweighs all of the private interests that their agreement presumably took into account?
See
Atl. Marine
,
We review de novo whether the forum-selection clause is applicable, mandatory, valid, and enforceable, then review for abuse of discretion the weighing of the public- and private-interest factors.
Kelvion, Inc. v. PetroChina Canada Ltd.
,
B
Azima filed suit in the United States, but RAKIA moved to dismiss for
forum non conveniens
because the parties had executed a forum-selection clause that states, in relevant part, "This Settlement Agreement and any dispute or claim arising out of, or in connection with, it or its subject matter or formation ... is governed by and shall be construed in accordance with English law and the Parties submit to the exclusive jurisdiction of the courts of England and Wales." J.A. 605-06. The clause is mandatory because it provides for "exclusive jurisdiction" in England and Wales.
See, e.g.
,
Phillips v. Audio Active Ltd.
,
That brings us to whether the clause applies to this dispute, an issue we resolve using general principles of contract law. Although the Settlement Agreement is governed by English law, the parties' briefs "make little reference to English contract law."
John Wyeth & Bro. Ltd. v. CIGNA Int'l Corp.
,
The Agreement's forum-selection clause applies to "any dispute or claim arising out of, or in connection with, [the Agreement] or its subject matter or formation." J.A. 605. Like the district court, we have little trouble concluding that the "subject matter" of the Agreement includes only the joint venture.
See
Azima
,
RAKIA argues that the subject matter of the Agreement is broader. In its view, "At the very least, the 'subject matter' of the Settlement Agreement must include those topics expressly mentioned in the document," and because the fifth whereas clause mentions the Massaad negotiation, that too is part of the Agreement's subject matter. RAKIA Reply Br. 5; see J.A. 603 (stating in fifth whereas clause that "Mr. Azima has recently provided negotiation assistance to RAKIA on an informal basis which RAKIA recognises and appreciates"). We cannot agree. The mere mention of an event does not make it the "thing in dispute."
But that does not end our inquiry, for the forum-selection clause also applies to claims arising from the Agreement's "formation." J.A. 605. Although the district court and parties did not address the scope of this word, where possible, we must give meaning to every contract term. See RESTATEMENT (SECOND) OF CONTRACTS §§ 202, 203 (AM. LAW INST. 1981 ). "Formation" here refers to the process during which something develops or is created, i.e. , the background considerations against which the parties entered into this Agreement. See Formation , WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY 893 (2002) ("the manner in which a thing is formed"); Formation , 6 OXFORD ENGLISH DICTIONARY 85 (2d ed. 1989) ("The action or process of forming; a putting or coming into form; creation, production.").
Read in context, the fifth whereas clause provides one such background consideration.
See
17A AM. JUR. 2D CONTRACTS § 373 (2019) (whereas clauses indicate the parties' purposes and motives, and help determine intent). Clause four states that "RAKIA does not agree that there is any legal basis for [HeavyLift's] claim." J.A. 603. Clause five explains that "Azima has recently provided ... assistance to RAKIA on an informal basis" in the Massaad negotiation, "which RAKIA recognises and appreciates."
By its plain terms, the Settlement Agreement therefore requires Azima to litigate in England any "dispute or claim arising out of, or in connection with," the Agreement itself, the outstanding claims from the joint venture, or the Massaad negotiation's role in the Agreement's formation. J.A. 605. As we explain, this case qualifies as such a dispute.
We begin by defining "in connection with." This phrase is equivalent to "in relation to," which is quite broad.
Coregis Ins. Co. v. Am. Health Found., Inc.
,
Azima recognizes that "in connection with" is often defined broadly, but he asserts that "a claim 'relates to' or is 'in
*878
connection with'
a contract
only when 'the dispute occurs as a fairly direct result of the performance of contractual duties.' " Azima Br. 43 (emphasis added) (quoting
Bailey v. ERG Enters., LP
,
That proposed definition is too narrow. The forum-selection clause applies to claims arising from the Agreement
and
from its subject-matter or formation, not just claims connected to the "contract." More fundamentally, although we agree that "in connection with" is quite broad, we fail to see why that requires us to limit its scope. If the parties had wished to mark a narrower boundary for this forum-selection clause, they could have easily done so. They might have restricted the clause to disputes "arising out of, or in connection with," the Settlement Agreement
itself
, as Azima suggests. They could have omitted "in connection with," which sweeps more broadly than "arising out of."
Coregis Ins. Co.
,
Azima's claims "connect[ ] with" the "formation" of the Agreement through the Massaad negotiation. Indeed, Azima conceded as much in his brief, stating "the hacking of Azima's computers, the theft of his data, ... and the extortion of Azima were done in connection with the regular course of commercial activity between Azima and RAKIA generally, and the mediation services Azima was providing for RAKIA's mediation with its former CEO specifically ." Azima Br. 44-45 (emphases added) (citing J.A. 429 ¶ 64). Those services are one reason the parties entered into the Settlement Agreement. The allegations in his complaint back up this assertion. It states that Azima's computers were hacked the "same day" that Sheikh Saud expressed disappointment over Massaad's actions, J.A. 419 ¶ 25, and suggests that RAKIA hacked his computers because it "blamed [him] for the lack of a settlement between RAKIA and" Massaad and wanted to make Azima " 'collateral damage' in the war RAKIA intended to wage against" Massaad, J.A. 421-22 ¶¶ 34-35. If Azima had not been involved in the Massaad negotiation, the parties may not have executed the Settlement Agreement, RAKIA could not have "blamed [him] for the lack of a settlement" with Massaad, and RAKIA would not have needed to make Azima "collateral damage." These allegations adequately link the negotiation (and thus the Agreement) to Azima's hacking, conversion, and unfair competition claims: the Massaad negotiation prompted the hack, which violated Azima's privacy, deleted his data, forced him to replace his computers, and interfered with his business interests. 3
*879
Azima resists this conclusion,
see
Azima Br. 43-47, but the three cases he points to are easily distinguishable for "whether or not a [forum-selection] clause applies depends on what the
specific clause at issue
says. Drawing analogy to other cases is useful only to the extent those other cases address contract language that is the same or substantially similar to that at issue."
John Wyeth
,
In sum, the forum-selection clause is mandatory and applies to Azima's claims, and the parties do not dispute that the clause is valid and enforceable. This case must therefore proceed in England, unless Azima has carried the heavy burden required to show that, based on the public-interest factors alone, this case should instead proceed here.
Atl. Marine
,
The district court's approach was flawed in several respects. Most fundamentally, the court erroneously placed the burden on RAKIA to show that dismissal
was
warranted.
Azima
,
*880
Despite these errors, we see no need to remand for the district court to redo its analysis. As we have explained, it is clear that Azima bore the burden to show that, based on the public-interest factors, transfer to England was unwarranted.
Id. at 63-64,
Simply put, this is not the "rare[ ]," "unusual," or "[un]common" case in which the public-interest factors defeat a forum-selection clause.
Atl. Marine
,
Where a case or legal issue is so clear that a contrary ruling would constitute an abuse of discretion, there is no need to remand to the district court.
Summers v. Howard Univ.
,
IV
The decision of the district court denying RAKIA's motion to dismiss is reversed.
So ordered.
Because we resolve this case on
forum non conveniens
grounds at the motion to dismiss stage, we accept as true the allegations in the complaint and draw all reasonable inferences in Azima's favor.
See
Shi v. New Mighty U.S. Tr.
,
Most courts do not discuss whether the location identified in an applicable, mandatory, valid, and enforceable forum-selection clause is available or adequate.
See, e.g.
,
Kelvion, Inc. v. PetroChina Canada Ltd.
,
Because Azima's claims "connect with" the Massaad negotiation, we need not address whether his claims "connect with" the joint venture or any other aspect of the Settlement Agreement, including whether the gravamen of Azima's unfair competition claim is a violation of the Agreement's non-disparagement clause.
See, e.g.
,
Anthony Allega Cement Contractor, Inc. v. Johnson Controls Fed. Sys./Versar, LLC
, No. 18-cv-875,
Reference
- Full Case Name
- Farhad AZIMA, Appellee v. RAK INVESTMENT AUTHORITY, Appellant
- Cited By
- 45 cases
- Status
- Published