Cerner Middle East Limited v. iCapital, LLC and Ahmed Saeed Mahoud Al-Badi Al-Dahari

At a glance

Parties

Cerner Middle East Limited (Cayman Islands) v. iCapital, LLC (UAE) and Ahmed Saeed Mohammed Al Badi Al Dhaheri (UAE)

Case no.

U.S. Court of Appeals, Ninth Circuit, No. 17-35514 (D.C. No. 3:16-cv-01631-YY)

Court

U.S. Court of Appeals for the Ninth Circuit, on appeal from the U.S. District Court for the District of Oregon

Underlying award(s)

ICC award of July 2015 (seat Paris), confirmed by a French trial court (23 May 2016) and by the Court of Appeal of Paris (16 October 2018)

Treaty

New York Convention 1958; arbitration clause in the Cerner Business Agreement, Amendment No. 5 and Settlement Agreement

Court panel

Richard R. Clifton (author), Consuelo M. Callahan, Circuit Judges; Roger T. Benitez, District Judge sitting by designation

Sector

Healthcare information technology

Outcome

The court reversed the dismissal for lack of personal jurisdiction and remanded. It recognised the Paris Court's decision under international comity, which supplied the basis for quasi in rem jurisdiction over Dhaheri's Oregon bank account.

Amount

The award held iCapital, LLC and Dhaheri liable for more than USD 62 million in damages.

The dispute

In 2008, the UAE Ministry of Health awarded iCapital S/E, a UAE sole proprietorship of Dhaheri, a contract to develop medical information software. iCapital S/E then signed the Cerner Business Agreement with Cerner, a subsidiary of Cerner Corporation. The agreement provided for ICC arbitration seated in Paris and for Missouri law. A first ICC arbitration (2012) was settled through a Settlement Agreement and Amendment No. 5, both signed by iCapital, LLC. Cerner began a second ICC arbitration in August 2013 against iCapital, LLC and Dhaheri personally. In July 2015 the arbitral tribunal held Dhaheri bound to arbitrate, as sole proprietor of iCapital S/E and as alter ego of iCapital, LLC, and held both respondents liable for more than USD 62 million. Cerner then sought to attach Dhaheri's Oregon bank account on a quasi in rem theory. The defendants argued that no court with jurisdiction over Dhaheri had confirmed that the tribunal had jurisdiction over him. The district court agreed and dismissed the action.

Key holdings

1. Cerner did not waive arguments based on the Paris Court's decision. The French trial court judgment was stayed on 9 February 2017, before the district court ruled. That judgment also did not address whether the tribunal had jurisdiction over Dhaheri. pp. 11–12
2. Recognition of foreign judgments is governed by comity under Hilton v. Guyot. The case involves the New York Convention rather than French law. The court may therefore refuse recognition only if the foreign decision clearly misinterprets the Convention, contravenes its fundamental premises or objectives, or fails to meet a minimum standard of reasonableness. The court does not sit as an appellate court over the Court of Appeal of Paris. pp. 12–15
3. The Paris Court referred to the "usual practices of international trade". This does not deprive its decision of comity: the decision cited the paragraphs of the award applying Missouri law, and a foreign decision may be recognised even where the U.S. court disagrees with its reasoning. p. 18
4. Any requirement that a court, not the arbitrator, decide arbitrability was satisfied, because a court may decide it later in confirmation proceedings. Under Missouri veil-piercing law, the conclusion that Dhaheri was bound as alter ego of iCapital, LLC was reasonable. He held 99% of the shares, controlled iCapital, failed to fund it, and converted it into an LLC to evade his obligations. pp. 19–22
5. Yang v. Majestic Blue Fisheries does not make the alter ego theory unreasonable. The circuits are split on binding non-signatories under the Convention. p. 20 n. 11
6. A court of competent jurisdiction has determined that Dhaheri was within the arbitration's jurisdiction, so the award is enforceable against him. Both elements of quasi in rem jurisdiction are met: a valid judgment against Dhaheri and his property in Oregon. The court reversed and remanded. The status of iCapital, LLC, which has no identified Oregon property, was left open for the remand. p. 23

Procedural history

1. September 2012Cerner files its first ICC request for arbitration. The dispute is settled about three months later through a Settlement Agreement and Amendment No. 5.
2. August 2013Cerner files a second ICC request for arbitration against iCapital, LLC and Dhaheri.
3. July 2015The ICC tribunal issues its award: it has jurisdiction over both respondents, who are liable for more than USD 62 million.
4. 23 May 2016A French trial court confirms the award as valid and enforceable. That judgment is stayed on 9 February 2017.
5. Cerner files an attachment action in Oregon state court. The defendants remove it to the U.S. District Court for the District of Oregon, which dismisses it for lack of personal jurisdiction.
6. 12 October 2018The appeal is argued before the Ninth Circuit in Portland, Oregon.
7. 16 October 2018The Court of Appeal of Paris affirms the confirmation of the award and holds that the tribunal rightly took jurisdiction over Dhaheri.
8. 23 September 2019The Ninth Circuit reverses the dismissal and remands for further proceedings.

Tribunal, counsel and experts

Decided by

• Richard R. Clifton Judge, U.S. Court of Appeals for the Ninth Circuit (authored the opinion)
• Consuelo M. Callahan Judge, U.S. Court of Appeals for the Ninth Circuit
• Roger T. Benitez Judge, U.S. Court of Appeals for the Ninth Circuit (District Judge, S.D. Cal., sitting by designation)

For the claimant

Holland & Knight LLP

For the respondent

Garvey Schubert Barer

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Keywords

• quasi in rem jurisdiction
• international comity
• recognition of foreign judgment
• New York Convention
• enforcement
• alter ego
• veil piercing
• non-signatory
• arbitrability
• Court of Appeal of Paris
• ICC arbitration
• Missouri law
• Hilton v. Guyot
• waiver
• healthcare IT
• UAE Ministry of Health
• attachment of bank account
• Cerner

Summary generated with AI from the published documents — refer to the award for the authoritative text.