Yulia Tymoshenko is the former prime minister of the Ukraine, and was one its most successful businesswomen, reportedly making a fortune in the natural gas industry. Today, however, she is serving a seven year prison sentence in the Ukraine for abuse of power and for working against the Ukraine’s interests while in office by agreeing to buy natural gas from Russia at inflated prices. Her supporters claim the sentence resulted from an unfair trial, and Tymoshenko has challenged her conviction in the European Court of Human Rights. (Here is a brief news summary of Tymoshenko’s political fights and present situation from Times Topics.)
But business moves on. In a case involving the scope of personal jurisdiction over foreign parties, Universal Trading v. Tymoshenko, Judge Crotty found that the New York courts did not have personal jurisdiction over Tymoshenko, and dismissed an action to enforce a $18.3 million judgment against her that stemmed from a mid-1990s commercial dispute in the Ukraine.
Citing Supreme Court precedent that ‘[g]reat care and reserve should be exercised when extending our notions of personal jurisdiction into the international field,’ Judge Crotty found that Tymoshenko’s filing of an “unrelated” action as plaintiff in the SDNY, and hiring public relations and consulting firms in the U.S.” was insufficient to establish jurisdiction over her.* As to Tymoshenko’s hiring of U.S. advisers and consultants, Judge Crotty found that “there are no allegations [in the complaint] regarding the scope of the efforts taken on her behalf by these agents, nor, more importantly, does Universal Trading allege that any such efforts were made in New York.”
Judge Crotty also rejected the argument that Tymoshenko is subject to personal jurisdiction “because she did business in New York by directing numerous… transactions, passing [through] bank accounts in New York.” The Judge recognized that in very specific circumstances a bank that moves money through New York may be subject to jurisdiction here, but found no precedent “in which a foreign individual holding foreign accounts has been found subject to jurisdiction in New York because their bank moved money through New York via a correspondent account.”
The ruling is informative on the scope of jurisdiction over foreign parties, and reflects a wise concern about entangling our federal courts in foreign commercial disputes.
(* DLA Piper is counsel to one of the defendants in the unrelated action involving Tymoshenko referred to by Judge Crotty (11 cv 1794 (SDNY).)