First Department Affirms Dismissal in Win for Curtis Client in Zhakiyanov v. Ogai

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In a significant win, the New York Appellate Division unanimously affirmed the trial court’s dismissal of claims brought by Mr. Galymzhan Zhakiyanov against Curtis clients including Mr. Eduard Ogai.

Mr. Zhakiyanov alleged that Mr. Ogai had misappropriated assets of a Kazakhstani company in which Mr. Zhakiyanov had an alleged interest and that he had “funnelled” the proceeds into US real estate with a value of over $100 million.

The trial court rejected Mr. Zhakiyanov’s claims, finding that they were barred under the doctrines of comity and act of state.

The Appellate Division affirmed the trial court’s ruling on the basis, advanced by Curtis, that the plaintiffs’ claims were barred under the doctrine of forum non conveniens. The Appellate Division ruled that “an adequate alternative forum” was available in the Kazakhstani courts, even though the courts of Kazakhstan might not be able “to reach foreign property or compel foreign documents or witnesses,” and even though a constructive trust remedy over US real estate might be unavailable through Kazakhstani courts.

While the complaint named as defendants US entities – LLCs holding property allegedly for Mr. Ogai – the Appellate Division ruled that the relevance of these entities “ to this dispute is only limited,” that the US real estate purchases were “not at the heart of plaintiffs’ claims,” and that the US real estate “will not be relevant” if it is determined that the underlying claim regarding events in Kazakhstan is rejected.

The Appellate Division further ruled that even if the courts of Kazakhstan are not available to Mr. Zhakiyanov in the sense that under Kazakhstan’s legal system he has no valid claim because he was not the legal owner of shares in the enterprise at issue, and because Kazakhstani law only provides standing to legal owners to pursue claims based on share ownership, the resulting “unavailability” of a Kazakhstani forum does not stand in the way of dismissing Mr. Zhakiyanov’s claims.

It has been claimed in New York proceedings that New York courts have a broad interest in providing a forum for recovery for alleged conduct having nothing to do with New York on the basis that the proceeds of that foreign conduct were purportedly used to purchase New York assets. The Appellate Division’s decision provides a corrective to any such assumption.

The Curtis team was led by partner Donald Hawthorne, counsel Felix Gilman, and associates Kaitlyn Kocharian, Grace Condro, and Joseph Muschitiello.