Since 2002, the Canadian oil company Norex Petroleum has been trying to sue the Russian billionaire Leonard Blavatnik in U.S. courts for his allegedly-illegal takeover of Norex’s stake in a lucrative Russian oil field. At every turn, Norex has hit a stone wall. But Thursday the heretofore luckless company returned to court with a new theory of the case, a new lawyer from Simpson Thacher & Bartlett, and a newly amended complaint that names not only Blavatnik and his company but also a second Russian oligarch and BP as defendants. Will this latest effort--Norex’s fourth run at Blavatnik—finally get the merits of Norex’s claim before a court?
The allegations in Norex’s June 23 complaint are certainly juicy enough to deserve a hearing. Norex claims that Blavatnik and his former college buddy (and fellow multibillionaire) Victor Vekselberg engineered a scheme to push Norex’s joint venture partner in the Siberian oilfield into bankruptcy and then acquire its assets. With that minority interest, Blavatnik and Vekselberg’s companies went to the Russian courts and obtained an injunction blocking Norex from voting its shares in the oilfield. When that effort didn’t put the field in their hands, Norex claims, the oligarchs sent “fatigue-wearing militiamen armed with AK-47 machine guns” to the oilfield to seize control. BP, according to Norex, subsequently teamed up with the oligarchs’ companies to oversee the field.
Norex has, however, never managed to get a court to hear its claims. It first filed suit in Manhattan federal district court, where its Racketeer Influenced and Corrupt Organizations (RICO) case was bounced on jurisdictional grounds. The U.S. Court of Appeals for the Second Circuit revived the suit in 2005, but the district court once again dismissed it, ruling that U.S. RICO laws don’t apply to overseas activity. Norex went back to the Second Circuit, but to no avail. In a groundbreaking ruling in 2010, the appellate court found that the U.S. Supreme Court’s ruling in Morrison v. National Australia Bank, which prohibits the extraterritorial enforcement of U.S. securities laws, also bars U.S. RICO suits against foreign defendants.
Norex filed a petition asking the Supreme Court to review the Second Circuit’s decision. In the meantime, it filed a complaint in New York state supreme court that alleged essentially the same facts as the twice-dismissed federal case, but refashioned them as New York state causes of action against New York residents (Blavatnik, who recently made a deal to take over Warner Music, and Vekselberg both have posh New York apartments.)
Soon after filing the New York complaint, Norex made a change in counsel. The company brought in Barry Ostrager of Simpson Thacher & Bartlett. Ostrager made his bones as a lawyer for insurance companies, most famously beating back World Trade Center leaseholder Larry Silverstein’s multibillion-dollar claims against Swiss Re. In recent years, though, Ostrager has begun appearing for plaintiffs in big commercial cases, including the hedge fund Aurelius in Argentine bond litigation. In May, Ostrager pushed the Norex suit into the spotlight when he moved for an injunction to block BP from acquiring the Blavatnik and Vekselberg stakes in the Siberian field.
Judge Eileen Bransten denied the injunction and said the state case should be stayed until the Supreme Court decided whether to hear Norex’s appeal of the Second Circuit ruling. But that gave Ostrager a game plan. On Wednesday he began the process of withdrawing Norex’s Supreme Court petition. And on Thursday he filed a streamlined amended complaint for Norex, focusing tightly on the defendants’ personal and business ties to New York.
“We’re optimistic that the Norex people are finally going be able to litigate their case,” Ostrager said. OTC called Owen Pell of White & Case, who has represented the Blavatnik entities in the litigation so far; Daryl Libow of Sullivan & Cromwell, who represents BP; and Peter Sherwin of Proskauer, who previously represented Norex. None returned calls.
(Reporting by Alison Frankel)