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Weil Secures Affirmation of Arbitrator’s Award Freeing Forbes Media From License Agreement With Sanctioned Party

On August 9, 2017, Weil successfully beat back an effort to vacate an arbitrator’s ruling on behalf of Forbes Media LLC arising from an alleged wrongful termination of a license held by a Ukrainian media company regarding the Ukrainian version of Forbes™ Magazine and website. The counter-parties in the arbitration, United Media Holdings (UMH) and TriLado Enterprises, had challenged the April 2016 arbitral award in U.S. District Court for the Southern District of New York, alleging that the Arbitrator had denied their requests for adjournment, the Award had been fraudulently procured, and the entire proceedings had violated an Executive Order. The Court sided with our client on all counts and denied UMH and TriLado’s petition to vacate the Award, allowing Forbes to engage a reputable licensee to continue operation of Forbes Ukraine, and avoid the significant reputational harm from doing business with a sanctioned party. 

In 2009, Forbes established a successful licensing program in Ukraine with an affiliate of UMH, which was later purchased by entities owned by Sergei Kurchenko. Once in charge, Mr. Kurchenko’s management team interfered with editorial practices to further his interests in violation of Forbes’ editorial standards and the License Agreement. In March 2014, Forbes terminated the License Agreement with UMH, which filed an arbitration proceeding against Forbes in New York seeking to prevent termination until December 2018, and to recover damages for breach of contract.

Weil began representing Forbes in February 2015 in that arbitration, and through creative lawyering – the filing of emergency motions, developing trusting relationships with foreign third party witnesses and experts, cooperating with the U.S. Federal Government, working closely with Ukraine counsel – our team overcame the many challenging issues that the case presented: most of the key witnesses were disinterested third-parties located in Ukraine; the Claimants were not forthcoming with the key documents or any of their witnesses for deposition, and sought to delay the arbitration hearing on multiple occasions for as long as possible; and a parallel proceeding was initiated in Ukraine that could have undermined the resulting arbitration award. A notable complication occurred in July 2015, when Mr. Kurchenko, and by extension the Claimants, were placed on the U.S. sanctions list pursuant to an Executive Order, meaning that Forbes was prohibited from any dealings in blocked property (including the License Agreement), unless a license was secured from the U.S. Office of Foreign Assets Control.

The Weil team secured a complete victory after a full hearing was conducted in February and March 2016. Forbes was not required to pay the Claimants damages in any amount and the final award issued by the arbitrator – upheld this week – declared the license with UMH terminated, more than two and a half years before the original License Agreement was set to expire. Coverage of this victory appeared in Global Arbitration Review (may require a subscription).

Partner Robert Berezin and associate Sarah Ryu comprised the Weil team representing Forbes Media in the arbitration and the subsequent litigation.