A New York judge has dismissed Perekhid Media’s $750 million lawsuit against Studio 1+1 investor Central European Media Enterprises (CME), ruling that the case should be litigated in Ukraine.
Justice Leland DeGrasse ruled last week that his court lacked jurisdiction because most parties to the case do not live in the United States and U.S. laws do not apply in Ukraine, said Perekhid attorney Michael Hirschfeld. ‘There are a bunch of connections in Ukraine and decisions that need to be decided under Ukrainian law,’ said Hirschfeld. ‘I don’t see it as a setback. The judge has simply said … that it would be easier for this case to be prosecuted in Ukraine. He hasn’t said the case is defective.’
Perekhid’s suit against CME and its founder Ronald Lauder, was filed last May in the Supreme Court of the State of New York, County of New York. It alleged that CME and associates used payoffs and intimidation to secure Perekhid’s prime-time broadcasting rights on Ukraine’s UT-2 television channel for the rival Studio 1+1. Perekhid sought more than $250 million in compensatory damages, and $500 million in punitive damages, arguing that the huge reward is appropriate since Lauder, a former U.S. ambassador to Austria and heir to the Estee Lauder cosmetics fortune, has a reputed net worth of more than $1 billion.
‘I am delighted with the New York court’s decision,’ said CME President and Chief Executive Officer Michel Delloye in a statement released Wednesday. ‘CME has consistently maintained the highest standards of ethical and responsible behavior and has been confident that our conduct would ultimately be vindicated.’
According to Hirschfeld, Judge DeGrasse attached conditions to his April 8 ruling that would return the case to his courtroom if Perekhid sues in Ukraine and CME and Lauder dispute Ukrainian jurisdiction. DeGrasse also ruled that confidential documents produced by CME and Lauder at the request of Perekhid’s lawyers in the New York case can be scrutinized by Perekhid Media executives, who were previously barred from seeing them.
‘It’s making sure Perekhid is not prejudiced in Ukraine and that Perekhid has not lost any time because they [can keep] the documents [they collected],’ said Hirschfeld. ‘It’s our belief CME’s documents support Perekhid’s position.’ Prekhid founder and chief executive Andrew Bain also disputed CME’s claims of victory. ‘Nothing about the decision has vindicated their conduct,’ he said. Perekhid’s lawsuit against CME and Lauder stems from the Ukrainian government’s 1996 decision to revoke Perekhid’s 10-year contract to provide programming and sell advertising between 9 p.m. to midnight on UT-2 as part of an overhaul of the state-owned TV channels. Studio 1+1 subsequently won the right to broadcast nine hours a day on UT-2 and went on the air at the start of 1997. Studio 1+1 is not out of the legal woods just yet. In mid-March, its broadcasting license was contested by another television company, TV Studio Information Service Ltd. (TV SIS), a participant in the HURT joint-stock company whose bid to broadcasting on UT-2 for 10 hours a week has been backed by Parliament.
TV SIS sued the National Council for Television and Radio and Studio 1+1 in the Supreme Court of Arbitration, alleging that Studio 1+1’s broadcast license violated the law, that the company failed to comply with local content programming requirements, and that it exceeded foreign investment restrictions mandated by Ukrainian law. TV SIS also charged that the National Council for Television and Radio granted three extra broadcasting hours a day to Studio 1+1 illegally in November.
Two hearings have been conducted, the last one on Thursday, said a Studio 1+1 spokesman who asked not to be named. The court is expected to issue a ruling next week. ‘It don’t think their claim will be granted,’ said the spokesman . ‘It’s a political claim rather than a business claim.’
The spokesman was unable to make comments on the Perekhid case, but Studio 1+1’s lawyer, Maxim Varlamov, said the decision was ‘right, but it took too long to make.’ Bain and his U.K.-based partner have 30 days to agree to decide if they want to appeal DeGrasse’s dismissal of the case.
‘We are considering appealing, but giving the conditionality [of the decision] there are alternatives which may be more appealing than New York,’ said Bain. ‘Given the vast evidence we have, I think it will not be very difficult for us to obtain justice in any reasonable court ultimately.’
Last year, however, one of Perekhid’s lawyers said the lawsuit was filed in New York because while ‘the legal system and procedures are well established and set in New York, they are less so in Ukraine.’
CME has consistently argued that New York courts lacked jurisdiction to decide the legality of a Ukrainian licensing decision. Bain suspects he knows why. ‘In my opinion, they probably believe that Kyiv courts are as objective as Ukrainian TV license tenders,’ he said.
