FILED: NEW YORK COUNTY CLERK 10/17/ :13 PM INDEX NO /2016 NYSCEF DOC. NO. 7 RECEIVED NYSCEF: 10/17/2016. Exhibit 2
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1 FILED: NEW YORK COUNTY CLERK 10/17/ :13 PM INDEX NO /2016 NYSCEF DOC. NO. 7 RECEIVED NYSCEF: 10/17/2016 Exhibit 2
2 Uthman Arakji & Partners Attorney Office Uthman Arakji Karmen Abu Shakra Lena Khater Nabeel Maad Ibrahim Kashli Fadi Farah Zeyad Al Moalem Randa Kanaan 4/7/2007 (Beirut) Court of First Instance in Baabda Commercial Court Petition Plaintiff: Lindustry S. A. L. (offshore) Its attorney Uthman Arakji appointed via a power of attorney, a copy is attached herewith (Document 1) Defendants: 1) Kodak Inc. (Near East) Dubai, United Arab Emirates, P.O. Box ) Carestream Health (Near East) Ltd. Dubai, United Arab Emirates, P.O. Box Third Person: The Ministry of Commerce and Trade (Department of Commercial Property Protection) to place a note of the current petition on the private registry of the first defendant. Ibeza Building, Fradan Street, P.O. Box , Beirut, Lebanon Tel: Fax: info@arakjiassociates.com
3 The plaintiff Company wishes to state the following: First Section The Facts - Early in 2000, owners of the plaintiff Company decided to study the Iraqi markets and found that AGFA is actually the only company that deals with the Iraqi Ministry of Health and sells imaging films in the Iraqi markets. - They also found absence of the name Kodak from the markets for almost eleven years due to Kodak Company being blacklisted after failing to deliver products to the State of Iraq which the latter had paid for. - The owner of the plaintiff Company thus began their exhausting endeavours to re-enter Kodak products in the Iraqi markets and intentionally visited the Minister of Health with a promise to deliver the due products to the Ministry. In addition, they decided to introduce Kodak products to the Iraqi markets through distributing free samples and giving lectures to Iraqi doctors from inside and outside of the Ministry of Health. And this is how the introduction and promotion of the first defendant s products were introduced in the Iraqi markets. Through their efforts, the Ministry of Health in Iraq decided to deal with the first defendant and signed contracts worth millions of US dollars. Faced with that reality, and in order to enable the distribution and selling of the products of the Company of first defendant in Iraq, the plaintiff s Company was established in 2003 as an offshore company that handles the selling and distribution of products outside Lebanon. - The first defendant also appointed the plaintiff Company as an exclusive agent for the promotion, distribution, and selling of Kodak s diagnostic and medical imaging products in Iraq, and this is well documented through the letters issued by the first defendant, particularly the one directed to the Iraqi Ministry of Health on 16/3/2004 in which it stated in its translations: We inform you through this letter that the certified distributor for all Kodak s medical imaging products in Iraq is Lindustry Company (Offshore) And that Kodak s medical imaging products which would be exported to Iraq through channels other than Lindustry Offshore or without its agreement cannot be shipped or stored in accordance with Kodak s requirements and recommendations. (Attached is a copy of the 16/3/2004 letter and its translation Document 2)
4 - Therefore and based on the plaintiff s efforts and massive financial investments, the use of employees whose number gradually increased, payment of rent allowances, offering of training to specialists let alone the human loses endured under the difficult circumstance which the country has been enduring Kodak s diagnostic and medical imaging products have enjoyed in a short period of time an outstanding position, even exceeding that of competing products. - The first defendant used to commend the plaintiff for its efforts and congratulates it for its success to the extent that it was not even pushed after the US invasion to send any of its employees to Iraq because of its trust in the plaintiff s performance and the results it achieved. Business between the plaintiff and the first plaintiff continued because of the plaintiff s achievements and progress in selling the products of the first defendant. Moreover, the first defendant never sold any of its products in Iraq except through and by the plaintiff, and it requested from those who contact it to buy its products in Iraq to immediately contact the plaintiff and to obtain all their products through the latter. That excellent relation between the plaintiff and the first plaintiff continued on that ground, and in a stable and successful way, with sales skyrocketing and the products of the first defendant occupying the first place. - The situation continued as such until the plaintiff suddenly received a letter from the first defendant requesting the signing of a new Distributor Agreement without stating that it is an exclusive distributor, as it claimed, to be unified and similar to all other agents worldwide and under the pretense that it wished to standardize the agreements with all its representatives worldwide. Nonetheless, it emphasized to the plaintiff that it would continue to work on an exclusive basis. After signing the distribution Agreement early in 2005, the first defendant sent a letter to the Ministry of Health in Iraq stressing and ascertaining that the plaintiff is the exclusive distributor and representative for it in Iraq, and that it does not guarantee except the products sold by the plaintiff. The first defendant stated in that letter:... We emphasized that Kodak Company would only guarantee the Kodak medical imaging products if they are sold by Lindustry Company Offshore... (Attached is a copy of the letter sent by the first defendant, together with its translation Document 3) The first defendant continued to deal with the plaintiff on exclusive basis and only sold its products in Iraq through and by the plaintiff.
5 - However, the plaintiff suddenly received a letter on 27/8/2006 from the first defendant informing it of the termination of relation between them, with no reason or justification mention, with termination to be effective as of 31/12/2006. In doing so, the first defendant entirely overlooked all the plaintiff s efforts and financial and human investments which have resulted in the revival, promotion, and popularity of Kodak s medical imaging products in the Iraqi markets. This has led to depriving the plaintiff from collecting its rights or even a small part of the expenditures inflicted on it let alone not obtaining the accumulated amount of commissions due for the plaintiff estimated at 390,087 (three hundred ninety thousand and eighty-seven) US dollars. (Attached is a copy of the letter of termination and the account statement documents 4 and 5) - The plaintiff sent a letter to the first defendant on 15/9/2006 requesting for the reasons for termination and wishing that the first defendant to reconsider said decision, in addition to paying the plaintiff its dues. (Attached is a copy of the letter with its translation Document 6) However, the first defendant did not change its decision to terminate the Agreement and requested that payment of commissions to the plaintiff be paid after the signing of a general, inclusive acquittal of liability statement. (Attached is a copy of the acquittal statement with its translation Document 7) Thus the plaintiff sent a letter to the first defendant through its legal agent requesting the payment of the balance of commissions due that are estimated at 390,0087 (three hundred ninety thousand and eighty-seven) US dollars, in addition to 1,600,000 (one million and six hundred thousand) US dollars temporarily estimated as compensation for damage inflicted due to the first defendant s arbitrary decision to terminate the exclusive relations held with the plaintiff. (Attached is a copy of the warning Document 8) On 27/5/2007, Carestream Health (Near East Limited) sent a letter in reply to the plaintiff s warning, and in which it served in place of the first defendant, stating that it would allocate the sum of 191,823 (one hundred and ninety one thousand and eight hundred twenty three) US dollars only and requested that its payment will be made after the plaintiff signs a final acquittal of liability from any rights or demands from the first defendant or Carestream Health (Near East Limited). (Attached is a copy of the letter Document 9) The plaintiff later realised that on 27/8/2006, the day on which it was notified of the termination of representation, the first defendant sent a letter to the Ministry of Health informing it that Dhoha Baghdad Co., located at Al Akhawat Building, No. 6, Al Ghadeer district, Section 702, Lane 87, has become the certified distributor of Kodak s medical products in Iraq. (Attached is a copy of the letter of 27/8/2006) Document 10)
6 Thus, the first defendant did not just deprive the plaintiff of all its rights and hurt it financially and morally but it continued its negative and harmful actions even after the termination of representation and prior to the end of the period allocated for the plaintiff, that is 31/12/2006 ignoring that the plaintiff remains the exclusive agent for its Company in Iraq, and that its behaviour as such constitutes a flagrant and fundamental violation of all the rights of the plaintiff and the contractual relations between them. Thus the first defendant has succeeded in fulfilling its plan which it carefully set since After the plaintiff entered the first defendant s products in Iraqi markets, the latter decided to reward it by terminating its agreement in an arbitrary way and with bad intentions. This mandates obliging the first defendant to work with the second defendant, which later replaced it, and compensate the plaintiff for the work loss and damage it endured due to that arbitrary termination, in addition to the lost profit, as we shall explain in the second part of this petition. - Based on the foregoing, the defendant s obstinacy and refusal to pay the plaintiff its rights, the plaintiff is left with no choice but to file a law suit in the court to gets its rights. First: On the jurisdiction of the Lebanese courts: Section Two The Law Article 5 of the Legislative Decree No. 34/67 states the following: In spite of any contradictory agreement, the courts of the place in which the commercial representative practises its activity is valid for considering the disputes of a representation agreement The Lebanese legislator has tried through the Decree to protect the Lebanese commercial representative from going to foreign courts and to secure the implementation of that Decree because it benefits the Lebanese commercial representative, stating: "It is clear that this exemption was enacted not only to avoid the agent installed in Lebanon from facing the penalty and additional costs of a proceeding to be filed abroad, but above all to ensure that this Decree-Law would be applicable to that agent" (Annotated-Commented Commercial Code on Article 5 of Decree-Law no. 34) - The place in which the commercial representative practises its activity is nothing but that main centre for that representative, and diligence in interpretation has confirmed that meaning. Under this Meaning: What is meant by Article 5 mentioned above is the obligation of the place of residence of the commercial representative
7 (Justice 1974 page 319) Thus we should consider these facts: The plaintiff is an offshore company registered in the Commercial Registry in accordance with Lebanese procedures and laws. The plaintiff handles the sale and distribution of the medical diagnostic equipment of the defendant and serves as its exclusive representative. The plaintiff used one of its main offices in Al Shwayfat as a main centre from which it administered all its activities abroad and as stated in its main operational system registered in the Commercial Registry (even though the Company is registered in the Commercial Registry in Beirut and not in Jabal Lebanon as there is only one main central registry in Beirut for the registration of offshore companies). The plaintiff, and despite practising its activities abroad, is a Lebanese Company particularly with its main centre located in Al Shwayfat in Lebanon. A main centre of a company is the place from where the body that administers the company directors, board of directors, general assemblies, and accountants is located, which means that it is the heart of its legal being or decision making. Under this Meaning: A main centre as deduced from jurisprudence and diligence is the administrative place of a company where the board of directors meet, decisions and instructions are made, and results are gathered. It has been decided that it is agreed upon that a main centre is the place occupied by the body that administers a company directors, board of directors, and general assemblies and it is generally defined by the company s articles of association. (Civil cases in the Lebanese and French laws by Marwan Karkabi- issued page 183) And so the provisions of the Legislative Decree No. 34/67 apply on the plaintiff Company. Therefore, the Lebanese courts hold the jurisdiction to examine the current dispute between the plaintiff and the defendant because of the termination of the relation of commercial representation between them. Therefore, your honourable court should be considered to have the jurisdiction and the authority to consider the current dispute. Second: On the plaintiff s right for compensation: The owners of the plaintiff Company were general and exclusive agents for the first defendant appointed to sell its products in Iraq since 2000.
8 The first defendant Company no longer desires to continue dealing with the plaintiff as its exclusive agent without any legitimate reason or fault by the plaintiff. As an exclusive agent, the plaintiff was making huge profit because of its commercial operations of selling and marketing the products of the Company of the first defendant. The termination of the exclusive representation came suddenly. And under Article 4 of the Legislative Decree No. 34/67, the termination of the representation without no fault committed by the plaintiff or other legitimate reason mentioned grants the latter the right despite all contrary agreements to ask for compensation comparable with the damage endured and the profit lost. The damage caused to the plaintiff due to the arbitrary termination is varied and massive. It includes direct damage, lost profit, and moral damage particularly when considering that the termination of every representation becomes the subject of negotiation, discussion, and question in commercial markets. And also when it reaches a company that has numerous competitors who benefit from such termination in their commercial competitions. In addition that every termination negatively affects a company s reputation and could hinder it from being commissioned as an agent by other companies and hence hurting certainly its development of its business. "Other elements (other than the termination fee) should possibly be taken into account; we cite as examples: the duration of the relationship between the parties... the Courts will also reflect the circumstances of the breach and the commercial damages caused to the agent. (Catoni, breach of the Commercial Distribution Agreement, bidl. commercial law, t.22, no. 159). And also under this same meaning: "Compensation for breach on the part of the commercial agent does not exclude compensation for wrongful breach or rather compensation for breach must be increased to additional damages if the breach takes on a wrongful nature. (Catoni, supra, p. 150, no. 159) The first defendant should be obliged to pay compensation for damage endured by the plaintiff. The second defendant notes and asserts that it has replaced the position of the first defendant and shoulders the responsibility of all rights and duties as stated in its letter of 27/5/2007, and thus it is obligated to cooperate with the first defendant in paying the plaintiff all compensations and accumulated rights. For sack of collecting the fees no more, the plaintiff estimates compensation for all damage caused to be for one million and six hundred thousand US dollar.
9 On the other side, the defendant owns the plaintiff the sum of 390,087 (three hundred ninety thousand and eighty-seven) US dollars in commissions due from business dealings between them. The defendant party is reluctant, without any right, to pay the commissions in spite of repeated and numerous requests, official notifications, and its admission that it owns that to the plaintiff. It associates their payment with the signing of an acquittal of liability statement that drops the plaintiff s right to ask for compensation a rejected demand. For those reasons; and what we may state later and your honourable court sees as permissible, The plaintiff requests sending a copy of the petition and its attachments to the two defendants and setting a close date after discussion and notification of both parties so that the court decides the following: First: Obliging both defendants to jointly carry the responsibility of compensating the plaintiff for the moral and financial damage and the lost profit endured due to the termination of the exclusive representation with a sum of one million and six hundred thousand US dollars for sack of collecting the fees no more. Second: Obliging the two defendants to jointly carry the responsibility of paying the balance of commissions they own to the plaintiff estimated at 390,087 (three hundred ninety thousand and eighty-seven) US dollars. Third: Obliging the two defendants to jointly carry the responsibility of paying the legally-stated interest rate on the due amount from the date of warning of 15/5/2007 and until the actual day of payment. Fourth: Notifying the third person, the Ministry of Commerce and Trade (Department of Commercial Property Protection), with a copy of this petition to place a note of it in the private record of the registry it holds there and in accordance with the provisions of the Legislative Decree No. 34/67 regarding commercial representation. Fifth: Oblige the two defendants to pay all fees, expenses, costs, loss, and damage. With all due respect. Uthman Arakji, Attorney (signed)
10 Attachments: 1 copy of power of attorney (Document 1) 2 copy of letter dated 16/3/2004 (Document 2) 3 copy of first defendant letter (Document 3) 4 copy of termination letter (Document 4) 5 copy of the statement of account (Document 5) 6 copy of termination letter (Document 6) 7 copy of letter of acquittal statement (Document 7) 8 copy of warning letter (Document 8) 9 copy of letter dated 27/5/2007 (Document 9) 10 copy of Letter dated 27/8/2006 (Document 10)
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