SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK GAZPROMBANK (SWITZERLAND) LTD. Plaintiff, -against- ANATOLY KARPOV Defendant. Index No. 656130/2016 AFFIRMATION OF THOMAS ROHNER IN SUPPORT OF PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT ON A FOREIGN COUNTRY MONEY JUDGMENT I, Dr. THOMAS ROHNER, a citizen and resident of Switzerland, hereby affirm pursuant to CPLR 2106(b) the truth of the following statements: INTRODUCTION 1. I am an attorney licensed to practice law in Switzerland and am a partner in the law firm of Pestalozzi Attorneys At Law Ltd. ("Pestalozzi"), one of the leading law firms in Zurich, Switzerland. I, together with Matthias Wiget, represented plaintiff Gazprombank (Switzerland) Ltd. ("Gazprombank") in its lawsuit against defendant Anatoly Stepanovitch Karpov ("Karpov") before the Zurich District Court (the "Swiss Court"), entitled No. CG150095-L/U (the "Swiss Action"). 2. I submit this affirmation in support of Gazprombank's motion for summary judgment pursuant to New York Civil Practice Law and Rules ("CPLR") 5302, 5303 and 3212, which seeks to enforce and recognize the judgment entered in the Swiss Action. 3. On August 23, 2016, the Swiss Court rendered a final judgment in a detailed 19- page decision (the "Swiss Judgment"). The Swiss Judgment held that Karpov must pay Gazprombank "the amount of USD 8,942,445.00 plus interest of 15% on USD 7,500,000.00 1 of 11
from June 4, 2015, and interest of 5% on USD 2,500.00 from February 23, 2015, as well as the amount of Fr. 32,400.00' plus 5% interest from February 23, 2015." The Swiss Judgment also directed that Kaipov pay certain court costs and attorneys' fees to the "prevailing party." A true and correct copy of the Swiss Judgment is attached hereto as Exhibit 1. A copy of the Swiss Judgment translated into English, accompanied by a certification of the translator, is attached hereto as Exhibit 2.' 4. The primary purpose of this Affirmation is to describe the Swiss Action, the Swiss Judgment, and the legal system in Switzerland. Except as otherwise indicated, I have personal knowledge of the facts set forth herein and could and would testify to such facts if called upon to do so. My knowledge is based on my involvement in the Swiss Action, my preparation and/or review of the documents filed in the Swiss Action, and my experience as a Swiss attorney. 5. I am a member of Pestalozzi's Litigation and Arbitration Group. I am a graduate of the University of St. Gall (lic.iur., 1998; Dr.iur., 2002). From 1997 until 2005, I served as a part-time judge at a District Court. In addition, I was a temporary vice-president of this Court on a full-time basis in 2001. In 2003, I graduated from the University of Chicago Law School (LL.M.). I have expertise in complex litigation and arbitration matters, both national and international. A. The Parties 1 Fr. is the abbreviation for the currency of Switzerland, the Swiss franc. The Swiss franc is also abbreviated as CHF. 2 The Swiss Judgment is in German. The quotations of the Swiss Judgment appearing in this Affirmation come from the certified English translation. 2 of 11
6. Plaintiff Gazprombank (Switzerland) Ltd. is a business entity incorporated and organized under the laws of Switzerland. It maintains a registered office at Zollikerstrasse 183, 8008 Zurich, Switzerland. 7. Defendant Karpov maintained an address for service of process during the relevant litigation in Switzerland at c/o IDC Legal GmbH, Beethovenstr. 7, 8002 Zurich, Switzerland. B. The Loan Agreement And The Guarantee 8. On April 12, 2011, Gazprombank entered into Loan Agreement N 1417 (the "Loan Agreement") with Dateline Overseas Limited ("Dateline"). A true and correct copy of the Loan Agreement is attached hereto as Exhibit 3. 9. Pursuant to the Loan Agreement, Gazprombank extended to Dateline a secured credit facility from which, provided certain conditions precedent were met, Dateline could withdraw up to USD 10 million. 10. In connection with the Loan Agreement (and, indeed, as one of the conditions precedent to Dateline utilizing the credit facility), Kaipov who, according to the Guarantee, is "holding 100% of the shares" of Dateline guaranteed Dateline's obligations under the Loan Agreement by executing Guarantee No. 1417 (the "Guarantee"). A true and correct copy of the Guarantee is attached hereto as Exhibit 4. 11. The Guarantee made Kaipov responsible for any and all of Dateline's obligations under the Loan Agreement upon first demand by Gazprombank. Specifically, the Guarantee states that "[Kaipov] hereby iitevocably and unconditionally guarantees... upon first demand of [Gazprombank] to pay to [Gazprombank] each and every sum which is at any time now and hereafter payable by [Dateline] by way of principal, interests, commissions and all other amounts 3 of 11
under or pursuant to the [Loan Agreement], up to a maximum amount of: (a) USD 10 000 000.00 (in words: Ten million and 00/100 US Dollars); and (b) all interests, fees, commissions or other payments expressed to be payable by [Dateline] in relation to the [Loan Agreement], as the same may be amended or modified from time to time." 12. The Loan Agreement specifies that it "shall be governed by, interpreted and construed in accordance with the substantive laws of Switzerland" and that the "competent courts of Zurich 1, Switzerland, shall have exclusive jurisdiction for all disputes arising out of or in connection with this Agreement". The Guarantee states that it "is governed by Swiss law" and that "any dispute arising out of or in connection with this Guarantee shall be submitted to the jurisdiction of the ordinary courts of Zurich 1, Switzerland". C. Dateline Defaults On Loan Agreement And Karpov Defaults On Guarantee 13. Pursuant to the Loan Agreement and a series of seven drawdown notices executed between July and December 2013, Gazprombank disbursed a total of USD 8.5 million to Dateline in seven tranches. 14. The repayment deadline for each tranche varied depending on the date of the drawdown notice (numbering in accordance with the Swiss Judgment): Tranche 1 (USD 2 million) - Due February 3, 2014 Tranche 2 (USD 1.5 million) - Due March 14, 2014 Tranche 3 (USD 1 million) - Due February 7, 2014 Tranche 4 (USD 1 million) - Due February 14, 2014 Tranche 5 (USD 1 million) - Due February 20, 2014 Tranche 6 (USD 1 million) - Due March 11, 2014 Tranche 7 (USD 1 million) - Due March 12, 2014 15. By late February 2014, Dateline having repaid only USD 1 million out of the USD 8.5 million due and payable was in breach of its repayment obligations. Nevertheless, at Dateline's request, Gazprombank granted Dateline a grace period of three months for repayment. 4 of 11
A true and correct copy of Gazprombank's February 26, 2014 letter granting the grace period is attached hereto as Exhibit 5. 16. Pursuant to this February 26, 2014 letter, the repayment of the outstanding loan tranches were due on the following dates: May 2, 2014 (USD 1 million), May 7, 2014 (USD 1 million), May 14, 2014 (USD 1 million), May 20, 2014 (USD 1 million), June 11, 2014 (USD 1 million), June 12, 2014 (USD 1 million), and June 13, 2014 (USD 1.5 million). 17. Dateline failed to make any of these required payments. 18. On January 21, 2015, Gazprombank sent a default notice to Dateline demanding repayment of principal and accmed interest (including interest on arrears at the contractuallyagreed rate of 15%). Dateline ignored this notice. 19. Thus, by letter dated January 28, 2015 (the "January 28, 2015 Demand"), Gazprombank demanded that, in accordance with the Guarantee, Kaipov pay Dateline's outstanding obligations under the Loan Agreement, i.e., USD 8,521,194.54. A true and con-ect copy of the January 28, 2015 Demand is attached hereto as Exhibit 6. 20. As required by the Guarantee, Gazprombank delivered the January 28, 2015 Demand to Kaipov at his residence in Russia. Karpov, however, ignored the January 28, 2015 Demand. 21. On June 3,2015, Gazprombank sent an additional demand for payment to Karpov (the "June 3, 2015 Demand"). A true and con-ect copy of the June 3, 2015 Demand is attached hereto as Exhibit 7. 22. By the time of the June 3, 2015 Demand, Kaipov's liability had increased to USD 8,942,444.58. Nevertheless, Karpov ignored the June 3, 2015 Demand. D. The Swiss Action and Swiss Judgment 5 of 11
23. On June 22, 2015, in order to enforce the Guarantee, and in accordance with the Guarantee's forum selection clause, Gazprombank initiated the Swiss Action by way of Complaint (the "Swiss Complaint"). 24. On December 18, 2015, Kaipov appeared in person at the Swiss Court and received a copy of the Swiss Complaint including exhibits as well as the Swiss Court's order of 29 June 2015 wherein Kaipov was ordered to designate an address for service in Switzerland in accordance with Article 140 of the Swiss Code of Civil Procedure. According to Article 138(1) of the Swiss Code of Civil Procedure, the summons, rulings and decisions are served by registered mail or by other means against confirmation of receipt. Service is accomplished when the document has been received by the addressee [...] (Article 138(2) of the Swiss Code of Civil Procedure). As Karpov appeared in person at the Swiss Court and received a copy of the Swiss Complaint and confirmed receipt with his signature, service was properly and lawfully accomplished. 25. Kaipov also later executed a power of attorney authorizing IDC Legal GmbH to receive documents from the Swiss Court on his behalf. By a submission dated February 10, 2016, IDC Legal GmbH filed the power of attorney with the Swiss Court that confinned its legally valid appointment as the authorized recipient for Karpov. 26. If a party to a civil proceeding appoints an authorized recipient for service of court documents, the service of court documents to the authorized recipient will be deemed a proper service to that party. 27. On February 11, 2016, the Swiss Court set a deadline of 20 days for Kaipov to respond to the Swiss Complaint. After Karpov failed to respond by the deadline, the Swiss Court, by order dated March 15, 2016, granted Kaipov an additional 10 days to respond and 6 of 11
warned him that, if he failed to do so, he would be excluded with any written statement of response and that the court could issue a final decision without considering any further statements of the parties. Kaipov nevertheless declined to respond to the Swiss Complaint. 28. Under Swiss law, there is generally no fixed standard time to respond but the judge has discretion in setting an appropriate time limit for the defendant to file a statement of response. If the defendant misses that deadline, the procedure is governed by Article 223 of the Swiss Code of Civil Procedure. According to Article 223(1) of the Swiss Code of Civil Procedure, if the statement of defense is not filed within the deadline, the court shall allow the defendant a short period of grace. If the statement of defense is not filed by the end of the period of grace, the court shall make a final decision provided the court is in a position to make a decision (Article 223(2) of the Swiss Code of Civil Procedure). 29. After the grace period (set by order dated March 15, 2016) had expired, the Swiss Court had to proceed in accordance with Article 223(2) of the Swiss Code of Civil Procedure, i.e., to make a final decision provided the court is in a position to make a decision. The Swiss Court considered itself in a position to make a decision and, hence, rendered its final decision (the Swiss Judgment) on August 23, 2016. 30. On August 23, 2016, the Swiss Court rendered the Swiss Judgment, which directed that Kaipov "must pay" Gazprombank "the amount of USD 8,942,445.00 plus interest of 15% on USD 7,500,000.00 from June 4, 2015, and interest of 5% on USD 2,500.00 from February 23, 2015, as well as the amount of Fr. 32,400.00 plus 5% interest from February 23, 2015." {See Swiss Judgment at 7, p.16, p. 18). The Swiss Judgment also directed that Karpov pay all court costs (CHF 50,600.00) and to compensate Gazprombank for legal fees in the amount of CHF 75,600.00. (See Swiss Judgment at p. 19). 7 of 11
31. The Swiss Judgment sets forth the factual and legal basis for its detennination that Kaipov is liable under the Guarantee and for the amounts awarded. The Swiss Court first concluded that the procedural conditions for the Swiss Judgment had been met. Specifically, the Swiss Court held that any dispute under the Guarantee was "subject to Swiss Law in accordance with the choice of law of the parties." (See Swiss Judgment at 1,5, pp. 3-4). 32. The Swiss Court then recited the facts of the dispute, based on "the uncontested description of the facts" of Gazprombank. The Swiss Judgment describes in detail the Loan Agreement, the Guarantee, the monies owed by Dateline under the Loan Agreement, the grace period Gazprombank gave to Dateline, Dateline's default under the Loan Agreement, Gazprombank's default notices to Dateline, and Gazprombank's Demand Letters, dated January 28, 2015 and June 3, 2015, to Karpov. (See Swiss Judgment, at pp. 5-9). Significantly, the Swiss Court held ( 12, p. 8): These factual claims of the Plaintiff are to be viewed as uncontested given the lack of statements of contradiction by the Respondent. Since there is no substantial doubt of their accuracy due to the proofs submitted on behalf of the Plaintiff, we assess the coitesponding claims in the case before us for judgment, as established (KILLIAS, BK [Bemer Kommentar (Bern Commentary)] ZPO, Bern 2012, Note 12 on Art. 223 ZPO). 33. The Swiss Court then addressed the legal basis for the Swiss Judgment. (See Swiss Judgment at pp. 8-16). The Swiss Court held, among other things, that Dateline did not fulfill the Loan Agreement and that Kaipov "obligated himself irrevocably and unconditionally to pay, at the first demand of the Plaintiff, the amount which is due to the Plaintiff based on the Loan Agreement with" Dateline. The Swiss Court concluded that "the demand preconditions of the guarantee were therefore met in the present case, and a valid demand declaration was made by the Plaintiff to the Respondent on January 28, 2015, which triggered the latter's payment 8 of 11
obligation regarding the sums demanded." (See Swiss Judgment at 6.6, p. 16). The Swiss Court's conclusions and holdings were based on the Swiss Code of Obligations and decisional law set forth in the Swiss Judgment (i.e., the Swiss Code of Civil Procedure, the Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters [Lugano Convention], the Zurich Law on the Organization of Courts and Authorities in Civil and Criminal Proceedings [Gesetz iiber die Gerichts- und Behordenorganisation im Zivilund Strafprozess (GOG)], the Swiss Code on Private International Law, the Zurich Supreme Court Ordinance on Court Fees [Gebiihrenverordnung des Obergerichts] and the Zurich Supreme Court Ordinance on Legal Fees [Verordnung iiber die Anwaltsgebiihren]). 34. Finally, the Swiss Court determined the monies that Kaipov owed Gazprombank under the Guarantee, exclusive of attorneys' fees and court costs. (See Swiss Judgment at 7, p. 16). Based on Swiss law, the Swiss Court held that Kaipov "must pay the Plaintiff prevailing party damages in full" and awarded all court costs and "prevailing party damages" of CHF 75,600.00 (including 8% VAT equaling CHF 5,600.00). 3 (See Swiss Judgment at pp. 16-18). 35. On August 29, 2016, the Swiss Court served the Swiss Judgment on IDC Legal GmbH, pursuant to the power of attorney it filed with the Swiss Court. Service on IDC Legal GmbH constitutes service of the Swiss Judgment on Karpov. 36. Kaipov was required to appeal the Swiss Judgment within 30 days upon service of the Swiss Judgment. Karpov did not appeal the Swiss Judgment by the required deadline of September 28, 2016. 37. The Swiss Judgment is final, conclusive, and enforceable in Switzerland as of September 29, 2016 (see p. 19 of the Swiss Judgment). 3 The Swiss Court held that Gazprombank is entitled to attorneys' fees as the "prevailing party" under the Superior Court Ordinance on Legal Fees of September 8, 2010. (See Swiss Judgment at pp. 17-18). 9 of 11
38. The Swiss Court is part of the independent judicial branch created under the Swiss Federal Constitution of the Swiss Confederation of 18 April 1999 ("Swiss Constitution"). Swiss judges are not permitted to hear cases in which they might have any personal interest or where there might be a conflict of interest. Article 30(1) of the Swiss Constitution states that any person whose case falls to be judicially decided has the right to have their case heard by a legally constituted, competent, independent and impartial court. Swiss courts apply the constitutional right of independent and impartial courts and judges strictly and rigorously. In addition, Article 29(1) of the Swiss Constitution grants every person the right to equal and fair treatment in judicial and administrative proceedings and to have their case decided within a reasonable time. Furthermore, each party to a case has the right to be heard (Article 29(2) of the Swiss Constitution). In court proceedings on civil and commercial matters, these constitutional rights are further specified by the Swiss Code of Civil Procedure which provides a procedure that is compatible with the rules of due process of law. 39. The Swiss judicial system is fair and impartial and provides all litigants who come before it with an opportunity to present their claims and defenses before a decision is rendered: litigants in adversarial proceedings are entitled to notice and an opportunity to be heard; parties can present evidence to support their case and file submissions advancing legal arguments; and in the event of a trial, parties can call witnesses and cross examine witnesses called by other parties. Parties have a right to appeal a judgment by the Swiss Court, provided they do so within the prescribed time. 40. The Swiss Court had personal jurisdiction over Kaipov because Kaipov consented to its jurisdiction for any dispute arising out of or in connection with the Guarantee. Specifically, the Guarantee "is governed by Swiss Law" and provides that "any dispute arising out of or in 10 of 11
connection with this Guarantee shall be submitted to the jurisdiction of the ordinary courts" of Zurich, Switzerland. Under Swiss law, this provision in the Guarantee constitutes Gazprombank's and Kaipov's express consent to submit to the jurisdiction of the Zurich courts with respect to any such dispute. 41. Moreover, as noted above, Kaipov was served with the Swiss Complaint in Switzerland and executed a power of attorney authorizing IDC Legal GmbH to receive documents from the Swiss Court on his behalf. 42. The Swiss Court had jurisdiction over the subject matter of the Swiss Complaint. 43. Karpov received notice of the proceedings and was given ample time to respond to the Swiss Complaint. 44. The Swiss Judgment was not obtained by fraud. 45. For all of the foregoing reasons, the Swiss Judgment was issued in accordance with the laws and procedures of the Swiss Court, an impartial tribunal whose procedures are compatible with due process of law. Karpov had a full and fair opportunity to defend himself in the Swiss Action, and the Swiss Judgment is final, conclusive, enforceable and has legal effect in Switzerland since September 29, 2016. I affinn this _? day of March, 2017, under the penalties of perjury under the laws of New York, which may include a fine or imprisonment, that I am physically located outside the geographic boundaries of the United States, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States, that the foregoing is true, and I understand that this document may be filed in an action or proceeding in a court of law. Dated: Zurich, Switzerland March [i, 2017 Dr. THOMAS ROHNER 11 11 of 11