The World in U.S. Courts: Spring 2017 - Racketeer Influenced and Corrupt Organizations Act (RICO)
March.21.2017
Plaintiff Armada, a Singaporean company, is a shipper that contracted with an Indian company, Ashapura, to transport bauxite. Ashapura encountered difficulties and breached its agreements, prompting Armada in 2008 to file legal and maritime attachment claims in US District Court in New York against a number of non-US entities that allegedly controlled Ashapura and were liable for Ashapura’s debt. In 2010, Armada also initiated two arbitrations in London that resulted in awards totaling USD 70 million. Ashapura subsequently filed for bankruptcy protection, to which Armada was an objecting creditor with respect to its unpaid arbitration awards. At issue in the present opinion are Armada’s claims that the defendants, among other things, had engaged in various “machinations to deplete Ashapura’s assets” prior to its insolvency and so undermined Armada’s ability to exercise its legal rights in the US.
As relevant here, the issue for decision was whether the defendants’ alleged conduct violated the civil provisions of the RICO statute. The Court observed that the US Supreme Court’s 2016 decision in the RJR Nabisco case established that plaintiffs pressing a private RICO claim must allege a US “domestic injury.” While acknowledging that the RJR Nabisco decision did not specify how the location of a RICO “injury” was to be determined, the Court found that the location must be where the injury was “suffered.” Armada argued that location was the United States, because Armada’s ability to obtain relief in US proceedings had been compromised. The Court disagreed, focusing on where an injury was “felt” and concluding that the proper location was Singapore. Referring to law not specific to RICO, the Court concluded: “A corporate entity generally suffers economic harm in its principal place of business.” It thus dismissed Armada’s RICO claim.