2022 LCA President Michael Ehrenstein and his firm, Ehrenstein|Sager, secured a decisive Second Circuit victory on behalf of Angola in a breach of contract lawsuit brought by Aenergy seeking $1.1 billion in claims against the African country. In its ruling, the court upheld the lower court’s authority to dismiss the lawsuit under the rule of forum non conveniens, a doctrine which permits a court to abstain from exercising jurisdiction when a dispute can be more conveniently adjudicated in a different location.
The Aenergy lawsuit alleged Angola wrongfully canceled power plant contracts and seized the energy company’s related property in violation of state and international law. Angola canceled the contracts in 2019 after alleged fraud on behalf of Aenergy when it applied Angola’s credit to purchase four turbines for Aenergy’s own use and without the country’s knowledge or approval. Aenergy sued Angola in New York for breach of contract. The action was dismissed by the lower court, which found that the claims should be raised in Angola, not New York.
Aenergy, an Angolan company owned by Portuguese national Ricardo Machado, appealed to the Second Circuit, arguing that the lower court’s dismissal violated the Foreign Sovereign Immunities Act (FSIA) and otherwise improperly applied the doctrine. In today’s ruling, the Second Circuit upheld the lower court’s dismissal, saying the trial judge properly dismissed the case.
“This case demonstrates the respect of U.S. courts for the Angolan judicial system, as well as its government officials, who should not have been hauled into our courts at great expense and inconvenience to testify about their executive decisions,” said lead counsel Michael Ehrenstein. “It is unfair to drag a sovereign country to defend itself in New York over alleged conduct which occurred in Angola, concerning contracts entered in Angola, for provision of power plants in Angola.”
Ehrenstein noted the decision will have an impact on foreign investment in Angola and other parts of Africa.
“Foreign investors in Angola can be confident of independent and fair treatment,” he said. “It also means that FISA does not deprive courts of the ability to abstain from exercising jurisdiction.”
Despite the staggering amount in damages on the line, the Angolan government did not retain a legion of attorneys from a white-shoe New York City or Washington D.C. firm. Instead, the country turned to Ehrenstein|Sager, a four-attorney firm in Coral Gables, Florida, with extensive experience trying cases arising under FSIA. The firm’s involvement and success in Aenergy exemplifies a growing trend among African nations and other countries toward retaining boutique firms with specialized experience over their larger, multinational counterparts.
Led by 2022 LCA President Michael Ehrenstein, Ehrenstein|Sager has secured favorable results for Angola in this case and others as well. In addition, he has consulted with other nations facing sovereign immunity challenges arising from their business..
“As more countries are encountering commercial disputes with their contracts, they are finding they need in-depth counseling on the ins and outs of federal sovereign immunity provisions,” said Ehrenstein. “This is a need that is both niche and critical, as proper contractual and arbitration provisions can make the difference when it comes to a sovereign’s liability.”
Ehrenstein|Sager is a business law boutique providing bespoke trial and transactional services to select clients. With three decades of trial practice, Ehrenstein|Sager has the knowledge and skill to effectively try cases. The firm’s trial prowess facilitates realistic negotiations before trial from a position of strength — often yielding favorable settlements. For more information, visit www.ehrensteinsager.com.