Telenor Mobile Communications AS v. Storm LLC

United States Court of Appeals for the Second Circuit · 2009 · Corporations

351 F. App'x 467 (2009)

Updated August 22, 2026

Corporationsalter egocivil contemptarbitration award enforcementcorporate dominationaffiliate divestitureTurkcellshare-deposit requirement

Facts

A final arbitration award in Telenor's favor required Storm to comply with corporate governance provisions and ordered Storm to sell its Kyivstar shares within 120 days unless Storm's affiliated entities divested their Turkcell holdings exceeding five percent. After the district court confirmed the award and ordered compliance, it later held Storm and certain parent entities in civil contempt for noncompliance and required Storm to deposit its Kyivstar shares with the Clerk of Court to secure compliance. The district court found Altimo, Alpren, and Hardlake to be alter egos of Storm based on their domination over Storm, including Altimo's negotiation of the transaction, payment of Storm's legal fees, employment of Storm's sole officer, and initiation of collusive litigation. On appeal, the parent entities challenged both the alter ego finding and the interpretation of the award as requiring divestiture from Turkcell rather than Astelit.

Issue

Whether the district court properly treated the Altimo entities as alter egos of Storm and therefore jointly liable for Storm's contempt, and whether the court properly enforced the arbitration award's literal requirement that Storm's affiliates divest from Turkcell rather than remanding the award to the arbitral tribunal for clarification.

Rule

A district court's legal conclusions on alter ego status are reviewed de novo, while related factual findings are reviewed for clear error; alter ego status is supported where an entity is so dominated that it primarily transacts the business of the parent or affiliated entities rather than its own. Arbitration awards are subject to very limited judicial review and should be enforced if there is a barely colorable justification for the outcome reached. Remand to an arbitration panel for clarification is appropriate only when an award is so ambiguous that a court cannot discern how to enforce it.

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A federal court in New York confirms an arbitration award requiring Lakeview Fiber LLC to honor certain governance restrictions. After Lakeview ignores the judgment, the court considers contempt sanctions against Lakeview and its affiliated holding company, North Harbor Capital Ltd. The record shows North Harbor negotiated the underlying deal, pays Lakeview's legal bills, employs Lakeview's only officer, and directed a separate lawsuit in Nevada designed to obstruct the arbitration process.

Which is the strongest basis for holding North Harbor jointly liable for Lakeview's contempt?

Explanation. The majority approved alter ego liability where affiliated entities dominated the contemnor so extensively that it primarily transacted their business rather than its own. Facts such as negotiating the transaction, paying legal fees, employing the sole officer, and directing collusive litigation support that conclusion. Mere ownership or omission from the award is not dispositive. (Derived from Telenor Mobile Communications AS v. Storm LLC (2009).)