After Global Chase, Boeing Sues Former Sea Launch Partners

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PARIS — Boeing is suing its former Russian and Ukrainian partners in the Sea Launch commercial satellite launch venture following months of effort to get the two companies to acknowledge the debt, forcing Boeing “to chase them around the world to seek payment,” Boeing said in its lawsuit.

In documents filed with the U.S. District Court for the Central District of California, Boeing said Energia of Russia and Yuzhnoye of Ukraine have each received more than $300 million in payments from the Sea Launch business since it was set up in 1995.

Each was paid about $10 million for its contribution to each Sea Launch rocket assembly. Yuzhnoye provides the first and second stages of the Zenit 3SL vehicle, while Energia provides the Block DM upper stage.

Boeing is seeking $222 million from Energia and $133 million from Yuzhnoye, plus interest and court costs, Boeing says in the lawsuit, which was filed Feb. 1 and amended with Sea Launch-related documentation Feb. 6.

When Sea Launch, then headquartered in Long Beach, Calif., filed for Chapter 11 bankruptcy protection in 2009, Chicago-based Boeing sought to recover several hundred million dollars in Sea Launch loans and loan guarantees that Boeing had paid on behalf of the Sea Launch partnership.

The partnership included Kvaerner of Norway, with a 20 percent share; Energia’s 25 percent stake and Yuzhnoye’s 15 percent. Boeing held the remaining 40 percent share.

As documented in the 1995 contract that formed Sea Launch, all partners agreed to reimburse Boeing their pro rata share of any debt assumed on behalf of the partnership. Kvaerner, now called Aker Maritime, reimbursed Boeing, but the Russian and Ukrainian partners did not.

The Sea Launch partners agreed in their founding contract they would be governed by Swedish law, with any disputes to be settled by an arbitration panel in Sweden. Sea Launch uses a converted floating oil platform to place heavy commercial telecommunications satellites into orbit from a spot on the equator in the Pacific Ocean, in international waters.

But Boeing says in its lawsuit that Energia and Ukraine fought the legitimacy of Boeing’s arbitration attempt, saying the Swedish tribunal lacked jurisdiction. The Swedish court ultimately dismissed the case in October 2011.

Boeing appealed the decision, but was unable to proceed because, the company says, Energia officials found ways to evade being served notices of appeal. The effort has remained stalled for the past 15 months.

Energia, which through an affiliate purchased 95 percent of Sea Launch to take it out of bankruptcy in late 2010, has used different “alter egos” and created a confusing list of subsidiaries in an attempt, Boeing says, to separate its current Sea Launch business from the Energia that was a partner in the original Sea Launch.

Boeing asks the court to consider that all these appellations — Energia Overseas Ltd., Energia Logistics Ltd. and RSC Energia among them — share a “unity of interest” and should be considered as a single unit by the court. Energia has created these companies “with the specific intent of continuing to run Sea Launch while attempting to avoid paying,” Boeing says.

Similarly, Boeing says the fact that Energia is owned partly by the Russian government, and Yuzhnoye entirely by the Ukrainian government, does not make the case one involving sovereign debt.

Boeing says Energia and Yuzhnoye stated on multiple occasions that they were entering the Sea Launch venture as a commercial transaction.

The reorganized Sea Launch, freed of much of its debt, returned to service and launched three times in 2012. The company is headquartered in Bern, Switzerland. While still on fragile footing in terms of backlog, Sea Launch had hoped to begin a four-per-year flight rate in 2014 after replenishing its stock of rocket components.

But on Jan. 31 — the day before the Boeing lawsuit was filed — the Sea Launch rocket failed less than a minute after ignition, destroying an Intelsat commercial telecommunications satellite with an insured value of some $400 million.

Boeing’s ability to collect from the Russian and Ukrainian companies is unclear. Neither has a major operating facility in the United States aside from Sea Launch, which continues to use Long Beach as its home port.

Sea Launch AG has said it will return to flight following the results of a board of inquiry into the Jan. 31 failure.