On May 15, a five-judge panel of New York’s Appellate Division, First Judicial Department, unanimously reversed a lower court and held that a contractual tax-allocation provision was unambiguous and the issue of its interpretation should be decided at the motion-to-dismiss stage in favor of two Sumitomo entities on the key issues.
The litigation stemmed from a $2.2 billion sale in 2021 by S&C’s clients, the two Sumitomo entities, of their collective 45 percent stake in the Sierra Gorda copper mine in Chile, which was financed by the clients’ Dutch subsidiaries, to South32, an Australian company. South32 had sued S&C’s clients for reimbursement of 89 million euros (roughly $92 million) in taxes it had paid to the Dutch tax authorities.
The trial court judge declined to interpret the pivotal tax-allocation provision of the sale contract at the motion-to-dismiss stage. He deferred the issue to summary judgment and sent the parties to the discovery process.
In an interlocutory appeal, the S&C team stressed that, although this case that had no real connection to New York, the parties had agreed to have New York law govern because of New York’s preeminence as a commercial center whose courts can be counted on to interpret contracts in accordance with their plain terms.
The S&C team included Thomas White (who argued the appeal), Sergio Galvis, Justin Decamp, Morgan Ratner, Michael Devlin, Christopher Graham, Robert Jones, Qingyang Song and Josiah Himmelman.
The litigation team greatly benefited from the input of our General Practice and Tax colleagues including Donald Korb, Eric Wang, Benjamin Kent, Michael Orchowski, HyunKyu Kim, Andrew Ferry and James Jang.