GEM Yield Bahamas Limited v. Mullen Technologies, Inc.

District Court, S.D. New York·Decided June 11, 2024·No. 1:24-cv-01120·Unknown

Opinion

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK GEM YIELD BAHAMAS LIMITED and GEM GLOBAL YIELD LLC SCS, Petitioners, 24 Civ. 1120 (KPF) -v.- REDACTED OPINION AND ORDER MULLEN TECHNOLOGIES, INC. and MULLEN AUTOMOTIVE, INC., Respondents. KATHERINE POLK FAILLA, District Judge:1 This action arises out of an underlying arbitration (the “Arbitration”) between Petitioners GEM Yield Bahamas Limited and GEM Global Yield LLC SCS (collectively, “GEM” or “Petitioners”) and Respondents Mullen Technologies, Inc. (“MTI”) and Mullen Automotive, Inc. (“MAI”) (collectively, “Respondents”). The Arbitration, captioned GEM Yield Bahamas Limited and GEM Global Yield LLC SCS v. Mullen Technologies, Inc. and Mullen Automotive, Inc., No. 01-21-0016-7001, was conducted between September 2021 and May 2024, and concerned competing allegations of breach of contract. The Arbitration was managed by the American Arbitration Association (“AAA”) and its affiliate, the International Centre for Dispute Resolution (“ICDR”), and is sited in New York, New York. The parties bifurcated the arbitration proceedings into two phases, the first of which to determine liability and the second to award damages and 1 Sunny Drescher, a rising second-year student at Harvard Law School and an intern in my Chambers, provided substantial assistance in researching and drafting this Opinion. resolve any remaining issues. On November 17, 2023, Arbitrator Mark C. Morill (the “Arbitrator”), issued a Partial Final Award (the “PFA”), . Subsequently, on January 24, 2024, the Arbitrator issued an interim measures award (the “Interim Measures Award” or “IMA”) ordering Respondents to

. Following the issuance of the Interim Measures Award, on May 10, 2024, the Arbitrator issued a Final Award, awarding damages. Petitioners filed this motion for summary judgment in support of their petition to confirm the Interim Measures Award.2 Respondents filed a competing cross-motion to vacate the Award. For the reasons set forth in the remainder of this Opinion, the Court grants Petitioners’ motion and confirms the Interim Measures Award. BACKGROUND3 A. Factual Background 1. The Parties and the GEM Agreements Petitioner GEM Yield Bahamas Limited is a limited company formed under the laws of the Commonwealth of the Bahamas (Joint 56.1 ¶ 1), and

2 While relevant for context, the Partial Final Award and the Final Award are not the subjects of the motions resolved in this Opinion. 3 The facts set forth in this Opinion are drawn from the parties’ submissions in connection with their cross-motions for summary judgment. The Court primarily sources facts from the parties’ Joint Local Rule 56.1 Statement (Dkt. #62 (“Joint 56.1”)); the parties’ Joint Appendix of Exhibits (Dkt. #64 (“Joint App’x, Ex. [ ]”)), including the Arbitrator’s Partial Final Award on Liability (Dkt. #64-7 (the “Partial Final Award” or “PFA”)) and the Arbitrator’s Decision and Order on Claimants’ Second Application for Interim Measures (Dkt. #64-15 (the “Interim Measures Award” or “IMA”)); Petitioners’ Notice of Supplemental Authority (Dkt. #72) and the exhibit attached thereto (Dkt. #72- 1 (the “Final Award”)); and Respondents’ Response Letter to Notice of Supplemental Authority (Dkt. #75). Petitioner GEM Global Yield LLC SCS is a limited partnership formed under the laws of Luxembourg (see id. ¶ 2). Petitioners are part of the GEM Group,4 an investment group that manages a diverse set of investments focused on global emerging markets. (See PFA ¶ 6). Respondent MTI is an automobile company that was previously engaged

in the business of “developing, manufacturing, and selling electric vehicles.” (PFA ¶ 8). Respondent MAI is an electric vehicle manufacturer and publicly traded company; MAI was created from a “spin-off of MTI’s former [electric vehicle] assets” via a merger with another company, Net Element, Inc. (Id. ¶ 10). On January 4, 2021, GEM and MTI executed three financing agreements to facilitate GEM’s investment in MTI’s electric vehicle business. (Joint 56.1 ¶ 7; see also PFA ¶¶ 16-17). The agreements included: (i) a Share Purchase Agreement (the “SPA”); (ii) a Registration Rights Agreement (the “RRA”), and (iii) a Warrant to Purchase Common Shares of MTI (the “Warrant”) (collectively, the “GEM Agreements”). (Joint 56.1 ¶ 7). The SPA and the RRA respectively provide that they are governed by New York law. (Joint 56.1 ¶ 10). Both agreements also contain an arbitration

clause, specifying that:

As noted, the parties to this action submitted a joint Rule 56.1 Statement. Citations in this Opinion to the parties’ Rule 56.1 Statement incorporate by reference the documents and testimony cited therein. For ease of reference, the Court refers to Petitioners’ memorandum of law in support of their motion for summary judgment as “Pet. Br.” (Dkt. #60), and to Respondents’ memorandum of law in opposition to Petitioners’ motion and in support of their cross- motion for summary judgment as “Resp. Opp.” (Dkt. #69). 4 “GEM” is an acronym that stands for “Global Emerging Markets.” (PFA ¶ 6 n.3). All disputes, controversies or claims between the Parties arising out of or in connection with this agreement (including its existence, validity or termination) which cannot be amicably resolved shall be finally resolved and settled under the Rules of Arbitration of the American Arbitration Association and its affiliate, the International Cent[re] for Dispute Resolution, in New York City. The arbitration tribunal shall be composed of one arbitrator. The arbitration will take place in New York City, New York, and shall be conducted in the English language. The arbitration award shall be final and binding on the Parties. (Id. ¶ 8 (quoting SPA § 9.02(b)); see also RRA § 11(e) (containing a nearly identical arbitration clause)). Separately, the Warrant provides that, for any dispute arising under the Warrant, venue lies exclusively in the state or federal courts located in New York. (Joint 56.1 ¶ 11). 2. The Arbitration and the Interim Measures Award In September 2021, Petitioners initiated the Arbitration by filing an Arbitration Demand and Statement of Claim naming MTI as Respondent. (Joint 56.1 ¶ 12). Petitioners alleged that . ( ). In November 2021, Mullen Automotive, Inc. completed the merger transaction with Net Element, Inc. (Joint 56.1 ¶ 5). The combined company maintained the name Mullen Automotive, Inc. and began trading on the Nasdaq Stock Market under the ticker symbol “MULN.” (Id. ¶ 6; see also PFA ¶ 10). On December 21, 2021, the Arbitrator issued Procedural Order No. 1. (Joint 56.1 ¶ 14; see generally Joint App’x, Ex. 5). Procedural Order No. 1 stated that

(Id. ¶ 15 (quoting )). The Arbitrator found that (Id. ¶ 16). The Arbitrator also provided . (Id. ¶ 17). , in January 2022, Petitioners filed an Amended Statement of Claim, which added the newly formed MAI as a party to the Arbitration. (Joint 56.1 ¶ 18). On February 1, 2022, Respondents MTI and MAI jointly filed an Answer to Petitioners’ Amended Statement of Claim. (Id. ¶ 19; see generally Joint App’x, Ex. 7). On August 3, 2023, the Arbitrator granted Petitioners’ first application for interim relief and

. (Joint 56.1 ¶ 21 (citing )). On October 5, 2023, the ICDR confirmed . (Id. ¶ 22). On November 17, 2023, the Arbitrator issued a Partial Final Award

, which concluded the liability phase of the Arbitration. (Joint 56.1 | 23; see generally PFA). In the Partial Final Award, the Arbitrator found that

RE (02: 56.1524 (oot in other ors, On December 15, 2023, Petitioners submitted a second application for interim relief requesting Respondents ee

ee (Joint App’x, Ex. 17 at 1). Respondents submitted their opposition to Petitioners’ application on December 29, 2023. (Joint 56.1 31; see generally Joint App’x, Ex. 18).

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GEM Yield Bahamas Limited v. Mullen Technologies, Inc., (S.D.N.Y. 2024).

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