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Global Gold Mining LLC v. Caldera Resources, Inc.

United States District Court, S.D. New York

April 15, 2013


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[Copyrighted Material Omitted]

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For Petitioners: Brian Scott Cousin, Esq., Lauren Beth Perlgut, Esq., Dentons U.S. LLP, New York, New York.

For Respondent: Darius Patrick Chafizadeh, Esq., Harris Beach PLLC, White Plains, New, York; John Mavridis, Newhouse Strategic Counsel, Montreal, QC, Canada.


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Petitioners Global Gold Mining LLC and Global Gold Corp. have filed this Petition to confirm part of a " Partial Final Award" entered on March 29, 2012, pursuant to ongoing arbitration between them and Respondent Caldera Resources, Inc. (" Respondent" or " Caldera" ). See Caldera Res., Inc. v. Global Gold Mining LLC et al., American Arbitration Association (" AAA" ) Case No: 50-180-00674-10. The dispute arises from a Joint Venture Agreement to mine gold on a piece of land known as the " Marjan Property," which is in Armenia. Respondent opposes confirmation and also requests that this Court vacate the award for a variety of reasons.

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For the reasons stated herein, the Petition is granted in large part.

I. Background

" There are strange things done in the midnight sun by the men who moil for gold," wrote the poet Robert Service in 1907.[1] Over a century later, strange machinations are still afoot in the gold-mining world, though this case takes place not in the Yukon Territory about which Service wrote but rather in the modern-day gold mines of Southwestern Armenia. Thus, a full account of this dispute would require a deep dive into the " strange things done" in the business and politics of gold mining in Armenia--including several court decisions by the Armenian courts. Fortunately, very little of this extensive and complicated backdrop is relevant here.

A. The Agreements and Subsequent Dispute Regarding the Marjan Property

Petitioners are a U.S.--based publicly held corporation and its wholly-owned subsidiary, and Respondent is a Canadian Corporation traded on the TSX Venture Exchange, or " TSX-V," which is a Canadian stock exchange. (Pet. ¶ ¶ 1-5.) Both companies are in the business of mining for precious metals, especially gold. ( Id. at ¶ 10.)

On December 18, 2009, the Parties entered into a letter agreement with each other regarding the exploration of a gold mine in Armenia known as the Marjan Property. ( Id. at ¶ 10; Partial Final Award, Caldera Res., Inc. v. Global Gold Mining LLC et al., AAA Case No: 50-180-00674-10 (" Mar. 29 Order" ) at 2.) In the letter, the parties agreed to, among other things:

o The formation of a Delaware limited liability company (Marjan-Caldera Mining LLC) to own Marjan Mining LLC, [an Armenian corporation];
o The issuance by Caldera to Global Gold of 500,000 shares of Caldera stock as partial consideration for [Global Gold's] transfer of its interest in the Marjan Property;
o Approval of the transactions, and specifically of the later [Joint Venture] Agreement, by the boards of directors of both Caldera and Global Gold;
o [The] [r]eceipt of approvals of the TSX Venture Exchange; and . . .
o Caldera obtain[ing] a 43-101 report on the Marjan property.[2]

(Mar. 29 Order at 2.) The letter agreement also required Respondent to make a $50,000 payment to Petitioners upon execution of the letter agreement and a $100,000 payment on March 30, 2010. (Mar. 29 Order at 2-3). These payments were separate from any more formal, subsequent agreement.

Then, according to the arbitrator:

On March 24, 2010, after much further negotiation, [a Joint Venture Agreement, known as the " JV Agreement" ] was signed by the parties. This agreement was to be the definitive agreement between them, as the earlier December 18, 2009 letter was more in the nature of an agreement to agree. Thus, the first " Whereas" paragraph of the JV Agreement specifically states that the parties

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were forming a Joint Venture " subject to, and in consideration of, the terms of this Agreement." [Quoting JV Agreement at 1.] . . .
The JV Agreement defines its " Effective Date" in its fourth " Whereas" paragraph, which reads as follows:
WHEREAS [Global Gold] and Caldera agree to form a Joint Venture . . . on the terms of this agreement. .. subject to the approvals of the TSX Venture Exchange, the respective boards of directors and the payments provided in § 4.2 and § 4.3 of this Agreement (the " Effective Date" ).
[JV Agreement at 1.]
The JV Agreement further provides in its opening paragraph labeled " Formation of the Joint Venture:" " [u]pon the Effective Date, the Joint Venture shall be created" for the purposes of establishing Marjan-Caldera Mining LLC, exploring claims on the Marjan Property, bringing the Marjan Property to commercial production, operating the Marjan Mine, engaging in such other activities as the parties may consider necessary. [Quoting JV Agreement at ¶ 1]
Upon the Effective Date, as defined in the JV Agreement, the parties agreed that the interest in Marjan-Caldera Mining LLC would initially be allocated 55% to Caldera and 45% to Global Gold. Caldera thereafter had what was labeled as a " purchase obligation" to purchase the balance of the title and interest in the Property and shares, pursuant to a payment schedule set forth in Section 4.4. . . .
The JV Agreement incorporated by reference and attached the Marjan-Caldera Mining LLC Agreement (the " LLC Agreement" ) dated March 15, 2010. The LLC Agreement sets forth the rights, duties, and obligations of the parties for the governance and oversight of Marjan-Caldera Mining LLC. The LLC Agreement requires at Section 4.13 that both parties unanimously consent before certain actions can be taken, including . . . the borrowing of money exceeding $250,000 . . . and the adoption ...

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