IFTIKAR AHMED v. OAK MANAGEMENT CORPORATION, SC 20677

Judicial District of Stamford-Norwalk

 

     Arbitration; Whether Application of Fugitive Disentitlement Doctrine Violated § 52-418 and Public Policy; Whether Case Should be Remanded to Modify Award to Avoid Duplicative Recovery.  Iftikar Ahmed worked for Oak Management Corporation (OMC), a venture capital firm, from 2004 to 2015.  His duties included identifying and recommending investment opportunities and negotiating the terms of the investment.  In April, 2015, Ahmed was arrested for insider trading unrelated to his employment.  OMC subsequently terminated Ahmed's employment after an investigation uncovered fraud in connection with three of his investments and, pursuant to various contracts, seized assets valued at $35 million earned by Ahmed but still in its possession.  In May, 2015, the Securities and Exchange Commission (SEC) filed a civil enforcement action against Ahmed in federal court.  Days later, Ahmed fled to India in violation of the terms of release in his criminal case.  The SEC ordered under the fugitive disentitlement doctrine that Ahmed was barred from access to confidential materials produced in its proceedings.  The doctrine provides that a fugitive from justice will be barred from seeking relief from the judicial system whose authority he evades.  The federal court found that Ahmed had committed fraud in connection with ten companies, including the three uncovered by OMC, and ordered that he pay over $65 million in disgorgement, civil penalties and interest.  The federal court declined to credit Ahmed for the amount seized by OMC.  OMC commenced arbitration seeking to recover the damages caused by Ahmed's fraud.  The arbitrator ordered that, due to Ahmed's fugitive status, he was barred from contesting OMC's allegations and prohibited from accessing confidential information.  His affirmative defenses were also stricken, and his counterclaim was dismissed.  Following a hearing in damages, conducted remotely over Zoom in Ahmed's absence, the arbitrator awarded OMC over $56 million in damages for gross compensation paid during Ahmed's employment, legal fees, management fees that were returned to investors as a result of his conduct, and punitive damages.  Ahmed filed an application to vacate the arbitration award.  The trial court denied the application, finding that, although the arbitration proceedings challenged its perspective of what a fair hearing should be, it could not conclude, given due deference to the arbitrator and Ahmed's own conduct, that the arbitrator crossed any limits when applying the fugitive disentitlement doctrine.  The trial court noted Ahmed's lack of candor throughout the proceedings and repeated attempts to delay and that it was his own elective absence from the hearing in damages, rather than any action by the arbitrator, that prevented him from presenting evidence and objecting to the claimed damages or confidentiality of certain documents.  Ahmed appealed to the Appellate Court, and the Supreme Court transferred the appeal to itself.  Ahmed claims on appeal that the trial court's denial of his application to vacate was improper because the arbitration award (1) violated General Statutes § 52-418, as the arbitrator exceeded his authority and committed misconduct in denying him a full and fair hearing; (2) violated the Federal Arbitration Act, which is nearly identical to § 52-418; and (3) was contrary to public policy that arbitration proceedings be fundamentally fair and that the integrity of the arbitration process be upheld.  If the arbitration award is not vacated, Ahmed requests that the case be remanded to the trial court with direction to modify the award to avoid duplicative recovery.