Starr International Company US$1 Billion lawsuit against AIG
Serving as counsel for the Panamanian corporation Starr International Company (SICO), Arias, Fábrega & Fábrega filed a US$1 billion lawsuit against American International Group (AIG) for damages caused to SICO due to AIG's omissions and misrepresentations about AIG's financial situation. This misrepresentation prevented SICO, which had relied on information from AIG's representative that was not at all consistent with the company's true financial health, from selling its AIG stock.
ARIFA's actions were part of a global strategy and multi-team effort lead by New York based Boies, Schiller & Flexner, LLP, oriented to reaching a settlement agreement with the financially distressed AIG, which had benefited from a series of much publicized US Government bailouts.
ARIFA successfully obtained admission to try the case in local civil court, since AIG had a domicile branch in Panama and also conducted business though local insurance companies. ARIFA also argued that SICO was a Panamanian corporation, entitled to pursue action locally. ARIFA further argued that AIG's misrepresentations put a Panamanian entity (SICO) at risk as well as other businesses that were subject to Panamanian law.
Finally, ARIFA maintained that the misrepresentations could have been made anywhere in the world, as today's technology allows communications between participants located in diverse countries, therefore no particular forum could claim preemptive jurisdiction. Such allegations were presented considering the recent implementing of a new chapter of the Code of Civil Procedure governing international civil law conflicts, which provides for the handling of multi-jurisdiction claims, and allows the Panamanian Courts to acquire jurisdiction over matters that occur abroad but that have effects or consequences in Panama.
The Court admitted the claim, setting off a favorable chain of events for ARIFA's client. AIG was forced to disclose its actions to the SEC, increasing pressure on AIG representative to negotiate a settlement with SICO.