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$29 Million Award Against Chilean Wine Producer and Distributor

The dispute stemmed from a $17 million investment EGI-VSR made in Vina San Rafael ...
by Kerana Todorov
June 22, 2018

A US federal judge has ordered a Chilean wine producer and distributor to pay nearly $29 million to a US-based investor, enforcing an arbitration award reached in Chile after the investment went sour, according to court filings. The judgment, decided June 4, was appealed Monday.

U.S. District Judge Robert Scola Jr on June 4 ordered Juan Carlos Celestino Coderch Mitjans to pay the award in US dollars to Chicago-based EGI-VSR LLC, a minority shareholder in Coderch’s Vina San Rafael S.A. EGI-VSR’s Chicago address is the same as Equity Group Investments’, a company chaired by billionaire Sam Zell.

The dispute argued in the federal court in Miami stemmed from a $17 million investment EGI-VSR made in Vina San Rafael over a four-year period beginning in 2005, according to court records.

In 2009, EGI-VSR sought to have Vina San Rafael’s controlling shareholders, including Coderch, buy back these shares, alleging the Chilean wine producer and distributor had breached provisions in the 2005 agreement, according to court records.

A Chilean court arbitrator concluded in 2012 Vina San Rafael had violated the terms of the 2005 agreement, according to court records. The arbitrator, Vasco Costa Ramirez, ordered Vina San Rafael’s majority shareholders, including Coderch, to buy back EGI-VSR’s shares, according to court records. Chilean courts subsequently affirmed the decision.

The Chilean arbitrator found the infractions included issuing preferred shares in Vina San Rafael without prior consent from EGI and having received non-monetary assets for the share and approving the revalued value of such assets, according to court filings.

In January 2015, EGI-VSR petitioned the South Florida District Court to have the award enforced under the Panama and New York conventions dealing with the recognition and enforcement of international arbitration cases. The case was filed in Florida, where Coderch owns multiple businesses, according to court records.

EGI-VSR’s representatives sought to serve Coderch with papers for nearly two years in Chile and Brazil, where he reportedly lived, according to court filings. A Brazilian lawyer working on behalf of the plaintiff reported a photo published in a magazine showing Coderch and his family throwing a lavish party at their penthouse in Rio de Janeiro, according to court documents filed by the plaintiff.

Eventually, a Brazilian court found that Coderch was evading service and ruled that he could be legally served if the papers were left at the complex with either a relative or a neighbor, according to the filings.
Coderch unsuccessfully tried to have Scola throw out the case alleging he had been improperly served in Brazil, according to court records. Coderch argued he had left Brazil for a farm in Paraguay, according to court filings. Scola denied Coderch’s request.

Scola also denied Coderch’s motion to dismiss the case in Miami because the U.S. District Court was the wrong venue.

Andrew Vail, of Jenner and Block LLP of Chicago, represents EGI-VSR. Other efforts are being made to force Coderch to pay. “The appeal is wholly without merit,” Vail also said this week.
One of Coderch’s attorneys, Christopher King, an attorney with Homer Bonner Jacobs of Miami, declined to comment on the case. “We’ll let the appeal play out,” King said Wednesday.

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