Distribution Support, Ltd. v. Southernsun Asset Management

ICDR Case No. 01-15-0004-8871
Type of case:
Commercial Arbitration
Date of introduction:
Unknown
Status of the case:
Concluded (non-ISDS case)
Claimant’s country of origin:
British Virgin Islands
Respondent's country of origin:
United States
Institution:
ICDR (International Centre for Dispute Resolution)
Seat of arbitration:
Mobile, Alabama

Documents of the case

Melvia B. Green Sole arbitrator

This document was contributed under the IBA x Jus Mundi Exclusive Partnership for Commercial Arbitration.

Contributor(s):

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    Jus Mundi

Lawyers, other representatives, expert(s), tribunal’s secretary

Final Award

I,Melvia B. Green, the undersigned Arbitrator, having been designated in accordance with the arbitration agreement between claimant Distribution Support, Ltd. ("DS") and respondent SouthernSun Asset Management LLC ("SSAM") dated on or about September 11, 2011; and having been duly sworn, heard the allegations and proofs of the parties at the final hearing conducted on June 22-24, 2016 in Mobile, Alabama wherein Jarrod L. White, Esq. and Patrick H. Sims, Esq. of Cabaniss, Johnston, Gardner, Dumas & O’Neal LLP represented DS and Brenda Sharpton, Esq. Joseph P. Rockers, Esq., Jeremy C. Scanlon, Esq. and Christine Dieter, Esq. of Goodwin Procter LLP represented SSAM; and having considered the testimony, documentary evidence, post-hearing written submissions and case law; and having issued a Partial Final Award dated September 15, 2016, do hereby make the following findings, conclusions and AWARD as follows:

FINDINGS

The following findings are in support of the Award entered herein. They are based upon the sworn testimony and other documentary evidence presented at the final hearing and post-hearing written submissions submitted by the parties. To the extent that these findings differ from either party’s position, that is the result of the determinations by the undersigned Arbitrator as to credibility and relevance, burden of proof considerations, legal principles, and the weighing of the evidence, both written and oral. The Findings and Conclusions previously entered in the Partial Final Award dated September 15, 2016 are incorporated by reference, except as otherwise amended herein.
1.
Claimant DS is a registered British Virgin Island company founded by Scott Givhan and operated in the Republic of Cyprus. DS is comprised of 4 principals, including Givhan, and a workforce whose size varies from 7 to 15, depending upon work demands.
2.
The work of DS varies depending upon its clients and assignments, but it generally provides third party marketing services to investment firms such as respondent SSAM. Neither DS nor Givhan have ever been registered as brokers, dealers, or investment advisers in the United States.
3.
Givhan also owns and operates the following companies that provide similar third-marking services: Sentry Advisor AG, Sentry Investment Advisors Ltd., ALPA Consultants Ltd., ALPA Finance Inc., and Advisor Administration Ltd.
4.
Respondent SSAM is an investment firm based in Memphis, Tennessee. It was founded by Michael Cook, its Chief Executive Officer and Chief Investment Officer. SSAM is a federal registered investment adviser with the U.S. Securities and Exchange Commission. This registration permits SSAM to conduct its investment advisory business in the United States.
5.
Most of SSAM’s client base has historically come from the United States. Several thousand U.S. individuals and institutions invest with SSAM, either through managed accounts or SSAM’s mutual funds. DS played no role in procuring or servicing these clients. Rebecca Smith, SSAM’s Director of Client Relations, has always had primary responsibility for identifying potential U.S. clients, including institutional clients, and conducting an initial investigation to determine their interest in and appropriateness for investments with SSAM, SSAM does, however, maintain relationships with U.S.-based consultants who maintain their own client relationships and, make investment recommendations for them. Two of such consulting relationships include Mercer-Chicago and Aon. Through these relationships, SSAM acquired business with entities such as Public Employees’ Pension Board and Cree Nation, who ultimately invested with SSAM. DS never played any role in developing or servicing either Mercer-Chicago or Aon or the SSAM clients generated by them.
6.
SSAM has also had a small number of wrap accounts, an investment mechanism for smaller investors to access the investment portfolios of managers such as SSAM. In a wrap account, SSAM has a direct master contractual relationship with the wrap sponsor, but not with the underlying investors in the wrap account. For example, in July 2011, SSAM entered into two such master contracts with Oppenheimer for wrap accounts. At all times material hereto, Ms. Smith managed SSAM’s U.S. relationship with Oppenheimer and DS played no role in the development or servicing of this relationship. Similarly, SSAM had a wrap account relationship with Goldman Sachs dating back to 2006 which permitted Goldman Sachs to invest its clients’ funds in SSAM’s investment strategies. Like Oppenheimer, Ms. Smith consistently managed SSAM’s wrap master contract with Goldman Sachs and DS never developed or participated in the maintenance of this account or relationship.
7.
SSAM’s book of international business has historically been and remains today, exceptionally limited. At the end of 2015, approximately 98% of SSAM’s assets under management were U.S. assets. Sometime during mid-2010, SSAM considered launching a commercial real estate fund to capitalize on the perceived international interest in U.S. real estate. SSAM sought to raise a fund of approximately $150-$200 million dollars over which it would independently determine what investments to make for its international investors.
8.
As SSAM sought to focus exclusively on international investors for this fund, Michael Cook reached out to Givhan to support SSAM’s efforts as a third-party marketer. Cook and Givhan had a business and personal relationship extending back for more than 20 years. SSAM understood from Givhan that he had extensive international contacts that could be leveraged to identify potential international investors for the proposed fund. Givhan promoted this fond for over 1 year; however, he secured only $20-$30 million in non-binding verbal commitments from potential investors. When Givhan could not raise the funds deemed necessary, SSAM made the decision to terminate the commercial real estate fund in January 2012. The evidence revealed that Givhan was in agreement with this decision. No one ever invested in the proposed fund.
9.
At some point during the spring of 2011, and prior to SSAM’s decision to terminate the proposed commercial real estate fund for international investors, SSAM and DS decided to enter into a formal contract ("Agreement") to allow DS to market both SSAM’s proposed commercial real estate fund and equity strategies on an international basis. Initially Cross and Givhan negotiated the terms for the agreement. Their proposals Were then turned over to their respective counsel for finalization. Thereafter, on or about September 9, 2011, DS and SSAM entered into the Agreement that is the subject matter of the instant arbitration proceeding.
10.
In general, the purpose of the Agreement was to grant DS the exclusive right to market SSAM’s products and services on an international basis. As a third-party marketer, DS had no equity or ownership interest in SSAM’s business. Nor did DS have any right to oversee SSAM’s operations or require SSAM to take certain actions, transact with particular parties, or accept any particular clients identified by DS.
11.
DS did not introduce any U.S. entities to SSAM for investment services. Nor did SSAM ever introduce any U.S. entities to DS for services. Moreover, DS never rendered any additional services to SSAM’s U.S. Clients.
12.
During the term of the Agreement and for services rendered, SSAM essentially agreed to pay DS a $10,000 monthly advance and, for international business generated or successfully developed by DS’s efforts, DS would receive 20% of the net profits generated from all such business on a quarterly basis minus the $10,000 advances and approved expenses already paid to DS. Further, in the event of the Agreement s termination, the Agreement prescribed that SSAM would continue to pay DS "all amounts due prior to the effective date of termination and will and continue to pay DS for five (5) years after the date of termination or expiration of this agreement all amounts according to the terms of this Agreement for DS Clients introduced to [SSAM] or its parent, subsidiaries or other related companies or its agents."
13.
After the execution of the Agreement and until its termination in 2014, DS arranged only a small number of in-person meetings with potential international equity investors for SSAM’s executives. With the exception of one (i.e. Pie Funds), these meetings never resulted in any investments with SSAM. During this same period, SSAM made approximately 27 referrals to DS for follow-up. Only two of such referrals (i.e. Pie Funds and Hambro) resulted in investments in SSAM’s UCITS fund, a mutual fund regulated in the European Union. DS has been fully compensated for all investments in SSAM’s UCITS fund. This finding, however, does not otherwise eliminate SSAM’s continuing contractual obligation to pay DS its quarterly fee for investments made in the UCITS fund during the term of the Agreement for the remainder of the five-year tail period.
14.
In early 2014, SSAM/Cross requested DS/Givhan to arrange a meeting for him to meet a representative from Old Mutual in London. This meeting failed to lead to an investment because Old Mutual wanted a small, one-off portfolio, which was inconsistent with SSAM’s investment model.
15.
During the term of the Agreement, SSAM directly pursued international investment opportunities with two Danish companies (i.e. Nykredit and Danske) through another entity and to the exclusion of DS. Competing for the business of these two companies required SSAM to submit Requests for Proposals ("RFPs") through an entity authorized to do so in Denmark. Neither DS nor Givhan was registered in Denmark to submit RFPs there. SSAM therefore hired Francis Paxton, who was authorized to submit the RFPs in Denmark, to do so. Paxton became SSAM’s agent for this limited international transaction. It is found, however, that SSAM’s procurement of Paxton even for this limited international transaction breached the exclusivity terms of the Agreement.
16.
Nykredit, however, did not select SSAM as its investment manager based upon its conclusion that SSAM carried too much key-man risk in Michael Cook. Based upon this reason, it is found that DS’s participation in this transaction would not have altered this result.
17.
Danske also did not invest with SSAM as Danske’s fee structure was not compatible with a fee structure acceptable to SSAM. It is again found that DS’s participation in this transaction would not have altered this result.
18.
SSAM also excluded DS from dealings with IST Investment Stifling, an investment group in Zurich. Although SSAM submitted a Request for Proposal and made it to the final round of nine bids, SSAM was not ultimately awarded the bid. Givhan’s testimony that he would have had a 90% probability of procuring this bid for SSAM based upon his friendship with the CFO of IST Investment Stifling is found to be speculative at best and
19.
Givhan’s testimony that his involvement in these transactions would have produced different results is rejected.
20.
During the term of the Agreement, SSAM did decline certain investment opportunities. For example, SSAM discontinued the entire commercial real estate fund, with the concurrence of Givhan. SSAM also declined, on Givhan’s recommendation, an investment from Skandia because the potential fees were too low. SSAM further turned down an investment from Old Mutual because that entity wanted a small, personalized portfolio, rather than the investment portfolios offered by SSAM.
21.
In December 2013, SSAM and Affiliated Managers Group ("AMG") reached an agreement for AMG to acquire a passive equity interest in SSAM. This transaction closed on March 31, 2014.
22.
Phillip Cook of SSAM informed Givhan of the AMG transaction in early 2014 and explained that it would not interfere with DS’s contract with SSAM. AMG never met with Givhan.
23.
SSAM provided AMG with a copy of its Agreement with DS as part of the routine due diligence in connection with AMG’s equity interest purchase. Aside from the Agreement, however, AMG was not given any information about DS, including any of its purported client or agent lists. SSAM required AMG to execute a non-disclosure agreement that prohibited AMG from disclosing the contents of SSAM’s Agreement with DS. DS was aware of the fact that SSAM had provided the Agreement to AMG.
24.
AMG requested SSAM to seek an amendment of the Agreement with DS to make clear that AMG was not assuming responsibility for SSAM’s Agreement with DS. On March 23, 2014 and March 24, 2014, Phillip Cook had conversations with Givhan about this amendment. Phillip Cook informed Givhan that SSAM would continue to retain complete operational control over its business after the transaction with AMG, and that this transaction would not affect SSAM’s day-to-day operations.
25.
SSAM did not receive any distribution services from AMG.
26.
On March 23 and 24, 2014, Phillip Cook informed Givhan that unless Givhan executed the amendment by March 27, 2014, SSAM would exercise its right to terminate their Agreement.
27.
DS did not sign the proposed amendment to its Agreement with SSAM. Instead, on March 26, 2014 and for the first time, DS sent SSAM a "pipeline" of more than 3,000 purported DS Clients and Agents. When DS failed to execute the amendment as requested on March 27, 2014, SSAM sent DS written notice of termination of the Agreement, effective May 26, 2014. SSAM subsequently emailed Givhan disputing DS’s characterization of the alleged pipeline as purported DS Agents and DS Clients.
28.
On February 18, 2015, or nearly a year after SSAM’s notice of termination, Givhan emailed SSAM a list of approximately 2,000 alleged Referrals, which DS claims were introduced to Givhan by Ms. Smith. DS seeks damages relating to these entities herein. It is found, however, that Ms. Smith credibly testified that she had developed the clients on this prospect list and did not share this list with Givhan for him to contact or service any such entities. Ms. Smith’s purpose for providing this list to Givhan was to acquaint him with SSAM’s U.S. strategy to raise assets so that he could duplicate it internationally. All but 100 of the entities on this list were allegedly Referrals for the potential commercial real estate fund. Since the commercial real estate fond was discontinued, none of these entities ever invested with SS AM.

ARBITRATION PROCEEDING

29.
DS has filed the instant arbitration proceeding against SSAM, essentially based upon SSAM’s alleged breach of various provisions of the Agreement as well as certain tort claims. DS, however, offered no evidence or argument in support of its tort claims against SSAM at the final hearing. With respect to the contractual claims, SSAM seeks approximately $86,000,000 as compensatory damages which fall under the following three headings: (a.) pre-termination fees calculated in accordance with paragraph 1 of the Agreement’s Appendix B and by referral from E.14; (b.) post-termination compensation calculated under the Agreement’s Section D2 as well as E.14; and (c.) SSAM’s alleged breaches of the Agreement’s exclusivity provisions and SSAM’s alleged obligation to accept investments. SSAM filed a counterclaim against DS for breach of contract against DS, but orally withdrew this counterclaim at the final hearing. Accordingly, the merits of the counterclaim will not be addressed herein.
30.
The parties’ arbitration clause specified that the substantive law of Alabama shall govern this arbitration proceeding and that it shall be administered by the American Arbitration Association’s International Centre for Dispute Resolution ("ICDR") m accordance with its "Procedures for Cases under UNCITRAL Arbitration Rules."

AGREEMENT TERMS AT ISSUE AND THEIR CONSTRUCTION

31.
Most of the contractual claims raised in this arbitration proceeding by DS are based upon the parties’ disagreements as to the meaning of certain terms of the Agreement. Accordingly, it is found that a legal construction of the terms of the Agreement at issue will resolve many, if not all, of the claims presented herein for consideration.

GEOGRAPHICAL SCOPE

32.
An initial threshold source of disagreement between the parties involves the geographic scope of the Agreement. The claimant asserts that while the primary focus of the Agreement was for DS to increase the international distribution of SSAM’s products, the scope of the Agreement also contemplated the parties choosing to cooperate directly or indirectly in relation to U.S. based investors or distributors on a non-exclusive basis. SSAM, however, argues that the explicit terms of the Agreement limited its scope to prospective and current clients located outside the United States.
33.
The parties’ intent as to the geographic scope for the Agreement is evidenced in the following relevant provisions:

-"Whereas: [SSAM] is a company that wishes to distribute its products to international investors directly and via independent financial advisors, investment managers or other firms and individuals located in jurisdictions outside the United States including certain select firms and individuals in Canada (the Distributors)",...

-"Whereas DS will act as [SSAM]’s exclusive representative for the purpose of providing the Services, including identifying Distributors and Investors located in jurisdictions outside the United States for the distribution of [SSAM]’s products and services."

-"Whereas DS will agree not to market or support products in jurisdictions outside of the United States with investment offerings substantially similar to the products and services of [SSAM]."

-"The parties acknowledge and agree that DS shall have the exclusive right to market and support [SSAM]’s products and services and provide the other Services to Distributors and investors located in jurisdictions outside the United States and that DS shall not market or support products in jurisdictions outside of the United States with investment offerings substantially similar to the products and services of [SSAM]..."

34.
By the plain and unambiguous foregoing provisions, it is found that the geographic scope for DS’s services to SSAM under the Agreement was limited to clients and distributors outside of the United States and certain select firms and individuals in Canada, There was no evidence adduced, however, that DS provided services to any Canadian entity during the term of the Agreement.
35.
Because the foregoing provisions are plain and unambiguous, they must be strictly enforced as written. Ex Parte Don Tucker Auto Sales, Inc v. Dan Tucker Auto Sales, Incl.., 718 So.2d 33, 35 (Ala. 1998). Although these provisions certainly did not preclude the parties from working together with regards to U.S. based investors or distributors on a non-exclusive basis, it certainly does not follow that any such U.S. business ventures or arrangements between them would be subject to the terms or provisions of this Agreement as asserted by DS in this arbitration proceeding. Any U.S. business ventures or arrangements between these parties would have to be the subject matter of a different agreement.
36.
In fact, over the course of the Agreement, DS consistently attested in writing that it had only marketed to non-U.S. entities. Indeed, on March 26, 2014 or the day prior to SSAM’s letter of termination, DS issued its written attestation that it had only marketed to non-U.S. entities.

TERM OF THE AGREEMENT

37.
There is a dispute between the parties herein as to whether SSAM s March 27, 2014 written notice of termination was effective on May 26, 2014 pursuant to the Agreement’s termination provision. The Agreement provided as follows: "This Agreement will be effective on the date of full execution hereof and will remain in effect for one year and be automatically renewed for one year at the end of each prior year unless terminated in accordance with the terms hereof. This Agreement may be terminated at any time by either party with or without cause by giving the other party sixty (60) days prior written notice of termination." While SSAM asserts that the Agreement was effectively terminated on May 26, 2014 under this provision, DS takes the position that the Agreement could only be terminated at the expiration of the original or a renewal year, upon sixty days notice in advance of that annual date. It is found that D S has misread the plain and unambiguous two sentences in this provision.
38.
The first sentence essentially provides, among other things, that the Agreement would remain effective for each renewal year "...unless terminated in accordance with the terms hereof." The Agreement then specifies the method of termination by either party in the second sentence. Specifically, the parties agreed in the second sentence that the Agreement could be terminated at "any" time, by either party, upon the giving of sixty (60) days prior written notice to the other party. In reading both of these sentences together, it is therefore found that SSAM’s March 27, 2014 termination letter to DS was : contractually sufficient to terminate this Agreement on May 26, 2014. See England s Flying Service, Inc. v. Mobile Airport Authority, 536 So.2d 1371, 1373 (Ala. 1988)(A court must construe a contract in its entirety, and single provisions or sentences are not to be dissociated from others having reference to the same subject matter.")

REMUNERATION TO DS

39.
Section C1. of the Agreement generally provides that SSAM will remunerate DS according to Section D without any reduction for counterclaim or setoff. Section D, in turn, essentially provides that the fees to be paid to DS by SSAM are in accordance with Appendix B as follows:

1. "[SSAM] shall pay DS a monthly non-refundable "Distribution Support Fee for providing the Services hereunder of USD 10,000.00 due and payable on the first of each month starting from August 1, 2011. [SSAM] shall also pay a quarterly "Distribution Support Fee" for providing the Services hereunder on or before the tenth day of each quarter equal to 20% of the prior quarter’s Net Profit less the amount of the monthly Distribution Support Fee previously paid by [SSAM] during such quarter "Net Profits" shall be deemed to be the total revenues resulting from [SSAM]’s relationship with DS Clients and [SSAM] Clients after deducting any directly related expenses approved by both parties which will not be unreasonably withheld.

2. [SSAM] shall also reimburse DS for any out of pocket expenses incurred by DS with the prior consent of [SSAM] or at [SSAM]’s request including but not limited to communication and travel expenses.

3. DS shall have the right to deduct any fees or other amounts owed to it by [SSAM] from any commissions or other amounts received by DS on behalf of [SSAM].

4. For further clarification, total revenues for the calculation of Net Profits related to any real estate products will include, but not be limited to, any carried interest related to real estate products that accrues to the benefit of [SSAM] directly. It is expected that a portion of any carried interest earned on real estate products will accrue to the benefit of specific individuals and other third parties rather than to [SSAM] directly."

40.
The Agreement, therefore, prescribed three forms of payment to DS by SSAM: (1) a $10,000 monthly advance; (2) a Net Profits payment on potential international clients and certain select Canadian individuals and entities that DS introduced to SSAM that actually made investments with SSAM, and potential international clients and certain select Canadian individuals and entities that SSAM introduced to DS that actually made investments with SSAM; and (3) reimbursement for reasonable, preapproved expenses. Thus, the Agreement authorized DS to receive a Net Profits payment only for non-U.S. and certain select Canadian entities or individuals for which: (1) an introduction occurred; (2) the introduced entity or individual actually invested with SSAM during the term of the Agreement; and (3) Net Profits from such investments exceeded DS s monthly $10,000 advances from that quarter.
41.
Upon the termination of the Agreement, the parties agreed that SSAM "will pay DS all amounts due prior to the effective date of such termination and will continue to pay DS for five (5) years after the date of termination or expiration of this agreement all amounts according to the terms of this Agreement for DS Clients introduced to [SSAM] or its parent subsidiaries or other related companies or its agents." DS disputes, however, that in the event of a termination, its remuneration under this provision is limited to a 5 year period. According to DS, the 5 year period commences only upon the expiration of all clauses of the Agreement. For examples, in Section C 12. of the Agreement, both parties were prohibited from employing or entering into any agreements with the others employees while the Agreement is in effect or for a period of 3 years after its termination. Similarly, Section C 13. of the Agreement is a non-compete provision which precludes SSAM from competing with DS for the performance of DS’s services with any third party during the term of the Agreement or for a period of 3 years following its termination. Thus, based upon these provisions, DS makes the argument that these provisions automatically extend any 5 year post-termination payments under D 2. by 3 additional years (i.e. 8 years).
42.
A conflation of the language and time limitations contained in Sections C12. and 13. with the time limitations contained in Section D2. of the Agreement to extend the agreed upon 5 year period for post-termination remuneration would result in an impermissible rewrite of the Agreement. See Ex Parte Dan Tucker Auto Sales, Inc., 718 So.2d at 35-36("A court may not make a new contact for the parties or rewrite their contract under the guise of construing it."). The 3 year time limitations contained in provisions of Sections C12. and 13. of the Agreement clearly and unambiguously pertain solely to the prescribed time that the parties may not employ each other’s employees and SSAM may not compete with DS for its services, respectively. The 3 year time limitations contained in these provisions have absolutely nothing to do with the prescribed time limitation for the remuneration due DS after the termination of the Agreement. Thus, because these provisions do not pertain to the same subject matters of this Agreement, they may not be construed together as suggested by DS. See England’s Flying Set-vice, Inc., 536 So.2d at 1373. DS’s proposed construction of these Agreement terms is therefore rejected. Accordingly, it is concluded that in the event of a termination, the parties agreed that SSAM would continue to pay DS for those sums due only for 5 years after the date of termination.
43.
Further, Section D 2. of the Agreement makes clear that the only amounts due to be paid DS during the 5 year period after the Agreement’s termination are for the resulting "Net Profits" realized from DS’s clients introduced to SSAM who invested with SSAM during the term of the Agreement. That is, the plain language of Section D 2. makes clear that during this 5 year period after termination, DS is not entitled to compensation for "Net Profits" generated by SSAM’s clients introduced to DS during the term of the Agreement.

DS CLIENTS/DISTRIBUTORS/AGENTS

44.
The Agreement essentially defines a "DS Client," among other things, as "an investor, client, distributor or agent introduced by DS or an agent of DS to SSAM or one of its affiliates. The Agreement also provides that unless SSAM establishes that it has a prior income-producing or other material relationship with any agent identified by DS, the agent will immediately be included on a list of DS agents (hereinafter ‘DS Agent List’) which will form part of this agreement."
45.
The Agreement alternatively provides that SSAM "may choose to introduce an investor or agent to DS and will disclose whether it has a material or income producing relationship at the time of introduction. The date of such an introduction shall be known as the ‘Introduction Date’." The Agreement further specifies that "Clients or agents introduced to DS by SSAM for which SSAM has an income producing or material ' relationship prior to the Introduction Date and so declared, will be referred to and treated as ‘Reserved Clients.’...Clients or agents introduced to DS by SSAM for which SSAM does not declare it has an income producing or material relationship prior to the Introduction Date will be referred to and treated as ‘Referrals.’ All Reserved Clients and Referrals will be jointly referred to as ‘SSAM Clients’." Finally, during its operative term, the Agreement allows DS to be compensated in the same manner for its services to Reserved Clients and Referrals as it is compensated for DS Clients, unless otherwise agreed by both parties. As previously concluded, however, during the 5 year period after the Agreement’s termination, the parties agreed that DS would only be compensated for DS Clients introduced to SSAM who invested with SSAM prior to the termination or expiration of the Agreement.
46.
The term "Distributors" is defined in the preamble of the Agreement as "independent financial advisors, investment managers or other firms and individuals located in jurisdictions outside the United States including certain select firms and individuals in Canada, through which [SSAM] wishes to distribute its products." When this definition is construed with Section E 12. which includes a Distributor as a DS Client, it is apparent that the parties intended for independent financial advisors, investment managers or other firms and individuals located outside the United States who were introduced by DS to SSAM or its affiliates, to become "DS Clients."
47.
Section 13. of the Agreement defines DS Agents as those "to be engaged in distributing the products or aiding in the distribution of the products of [SSAM] and/or carrying out its rights and obligations hereunder." This Section further provides, among other things, that an agent identified by DS will immediately be placed on the DS Agent,List, included on Appendix C of the Agreement, unless SSAM has a prior income-producing or other material relationship with any such agent identified. Finally, all agents introduced to SSAM prior to the signing of the Agreement will automatically be accepted as DS agents.

CONTRACTUAL MEANING OF "INTRODUCTION "

48.
The word "introduction" or its derivative, "introduce," is not defined in the Agreement. There is a dispute between the parties as to the meaning of the word "introduce" or "introduction" for purposes of SSAM’s pre and post-termination payment obligations to DS. At the final hearing, SSAM adduced lay and expert testimony to the effect that the word "introduction" has a specific meaning in the assets management industry with regards to third party marketers. SSAM’s expert witness (i.e. David W. Richardson) opined that the term "introduction" refers to "meaningful efforts by the third-party marketer to increase investor familiarity with the asset manager’s financial products, typically in the form of personalized outreach to the potential client, and it is completed with a ‘warm handoff of the prospective client from the third-party marketer to the asset manager." According to Mr. Richardson, an introduction in the assets management industry usually entails a substantive conversation with a potential client about the asset manager. Thus, Mr. Richardson opines that "cold calls" by third party marketers to potential investor entities; "blast" emails to groups of possible investors; and/or the mere sharing of a list of potential prospects do not constitute "introductions.
49.
DS, on the other hand, contends that in the absence of a defined meaning for "introduce or "introduction" in the Agreement, it is appropriate to resort to dictionary definitions for these words. DS asserts that a dictionary’s definition for "introduce" begins with "1) to lead or bring in especially for the first time." The definition also includes "3) to make known ‘by a formal act’" and then includes in definition "5) ‘to bring to knowledge of something’." DS then contends that none of these definitions include the "warm hand-off’ approach proffered by SSAM’s expert.
50.
Having considered the language of the Agreement, the testimony and applicable law, it is concluded that in construing the words "introduction" and "introduce" in the parties’ Agreement, it is appropriate to employ the plain meaning that ordinary people would give these words. See Ex parte Richard E. Chestnut v. Board of Zoning Adjustment, _So. 3d__, 2016 WL 280753 at * 13 (Ala. Jan. 22, 2016)("..., when a term is not defined in a statute, the commonly accepted definition of the term should be applied...Furthermore, we must give the words in a statute their plain, ordinary, and commonly understood meaning, and where plain language is used we must interpret it to mean exactly what it says...")(citations omitted); Ex parte Hope Elisabeth Ankrom v. State of Alabama, 152 So.3d 397,403 (Ala. 2013). Had these parties intended for these words to be given industry-specific or other specialized definitions, they certainly could have included the same in this Agreement. Thus, giving these words their plain, ordinary meaning, it is concluded that "introduce" or an "introduction" entails one of the parties to this Agreement, with knowledge of a potential suitable investor unknown to the other party, making this potential investor known to the other party in some meaningful manner. An introduction, however, entails more than random blast emails, cold calls or the mere sharing of a fist of potential investors. The party making the introduction must at least have some knowledge about the potential investor being introduced to the other party. Indeed, it is typically understood and expected that a person making an introduction will have some knowledge of both parties, so that there is a rationale reason for the introduction.

EXCLUSIVITY PROVISIONS

51.
The parties dispute the scope of the exclusivity provisions contained in the Agreement for DS’s services to SSAM. These exclusivity provisions include:

Preamble 4 : "DS will act as [SSAM]’s exclusive representative for the purpose of providing the Services, including identifying Distributors and investors located in jurisdictions outside the United States for the distribution of [SSAM]’s products and services."

Preamble 5.:"DS will agree not to market or support products in jurisdictions outside of the United States with investment offerings substantially similar to the products and services of [SSAM]."

Section E 5.: "The parties acknowledge and agree that DS shall have the exclusive right to market and support [SSAM]’s products and services and provide the other Services to Distributors and investors located in jurisdictions outside the United States and that DS shall not market or support products in jurisdictions outside of the United States with investment offerings substantially similar to the products and services of [SSAM]. Other than the foregoing, it is acknowledged and agreed that the parties’ rights hereunder are not exclusive and that they shall each have the right at all times to enter into similar or other arrangements with other parties."

52.
DS contends that these exclusivity provisions plainly and unambiguously grant DS the exclusive right to market and support all of SSAM’s products outside of the United States and thereby forbid SSAM from competing with DS in this market. SSAM, however, argues that these provisions must be construed to permit it to pursue international opportunities for its existing clients and to use its own efforts to develop new international clients.
53.
The plain and unambiguous meaning of these exclusivity provisions clearly provided DS with the exclusive right to market and support all of SSAM’s products outside of the United States and precluded SSAM from directly or indirectly competing with DS in this market during the term of this Agreement. SSAM’s argument that the second sentence of Section E 5. somehow vitiated this exclusivity is rejected as without merit. This second sentence simply provided both parties with the freedom to act on a non-exclusive basis with U.S. based investors and distributors and DS with the freedom to provide services to other clients with dissimilar products and services. Thus, it is concluded that by virtue of these exclusivity provisions, SSAM agreed not to work with another international third-party marketer nor pursue international business on its own without DS during the term of the Agreement.
54.
SSAM claims that Section E 14. of the Agreement, giving SSAM the discretion to introduce an investor or agent to DS, explicitly evidences the fact that DS had no monopoly on the international marketplace and that SSAM had the right to pursue international investors on its own during the term of this Agreement. In construing this provision in pan materia with the exclusivity provisions, however, it is concluded that Section E 14. only evidences the right of SSAM to exclude DS from servicing SSAM’s international clients or working with SSAM’s international agents with whom SSAM had a pre-existing relationship (i.e. Referrals). To the extent that a new potential international investor or agent contacted SSAM directly during the term of the Agreement, SSAM could have either referred such an investor or agent to DS or decline any opportunities with the potential investor or agent. This unambiguous exclusivity provision in this Agreement was negotiated by two sophisticated business entities with access to legal counsel in an "anus-length" transaction. The undersigned Arbitrator is without authority, under the guise of construction, to essentially rewrite this provision to make it commercially reasonable or fair to one or both parties. See Shoney 's LLC v. MAC East, LLC, 27 So.3d 1216, 1223 (Ala. 2009)(noting "[W]here the language is unambiguous, and but one reasonable construction of the contract is possible, it must be expounded as made, as the courts are not at liberty to make new contracts for the parties. ’")(Citations omitted).

RIGHT OF REFUSAL OF INVESTMENTS

55.
In this proceeding, DS seeks damages in the form of lost opportunities, based upon SSAM’s refusal to proceed with various investment opportunities. Specifically, during the term of the Agreement, SSAM made the decision to: (a) terminate the commercial real estate fond when DS/Givhan failed to sufficiently raise the funds deemed necessary to launch this venture; (b) decline, on Givhan’s recommendation, an investment from Skandia because the potential fees from this transaction were too low; and (c) decline a potential investment opportunity with Old Mutual because its desired portfolio was incompatible with the investment portfolios offered by SSAM.
56.
There is a dispute between the parties as to whether certain terms of the Agreement required SSAM to accept all investment opportunities presented. DS argues that Section C 6. of the Agreement required SSAM to approve all transactions by a distributor or investor. That provision of the Agreement provides, in relevant part, that: "[SSAM] shall approve all transactions to be executed on behalf of a Distributor or an investor in writing, which approval may be specific as to a particular transaction or more general as to certain types of transactions..." According to DS, the only contractual basis for SSAM’s refusal of an investment transaction is found in Section E 13., the so called "mobster-rule," providing that: "[SSAM] may refuse to accept investments from any party or via any agent if it determines that it is likely to materially negatively impact [SSAM]’s reputation in the investor community." DS contends that this so-called "mobster provision" would allow SSAM only to refuse an investment transaction with a nefarious investor, but SSAM could not otherwise decline investment opportunities in other instances (e.g. low fees, too much work required by SSAM, or were inconsistent with the international product de jure).
57.
It is concluded that DS’s reliance on Section C 6. in support of its refused investment argument is misplaced. As SSAM correctly observes, this provision does not require SSAM to approve or accept all investment demands from prospective or current clients. Instead, this provision simply requires that SSAM’s approval of any such transactions be in writing.
58.
It is further found that, in addition to the aforementioned Section E 13. or so-called "mobster rule", the following contractual provisions also support the conclusion that, SSAM retained its discretion to refuse certain investment opportunities presented: (a) C. 8.: "[SSAM] and DS shall remain totally independent from one another and shall act in their own name and for their own account. Both parties shall not and will not have any authority whatsoever to bind or represent the other towards any third party" and (b) E 1.: "Both parties reserve the right, at their sole discretion, to refuse to furnish any Services to any Distributor." All of these provisions must be construed in para material, to accord them a reasonable construction. See Mass Appraisal Services, Inc. v. Carmichael, 404 So.2d 666, 673 (Ala. 1981) (stating "...in reviewing contracts, courts are to ‘accord them a reasonable construction under the terms used by the parties who made them, and when the contracts contain several provisions, all are construed together so that a harmonious operation can be given to each provision as far as the language used will permit.")(quoting Green v. Russell County, 603 F.2d 571 (5th Cir. 1979)).
59.
In construing all of these provisions together, a reasonable construction would be that both parties reserved their autonomy or discretion to refuse participation in a particular investment opportunity. Indeed, SSAM has offered numerous legitimate explanations why it might refuse an investment such as: (a) regulatory constraints; (b) obligations to existing clients; (c) the investment was unsuitable to the prospective client; (d) SSAM s incapacity to deploy and manage the additional capital; (e) insufficient fee level for SSAM; (f) investment did not meet applicable account minimums, (g) potential client required unacceptable contract provisions; and (h) the costs of servicing the prospective client. These are all reasonable explanations that were not calculated to frustrate DS’s efforts under the Agreement.

CONFIDENTIALITY UNDER THE AGREEMENT

60.
Section E 6. of the Agreement provides the following confidentiality clause: "Each party shall keep strictly confidential the terms of this Agreement and any information about the operations of the other party, its clients or its activities, which it may obtain as a result of the Agreement ("Confidential Information") and shall not make such Confidential Information known to anyone who is not a party to this Agreement without the prior written consent of the other party, provided that a party may make such Confidential Information known to its affiliates and its and their respective representatives, agents, counsel and other advisors to the extent reasonably necessary in order to carry out the terms of this Agreement and provided further that it obtains the agreement of such parties to abide by the terms of this Section (or to such parties who, as part of a confidential relationship, are already effectively so bound). This confidentiality provision also shall not prevent either party from disclosing the Confidential Information as required by law, including responding to a subpoena issued by a court having jurisdiction over the matter, nor shall this Agreement prevent a party from providing information in response to a demand from any governmental or regulatory entity having jurisdiction over either party or from disclosing such information as necessary to tax or regulatory authorities."
61.
DS has alleged that SSAM breached this confidentiality clause when SSAM provided a copy of the Agreement to AMO in connection with AMG’s purchase of an equity interest in SSAM. It is found, however, that upon AMG’s purchase of equity interest in SSAM, AMG became an affiliate of SSAM. Thus, the terms of this confidentiality clause authorized SSAM to share the Agreement with AMG where SSAM required AMG to execute a non-disclosure agreement that prohibited AMG from sharing the Agreement with others. Further, there was no evidence adduced that SSAM ever shared DS’s purported client or agent lists with AMG. Moreover, even assuming arguendo, that it could be said that SSAM’s sharing of the Agreement with AMG constituted a breach of this confidentiality clause, DS acknowledged at the final hearing that it had no calculated damages as a result of any such breach.

CONCLUSIONS

In order to prevail on its breach of contract claims under Alabama law, DS must establish four elements: (1) the existence of a valid Agreement binding the parties; (2) DS’s performance under the Agreement; (3) SSAM breach or nonperformance of the Agreement; and (4) resulting damages from the breach. See Shaffer v. Regions Fin. Corp., 29 So.3d 872, 880 (Ala. 2009). Based upon a careful consideration of the evidence introduced at the final hearing; the extensive post-hearing briefing by the parties; and the foregoing findings, it is concluded that DS has failed to prove that SSAM has either breached the terms of the Agreement or that DS has sustained any damages for any breach by SSAM.

DS IS OWED NO PRE-TERMINATION FEES CALCULATED IN ACCORDANCE WTTH PARAGRAPH 1 OF THE AGREEMENT’S APPENDIX B OR BY REFERRAL IN E 14

62.
It is concluded that DS is owed no pre-termination fees pursuant to Paragraph 1 of the Agreement’s Appendix B or by Referral in Section E 14. for the reasons that: (a) SSAM did not breach the Agreement by failing to pay DS fees based upon a percentage of SSAM’s U. S.’s clients where the scope of the Agreement was limited to SSAM’s clients outside the U.S.; (b) there was no credible evidence adduced, in any event, that DS ever introduced any U.S. Clients to SSAM or rendered any services to SSAM’s U.S. Clients.; (c) As for SSAM’s Reserved Clients, there was no credible evidence adduced that DS ever generated any new business from such entities or serviced them during the term of the Agreement to justify DS’s entitlement any fees; and (d) There was credible evidence that DS was fully compensated for all Net Profits owing and due during the course of the Agreement.
63.
DS seeks damages based on "DS Agents," at the time the parties entered into the Agreement. Upon the parties’ execution of the Agreement, however, DS did not identify any DS Agents to SSAM in Appendix C. Moreover, DS regularly attested that "[a]ll agents of DS that are receiving compensation on any [SSAM] business have been disclosed to [SSAM]." DS made this same attestation on March 26, 2014, the day before SSAM provided its written notice of termination.
64.
Effective March 26, 2014, the only DS Agent disclosed to SSAM was Primary Asset Consulting ("PAC"), an Australian entity. The evidence established that DS submitted invoices to SSAM for reimbursement of PAC’s fee, and SSAM paid these invoices in full. Further, there was no evidence that PAC introduced any new clients to SSAM. Nor was there any evidence that SSAM developed any new business from PAC. DS, therefore, is not entitled to any compensation relating to any alleged DS Agents.

THERE IS NO CREDIBLE EVIDENCE THAT SSAM HAS FAILED TO FULLY COMPENSATE DS FOR POST-TERMINATION COMPENSATION BASED UPON THE AGREEMENT’S SECTION D 2 AND E 14.

65.
It is concluded that SSAM has not breached the Agreement by failing to fully compensate DS for post-termination compensation based upon the Agreement’s Section D 2. and E 14. and is entitled to no further Net Profits payments for the reasons that:

(a) Givhan’s mere sharing of an alleged pipeline list of potential investors to SSAM on March 26, 2014 was not an introduction. Nor is it credible to believe, for example, that DS made more than 2,000 of these alleged potential investors known to SSAM on February 20, 2014 as DS asserts herein in any meaningful manner.

(b) Further, many of the entities on this purported pipeline list were not suitable potential investors in that they did not even invest with asset managers like SSAM.

(c) Finally, of all of the entities on this alleged pipeline list, only two were SSAM’s clients (i.e. Pie Funds and Perpetual). There is credible evidence that DS has been fully compensated for Pie Funds’ investment in the UCITS fund. Perpetual was a Reserved Client for whom DS provided no services and brought in no new business. DS, therefore, is entitled to no payment.

SSAM BREACHED THE AGREEMENT’S EXCLUSIVITY PROVISION

66.
Based upon the plain and unambiguous language of the Agreement, it is concluded that SSAM breached the exclusivity provisions of the Agreement when it independently or through entities other than DS, pursued international opportunities while the Agreement was in effect. As found earlier herein, the exclusivity provisions of the Agreement precluded SSAM either directly or indirectly with any entity other than DS from pursuing international opportunities. None of SSAM’s efforts in this regard, however, generated any international business for SSAM and there was no credible evidence that DS or Givhan could have altered these results. Accordingly, it is concluded that DS has established no damages as a result of SSAM’s breach in this regard.

THE TERMS OF THE AGREEMENT DID NOT RESTRICT SSAM’S RIGHT TO REFUSE INVESTMENT OPPORTUNITIES

67.
Based upon the findings herein that the terms of the Agreement did not restrict or limit SSAM’s discretion to refuse certain investment opportunities, it is concluded that SSAM did not breach the Agreement when it declined to proceed with investment opportunities during the course of the Agreement. As a result, DS is not entitled to any damages for purported lost investment opportunities in this regard.

THERE WAS NO BREACH OF THE CONFIDENTIALITY CLAUSE

68.
Based upon the foregoing findings that SSAM shared the Agreement with AMG, an affiliate who purchased an equity interest in SSAM and signed a non-disclosure agreement, it is concluded that there was no breach of the confidentiality clause. Accordingly, this claimed breach of the confidentiality provision fails. Moreover, DS offered no evidence of damages even assuming arguendo, a breach had occurred.

AWARD

Based upon all of the foregoing findings, reasons and conclusions, I do hereby AWARD as follows:
69.
The claimant’s breach of contract claims against the respondent are denied.
70.
The claimant’s tort claims against the respondent are dismissed for lack of evidence and prosecution herein.
71.
Based upon the respondent’s ore tenus withdrawal of the counterclaim at the final hearing, the counterclaim is dismissed.
72.
The respondent is the prevailing party. Accordingly, pursuant to the parties’ Agreement and the UNCITRAL rules, the administrative filing and case service fees of the ICDR totaling $49,800.00 and the fees and expenses of the Arbitrator totaling $43,616.03 shall be borne entirely by the claimant. Therefore, the claimant shall reimburse the respondent the sum of $39,008,01, representing that portion of said ICDR fees and expenses in excess of the apportioned costs previously incurred by respondent, upon demonstration by respondent that these incurred costs have been paid.
73.
In addition to the foregoing fees and costs, the claimant shall additionally reimburse the respondent for its reasonable attorneys’ fees in the amount of $1,100,000 and other reasonable costs in the amount of $280,000 of this arbitration proceeding.
74.
This Final Award is in full settlement of all claims submitted to this arbitration proceeding. All other claims not expressly granted herein are hereby denied.
I hereby certify that, for the purposes of Article I of the New York Convention of 1958, on the Recognition and Enforcement of Foreign Arbitral Awards, this Partial Final Award was made in Mobile, Alabama in the United States of America.
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