Airline Can’t Move Suit From N.J. to Croatia

(CN) - Croatia Airlines must continue to defend itself against claims it conspired against its general sales agent in the United States and Canada in order to deprive it of commissions and other proceeds, a federal judge ruled.

Networld Communications Corp., a Parsippany, N.J.-based company says it served as Croatia Airlines sales agent from 1997 to July 30, 2013, when the airline unilaterally terminated their contract without cause.

Over the course of their relationship, Networld claims its work - including building relationships with travel agents, sales initiatives, and customer call center services - helped grow Croatia Airlines' North American sales from $2 million to $26 million annually.

And all seemed to be going well. On July 1, 2011 the parties signed a new four-year sales contract which became effective Jan. 1, 2012, the complaint says. Then the airline abruptly decided to terminate the agreement.

In a complaint filed on Sept. 8, 2013, Networld alleged the airlines and Lidija Saban, the Croatia Airlines employee primarily responsible for the parties' working relationship, terminated the contract with one goal in mind - to deprive the American firm of commissions and other revenue to which it is entitled.

The defendants moved to dismiss on the grounds of forum non conveniens in February 2014.

Though the contract stated all disputes must be submitted to court in Zagreb, Croatia, where the airline is headquartered, Networld argues that Croatia is not an appropriate alternative forum because its legal system has "been in a state of crisis for several decades."

Networld further claims that battling the airline in Croatia could take over a decade; that the Croatian government - the airline's majority shareholder - will likely influence the proceedings; that Croatia lacks a direct counterpart to the New Jersey Sales Representative Rights Act or claims for tortious interference and accounting; and that Croatian courts cannot compel production of documents if a party refuses to produce them.

U.S. District Judge Susan Wigenton largely rejected those arguments, but denied the defendants' motion to anyway, finding that public interest factors disfavor dismissal.

"Defendants have ... established NCC's suit is cognizable in Croatia and that forum would provide NCC with adequate redress," the ruling states. "First, it should be noted that even prior to Croatia's recent judicial reforms, other courts had concluded Croatia was a satisfactory forum. Additionally ... the Croatian legal system has only improved since Croatia joined the European Union [in 2013]."

All that said, she continued, "It appears that court congestion is much greater in the Croatian commercial courts,"

" ... New Jersey has a strong interest in adjudicating this dispute because NCC is a New Jersey corporation, the agency agreement was executed in New Jersey, NCC performed its obligations in New Jersey, and NCC's injuries were felt in this state. Additionally, while NCC represents that the Foreign Sovereign Immunities Act mandates a bench trial, even if the case would be decided by a jury, a New Jersey jury would have an interest in adjudicating this matter," Wigenton wrote.

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