Spanski Enterprises, Inc. v. Telewizja Polska S.A.

Background

Spanski Enterprises, Inc. and Telewizja Polska S.A. entered into a Polish-language agreement in 1994 concerning the exclusive distribution of TV Polonia programming in North and South America. The agreement initially lasted 25 years, expiring on December 13, 2019. It required Telewizja Polska to provide programming and required Spanski to distribute it, recruit subscribers, begin continuous broadcasting, and pay Telewizja Polska 8% of specified revenues. An amendment in 2002 provided that New York law governed the agreement and that disputes would be handled by a federal court in New York City.

The extension provision stated: “TVP and SEI may extend its term by subsequent 10 year periods.” On December 14, 2018, Spanski told Telewizja Polska that it was exercising what Spanski described as a unilateral right to extend the agreement for another ten years. Telewizja Polska rejected that position, asserting that both parties had to consent to an extension. Spanski then sought a declaration that it had properly exercised the alleged extension right.

Motion for a Preliminary Injunction

Spanski moved for a preliminary injunction, which is temporary relief issued before a final decision on the claims. It asked the court to bar Telewizja Polska from interfering with Spanski’s distribution of TV Polonia programming in North or South America and from distributing or transmitting that programming in those regions.

To obtain this relief, Spanski had to show either a likelihood of success on the merits or serious questions supporting litigation, likely irreparable harm without an injunction, a balance of hardships favoring an injunction, and consistency with the public interest. The court concluded that Spanski had not met the first requirement, so it denied the motion.

Contract Interpretation

The court applied New York contract law. It examined whether the words “TVP and SEI” gave either party a unilateral right to extend the agreement or instead required both parties to agree. Spanski relied on the original Polish wording, “TVP i SEI,” and argued that the Polish conjunction “i,” ordinarily translated as “and,” could be understood as “or,” or as allowing each party to act independently.

The court found Spanski’s interpretation unpersuasive at the preliminary-injunction stage. It emphasized that Spanski had repeatedly submitted and relied on an English translation using “TVP and SEI,” while its expert acknowledged that the Polish word for “or” was “lub.” The court also compared the extension sentence with the next sentence, which said that “each party” could terminate the agreement if the other committed a significant violation. In the court’s view, the parties’ use of “each party” for unilateral rights, but not in the extension provision, supported Telewizja Polska’s interpretation that the parties had to act together.

The court also stated that it would be commercially unreasonable to interpret a 25-year distribution agreement as giving either side a unilateral right to continue the agreement on the same terms forever. It rejected Spanski’s argument that requiring mutual agreement would make the extension provision meaningless, explaining that the provision could establish the possibility of ten-year extensions while denying either party a unilateral extension right.

The court noted that the parties’ negotiation history did not convincingly show an intent to grant either side a unilateral right to extend the agreement indefinitely. It nevertheless stated that its decision on the preliminary-injunction motion was not based on outside negotiation evidence because both parties argued that the contract’s language was unambiguous.

Other Motions and Disposition

The court held that it had subject-matter jurisdiction under the Foreign Sovereign Immunities Act because the action involved Telewizja Polska’s commercial activity and the statute’s commercial-activity exception to immunity. That jurisdiction ruling did not resolve the parties’ contract dispute.

The court denied Spanski’s motion for a preliminary injunction. It struck Telewizja Polska’s cross-motion for summary judgment because Telewizja Polska had not complied with the court’s pre-motion conference requirement. The court also denied Spanski’s motion to strike a declaration supporting that cross-motion as moot. The parties were directed to submit a joint letter explaining how they wished to proceed, and the clerk was directed to terminate the motions.