Arizona Helicopter Builder Hopes Supreme Court Overturns $7.6 Million Foreign-Country Judgment

[Photos taken from the MD Helicopters Inc website]

The Arizona Supreme Court has been asked to overturn two lower court rulings that allow The Netherlands to pursue a nearly $7.6 million judgment against a Mesa-based aerospace company whose corporate history traces back to billionaire Howard Hughes in the late 1940s.

MD Helicopters Inc. manufactures high-performance helicopters for government customers such as Afghanistan, Argentina, Japan, and Turkey. The company has its roots in Hughes Helicopters, a unit of Hughes Aircraft started in 1947 that has been the subject of numerous corporate sales and mergers over the decades.

On April 17, attorneys for MD Helicopters petitioned the state’s high court to review of a 2012 judgment ordered by The Hague against the company in favor of The Netherlands for 5.9 million euros, or $7.58 million U.S. dollars. The Netherlands is commonly referred to as Holland. At nearly 16,000 square-miles, the country is slightly more than one-tenth the size of Arizona.

The Hague judgment stems from a nearly 20-year contract dispute related to an order The Netherlands placed with a subsidiary of MD Helicopters in 2001 for eight twin-engine helicopters for its National Police Services. After numerous delays and amended contracts, the contract hadn’t been fulfilled by March 2005, leading to legal actions by both parties.

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In 2008, The Hague initially ordered a judgment against MD Helicopters for nearly 1.1 million euros, or roughly $1.6 million at the then-exchange rate. A second judgment, in 2009, was for more than $6.8 million. Appeals followed, and in 2012 The Hague ordered the final consolidated judgment against MD Helicopters.

However, collection of the 2012 judgment has been on hold while Arizona courts determine if it’s enforceable in the state. In 2018, the Maricopa County Superior Court ruled the judgment complies with Arizona’s Uniform Foreign-Country Money Judgments Recognition Act. Earlier this year the Arizona Court of Appeals came to the same finding.

A decision by the Arizona Supreme Court to not hear the case would leave the lower court rulings in place, making it possible for The Netherlands to collect on the judgment. As of May 15, the court has not decided whether to hear the case.

In the 1980s, Hughes sold its helicopter division to McDonnell Douglas, which opened a facility at Mesa’s Falcon Field before merging with Boeing. Then in 1999 Boeing sold its commercial helicopter division to a subsidiary of Dutch company RDM Holdings, whose predecessor’s corporate history dates back to 1902 as one of the world’s biggest shipbuilders.

In 2005, RDM Holdings was taken over by a New York-based private investment firm that rechristened the company MD Helicopters Holdings Inc. That company then became MD Helicopters Inc., a standalone corporation based in Arizona that manufacturers commercial, police, and military helicopters.