Darby Investments Services Inc. v Inguetberg SA [Eastern Caribbean Supreme Court]
| Jurisdiction | British Virgin Islands |
| Judge | Bannister J |
| Judgment Date | 14 February 2013 |
| Court | High Court (British Virgin Islands) |
| Docket Number | CLAIM NO. BVIHC (COM) 32 OF 2012 |
| Date | 14 February 2013 |
THE EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
COMMERCIAL DIVISION
CLAIM NO. BVIHC (COM) 32 OF 2012
(Funding agreement — whether agreement to lend money or to make investment — whether agreement complete — whether to be construed as incorporating term requiring repayment in events not expressed in the agreement as requiring repayment to be made —Attorney General of Belize v Belize Telecom [2009] 1 WLR 19881 applied)
Bannister J [Ag]: In these proceedings the Claimant, Darby Investments Services Inc (‘Darby’), claims US$3,072,703 together with interest from the Defendant, Inguetberg SA (‘Inguetberg’). Each company is incorporated here in the BVI.
Darby's statement of claim pleads that in late 2007 Mr Selivanov, the principal behind Inguetberg, approached Darby to provide funds by way of loan to assist Inguetberg in acquiring a minority shareholding in a Cyprus incorporated company called Dratam Holdings Limited (‘Dratam’). The other shareholder in Dratam was to be a company
called Rinterino Investments Limited (‘Rinterino’), which was owned or controlled by a Mr Grigorishin. The intention was that Dratam would itself enter into a joint venture with a company called Nervia Trading Limited (‘Nervia’) for the acquisition of the entire issued capital of yet another company, called Perduk Enterprises (Cyprus Limited (‘Perduk’), with Rinterino taking 70% of Perduk and Nervia the remaining 30%. Perduk owned the ultimate object of these arrangements, a Russian chemical company called Samaraorginstez LLC (‘Samara’).Once these arrangements were in place, therefore, Inguetberg would be the owner of 28.57% of Dratam, which would own, through Perduk, 70% of Samara. Inguetberg would thus be the indirect owner of just under 20% of Samara.
Darby pleads that it agreed to make the requested loan, in the sum of US$3,072,703, and it is common ground that Darby paid that sum to Inguetberg sometime in late 2007. The amount of the loan originally agreed upon was US$3 million. The odd figure is the result of adjustments which had to be made on account, as I understand it, of currency exchange fluctuations. I shall refer to the amount, as it was referred to at trial, as US$3 million.
In fact, although this is not pleaded,2 the US$3 million was merely the first instalment of the sum of US$8 million which Inguetberg was going to have to pay to acquire its 20% stake in the overall structure. Mr Grigorishin/Rinterino was to pay US$20 million, the balance of the overall US$28 million cost of the acquisition.
Returning to the pleading, it is alleged at paragraph [7] that the loan was made pursuant to a written investment agreement (‘the IA’) dated 5 December 2007. Recitals to and provisions of the IA are then set out. It is probably best at this point if I turn to the IA itself and summarise the relevant provisions in my own language.
The IA is made between Inguetberg (described as ‘Investor 1') and Darby (described as ‘Investor 2') and is dated 5 December 2007. It is made subject to the law of Great Britain, which the parties have rightly agreed to treat as a reference to the law of England and Wales. It contains an entire agreement clause and the preamble and recitals are expressed to be an integral and inseparable part of its body.
The first recital explains that Inguetberg and Rinterino3 are to acquire 100% of Dratam and thus 70% of of Perduk by 20 December 2007
‘provided that [Inguetberg] acquires in its own name 10.71% of shares in [Dratam] using the funds provided thereto by [Darby]'
The 10.71% Dratam shares are defined in Recital 1 as ‘the Shares.’
Recital 1 then continues by stating that Inguetberg acquires [i.e. will acquire] the Shares using the funds provided pursuant to the IA by Darby which, for its part, agrees to provide the funds for purchasing the Shares on the terms of the IA (defined as ‘the Project’). Inguetberg's remaining 17.86% Dratam shares were to be purchased later.
Clause 1 of the IA provides that all previous obligations of the parties relative to the implementation of the Project shall terminate.
Clause 2 provides, in its first paragraph, (it was referred to as clause 2.1 at the hearing and I shall refer to the seven subdivisions of clause 2 in the same way in this judgment) that all the rights to the Shares acquired by Inguetberg shall belong to Inguetberg alone. Clause 2.2 says that Darby is to provide Inguetberg with the US$3 million in cash ‘to acquire the Shares.’ Clause 2.3 sets out that all income and dividends received by Inguetberg in relation to the Shares shall be divided between the parties 50/50, with the parties being responsible for their own tax.
Clause 2.4 gives Inguetberg the right, within the three years following Inguetberg's acquisition of the Shares, to repurchase, as it is put, from Darby the right to receive 100% of the dividends, etc, relative to the Shares for (in round figures) US$4.5 million. Any dividends, etc, previously received by Darby pursuant to clause 2.3 of the IA are to be set off against the US$4.5 million. The provision is not happily worded but the meaning is plainly that upon such repurchase Inguetberg will be solely entitled to dividends, etc, generated by the Shares. If such right of repurchase is exercised, the IA terminates. The right of repurchase is to be lost if the entire 70% Samara holding [indirectly] held by Inguetberg and its partners is disposed of.
It is common ground that (a) no dividends have been received by either party for sharing pursuant to clause 2.3; (b) the clause 2.4 option has not been exercised; and (3) it is now too late for Inguetberg to exercise it.
Clause 2.5 provides that if all or part of the [indirect] 70% shareholding held by Inguetberg and its partners in Samara is sold to third parties, Darby will receive, by reference to the proportion of the Shares comprised within the disposal, the price at which the disposed of parcel of Shares was originally purchased by Inguetberg. If the disposal generates any ‘income’, that ‘income’ is to be shared 50/50 between Inguetberg and Darby. It was common ground that ‘income’ in clause 2.5 was to be taken as meaning ‘profit.’ It is also common ground that no sale within the meaning of clause 2.5 has occurred.
By clause 2.6 the parties agreed that sale, transfer, or incumbrance of the Shares (or accordingly of a share in Samara) by virtue of the general law or under any bankruptcy or insolvency law was to be treated as a sale of the Shares to third parties. It is clear (and I think that it was common ground) that this meant that charges or sales of direct or indirect interests in Samara, insofar as they disposed of the interests represented by the Shares, were to be treated as sales for the purposes of clause 2.5.
Clause 2.7 provided (straightening out the language a little) that the fact that Darby had financed the acquisition of the Shares did not give it ‘any preferential right or privilege of Inguetberg to the Shares.’
The final paragraph of numbered clause 4 of the IA provides that if Dratam had not acquired its 70% interest in by 1 June 2008, Inguetberg was obliged to repay the US$3 million to Darby. That provision is spent.
Numbered clause 7 deals with termination. It provides that the agreement shall come into force on 5 December 2007 and will continue indefinitely unless the parties agree in writing to determine it; or Inguetberg has exercised its right of repurchase under clause 2.4; or if the 70% stake in Samara is sold; or if Samara is wound up or dissolved. None of those things has happened.
Returning to the statement of claim, having set out the terms of the IA substantially as I have done above, it proceeds to allege that it was an implied term of the IA
‘that the Loan would be repayable on reasonable notice either on the termination of the [IA] or in the event that the joint venture between Inguetberg and Rinterino (namely to acquire and hold the 70% interest in Samara through Dratam) came to an end.’
The joint venture being referred to here is the joint venture...
To continue reading
Request your trial