Shallan Overseas Investments Ltd v Primefuels Investments Ltd
| Jurisdiction | British Virgin Islands |
| Judge | Webster JA |
| Judgment Date | 18 September 2020 |
| Neutral Citation | VG 2020 CA 15 |
| Court | Court of Appeal (British Virgin Islands) |
| Docket Number | BVIHCMAP2019/0005 |
| Date | 18 September 2020 |
EASTERN CARIBBEAN SUPREME COURT
IN THE COURT OF APPEAL
The Hon. Mr. Davidson Kelvin Baptiste Justice of Appeal
The Hon. Mr. Paul Webster Justice of Appeal [Ag.]
The Hon. Mde. Vicki Ann Ellis Justice of Appeal [Ag.]
BVIHCMAP2019/0005
Mr. Michael Todd, QC, with him, Mr. Philip Gillyon and Ms. Rhonda Brown for the Appellant
Mr. Giles Richardson, with him, Mr. Peter Ferrer and Ms. Marcia McFarlane for the 3 rd and 4 th Respondents/Defendants
Interlocutory Appeal — Commercial Appeal — Counter Appeal — Joint Venture — Parity of interest — Relief under section 184I of BVI Business Companies Act — Application for stay of proceedings — Forum non conveniens — Connecting factors to the jurisdiction — Whether judge erred in principle to such a degree that Court should interfere with findings — Proper law for determination of internal management issues of company — Risk of inconsistent judgments — Consideration of delays in the court system in Mauritius — Consideration of expense of consecutive trials — Case management decision — Appellate court's approach to case management decision by trial judge
This appeal has its origin in the circumstances surrounding a disputed joint venture between the Somji family of Kenya and the 6 th defendant, Mr. Asif Abdulla. The Somji family structured its investment in the joint venture through the appellant, Shallan Overseas Investments Limited, a company incorporated in the British Virgin Islands (“BVI”). Mr. Abdulla, structured his investment in the joint venture through his various companies, starting with Rodina Holdings Limited (“RHL”).
The terms of the venture appeared to have evolved out of mutual understandings and course of dealings between the parties. They were in essence that (i) the appellant and the Rodina Parties (as hereinafter defined) would each own equal shares in Primefuels Holding Company (“Holdings”), the holding company of the Group; (ii) there would be equal representation on the boards of directors of each company within the Group; (iii) all decisions of the boards of the companies in the Group would require the consent of both the appellant and the Rodina Parties; and (iv) the appellant and Rodina Parties would each be entitled to participate equally in the management of the companies in the Group. It was also claimed that in 2007, the appellant and the Rodina Parties concluded a voting agreement that preserved the parity of interest and joint control of Holdings and its subsidiaries.
In 2007, the 1 st defendant, Primefuels Investments Limited (“PIL”), was incorporated in the BVI for the purpose of acquiring all the shares of Holdings. The appellant and Mr. Abdulla became equal shareholders of PIL. Mr. Abdulla owned his shares through RHL. RHL later transferred its shares to the 3 rd respondent, New Rodina Limited, which then transferred the said shares to the 4 th respondent, Maxim Ventures Trading Corp. (“Maxim Ventures”). These entities were controlled by Mr. Abdulla. New Rodina Limited, Maxim Ventures and Mr. Abdulla, are individually and collectively referred to as the “Rodina Parties”. Also, in 2007 Holdings issued and sold shares representing 15% of its issued capital to Aureos East Africa Fund LLC (“Aureos”), a Mauritian company, reducing PIL's holding in Holdings to 85% of its issued capital. On 16 th July 2013, Aureos transferred its 15% interest in Holdings to the 5 th defendant, Fuel Transport Holdings Limited (“FTHL”), a company controlled by Mr. Abdulla. In the following month FTHL was acquired by Mapplewell Global Group Limited (“Mapplewell”), a BVI company beneficially owned and controlled by Mr. Abdulla. This resulted in Mr. Abdulla having a further 15% interest and effective control of Holdings from August 2013, thereby disturbing the parity of ownership and control of Holdings and its subsidiaries contemplated by the joint venture agreement.
In 2015, the appellant's representative on the board of PIL resigned as a director of the company. It is claimed that the Rodina Parties blocked the appointment of the appellant's replacement director, thereby allowing Mr. Abdulla's representative on the board to act as sole director of PIL. Further, the appellant claims that through acquisition of FTHL by Mapplewell, and the Rodina Parties' veto of the appellant's nominee to the board of directors, the appellant has lost effective control of PIL. Additionally, FTHL acquired additional shares of Holding through a rights issue. This diluted the appellant's indirect interest in Holdings and gave Mr. Abdulla effective control of Holdings.
On 18 th January 2018 the appellant commenced proceedings in the BVI under section 1841 of the BVI Business Companies Act (“BC Act”) against the defendants (including the 3 rd and 4 th respondents), on the ground that the affairs of PIL have been conducted and are being conducted in a manner that was oppressive, unfairly discriminatory and/or unfairly prejudicial to the interest as a member of PIL (“BVI Claim”). Meanwhile, on 20 th February 2018, FTHL commenced proceedings in Mauritius against Shallan and some (but not all) of the other parties seeking declaratory relief in respect of Holdings in relation to the board of directors, confirmation that the rights issue was duly made and that FTHL is the rightful owner of the shares issued to it (“Mauritius Claim”). The Mauritius Claim has yet to be determined in Mauritius.
In relation to the BVI Claim, the 3 rd and 4 th respondents applied to strike out the claim form and statement of claim against them, or that the BVI Claim be stayed under rule 9.7 or 9.7A of the Civil Procedure Rules, 2000 (“CPR”). The matter came before Adderley J (“the Judge”) who ordered a limited stay of the BVI Claim until the hearing and final determination (including any appeals) of the Mauritius Claim.
Being dissatisfied with the stay granted by the Judge, the appellant appealed to this Court. The respondents, being dissatisfied only with the Judge's finding that Mauritius was not clearly and distinctly the correct forum to decide the BVI Claim, filed a counter notice of appeal challenging this finding. As a result, the issues for this Court to determine are: (i) the most appropriate forum for the trial of the claims; (ii) the nature of the claims in the BVI and in Mauritius and the proper court for resolving the issues arising from the claims (iii) the risk of inconsistent judgments; (iv) delays in the court system in Mauritius; and (v) the expense of consecutive trials in Mauritius in the BVI brought about by the stay order.
Held: dismissing the appeal; dismissing the counter appeal; affirming the orders of the Judge, including the order that the costs of the proceedings in the Commercial Court be reserved; and ordering that each party shall bear their own costs of the appeal, that:
-
1. In determining the most appropriate forum for the trial of an action, a trial judge must consider (a) is there another available forum; (b) if so, is that forum more appropriate for the trial of the claim and; (c) if there is another more appropriate forum, a stay should be granted unless there is a risk that the claimant will not receive justice in the more appropriate forum. In the second limb of the test, the trial judge is required to make an assessment of the connecting factors to the jurisdiction to decide whether the jurisdiction is clearly the most appropriate forum. The Judge did not err in principle in finding that the respondents had not satisfied him that Mauritius or any jurisdiction other than the BVI was clearly and distinctly the more appropriate forum for the trial of the BVI Claim.
Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460 applied; IPOC International Growth Fund Ltd v LV Finance Group Limited et al BVIHCVAP2003/0020 (delivered 22nd November 2004, unreported) applied; Lubbe and others v Cape plc [2000] 1 WLR 1545 applied; Anjie Investments Limited and another v Cheng NGA Yee and another BVIHCMAP 2016/0003 (delivered 24th November 2016, unreported).
-
2. Questions of internal management of a company are governed by the law of that company's place of incorporation, and the courts of that jurisdiction are best suited to give decisions on the control and extent of the powers of management. However, this rule is not absolute or exclusive, as different considerations can arise, especially when the court being asked to adjudicate on a matter of the internal management of a foreign company, is the forum conveniens for the trial of the action. The Judge treated the case as one where the issues of Mauritian law should be decided in Mauritius before the BVI Action could proceed. However, this was not mandatory, as the court that is the forum conveniens can deal with issues involving the internal management of a foreign company on the basis of expert evidence of foreign law, if necessary. The Judge erred in principle in his treatment of the issues of Mauritian law, but this was not fatal to his overall decision.
Pergamon Press Ltd v Maxwell [1970] 1 WLR 1167 considered; Konamaneni and others v Rolls Royce Industrial Power (India) Ltd and others [2002] 1 WLR 1269 applied; KMG International NV v Chen and another [2018] EWHC 1078 (Comm) considered; Reeves v Sprecher and others [2007] EWHC 117 (Ch) considered.
-
3. The risk of inconsistent judgments is a matter of real concern to the courts and should be avoided where possible. A judge must satisfy himself that (a) there is an overlap of issues between the two actions; (b) the parties are the same or substantially the same in both actions; and (c) there is a real risk of...
To continue reading
Request your trial