![]() |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] [DONATE] | |||||||||
England and Wales High Court (Chancery Division) Decisions |
||||||||||
PLEASE SUPPORT BAILII & FREE ACCESS TO LAW
To maintain its current level of service, BAILII urgently needs the support of its users.
Since you use the site, please consider making a donation to celebrate BAILII's 25 years of providing free access to law. No contribution is too small. If every visitor this month gives just £5, it will have a significant impact on BAILII's ability to continue providing this vital service.
Thank you for your support! | ||||||||||
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Third Eye Projects Ltd & Anor v Mint SPA [2023] EWHC 1023 (Ch) (05 May 2023) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2023/1023.html Cite as: [2023] EWHC 1023 (Ch) |
[New search] [View without highlighting] [Printable PDF version] [Help]
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
7 Rolls Buildings London, EC4A 1NL |
||
B e f o r e :
____________________
(1) THIRD EYE PROJECTS LTD (2) MR JAVID ZAHIR |
Claimants |
|
- and – |
||
MINT S.P.A |
Defendant |
____________________
Mr Edward Meuli (instructed by Morgan Lewis & Bockius UK LLP) for the Defendant
Hearing dates: 23 January 2023
____________________
Crown Copyright ©
This judgment will be handed down remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 10 am on Friday 5 May 2023
Master Kaye :
i) whether the claim falls within the scope of a jurisdiction clause conferring exclusive jurisdiction on the courts of England and Wales. If it does then the Application will fail. (The Jurisdiction Clause Issue)
ii) If it does not then the court must consider whether, as the defendant maintains, the First Instance Court of Milan is clearly and distinctly the more appropriate forum. (The Forum Issue)
The Legal Principles/Tests
"The following six points can be made about the Extended Fiona Trust Principle:-
(1) The principle is based on the construction of the relevant jurisdiction clause (which I will refer to as being contained in "Contract A"): it is not based on an implication or implied incorporation of the jurisdiction clause from Contract A into a related contract (henceforth known as "Contract B").
(2) As a matter of contractual construction, the wording of the clause in Contract A must be fairly capable of applying to disputes in Contract B. For example, a clause which stated that "any dispute under this contract shall be referred to arbitration" may not apply to disputes arising out of a (related) Contract B.
(3) It is not legally or commercially odd or improbable that an agreement should have no jurisdiction clause. Equally an agreement may have no jurisdiction clause and not be covered by a jurisdiction clause in a different agreement. This was confirmed in Am Trust Europe Ltd v Trust Risk Group at [46] (albeit in reference to competing jurisdiction agreements):
"There is no presumption that a jurisdiction (or arbitration) agreement in contract A, even if expressed in wide language, was intended to capture disputes under contract B; the question is entirely one of construction".
However, the absence of any competing jurisdiction clauses in any agreements within a particular set of agreements concluded by the parties for the same purpose, at the same time, and with the same subject matter, can be a relevant consideration (Etihad at [102(v)]).
(4) This principle normally applies where the parties to Contract A and Contract B are the same. This arises from the fact that the Extended Fiona Trust Principle ultimately involves an exercise in contractual construction. One would normally expect the parties to Contract A to intend that their dispute resolution mechanism be binding upon the parties to Contract A rather than also applying to persons who were not party to that contract at all. Where the principle is applied to a situation in which the parties to Contract A and Contract B are different, then it is possible that the court may conclude that it was the Contract A parties' intention that third parties should be able to rely on Contract A (for example in a Himalaya clause situation), or the court might conclude that only the common parties between Contract A and Contract B are bound by the jurisdiction clause in Contract A. However, the latter is an inherently unattractive prospect, as it involves the fragmentation of disputes pursuant to the same agreement (Contract B) – possibly even disputes concerning the very same obligations. This is the very menace which it was assumed in Fiona Trust rational businessmen want to avoid (of course agreements which appear to have been deliberately and professionally drafted are to be given effect, even where this may result in a degree of fragmentation in the resolution of disputes: see Dicey, 15th Edition at 12-110). The effect of Fiona Trust is that fragmentation of disputes under one agreement is unlikely to be what the parties intended. However, it is perfectly possible that there may be fragmentation of the resolution of disputes across several agreements (although whether this was the parties' intentions is to be considered when construing the contracts).
(5) The Extended Fiona Trust Principle normally applies where Contract A and Contract B are interdependent (Point (5a)), or have been concluded at the same time as part of a single package or transaction (Point (5b)), or (if concluded at different times) dealt with the same subject-matter (Point (5c)).
(6) A jurisdiction agreement in Contract A will generally apply to Contract B where that contract was entered into at the same or a similar time as Contract A. In this regard:
(a) In Etihad at [104], the judge noted that jurisdiction agreements in Contract A generally did not apply to a different agreement (Contract B) which had been concluded prior to the jurisdiction agreement coming into existence:
"Whilst it is not impossible for a jurisdiction agreement to have, on its true construction, such retrospective effect, a party seeking to rely upon a subsequently agreed jurisdiction agreement, in a separate contract, is likely to face an uphill struggle: see e.g. Satyam. One reason is that the earlier contract had an existence of its own, and hence an applicable law, prior to the conclusion of the subsequent agreements. If there was no jurisdiction agreement at the time it was concluded, then it may be difficult to conclude that it is to be found in a subsequent agreement, particularly if (as in Choil) the disputes arising under the later agreement are likely to have a very different character to disputes arising under the earlier agreement."
(b) Further, if Contract B was concluded prior to Contract A and the Contract A parties intended for the jurisdiction clause to deal with disputes under Contract B, one would normally expect Contract A to deal expressly with jurisdiction under Contract B. Quite apart from anything else the parties already know about Contract B's existence.
(c) If Contract A was concluded prior to Contract B, and a jurisdiction clause in Contract A was intended to cover Contract B, one might expect Contract B to cross-refer back to Contract A (albeit that ultimately what one is construing for present purposes is Contract A and on normal principles of contractual construction it stands to be construed at the date on which it was entered into). It is also to be borne in mind that it may be more difficult to conclude that parties to a particular jurisdiction agreement intended for that agreement to apply to disputes arising out of contracts that have not been concluded yet, particularly if such future contracts are not being discussed as part of the same package of agreements, or if the future contracts are in fact separated by a significant period of time from the conclusion of the jurisdiction agreement."
i) The defendant bears the burden of showing that there is some other available forum with competent jurisdiction which is the appropriate forum, i.e. in which the case may be tried more suitably for the interests of all parties and the ends of justice.
ii) The alternative forum must be "clearly and distinctly" more appropriate.
iii) The court looks at factors pointing to the natural forum, i.e. the forum with which the action has the most real and substantial connection, including the governing law, location of witnesses & documents, and where the parties conduct business.
iv) If the defendant discharges this burden, the burden shifts to the claimant to show special circumstances justifying the continuation of proceedings in England.
v) Where there is another forum available which prima facie is clearly more appropriate the court will ordinarily grant a stay unless there are special circumstances requiring the trial to take place in England.
vi) A stay will not be refused simply because the claimant would be deprived of a personal advantage. The question is whether substantial justice would be available in the other forum.
vii) No presumption arises from the fact that a defendant was served in England as of right.
The Parties
Brief Background:
"22 GOVERNING LAW AND JURISDICTION
22.1 This Agreement shall be construed in accordance with the laws of England & Wales and all disputes, claims or proceedings between the parties relating to the validity, construction or performance of this Agreement shall be subject to the exclusive jurisdiction of the Courts of England & Wales."
"9. General provisions
9.1. Governing Law. This Agreement (and any dispute or claim relating to it or its subject matter (including non-contractual claims)) is governed by and is to be construed in accordance with English law.
9.2. Jurisdiction. The parties irrevocably agree that the courts of England and Wales shall have exclusive jurisdiction to settle any claim, dispute or issue (including non-contractual claims) which may arise out of or in connection with this Agreement."
"Dear Javad
I want to assure you that the value of your 1.5% stake in Myntelligence is and will be preserved, in no circumstance, anyone of us has ever thought something different. As you know the whole group is going through a restricting by merging the operating companies (ie Myntelligence and TheOutplay into the holding company [Mint]). I apologize if during the various steps that have been undertaken to get to the merger we have evidently failed to clarify to you the process that has erased your stock in Myntelligence. Once the merger will be completed you will receive the shares of the merged entity which will correspond to the value of your original stake(1.5%) in Myntelligence…"
"A merger with 100% owned companies is much faster, easier, and less expensive, in particular in this case where we are dealing with an international merger. If we proceed with a reallocation [of Myntelligence shares to Third Eye], for example we would have to hire UK fiscal advisors who will take time and money. With 100% ownership[ie following the cancellation of the shares] we avoid all that".
i) a personal claim against Mint (in its own right and as the successor to Myntelligence's liabilities) for breach of Third Eye's rights under the contract of membership formed by Myntelligence's articles of association. The claimants say that the articles did not permit, and pursuant to the Companies Act 2006 could not lawfully have permitted, the cancellation of Third Eye's shares;
ii) a claim for breach of contract in relation to the SPA on the bases that: (i) it expressly granted Third Eye "all the rights of a stockholder" with respect to its vested shares; and (ii) it contained conventional implied terms as to non-derogation from grant and prevention of performance. Without the Mint Agreement, Myntelligence and Mint would have breached these express and implied terms under the SPA by depriving Third Eye of its shares and the benefit of the rights attaching to its shares, and by putting themselves in a position in which they were unable to continue to perform their obligations under the SPA;
iii) a claim in unjust enrichment, on the basis that Mint has been enriched at Third Eye's expense by appropriating for itself – without Third Eye's consent - the value of Third Eye's interest in Myntelligence; and
iv) a claim to set aside the Merger on the basis that, having regard to the unlawfulness of the Purported Expropriation, Myntelligence was not a wholly owned subsidiary of Mint. That being the case, the English Court had no jurisdiction to issue a pre-merger certificate pursuant to regulation 6 of the UK CBMR and/or the English Court was misled by Myntelligence's failure to draw that points to its attention.
The Jurisdiction Clause Issue: Does the dispute fall within the scope of a clause 9.2 of the SPA?
9. Myntelligence and Mint wished to progress the Merger as a merger by absorption of a wholly-owned subsidiary notwithstanding that, as a result of Third Eye's shareholding, Myntelligence was not a wholly-owned subsidiary of Mint. In order to achieve that result, Myntelligence and Mint:
(1) sought to dilute and cancel Third Eye's shareholding without reference to Third Eye, which steps were obviously unlawful and ineffective without Third Eye's (informed) consent; and
(2) when Mr Zahir asked for Third Eye's shareholding to be restored (those steps having then come to his attention), agreed with the Claimants that Third Eye would instead receive shares in the merged entity, Mint, equivalent in value to its 1.5% shareholding in Myntelligence (and insisted that had been their intention all along).
The Forum Issue