Abraaj Investment Management Ltd & Anor v Kes Power Ltd [2024] EWHC 41 (Comm) (16 January 2024)

Facts · 事实

HTML VERSION OF APPROVED JUDGMENT ____________________ Crown Copyright © This judgment was handed down remotely at 10.30am on 16 January 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives. ............................. Sean O'Sullivan KC (sitting as a Deputy High Court Judge): Mr Shan-E-Abbas Ashary (who I will call "the Applicant") applies for a stay of these English proceedings whilst a dispute as to who is entitled to represent the Defendant ("D") is determined in the Cayman Islands. The Claimants ("the Cs") oppose that application. D has not taken any position, and has not been represented, for reasons I will explain. However, there is no objection by the Cs to the Applicant's request to be joined to the action as a party, so that there is no dispute as to his standing to make this application. I therefore make that order pursuant to CPR 19.2(2), with the effect that the Applicant becomes the Second Defendant in these English proceedings. I will, however, continue to call him "the Applicant" and to refer to the First Defendant as "D". The parties The relationships between the different parties involved, or having an interest, in these proceedings are complicated. I am going to focus on the aspects which seem to me to matter for the purposes of the present application, which inevitably means that what follows is not a complete picture. The Cs' substantive claim in these English proceedings concerns an alleged debt of US$41,446,114 plus interest ("the Debt") said to be owed by D to the Cs. The Debt relates to fees for services that the First Claimant (which I will call "AIML") provided to D, and expenses that AIML incurred on D's behalf, from 2009 onwards. AIML was part of the Abraaj Group of companies, a private equity group which focused on investment in emerging markets. AIML was the principal investment management entity within the Abraaj Group. AIML was wound up by order of the Grand Court of the Cayman Islands on 11 September 2019. The Second Claimant ("Sage") is said to have acquired the Debt in 2022. I understand Sage to form part of a group which is seeking to take control of an investment vehicle called IGCF SPV 21 Limited ("SPV21"). Specifically, on 3 August 2022, it is said that: 7.1. AIML sold its rights and interest in the Debt (less an amount of US$1,139,526, which AIML is liable to pay to another entity) to Sage; 7.2. AIML transferred its equitable interest in the sole voting share in SPV21 to Sage; and 7.3. AIML received back an assignment of the Debt from Sage, as security for the consideration which will be payable by Sage for the Debt. D is a Cayman Islands company which serves as a special purpose vehicle for various parties' investments in the Karachi Electric Supply Corporation Limited ("K-Electric"), an energy supply company in Pakistan. It is said that D's only substantial asset is an illiquid 66.4% stake in the ordinary shares of K-Electric. There are three shareholders in D: 9.1. SPV21. The sole voting share in SPV21 is legally held by AIML, but (as I have indicated) it is said that the equitable interest in the voting share was transferred to Sage in August 2022; and 9.2. Al Jomaih Power Limited ("AJP") and Denham Investments Ltd ("Denham"), who the parties together call the "Original Shareholders", because they held investments in K-Electric through D before SPV21 acquired its interest in D in October 2008. I am told that SPV21 owns 53.8% of the shares of D. AJP holds 27.7% and Denham 18.5%. Each of the shareholders is entitled to appoint representative directors to the board of D pursuant to the terms of a Shareholders Agreement dated 15 October 2008. SPV21 is entitled to appoint five directors, referred to by the parties as "the Abraaj Nominees", although I am told that the right to appoint one of these was transferred to the receivers of certain Abraaj Group companies (and is, or was, controlled by Mashreqbank PSC � see further below). AJP appoints three directors and Denham appoints two directors. There is no provision for a casting vote. The Applicant is one of the three AJP appointed directors. The Debt The Cs' position is that the Debt had long been treated as undisputed. The Debt is said to arise from a Consultancy Services Agreement entered into between AIML and D on 18 May 2009 ("the CSA"). The CSA has an English governing law and exclusive jurisdiction clause. Pursuant to the CSA, D had a contractual obligation to pay AIML a fee of US$10 million per annum for services provided under the CSA. The CSA had an initial term of 5 years and covered the period from 2008 to 2012, ending on 31 December 2012. The CSA was then extended from 1 January 2013 until 31 December 2016 by way of a Side Letter dated 15 July 2015, which also contained an English governing law and exclusive jurisdiction clause. It amended the annual fee to be paid by D to US$4 million per annum. I am told that, on 28 May 2012, US$20 million worth of fees owed to AIML was settled by a debt-to-equity conversion. Then, in 2015, a further US$13 million worth of those fees were settled by D using the proceeds of an accelerated equity offering. It is alleged that there is a balance of US$33 million in fees which is outstanding (i.e. 5y x $10m + 4y x $4m = $66m, less $20m and $13m). In addition, it is alleged that AIML incurred expenses on D's behalf and for its benefit. The outstanding expenses are said to total US$8,446,114. The Cs point out that the Debt was acknowledged in D's accounts for several years, including between 2014 and 2021, and that it featured in at least three sets of accounts which appear to have been signed by the Applicant himself. For example, D's accounts for the year ended 31 December 2021 (which were signed by the Applicant) acknowledge sums of US$25 million and US$8 million to be due as management fees. They also record another payable to AIML in the sum of US$8,446,114, which I take to be the expenses. After Sage became involved, however, the Original Shareholders took the position that the Debt should be challenged. The Cs say that half of D's board of directors does not accept that the Debt should be disputed and does not accept that there is any proper basis for the present claim to be defended. I will say a little more about this in due course. In any event, when it became apparent that there was a disagreement about the Debt, the Cs say it was necessary for AIML to take steps to preserve its security interest, and Sage's interest, in the Debt. On 30 November 2022, a statutory demand was served by AIML on D's registered office in the Cayman Islands. The 21-day period for the statutory demand expired on 21 December 2022, without any payment being made by D. The Cs say that they did not progress the winding up of D for non-payment of the Debt, because D's ability to pay the Debt was dependent upon a sale by D of its interest in K-Electric. The Cs suggest that a winding up of D might jeopardise D's attempts to realise its interest in the K-Electric shares, which are D's sole asset. For his part, the Applicant invites me to infer that the Cs did not progress the winding up because they recognised that there was a bona fide dispute about the Debt. The current proceedings and the dispute about the representation of D The Claim Form in the present action was issued on 21 March 2023. On 9 June 2023, the Cs served the Claim Form and Particulars of Claim on D. The Claim Form and PoC were served out of the jurisdiction pursuant to CPR 6.34, on the basis that the claim was made pursuant to or in respect of a contract which contains a term to the effect that the Court has jurisdiction to determine the claim. I do not understand there to be any dispute about the validity of service. On 12 June 2023, there was a meeting of D's board which was adjourned because it was inquorate. The Applicant's case is that the board meeting was automatically adjourned until 19 June 2023 and that there was a valid meeting of D's board on that date. He says that the board voted in favour of a resolution that Fieldfisher should represent D in these proceedings. The Cs say that this was not a valid meeting at all and further that, if it was, the vote was deadlocked (5 vs 5). To some degree, this outcome of the vote depends on whether a Mr Keiran Hutchison was entitled to cast a vote at that meeting in favour of Fieldfisher's instruction. Mr Hutchison is a partner in EY Cayman Ltd and a director of KP Corporate, which was in turn a corporate director of D. He makes various complaints about KP Corporate Director Ltd ("KP Corporate") (purported) removal from the D's board immediately before the 19 June meeting. His removal is being challenged in the Grand Court of the Cayman Islands. The Applicant also argues that the directors who voted (by proxy) against the appointment of Fieldfisher were acting in breach of their fiduciary duties owed to the D when doing so, because they were (it is alleged) doing so on the instructions of the Cs, notwithstanding that it would be in the best interests of D to dispute the Debt. On 30 June 2023, an Acknowledgement of Service was served on Cs, indicating an intention both to defend the claim and to contest jurisdiction. The AoS was served by Fieldfisher, apparently on behalf of D. No application to contest jurisdiction followed. On 6 July 2023, Fieldfisher wrote to Simmons & Simmons (solicitors for the Cs), requesting an extension to the deadline for filing the Defence, and asking for copies of documents allegedly referred to in the PoC. On 11 July 2023, Simmons & Simmons asked whether Fieldfisher considered that that firm was properly authorised to act for D, given the wider dispute between the shareholders. The same day, Charles Russell, solicitors for SPV21, wrote to Fieldfisher to suggest that the Original Shareholders did not have the authority to instruct Fieldfisher to act on behalf of D. On 13 July 2023, Fieldfisher responded to say that they considered themselves to have been properly instructed on behalf of D. However, they accepted there was now a dispute as to whether the board meeting on 19 June 2023 had authorised them to act on behalf of D. Until that dispute had been resolved, Fieldfisher indicated that they would be acting on behalf of directors of D appointed by the Original Shareholders only. They invited the Cs to apply for a stay of the proceedings until determination of that dispute as to the representation of D. After further correspondence between the parties, the Stay Application was issued by the Applicant on 31 July 2023. The various Cayman Proceedings Meanwhile, on 7 July 2023, SPV21 filed a petition in the Grand Court of the Cayman Islands seeking an order that D be wound up on just and equitable grounds, including on the basis that D's board is now deadlocked. I am told that the Original Shareholders unsuccessfully applied to strike out that petition, and intend to appeal that decision not to strike it out. There are also proceedings in the Caymanian Court against SPV21, seeking a declaration that the (purported) removal of KP Corporate from D's board was void or voidable and should be set aside. On 31 August 2023, the Applicant and the Original Shareholders issued proceedings in the Cayman Islands against D, SPV21 and all of the directors nominated by SPV21, seeking declaratory relief: (a) confirming the validity of the 19 June meeting; (b) confirming the validity of the instruction of Fieldfisher and (c) seeking the establishment of a sub-committee of the board of D to instruct Fieldfisher to defend the English claim. The last is the set of proceedings in the Cayman Islands which the Applicant originally said should be determined before the current litigation could proceed. However, there is said to be significant overlap in the factual matters in the various Caymanian actions and petitions. I understand the Applicant's position now to be that, in practice,

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