International Trading Holding Company Ltd v MED Trading Ltd

CourtEastern Caribbean Supreme Court
Docket NumberBVIHCMAP2020/0002
JudgeFarara JA
Judgment Date11 Feb 2021
JurisdictionCaribbean States
Neutral Citation[2021] ECSC J0211-2
[2021] ECSC J0211-2

THE EASTERN CARIBBEAN SUPREME COURT

IN THE COURT OF APPEAL

Before:

The Hon. Mde. Louise Esther Blenman Justice of Appeal

The Hon. Mr. Paul Webster Justice of Appeal [Ag.]

The Hon. Mr. Gerard St. C. Farara, QC Justice of Appeal [Ag.]

BVIHCMAP2020/0002

Between:
[1] International Trading Holding Co. Limited
[2] Intraco UAE Limited
Appellants
and
MED Trading Limited
Respondent
Appearances:

Mr. Andrew Willins for the Appellants

Mr. John Carrington, QC for the Respondent

Interlocutory appeal — Summary judgment — Refusal of application for summary judgment — Test of summary judgment — Realistic prospect of defending claim — Whether learned judge erred in refusing application for summary judgment — Whether learned judge misapplied the test of summary judgment — Permission to file amended defence and counterclaim — Whether learned judge erred in exercise of discretion in granting permission to file amended defence and counterclaim — Validity of shareholder resolution amending articles of association — Interpretation of arbitration clause in articles of association — Whether judge erred in concluding that there were questions of law and fact better suited for determination at trial

The appellants, (“ITHC” and “Intraco”), and the respondent, (“Med Trading”), are companies incorporated under the laws of the Territory of the Virgin Islands (“BVI”), which are involved in a series of interconnected court proceedings in Dubai, started by Med Trading in 2013. ITHC is the majority shareholder of Intraco. Med Trading is one of four shareholders in ITHC.

At the time of its incorporation in 2001, ITHC's articles of association contained an arbitration agreement that provided for the resolution, by arbitration, of all disputes between ITHC and its shareholders regarding the declaration and payment of dividends. However, in 2018, ITHC purported to adopt a new amended and restated memorandum and articles of association, including a stipulation for disputes between ITHC and its shareholders to be dealt with in accordance with the BVI IAC Arbitration Rules (“the 2018 ITHC Arbitration Agreement”). These amendments were purportedly effected by two written resolutions, one of which was signed by three out of ITHC's four shareholders. As to the fourth shareholder, Med Trading, the execution section of the resolution records the words ‘not available to sign’.

In 2019, ITHC and Intraco filed a claim in the Commecial Division of the High Court of Justice against Med Trading seeking, inter alia, in the ITHC claim, a declaration that the 2018 ITHC Arbitration Agreement is binding on the Med Trading and, in the Intraco claim, a declaration that as Med Trading is not a shareholder of Intraco it has no right t or entitlement to receive dividends from Intraco; and an anti-suit injunction restraining Med Trading from commencing or pursuing any further claims or proceedings against ITHC in respect of any dispute falling within the articles other than by arbitration in accordance with the BVI IAC Arbitration Rules, as required by the 2018 ITHC Arbitration Agreement and, in the case of Intraco, an anti-suit injunction restraining it from commencing or pursuing any further claims and/or proceedings which are inconsistent with the terms of the declaration. Med Trading filed a defence to the claims, and the appellants applied for summary judgment against Med Trading pursuant to rule 15.2 of the Civil Procedure Rules 2000, seeking the same declaratory and injunctive reliefs sought in their respective claims, on the basis that Med Trading's defence disclosed no reasonable grounds for defending ITHC and Intraco's claim, and that Med Trading had taken a number of ‘abusive proceedings’ against them in Dubai which are inconsistent with BVI law and the 2018 ITHC Arbitration Agreement.

Subsequently, and without permission of the court, Med Trading filed an amended defence and counterclaim by which it challenged the validity of the 2018 shareholders' resolution on several grounds including, in relation to the claim by ITHC, that the 2018 shareholders' resolution was not circulated to Med Trading, that Med Trading was not given sufficient notice of the resolution, and that the 2018 amendments to the articles were oppressive and made for an improper purpose. By its amended defence, Med Trading also relied on an unparticularised defence of estoppel in relation to the claim by Intraco.

The application for summary judgment was refused by a judge of the Commercial Division of the High Court, who concluded that there were factual and legal issues, raised by both sides, which were not suited for determination on a summary judgment application. The learned judge also granted permission retrospectively to Med Trading to file its amended defence and counterclaim, and struck out Med Trading's estoppel defence in relation to the Intraco claim.

The appellants appealed the decision of the learned judge refusing to enter summary judgment and granting the respondent retrospective permission to file its amended defence and counterclaim.

The Court considered: (1) whether the learned judge erred in the exercise of his discretion by granting Med Trading retrospective permission to amend its defence and in deeming the amended defence and counterclaim filed without the permission of the court duly filed; (2) whether the learned judge, having struck out Med Trading's estoppel defence to Intraco's claim ought to have granted summary judgment in favour of Intraco for the declaratory and anti-suit injunctive relief it sought against Med Trading; (3) whether the learned judge erred in concluding that the validity of the 2018 shareholders' resolution and the legal effect of the 2018 Arbitration Agreement ought not be determined on summary judgment; (4) whether the learned judge wrongly held that Med Trading had a realistic prospect of establishing at trial that there was some improper purpose or oppression in relation to the 2018 amendment of ITHC's articles of association; and (5) whether the learned judge adopted an overly cautious approach to issues of construction and law on the summary judgment application and/or misapplied the test applicable to summary judgment applications.

Held: dismissing the appeal; affirming the order of the learned judge dismissing the appellants' application for summary judgment and permitting the respondent to file its amended defence and counterclaim; ordering costs to Med Trading to be assessed at no more than two-thirds of its costs in the court below, that:

  • 1. While there may have been some basis for complaint as to the lateness of the amended pleading filed by Med Trading, it was within the judge's power and discretion to permit Med Trading to file its amended pleading retrospectively, Med Trading having sought such permission during the hearing of the application for summary judgment. In accordance with the well-settled principles upon which an appellate court can review a judge's exercise of discretion, there is no basis upon which this Court ought to disturb or set aside the judge's order granting permission to amend, the exercise of which discretion was within the generous ambit of disagreement.

    Dufour et al v Helenair Corporation Ltd et al (1996) 52 WIR 188 applied.

  • 2. Where a claimant has established the right or interest upon which a declaration sought is based, it is wrong in principle to refuse to grant the declaration unless the claimant has done something or there exist special considerations which would disentitle him to the declaration, or some good reason why the court ought to exercise its discretion not to grant the declaration sought. In this case, the appellants have effectively delayed since the first action was brought by Med Trading before the courts in Dubai in 2013, in commencing any claim and in seeking declaratory or anti-suit injunctive relief against the respondent in the BVI; and is only seeking, at this stage, to obtain an order of this Court for the declared purpose of using it in the on-going (or any future) proceedings brought against the appellants by Med Trading in Dubai. Given the delay and the appellants' declared purpose, the declaration sought by Intraco is arguably academic as there exists currently no on-going proceedings before the courts in Dubai in which Intraco is a defendant, the claim against it in case 351/2020 having been dismissed on limitation grounds. The learned judge was therefore correct in declining to grant the declaration sought at this stage.

    Zamir & Woolf – The Declaratory Judgment 4 th Edition, Sweet & Maxwell (2011) at 4–17, 4–30 and 4–31 applied.

  • 3. The anti-suit injunction sought by Intraco depended on the grant of the declaratory relief which it sought. Accordingly, if it was not proper for the court to grant summary judgment for the declaratory relief sought by Intraco, then equally so, it would not have been correct, as a matter of principle, for the court to grant summary judgment for the anti-suit injunction. In any event, the court will only grant an anti-suit injunction where the proceedings in a foreign court, if pursued, would be vexatious or oppressive. Contrary to the appellants' argument, there was nothing unconscionable in Med Trading's pursuit of its claims before the courts in Dubai in circumstances where the laws of Dubai permit such a claim to be brought against ITHC and Intraco. The learned judge's refusal to grant summary judgment on Intraco's claim was therefore not plainly wrong and was, in any event, correct.

    Societe Nationale Industrielle Aerospatiale v Lee Kui Jak and another [1987] AC 871 applied.

  • 4. A resolution to amend ITHC's articles of association, must be passed by an ‘absolute majority’ of ITHC's shareholders, that is, by a majority of the total number of ITHC's shareholders entitled to vote, irrespective of the number of members who actually vote on the resolution. It is clear...

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