Amber Fund (Cayman) Ltd Plaintiff v (1) Saad Investments Company Ltd (in Official Liquidation) (a company incorporated in the Cayman Islands) 1st Defendant (2) Banque Syz & Company S.A. (a company incorporated under the laws of Switzerland) 2nd Defendant

• Jurisdiction: Cayman Islands
• Judge: The Hon. Anthony Smelllie
• Judgment Date: 12 July 2012
• Court: Grand Court (Cayman Islands)
• Docket Number: CAUSE NO: FSD 225 of 2010(CJ)
• Date: 12 July 2012

Between

Amber Fund (Cayman) Ltd

Plaintiff

and

(1) Saad Investments Company Limited (In Official Liquidation) (a company incorporated in the Cayman Islands)

1st Defendant

(2) Banque Syz & Co. S.A. (a company incorporated under the laws of Switzerland)

2nd Defendant

[2012] CIGC J0121-1

Before

The Hon. Anthony Smelllie, CHIEF JUSTICE

IN CHAMBERS

CAUSE NO: FSD 225 of 2010(CJ)

IN THE GRAND COURT OF THE CAYMAN ISLANDS

RULING

1 Amber Fund (Cayman) Ltd. (“the Fund”) applies for interpleader relief. Its interpleader action is brought in respect of what the Fund regards as the competing and adverse claims if SAAD Investment Company Limited (‘SICL’), a Cayman Islands Company in official liquidation, and Banque SYZ & Co, S.A (Banque SYZ), a Bank incorporated under the laws of Switzerland and carrying on business in Switzerland (together ‘the Defendants’). The Fund seeks the Court's leave to pay the amount underlying the competing and adverse claims into Court (the ‘RedemptionProceeds’ to be explained below), in escrow, or to one of the Defendants as trustee pending resolution of the dispute between them. In doing so the Fund seeks to discharge itself from any outstanding obligation in respect of the Redemption Proceeds. In addition, the Fund seeks leave to effect substituted service on Banque SYZ within the jurisdiction by way of substituted service or alternatively, leave to serve Banque SYZ out of the jurisdiction. Service is sought so as to join Banque SYZ in the interpleader proceedings and so as to ensure that it is bound by the outcome. In addition, the Fund seeks leave to serve the proceedings locally on SICL and for those purposes leave to commence the interpleader proceedings against SICL under Section 97 of the Companies Law, SICL being a company in liquidation.

Background

2 The Fund is a Cayman Islands” domiciled mutual fund and exempted limited liability company incorporated in 2005 under the laws of the Cayman Islands and has carried on business regulated by the Cayman Islands Monetary Authority (CIMA). The Fund is an offshore feeder fund in a master-feeder structure, in relation to which the master fund, Amber Master Fund (Cayman) SPC, and the onshore feeder, Amber Fund LP, are both in liquidation or receivership and there is no prospect of any future investment by either feeder fund into the Master Fund. In the course of winding up its business, the Fund has satisfied the claims of its known creditors and made distributions of capital in accordance with the provisions of its Articles of Association.

3 The competing and adverse claims by SICL and Banque SYZ are in respect of 3,429.584391 class U-3/2 shares of the Fund (“the Shares”), registered in the name ofBanque SYZ, that were redeemed on 26^th August 2010; that is: the Redemption Proceeds. It is, however, common ground that the Shares and/or Redemption Proceeds represent SICL's investment in the Fund made on its behalf by Banque SYZ. The Redemption Proceeds, currently held by the Fund in cash in the amount of USD130,000 in a Cayman Islands bank account, represent the only outstanding payment to be made in connection with the Fund's wind-down process. Following payment out of the Redemption Proceeds, the directors intend to recommend a resolution to the shareholders to put the Fund into dissolution at the earliest opportunity. Accordingly, the competing claims of SICL and Banque SYZ (as well as the existence of a worldwide Freezing Order (the ‘WFO’) to be discussed below) are preventing the Fund from following its intended course of dissolution.

4 Banque SYZ asserts that it is entitled to payment of the Redemption Proceeds in its capacity as the legally registered holder of the Shares. For their part, the joint official liquidators of SICL (the “JOLs”) claim that the shares are beneficially owned by SICL pursuant to a custodian agreement entered into with Banque SYZ and that SICL is entitled to payment of the Redemption Proceeds by the Fund, notwithstanding Banque SYZ's refusal to recognise the authority of the JOLs under Swiss Law, which Banque SYZ asserts governs the custodian agreement.

5 The Fund seeks leave, pursuant to GCR O. 11, r.1(1)(i), to serve Banque SYZ out of the jurisdiction or alternatively by substituted service (in practice, by service in person on its Cayman Islands legal representatives, Appleby). The Fund has indicated that service out of the jurisdiction upon Banque SYZ would engage the Hague Convention on Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (the “Hague Service Convention”) and that that process wouldtake several months to complete. Further, the Fund has only one remaining asset, the Redemption Proceeds, which is at risk of being dissipated by further delay and expense.

6 The parties agree that the Redemption Proceeds are beneficially owned by SICL and that, as such, they come within the ambit of the WFO made by this Court on 24^th July 2009, as varied on 4^th September 2009. The WFO prohibits any person having notice of its existence from assisting in ‘The removal of any [of SICL's] assets located in the Cayman Islands up to the value of US$9.2 billion. …assets whether or not they are in the name of [SICL], whether they are solely or jointly owned and whether [SICL] is interested in them legally, beneficially or otherwise.’

7 Being on notice of SICL's beneficial interest in the Redemptions Proceeds, the Fund is prevented at pain of penalty from paying the Redemption Proceeds to Banque SYZ by the terms of the WFO which further provide that:

‘It is a contempt of court for any person notified of this order knowingly to assist in or permit a breach of this order. Any person doing so may be imprisoned, fined or have their assets seized.

8 The Fund is well advised that this is the case, notwithstanding the existence of a “Non-Recognition of Trusts” provision in the Fund's Articles of Association, in the following terms:

‘The Company shall not be bound by or compelled to recognise in any way (even when notified) any equitable, contingent, future or partial interest in any Share, or (except only as is otherwise provide by these Articles or the Statute any other right in respect of any Share other than an absolute right to the entirety thereof in the registered holder.’

9 It is to be noted however that a 4^th September 2009 variation (the “Variation Order”) to the terms of the WFO, appears to allow for payments to be made to the JOLs (on behalf of SICL) in appropriate circumstances. Specifically, the Variation Order states that:

‘Nothing in this order shall operate to prevent or restrict in any way steps taken by or under the Provisional Liquidators and/or Official Liquidators appointed in respect of [SICL]’.

10 As noted above, SICL is a company incorporated under the laws of the Cayman Islands and a member of the Saad Group of Companies (headquartered in Saudi Arabia) (The “Saad Group”). The Saad Group was formed in 1980 by Mr. Maan Al-Sanea. By an order dated 18^th September 2009, the JOLs were appointed with the power inter alia;

• (a)to bring or defend any action or other legal proceedings in the name and on behalf of SICL.

• (b)to carry on the business of SICL so far as may be necessary for its beneficial winding up; and

• (c)to take possession of, collect and get in the property of SICL for that purpose take all such proceeding as they consider necessary.

11 The JOLs are of the opinion that, on the documents that they have seen, Banque SYZ at all material times acted as SICL's nominee and custodian in respect of the investment. This is a natural inference to be drawn from the documents that have been made available to the JOLs, particularly the custodian agreement and portfolio valuations. [It is noted that the JOLs have indicated that they have not been provided with the nominee agreement, subscription agreement or any other documents which could be considered to govern the relationship between SICL and Banque SYZ].

12 The JOLs have requested that Banque SYZ, as SICL's custodian and nominee, instruct the Fund to pay the Redemption Proceeds to the JOLs, as the Court appointed liquidators of SICL. However, to date, Banque SYZ has not complied with this request.

13 Banque SYZ, via its legal representatives Appleby, has been provided with a copy of the WFO. Banque SYZ's position, as communicated by Appleby, is that neither the appointment of the JOLs nor the WFO has any application in respect of the Redemption Proceeds or any instructions Banque SYZ might give the Fund to pay over Redemption Proceeds. Accordingly, Banque SYZ has refused to instruct the Fund to procure the payment to SICL.

Interpleader

14 Interpleader relief falls within the ambit of GCR O. 17, r.1 which provides;

‘Entitlement to relief by way of interpleader

1. Where-

• (a) A person is under a liability in respect of a debt or in respect of any money, goods or chattel and he is, or expects to be, sued for or in respect of that debt or money or those goods or chattels by two or more persons making adverse claims thereto; or

• (b) Claim is made to any money, goods or chattels taken or intended to be taken by the Bailiff in execution under any process, or to the proceeds or value of any such goods or chattels, by a person other than the person against whom the process is issued

The person under liability as mentioned in subparagraph (a) or (subject to rule 2) the Bailiff may apply to the Court for relief by way of interpleader.

15 And Order 17 r.5 provides:

• (i) Where on hearing the summons under this order all the persons by whom adverse claims to the subject matter in dispute (hereafter in this Order referred to as ‘the claimants) appear, the Court may order —

  • (a) That any claimant be made a defendant in any action pending with respect to the subject matter in dispute in substitution for or in...