Order 29 of the Grand Court Rules and IGCF SPV 21 Ltd

• Jurisdiction: Cayman Islands
• Judge: Mr. Justice Segal
• Judgment Date: 20 July 2023
• Docket Number: CAUSE NO: FSD 0269 OF 2022 (NSJ)
• Court: Grand Court (Cayman Islands)

In the Matter of Order 29 of the Grand Court Rules

And in the Matter of IGCF SPV 21 Limited

Before:

The Hon. Mr. Justice Segal

CAUSE NO: FSD 0269 OF 2022 (NSJ)

THE GRAND COURT OF THE CAYMAN ISLANDS

FINANCIAL SERVICES DIVISION

HEADNOTE

Exclusive jurisdiction clause in a shareholders agreement governed by English law with respect to a Cayman company (A) stipulating that disputes arising out of or in connection with the agreement be litigated in Cayman or London – X, Y and Z own the shares in A — A owns a majority stake in a company incorporated in Pakistan (B) – B is a regulated utility company in Pakistan and the other shares in B are owned by the Government of Pakistan – the shareholders of B are subject to the terms of a sale and purchase agreement governed by Pakistan law — the sole voting share in X and interests in other shareholders of X were transferred and X sought to exercise its rights under the shareholders agreement to require A to appoint new directors to the board of B – Y and Z opposed such an appointment and commenced proceedings in Pakistan against X, A and B and the Government of Pakistan and the Pakistan regulatory authorities seeking orders against X and the Pakistan authorities – Y and Z also obtained an interim injunction against X – X claimed that the commencement of the proceedings in Pakistan were in breach of the exclusive jurisdiction clause and applied for a permanent injunction restraining X and Y from continuing with those proceedings

Appearances:

Graham Chapman KC instructed by Conal Keane of Dillon Eustace Cayman for the Applicant

Simon Birt KC instructed by Laura Hatfield and Richard Parry of Bedell Cristin Cayman Partnership for Al Jomaih Power Limited and Denham Investment Ltd.

Introduction

1 This is my judgment following the trial of the originating summons dated 25 January 2023 (the Summons) issued by IGCF SPV 21 Limited (the Applicant) in which it claims permanent injunctive and associated relief against Al Jomaih Power Limited ( AJP) and Denham Investment Ltd. ( Denham) (together the Respondents). The Applicant seeks a permanent anti-suit injunction to restrain the pursuit of proceedings (the Pakistan Proceedings) brought by the Respondents before the High Court of Sindh at Karachi, Pakistan (the Pakistan Court) which the Applicant claims were in breach of an exclusive jurisdiction clause that binds them (clause 25.2 of the SHA).

2 The background to and the basis of the Applicant's claim is set out in detail in my judgment dated 1 February 2023 (the Judgment) which explained my reasons for granting the Applicant's application (heard on 17 January 2023 – the Interim Hearing) for interlocutory (interim) injunctive relief restraining the further pursuit of the Pakistan Proceedings. I shall use the same definitions in this judgment as those set out in the Judgment (save for the definitions of the parties) and I shall not repeat the summary of the background to the dispute, the evidence, the SHA, the SPA 2005 and the proceedings in Pakistan which is set out therein.

3 Following the handing down of the Judgment an order was made on 30 January 2023 setting out the terms of the interim injunction and giving directions consequential on the Judgment, including for the filing and listing of the Summons and for the service of evidence in reply by the Applicant and of expert evidence in relation to relevant issues of Pakistan law (one expert for the Applicant and one for the Respondents). The Applicant filed evidence in reply by way of the Third Affidavit of Casey McDonald ( McDonald 3). The Applicant's expert is Mr Bilal Shaukat (a licenced advocate and managing partner of RIAA Barker Gillette, a law firm in Karachi) ( Mr Shaukat). The Respondents' expert is Justice Syed Zahid Hussain (a former Judge of the Supreme Court of Pakistan, and former Chief Justice of the Lahore High Court) (I shall refer to him as Justice Hussain even though he has now retired). Each expert has served a report (which I shall refer to as the Shaukat Report and the Hussain Report respectively) and the two experts have also completed and filed a joint memorandum (the Joint Memorandum), summarising the points on which they agree and disagree. However, there have been no reply reports. Both experts were cross-examined at the trial. While not having permission to do so, the Respondents also filed further evidence in response to McDonald 3 by way of a further affidavit, his second, sworn by Mr. Shan-e-Abbas Ashary ( Mr Ashary), a director of AJPL ( Ashary 2). The Applicant did not object to the Court giving such weight as it considered to be appropriate to Ashary 2 (subject to a properly sworn copy of Ashary 2 being filed and served after the hearing, which it was).

4 At the hearing, Mr Chapman KC again appeared for the Applicant while on this occasion Mr Birt KC appeared on behalf of the Respondents.

5 In summary, I have decided as follows:

• (a). the Applicant has established that the Respondents are in breach of clause 25.2 of the SHA as a result of having commenced and continued the Pakistan Proceedings against the Applicant, Alvarez and Marsal, KESP and KEL.

• (b). the Applicant has not established that the Respondents are in breach of clause 25.2 of the SHA as a result of having commenced and continued the Pakistan Proceedings against the Privatisation Ministry, the Energy Ministry, NEPRA and the SECP if and to the extent that the Respondents only apply for relief that requires those parties to exercise their duties, rights or powers in relation to KEL (or KESP) without challenging the steps taken by the Applicant as a KESP shareholder. The proceedings in Pakistan commenced by the Respondents must not seek to challenge or seek relief that will interfere with the actions taken by the Applicant as a KESP shareholder. Of course, the Pakistan authorities in exercising their rights and powers with respect to KEL (and possibly KESP), may impact on the ability of KESP to put into effect the instructions and decisions made by its shareholders (and thereby indirectly affect the exercise of the Applicant's rights as a KESP shareholder). That is unobjectionable because the Applicant's rights under the SHA are against the Respondents and KESP and do not override KESP's obligations under the SPA and Pakistan law. But the Respondents cannot be permitted indirectly to do that which they are not permitted to do directly and so cannot formulate their claim against the Pakistan authorities in a way that seeks to put in issue matters covered by, and the validity of, the exercise by the Applicant of rights granted by the SHA. Paragraph 5 of the prayer in the Plaint is unobjectionable. Paragraph 8 should be clarified to make it quite clear that the Respondents only seek an order that the Privatisation Ministry exercises such rights as it has under the SPA and the other Pakistan authorities exercise the powers they have under applicable Pakistan law in relation to KEL (and if appropriate KESP). It remains to be seen whether the Privatisation Ministry and the other Pakistan authorities will permit these claims to continue or challenge the Respondents' standing (in circumstances where the Respondents are not permitted to bring claims against the Applicant, KESP or KEL based on the SHA or a breach of the SPA which is said to arise because of the exercise of rights under or steps taken which are regulated by the SHA).

• (c). the Respondents have not established that there are strong reasons for refusing to grant an injunction.

• (d). in particular, they have not shown (a) that the Applicant has submitted to the jurisdiction of the Pakistan Court by taking a step in those proceedings going beyond a challenge to that court's jurisdiction or that the Applicant has conducted itself in a manner that is inconsistent with the contractual agreement for the Courts of either the Cayman Islands or England & Wales being the sole fora for the resolution of the dispute between the Respondents and the Applicant; (b) that in the event that the injunction is granted, there would be a material risk of a multiplicity of proceedings and of inconsistent findings such that it would be in the interests of justice to refrain from granting an injunction in order to allow the dispute between the Applicant and the Respondents to be litigated in one place (or that there are material benefits of one-stop shopping by having all disputes litigated before the Pakistan Court which would override the Applicant's prima facie right to enforce its contractual exclusive jurisdiction clause); (c) that the connections with Pakistan require or justify the refusal of an injunction to restrain the continuation of the Pakistan Proceedings (or that the interests of the Pakistan authorities require or justify a refusal of injunctive relief) or (d) that the Applicant impermissibly delayed its application for injunctive relief in this jurisdiction.

• (e). the Applicant is not entitled to an anti-suit injunction against the Respondents in respect of the proceedings against the Privatisation Ministry, the Energy Ministry, NEPRA and the SECP on the ground that such proceedings are vexatious or oppressive.

The shares in KESP, the Applicant's shareholders and the Transaction

6 At [5] of the Judgment, I noted that the Applicant and the Defendants are shareholders in KESP with the Applicant holding 53.8%, AJPL holding 27.7% and DIL holding 18.5% of the KESP shares and that KESP in turn holds a majority (66.4%) interest in KEL, an important Pakistani-incorporated utility company whose shares are listed on the PSX.

7 At [9] of the Judgment, I also noted that the Applicant had been incorporated by members of the Abraaj group for the purpose of acquiring shares in KESP and that the sole voting share in the Applicant was held by AIML with other non-voting shares in the Applicant being held (directly or indirectly) by the...