Origami v Pursuit Capital

JurisdictionCayman Islands
CourtGrand Court (Cayman Islands)
Judge(Cresswell, J.)
Judgment Date27 September 2012
Date27 September 2012
Grand Court, Financial Services Division

(Cresswell, J.)

ORIGAMI PARTNERS III LP
and
PURSUIT CAPITAL PARTNERS (CAYMAN) LIMITED, PURSUIT CAPITAL PARTNERS MASTER (CAYMAN) LIMITED and PURSUIT INVESTMENT MANAGEMENT LLC

N.F.R.C. Timms, Q.C. and S. Dickson for the plaintiff;

N.P. Dunne for the defendants.

Cases cited:

(1) Bank of Tokyo Ltd. v. Karoon, [1987] A.C. 45; [1986] 3 W.L.R. 414; [1986] 3 All E.R. 468, referred to.

(2) Boys v. Chaplin, [1971] A.C. 356; [1969] 3 W.L.R. 322; [1969] 2 All E.R. 1085; [1969] 2 Lloyd”s Rep. 487, referred to.

(3) Broome v. Cassell & Co. Ltd., [1972] A.C. 1027; [1972] 2 W.L.R. 645; [1972] 1 All E.R. 801, referred to.

(4) Castanho v. Brown & Root (U.K.) Ltd., [1981] A.C. 557; [1981] 1 All E.R. 143, applied.

(5) Deutsche Bank AG v. Highland Crusader Offshore Partners LP, [2010] 1 W.L.R. 1023; [2009] 2 All E.R. (Comm) 987; [2009] EWCA Civ 725, applied.

(6) Glencore Intl. AG v. Exter Shipping Ltd., [2002] 1 All E.R. (Comm) 1; [2002] CLC 1090; [2002] EWCA Civ 528, referred to.

(7) Masri v. Consolidated Contractors Intl. Co. SAL (No. 3), [2009]

Q.B. 503; [2009] 2 W.L.R. 669; [2008] 2 All E.R. (Comm) 1146; [2008] EWCA Civ 625, referred to.

(8) Metall & Rohstoff AG v. ACLI Metals (London) Ltd., [1985] E.C.C. 502; [1984] 1 Lloyd”s Rep. 598, referred to.

(9) OBG Ltd. v. Allan, [2008] 1 A.C. 1; [2007] 2 W.L.R. 920; [2007] 4 All E.R. 545; [2007] UKHL 21, referred to.

(10) Pan American World Airways Inc. v. Andrews, 1992 SLT 268; 1992 S.C.L.R. 257; [1993] I.L.Pr. 41, referred to.

(11) Phillips v. EyreELR(1870), L.R. 6 Q.B. 1, referred to.

(12) Phoenix Meridian Equity Ltd. v. Lyxor Asset Management S.A., 2009 CILR 342; further proceedings, 2009 CILR N[18], applied.

(13) Red Sea Ins. Co. Ltd. v. Bouygues SA, [1995] 1 A.C. 190; [1994] 3 W.L.R. 926; [1994] 3 All E.R. 749, referred to.

(14) Rookes v. Barnard, [1964] A.C. 1129; [1964] 1 All E.R. 367, referred to.

(15) Simon Engr. PLC v. Butte Mining (No. 2), [1997] I.L.Pr. 599; [1996] 1 Lloyd”s Rep. 91, referred to.

(16) Smith Kline & French Labs. Ltd. v. Bloch, [1983] 1 W.L.R. 730; [1983] 2 All E.R. 72, referred to.

(17) Société Nationale Indus. Aerospatiale v. Lee Kui Jak, [1987] A.C. 871; [1987] 3 W.L.R. 59; [1987] 3 All E.R. 510, referred to.

(18) Star Reefers Pool Inc. v. JFC Group Co. Ltd., [2012] 2 All E.R. (Comm) 225; [2012] 1 CLC 294; [2012] 1 Lloyd”s Rep. 376; [2012] EWCA Civ 14, applied.

Injunctions-anti-suit injunctions-injunction against foreign proceedings-court must have personal jurisdiction over respondent-if Cayman jurisdiction or arbitration agreement, may grant injunction to restrain breach-otherwise discretion to grant injunction if necessary in interests of justice-requires that threatened conduct ‘unconscionable’ and injunction protects applicant”s legitimate interest in existing Cayman proceedings-discretion to be exercised cautiously, having regard to injustice to respondent and principle of comity

Injunctions-anti-suit injunctions-injunction against foreign proceedings-not necessary in interests of justice if Cayman trial imminent and respondents will not take steps in foreign court to disrupt it-preferable if respondents seek postponement of foreign proceedings pending final Cayman judgment

The plaintiff brought proceedings in the Grand Court against the defendants for breach of contract.

The Russell companies (two now-defunct Irish companies and a Cayman company in liquidation) owned shares in the first defendant, which was the Cayman feeder fund to the second defendant, a Cayman master fund. The third defendant-the first and second defendants” Delaware investment manager-circulated a restructuring proposal to investors. The Russell companies disagreed with the proposal and applied to the Grand Court for inspectors to be appointed over the first defendant. Following a period of negotiation, a deed of settlement was entered into whereby the Russell companies would withdraw their application in exchange for redemption from the feeder fund. They were paid all but US$4,337,297.87 of the redemption money and the plaintiff, the Russell companies” alleged assignee, brought proceedings in the Grand Court against the defendants seeking repayment of the retained money, which the defendants opposed. The Grand Court set the final hearing for October 22nd and 23rd, 2012.

The defendants subsequently brought proceedings in a Connecticut court against inter alia the plaintiff and the Russell companies, seeking a

declaration that the purported assignment was illegal and in breach of contract, as well as damages. The defendants alleged that the Connecticut court was an appropriate forum for, and had jurisdiction to determine, such a dispute. The Connecticut court set October 4th, 2012 as the deadline for all parties to respond to the defendants” claims.

The plaintiff applied to the Grand Court for an anti-suit injunction restraining the defendants from pursuing the Connecticut proceedings and any other proceedings relating to issues to be determined in the Grand Court, submitting that (a) it would be unconscionable, vexatious and oppressive for the defendants to litigate in the United States an issue pending before this court; (b) permitting the Connecticut proceedings to proceed would result in injustice to the plaintiff; (c) requiring the dispute to be litigated in the Cayman Islands would not cause injustice to the defendants or deprive them of any legitimate juridical advantage; (d) since the redemption and assignment were both governed by Cayman law, the Islands were the natural forum for the resolution of the issues; and (e) an injunction was appropriate to protect this court”s own process and to ensure that its judgment would not be frustrated.

The defendants submitted in reply that (a) the Connecticut proceedings were properly and necessarily brought-relating to matters that took place in the United States involving US parties-and not unconscionable, vexatious or oppressive; (b) to the extent that issues of natural forum arose in relation to the Connecticut proceedings, these were for the Connecticut court to determine; (c) further, the issues were not bound to be litigated in the Cayman Islands, as there was no exclusive jurisdiction clause; (d) the juridical advantages the defendants obtained by bringing proceedings in Connecticut were legitimate; (e) the Connecticut proceedings had no material impact upon the Cayman proceedings and would not prejudice the plaintiff or risk frustrating the final judgment; (f) the two sets of proceedings were at widely differing stages-a final determination by the Grand Court was expected in the coming weeks, which would be made available to the Connecticut court well in advance of its making any determinations; and (g) it was not appropriate for this court to disregard comity and pre-empt the Connecticut court”s power to manage its own proceedings.

Held, refusing the application:

(1) The court set out the conditions for the grant of anti-suit injunctions. As they operated in personam, the court must have personal jurisdiction over the respondent to an application, i.e. it must be possible to serve process on the respondent. If there were a jurisdiction or arbitration agreement in favour of the Cayman Islands (or, possibly, another foreign court), the court could straightforwardly grant an injunction to restrain the respondent from bringing foreign proceedings in breach of that agreement. If there were no agreement, however, the court had a discretion to grant an injunction only if it were necessary in the interests of justice. This required that (i) the threatened conduct was ‘unconscionable,’ in the sense

of being vexatious or oppressive or an interference with the due process of this court; and (ii) there were existing proceedings in the Cayman Islands, as the natural forum, and the injunction was necessary to protect the applicant”s legitimate interest therein. Even if these conditions were satisfied, the court would exercise its discretion cautiously, having regard to any injustice to the respondent and the principle of comity, i.e. recognizing that judges of different legal systems could legitimately arrive at different answers, that it was not for this court to decide how a foreign court should determine the matter and that the stronger the foreign court”s connection with the parties and matter, the less readily this court should intervene (paras. 95–102).

(2) The court would not grant an anti-suit injunction restraining the defendants from pursuing the Connecticut proceedings, as it was not necessary in the interests of justice. Irrespective of whether the conditions for the grant of an anti-suit injunction not founded on any contractual agreement were satisfied, the court would refuse to exercise its discretion to grant the relief sought. As the Cayman trial was only a few weeks away, and it appeared that the defendants would not take any steps in the Connecticut proceedings in the meantime to prevent the plaintiff from obtaining a final Cayman judgment, an injunction was not necessary to protect these Cayman proceedings (paras. 113–116).

(3) Nonetheless, it was regrettable that the defendants had not taken any steps to extend the deadline for the plaintiff”s response in the Connecticut proceedings until after the Cayman trial date. A short postponement of the Connecticut proceedings-so that they did not advance until after the final Cayman judgment was available-would have been helpful. The court would therefore ask that the Connecticut court be given a copy of the present judgment with a view to procuring such a postponement and in order that the Connecticut court be made aware of the submissions in this proceeding (paras. 111–112).

1 CRESSWELL, J.: The plaintiff applies by ex parte summons on notice, dated September 4th, 2012, for injunctions preventing the defendants from pursuing proceedings they...

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