Home Information Cases Dominion Petroleum Limited v Carlo Seidel (2008)

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Dominion Petroleum Limited v Carlo Seidel (2008)

Summary

Dominion Petroleum Limited (“DPL”) is an AIM listed exploration company incorporated in Bermuda. It has a subsidiary (“DPAdmin”) incorporated in England. Carlo Seidel (“CS”), who is resident in England, is/was a 16% (with 65 million shares) shareholder in DPL, a director and CEO of DPL, and a director/CFO of DPAdmin and with employment contracts with both DPL (with a Bermuda exclusive jurisdiction clause) and DPAdmin (with an English exclusive jurisdiction clause). On the AIM Placing in December 2006, CS entered into a Placing Agreement (which had a non-exclusive English jurisdiction clause) with DPL and others under which he agreed to restrictions upon all shares acquired as director/employee. In January 2007, the other directors of DPL talked and with the result that on 18 January 2007 DPAdmin sent a summary dismissal letter (based mainly on allegations that CS had blackmailed other shareholders into transferring 20.5 million shares to him and had sought monies from a co-director for another company in which he is involved) and DPL contended that it could dismiss under a cross-termination provision and that other provisions meant that CS ceased to be a director of either company. In August 2007, DPL’s shareholders passed a resolution to introduce Bad Leaver provisions (“BPL”) to acquire CS’s shares at nominal value. DPL commenced proceedings in Bermuda to enforce the BLPs and the Placing Agreement. DPL then sought injunctions in England in aid of the Bermudian proceedings under section 25 of the Civil Jurisdiction and Judgments Act 1982 (“Section 25”) to freeze CS’s shares pending resolution of matters in Bermuda. CS commenced proceedings in England against DPAdmin seeking declarations and other relief as to whether he still is (or has been wrongfully dismissed as) a director and employee. DPAdmin sought to stay those proceedings pending resolution of matters in Bermuda, while CS sought an Expedited Trial (and CS sought to join DPL to that litigation).

Facts

The decision may well be of interest to AIM investors (at least in Dominion). It included outline consideration of the company law requirements for there to be any dismissal at all, and also of lawfulness of BLPs (here introduced retrospectively and so as to effect expropriation i.e. not at “fair value”). However, the main interest may be in the Judge’s approach to the jurisdiction questions. He decided to hold that the Judgments Regulation did not “trump” (and probably virtually negate) Section 25 notwithstanding the width of the Owusu decision, but that forum non conveniens would result in a Section 25 jurisdiction not being exercised.

Held

(1) DPL had a sufficiently arguable case (notwithstanding numerous problems) to trigger the jurisdiction for an interim injunction under the BLPs but not in respect of the “blackmail” shares (as on DPL’s case they were not acquired by virtue of CS’s employment but by blackmail). The section 25 jurisdiction was not effectively abrogated by Article 2 of the Judgments Regulation and the decision in Owusu v Jackson so as to prevent the English court assisting the Bermudian proceedings (permission was given to appeal). DPL could have an injunction but only once it had provided £2.5million security for a cross-undertaking in damages

(2) DPL had an arguable case under the Placing Agreement but the non-exclusive jurisdiction clause (and the Judgments Regulation although the Judge. like other judges, did not decide whether it was mandatory) meant that the appropriate forum was England and so the English Court would refuse to assist the Bermudian proceedings

(3) DPAdmin did not satisfy the requirements for a “Reichhold” case management stay of the English proceedings and so the Expedited Trial would be ordered (although DPL would not be joined)

(4) most of the costs, as they related to the grant of interim relief (and where the eventual injunction was very different to that sought by DPL) would be adjourned for further developments.

Chancery Division
Norris J
Judgment date
7 March 2008
References

[2008] EWHC 633 

Practice areas