Saad Investments Co Ltd (In Liquidation) v Maan Abdulwahed Abdulmajeed Al-Sanea (2011)
The court declined to set aside an order for service out of the jurisdiction of proceedings relating to a put option agreement and made a freezing order in support of the proceedings.
The applicant (D) applied to set aside an order giving the respondent (C) permission to serve proceedings out of the jurisdiction and C asked the court to grant a freezing order in support of its proceedings. D was a national and resident of Saudi Arabia. C was a company incorporated in the Cayman Islands which had been created to hold some of the offshore assets of D and his family. It had been placed into official liquidation in the Cayman Islands. D, as seller, had granted C a put option in relation to 32.6 million shares in a company whose shares were listed on the London Stock Exchange. The put option agreement contained an English law and jurisdiction clause. The agreement referred to a sale of shares beneficially owned by C, but also conferred on C an option under which it would receive a cash payment without any sale of shares. C brought proceedings on the agreement and obtained permission to serve them out of the jurisdiction. D applied to set aside the order giving permission on the basis that the put option exercise notice had not been properly served, the notice was invalid and that C's claim was bound to fail on the correct interpretation of the agreement. D argued that the words used in the agreement and the structure adopted envisaged an actual sale of shares and the option to receive cash was expressed to arise at the put option closing, a stage which by definition would only be reached if procedures which were designed to lead up to an actual sale were followed; C warranted that if a put option closing date was ever reached then on that date it would be the owner of the shares; on that construction of the agreement C's claim would be bound to fail as it admitted that at the put option closing date it did not own anything like the number of shares in question; its claim would also fail because the notice failed to do the things which were required in relation to an intended actual sale of shares, and because no put option closing took place in the way that might be expected if an actual sale of shares occurred.
(1) C had a reasonable prospect of successfully showing that the put option exercise notice had been served in time by delivering it to a post office box in Saudi Arabia. D criticised the content of the notice but there was a substantial argument that any criticisms that could be made did not invalidate it. D had strong arguments on the interpretation of the agreement. However, C had substantial arguments that the agreement was to be read in a way which would permit exercise of the cash option prior to the put option closing date, thereby making it unnecessary to comply with requirements which only made sense in the context of an actual sale of shares. In the circumstances C's claim had a reasonable prospect of success for the purposes of granting permission to serve out of the jurisdiction (see paras 10-22 of judgment). (2) C had shown such a risk of dissipation of assets as made it appropriate to grant a freezing order. There was a good arguable case that there had been failures to co-operate with the liquidators and also active steps taken by D deliberately in order to cause property belonging to companies in liquidation to be removed and withheld from the liquidators; failures to comply with court orders in the Cayman Islands; and a history of evading the service of process of foreign courts. The account of events since the appointment of the liquidators, if borne out, warranted intervention by the court to safeguard such assets as were known to exist (paras 34-35).