Sian Participation Corp (In Liquidation) (Appellant) v Halimeda International Ltd (Respondent) (Virgin Islands)
Case ID: JCPC 2023/0055
Jurisdiction: Court of Appeal of the Eastern Caribbean Supreme Court (British Virgin Islands)
Case summary
Issue
What is the correct approach to determining a creditor's winding-up application pursuant to section 162(1)(a) of the Insolvency Act 2003 (BVI) in circumstances where the debt is disputed and is subject to an arbitration agreement?
Facts
Sian Participation Corp (the "Appellant") is an indirect majority shareholder in Halimeda International Limited (the "Respondent"). Together, the companies form part of a group of companies which is beneficially owned by Mr Ziyavudin Magomedov through SGS Universal Holdings (BVI) ("SGS"). Another business owner, Mr Mikhail Rabinovich, holds a minority stake in the two companies indirectly through other companies which do not form part of the SGS group.
On 7 December 2012, the Appellant and Respondent entered into an intra-group facility agreement pursuant to which the Respondent provided a facility of up to US$150,000,000 to the Appellant (the "Facility Agreement"). Clause 14.1 of the Facility Agreement states that the parties shall refer any dispute regarding the Facility Agreement to arbitration (the "Arbitration Clause").
On 29 September 2020, the Respondent, in its capacity as the Appellant's creditor, filed an application in the High Court of the British Virgin Islands to appoint liquidators over the Appellant pursuant to sections 159(1)(a) and 162(1)(a) of the Insolvency Act 2003 (the "Winding Up Application"). The Respondent pleaded, among other things, that all loans made pursuant to the Facility Agreement were repayable on the termination date which fell on 31 December 2018. The Respondent requested payment on 20 February 2020, but the Appellant did not reply. By 15 September 2020, the principal sum plus interest due was approximately US$226,000,000.
In its notice of opposition filed on 27 November 2020, the Appellant pleaded that the Winding Up Application should be dismissed because it is as an abuse of process for a number of reasons, including because the Appellant was not insolvent, the debt was not due and owing and the Appellant had a cross-claim in damages on the basis of unlawful means conspiracy which was equal to or greater than the sums claimed by the Respondent. In its strike-out application filed on 30 January 2021, the Appellant pleaded that the Winding Up Application should be struck out because there was a dispute about the debt (on the basis of the cross claim in unlawful means conspiracy) to which the Arbitration Clause applies.
The High Court granted the Winding Up Application and ordered the Appellant to pay the Respondent's costs. The Appellant unsuccessfully appealed to the Court of Appeal. The Appellant now appeals to His Majesty in Council.
Parties
Appellant
Sian Participation Corp (In Liquidation)
Respondent
Halimeda International Ltd
Appeal
Justices
Lord Reed, Lord Lloyd-Jones, Lord Briggs, Lord Hamblen, Lord Burrows
Hearing start date
19 March 2024
Hearing finish date
19 March 2024
| Watch hearing | ||
|---|---|---|
| 19 March 2024 | Morning session | Afternoon session |