Athena Capital Fund Sicav-Fis S.C.A. v Secretariat of State for the Holy See
| Jurisdiction | England & Wales |
| Judge | Lord Justice Males,Lord Justice Birss,Lord Justice Peter Jackson |
| Judgment Date | 26 July 2022 |
| Neutral Citation | [2022] EWCA Civ 1051 |
| Docket Number | Case No: CA-2021-003257, CA-2021-003257-A |
| Court | Court of Appeal (Civil Division) |
[2022] EWCA Civ 1051
Lord Justice Peter Jackson
Lord Justice Males
and
Lord Justice Birss
Case No: CA-2021-003257, CA-2021-003257-A
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Simon Salzedo QC (sitting as a Judge of the High Court)
Royal Courts of Justice
Strand, London, WC2A 2LL
Charles Samek QC & Tetyana Nesterchuk (instructed by Withers LLP) for the Appellants
Charles Hollander QC, Samar Abbas Kazmi & James Bradford (instructed by Hill Dickinson LLP) for the Respondent
Hearing date: 6 July 2022
Approved Judgment
Remote hand-down: This judgment was handed down remotely at 10.30am on 26 July 2022 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
The issue in this appeal is whether the judge was wrong to impose a case management stay of the appellants' claims for wide-ranging negative declarations, essentially to the effect that they have no liability to the respondent in connection with the sale to the respondent of an expensive property in London. Mr Simon Salzedo QC sitting as a Deputy High Court judge accepted that, if the appellants' claims are to be tried at all, they should be tried in England, but decided to impose a stay because the declarations claimed would serve no useful purpose. In short, that was because he took the view that the respondent had adopted a neutral position as to whether the appellants were under any liability and because the real dispute was not between the parties to this action but between the appellants and the prosecuting authorities responsible for the conduct of criminal proceedings against the fourth appellant in the Vatican City State.
The parties
The respondent/defendant (“the Secretariat”) is the Secretariat of State for the Holy See. It is a governmental unit of the Holy See, which is the jurisdiction of the Pope, the head of the Roman Catholic Church. The Holy See exercises sovereign jurisdiction over the Vatican City State, and is recognized as a foreign sovereign in international law. The Secretariat assists the Pope in the exercise of his office. It has various administrative roles as well as responsibility for diplomatic relations with other States.
The Office of the Promoter of Justice (the “OPJ”) is a separate emanation of the Holy See. It is responsible for investigating and prosecuting crimes on behalf of the state. It is not a party to this action and is independent of the Secretariat.
The fourth appellant/claimant, Mr Raffaele Mincione, is an individual holding Swiss and British nationality. He is a defendant to criminal proceedings brought by the OPJ in the Vatican City Court. He is accused of having misused his position as a financial adviser to the Secretariat in order to defraud it and embezzle money from it over a period of years going back to at least 2014.
For practical purposes Mr Mincione exercises control over the first and third appellants/claimants (“Athena Capital” and “WRM”), both of which are entities organised under the laws of Luxembourg engaged in investment management. The named second appellant/claimant (“RSS1”) is not in fact a separate legal person at all, but is a sub-fund of Athena Capital. In that capacity it was the sole legal and beneficial owner of all the issued shares in 60 SA-2 Limited, which was the sole legal and beneficial owner of all the shares in 60 SA-1 Limited, which was the sole legal and beneficial owner of all the shares in 60 SA Limited. 60 SA Limited was the legal and beneficial owner of a freehold property at 60 Sloane Avenue in London (the “Property”).
Athena Capital and WRM are not defendants to the Vatican criminal proceedings and are not themselves accused of wrongdoing in them, although they are named in the proceedings in connection with the allegations against Mr Mincione.
The facts
For the purpose of this appeal the following summary of the facts will suffice. Greater detail can be found in the judge's judgment.
The Transaction
Although the allegations faced by Mr Mincione in the Vatican criminal proceedings range more widely, the claims in this action are concerned with a transaction whereby the Secretariat became the indirect 100% owner of the Property (“the Transaction”). The Transaction can be summarised as follows.
Prior to the Transaction, the Secretariat held shares in a sub-fund of Athena Capital called the Global Opportunities Fund (“the GOF”), which held 45% of the units in RSS1. It held, therefore, an indirect interest in the Property. The circumstances in which it acquired this interest appear to be in issue in the Vatican criminal proceedings, but are not (or at any rate not yet) relevant in this action. According to the appellants, the Secretariat wanted to become the 100% owner of the Property and, to that end, it was agreed that it would purchase all the shares of 60 SA-2 from RSS1 for a consideration of £40 million plus shares in the GOF; it was agreed also that the Secretariat would act through a Luxembourg agent, Gutt SA.
The Transaction was implemented through several documents, including a Framework Agreement and a Share Purchase Agreement (“the SPA”).
The Framework Agreement was dated 22 nd November 2018. It was made between (1) Gutt SA as “Purchaser”, (2) Athena Capital as “Seller”, and (3) the Secretariat, represented by the Head of its Administrative Office, Mgr. Alberto Perlasca. Recitals to the Framework Agreement stated that the Property had become “a strategic asset” for the Secretariat, with “significant upside potential”; and that it was intended that a sale and purchase agreement would be concluded for a consideration consisting of a combination of cash and shares in the GOF so that the Secretariat would become the indirect 100% owner of the Property.
Clause 11 of the Framework Agreement provided for English law and the exclusive jurisdiction of the English courts:
“11.1. This Framework Agreement is governed by, and shall be construed in accordance with, the laws of England.
11.2. Any dispute arising in connection with this Framework Agreement shall be submitted to the competent courts of England.”
The Framework Agreement contained various acknowledgements, confirmations, agreements, waivers and releases by the Secretariat which were stated to be given not only to Athena Capital, but also for the benefit of its managers, principals, representatives and consultants. Although Mr Mincione is not named as a party to the Framework Agreement, it is the appellants' case (and was not disputed for the purpose of the application before the judge or this appeal) that he is entitled to enforce these terms pursuant to section 1 of the Contracts (Rights of Third Parties) Act 1999.
The SPA was dated 3rd December 2018. It was made between (1) Athena Capital as “Seller” and (2) Gutt SA as “Buyer”. It too provided in wide terms for English law and exclusive jurisdiction:
“11.1 This Agreement and any dispute or claim arising out of or in connection with it or its subject matter, existence, negotiation, validity, termination or enforceability (including non-contractual disputes or claims) shall be governed by and construed in accordance with English law.
11.2 Each Party irrevocably agrees that the Courts of England shall have exclusive jurisdiction in relation to any dispute or claim arising out of or in connection with this Agreement or its subject matter, existence, negotiation, validity, termination or enforceability (including non-contractual disputes or claims).”
The Vatican criminal proceedings
One of the allegations against Mr Mincione in the Vatican criminal proceedings is that, as a result of the corruption of Secretariat officials, the Transaction involved a very substantial overpayment by the Secretariat in order to acquire its 100% interest in the Property, with the surplus monies being diverted to the personal use of Mr Mincione and his associates. It is this allegation which has led to the present action in the English court. In a Letter Rogatory sent by the OPJ to the Swiss Federal Prosecutor on 19 th December 2019, the OPJ alleges that its investigations focusing on the Property have shown damage to the assets of the Secretariat quantified at no less than €300 million. Those investigations included a search of the Secretariat's offices on 1 st October 2019, the suspension of Vatican officials and, subsequently, the seizure of computers and documents in February 2020 from the home of Mgr Perlasca who had signed the Framework Agreement on behalf of the Secretariat.
These matters were widely reported in the Italian and international press. The Pope himself is reported to have described the Transaction as “a scandal”. Mr Mincione for his part has given press interviews defending the Transaction.
The OPJ sought to interview Mr Mincione about the Transaction and an interview was arranged for 19 th June 2020. However, Mr Mincione did not attend. Instead his lawyers filed what was described as a “Defence Brief” asserting his innocence of all the allegations against him and communicating that this action in England had been commenced, as it was by the issue of the claim form on 16 th June 2020. The Defence Brief continued:
“The aim of the action is to obtain a Declaratory Relief judgment which will achieve, among other things, the recognition and confirmation of the rights and obligations of each of the parties based on the Framework Agreement, the SPA, the Transfer...
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