Econet Wireless Ltd v Vee Networks Ltd and Ors
| Jurisdiction | England & Wales |
| Judge | THE HON MR JUSTICE MORISON |
| Judgment Date | 28 June 2006 |
| Neutral Citation | [2006] EWHC 1568 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2006/443 |
| Date | 28 June 2006 |
[2006] EWHC 1568 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Hon Mr Justice Morison
Case No: 2006/443
Mr Stephen Moverley Smith QC and Mr Richard Ritchie (instructed by Finers Stephens Innocent) for the Claimant
Mr Simon Browne-Wilkinson QC and Mr Andrew Mitchell and Mr Edward Levey (instructed by DLA Piper Rudnick Gray Cary) for the 1 st Respondent
Mr Ian Glick QC and Mr Mr Andrew Lenon (instructed by Linklaters) for the 22 nd Respondent
Mr Michael Brindle QC and Ms Veronique Buehrlen (instructed by DLA Piper Rudnick Gray Cary) for the 3 rd, 5 th to 14 th and 18 th to 21 st Respondents
Hearing dates: 25 May 2006
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
The Hon. Mr Justice Morison:
On 15 May 2006, Langley J granted a 'without notice' injunction against 21 Respondents in favour of the claimants, whom I shall call Econet. In my judgment, the injunction should never have been sought as it was, and should not have been granted. On an application by the 1 st, 2 nd, 5 th to 14 th and 18 th to 22 nd Respondents, [a company called Celtel Nigeria BV was added as 22 nd Respondent], on May 25 2006 I ordered that the injunction be lifted and these are the reasons for my decision.
Respondents 2 – 21 [the vendors] were, with Econet, shareholders in a Nigerian Company called VNL, the 1 st Respondent, then known as Econet Wireless Nigeria Limited. Their participation as shareholders was pursuant to a Shareholders' Agreement [SHA] made in April 200Under the SHA, Clause 17.2 provided as follows:
"17.2.1 In the event that any Shareholder shall decide to sell or transfer all or any part of its equity holding in EWN, it shall give written notice to the other Shareholders, setting forth in the full terms of such sale or transfer, including the sale price thereof, and give to the said Parties, the first right of refusal thereof.
17.2.2 The Shareholders receiving the notice shall exercise their first right and option of refusal within 15 (fifteen) days from the date of receipt of the notice and in the event that they or any combination of them decide to buy the offered shares, they shall pay the sale or such other agreed price within 30 (thirty) days from the date of the initial notice under Clause 17.2.1.
17.2.3 The Shareholders exercising the option shall be at liberty to agree inter se on the proportion of the transferred equity to be acquired by each of them and in the absence of such agreement, the transferred equity shall be allotted to them based on the proportion of their respective then current shareholding in the Company.
17.2.4 If the Shareholders receiving the notice fail to exercise their respective rights and option of refusal or refuse to buy the shares at the offered or any other negotiated price, the Party selling or transferring the shares shall sell the same to any interested third party provided that the sale price in that event must not be lower than the price for which the Shareholders receiving the notice were willing and ready to pay for the offered shares."
The governing law of the SHA was expressly stated to be Nigerian Federal Law. The Disputes Resolution clause provided for arbitration in Nigeria in accordance with UNCITRAL Rules, by three arbitrators appointed by The Chief Judges of the Federal High Court of Nigeria.
On about 15 April 2006 Celtel made an offer to buy the shares of the vendors for a price of some US$755 million together with vendors' put options worth about US$460 million, a total consideration of US$1.2 billion, and Celtel offered, in addition, to add to VNL's share capital by subscribing for 32.89 million shares for a total consideration of US$250 million. In accordance with clause 17 Econet were to be given the opportunity to match that offer and that was done by the Offer Letter dated 15 April 2006. By the Offer Letter, Econet were informed that the vendors were 'minded to accept' Celtel's offer and were giving Econet the right of first refusal in respect of their shares. Accordingly the letter confirmed that they were making an offer on the same terms, mutatis mutandis, as that made to the selling shareholders and VNL. It indicated that Mr Usoro was authorised to receive a signed and dated acceptance copy of the offer letter and that the opportunity to accept would expire on the 15 th day from the date when the letter was received. The letter confirmed that if the Offer were accepted then by no later than 30 days after receipt of the offer letter, Econet must credit the account of First Bank of Nigeria Plc "who shall act as escrow agent with the sum of US$1,215,823,497.60" failing which the offer was to be deemed void and of no effect. The offer letter was received by Econet on 18 April 2006 and it had annexed to it the Transaction Documents made between the shareholders and Celtel.
One of those documents was a Share Purchase Agreement made between the selling shareholders and Celtel under which it was provided that the obligations to sell and buy the shares would not become effective until either Econet rejected the offer in whole or in part, or failed to pay for the shares in accordance with the terms of the offer letter.
On 2 May 2006 Econet purported to accept, unconditionally, the offer of pre-emption. On 9 May 2006, Econet's Nigerian lawyers received the Transaction Documents with a confirmation that the "date limit for payment of the purchase price is 18th May 2006". Two days later Econet asked for an extension of time in which to pay since the Transaction Documents were not in an acceptable form to Econet and their financiers. The request for an extension of time was refused the next day. Econet's English lawyers then demanded that the Transaction Documents be put into proper form and provided to Econet by Monday 15 May 2006, at 7.00am otherwise the vendors should agree an extension of time. A further Email was sent late on Friday evening reiterating the request for the documents by first thing on Monday morning. This was followed by yet a further letter dated Saturday, 13 May 2006.
Thereafter the application to this court was prepared and presented to the Judge in the late afternoon. He indicated that he had only had a chance to skim read the affidavit of Mr Lombard who is responsible for the legal and commercial affairs department of the Econet Group. The evidence in that affidavit was said either to be in his own knowledge or "supplied to me by the source stated". At paragraph 31 he said:
"The Applicant has access to the funds to enable it to make the payment of US$1,215,823,497.60 subject to obtaining the Transaction Documents mutatis mutandis in executed form and subject to the appointment of an agreed escrow agent can then make the payment."
Econet had asked for the appointment of an escrow agent different from the First Bank of Nigeria plc with whom they were in dispute.
The basis of the application before the court
There was a draft of an Arbitration Claim Form which Econet undertook to issue and serve in the form of the draft (and this was issued the following day). There was an affidavit, sworn, plus exhibits. The claim form sets out the grounds of the application for relief. I can summarise them:
(1) Reference is made to the SHA and the reference there to an UNCITRAL arbitration in Nigeria.
(2) "Various disputes have arisen between [Econet] and various of the Respondents as to [Econet's] shareholding in.. VNL which are the subject of arbitration and/or legal proceedings in Nigeria."
(3) Details are given of Celtel's offer and the Offer Letter dated 18 April.
(4) "The following terms are to be implied into the contract resulting from acceptance of the offer letter from the Vendors:
(a).. the respondents acting by their agent … were to supply the Transaction Documents to [Econet] within a reasonable time.. [namely]..a sufficient period prior to the date for payment to enable (i) [Econet] to consider and approve the same and (ii) its bankers and funders to consider and approve the same and (iii) the parties to execute the same in time to arrange for the sum of US$1,215,823,497.60 to be credited to the escrow account in cleared funds
(b) The Offer constituted an implied if not express offer by VNL to issue the Subscription Shares to the Applicant on the same terms mutatis mutandis as the Celtel offer to subscribe for the same.
(c) Alternatively to (b), there was an implied term that if the Vendor's Offer was accepted by [Econet] the Vendors would procure that VNL enter into a Subscription Agreement and issue the Subscription Shares to [Econet] on the same terms mutatis mutandis as the Celtel Offer.
(d) that the Respondents and [Econet] would co-operate with each other to ensure the performance of the agreement and that neither party would do any act or thing which would prevent or hinder performance by the other.
Further or alternatively it was a condition precedent to [Econet's] obligation to make the payment by 5.00 pm on 18 May 2006 that it would be supplied by the Defendants with the Transaction Documents a sufficient period prior to the date of completion to enable (i) [Econet] to consider and approve the same (ii) its bankers and financiers to consider and approve the same and (iii) the parties to execute the same in time to arrange for the sum of US$1,215,823,497.60 to be credited to the escrow account in cleared funds."
(5) Reference was made to one of the Transaction Documents, namely the Share Purchase Agreement and to clause 23.2 which provided for disputes arising out of or in...
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