ICS INCORPORATION LIMITEDMICHAEL WILSON & PARTNERS Ltd and 6460 of 2003 ICS; INSPECTION and CONTROL SERVICES Ltd and The INSOLVENCY ACT 1986 BetweenICS

JurisdictionEngland & Wales
JudgeMr Justice Lawrence Collins
Judgment Date17 March 2005
Neutral Citation[2005] EWHC 404 (Ch)
Date17 March 2005
CourtChancery Division
Docket NumberNo.6459 of 2003 and No.6460 of 2003 6460 of 2003

[2005] EWHC 404 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

COMPANIES COURT

Royal Courts of Justice

Strand

London WC2A 2LL

Before

Mr Justice Lawrence Collins

No.6459 of 2003 and No.6460 of 2003

6459 of 2003

6460 of 2003

In the Matter Of

Ics Incorporation Ltd

And in the Matter Of

The Insolvency Act 1986

Between
Ics Incorporation Limited
Applicant
and
Michael Wilson & Partners Limited
Respondent

And in the Matter Of

Ics, Inspection and Control Services Limited

And in the Matter Of

The Insolvency Act 1986

Between
Ics, Inspection and Control Services Limited
Applicant
and
Michael Wilson & Partners Limited
Respondent

Mr Lloyd Tamlyn (instructed by Herbert Smith) for the for the Applicants

Miss Birgitta Meyer (instructed by Healys) for the Respondent

Judgment Approved by the court for handing down (Subject to editorial corrections)

Hearing: March 2, 3, and 4, 2005

Mr Justice Lawrence Collins

I. The applications

1

Before the court are two originating applications issued by ICS Incorporation Ltd and ICS, Inspection and Control Services Ltd ("the UK ICS Companies") against Michael Wilson & Partners Ltd ("MWP"), seeking to restrain the presentation of winding-up petitions against either of the UK ICS Companies.

2

The UK ICS Companies are part of a group of companies ("the ICS Group"). The directors of ICS, Inspection and Control Services Ltd are Mr Bassam Khoury, Mr Tarek Sultan and Mr Alan Robinson. The directors of its parent company ICS Incorporated Ltd are Mr Khoury, Mr Sultan and Mr Nasser Al-Rashed.

3

The ICS Group is in the business of providing government agencies with access to a database of information to verify the price, quality and quantity of goods at point of importation and exportation as against those matters as declared by importers and exporters, by use of the ICS Price Information and Customs Audit Programme ("PICAP").

4

The latest accounts of the UK ICS Companies (to December 31, 2001) are heavily qualified and indicate a very substantial deficiency as a result of doubts about the recoverability of more than $20 million of trade debts. I was told by Mr Tamlyn, for the UK ICS Companies, that parent company debt accounts for much of the creditors, no doubt with the suggestion (but certainly no evidence) that there would be enough for ordinary creditors because the ICS Group would not let them go under.

5

In about early 2001, the ICS Group wished to tender for the provision of customs services, by PICAP, to the government of Kazakhstan. It decided that it was necessary to involve the services of Mr Raimbek Batalov, a businessman based in Kazakhstan, in this process, by way of a joint venture. He owns, or is ultimately interested in, a number of companies including, inter alia, McKellen Holdings Ltd, Raimbek JSC and (on the UK ICS Companies' evidence) Transnational Capital Ltd ("the Batalov Companies"). The joint venture operating company was eventually incorporated as Inspection and Control Services Kazakhstan LLP ("ICS Kazakhstan LLP").

6

MWP is a solicitors' practice, the principal director of which is Mr Michael Wilson. It is incorporated in the British Virgin Islands, and is based in the city of Almaty in Kazakhstan, but practises in other countries. MWP performed substantial legal services in connection with the joint venture.

7

The relevant MWP invoices were originally addressed to Transnational Capital Ltd, and ICS Kazakhstan CJSC or ICS Kazakhstan LLP. The three largest invoices were addressed to Transnational Capital Ltd: US$405,386 in January 2002; US$126,361 in March 2002; and US$165,355 in May 2002. The first invoice to be addressed to either of the UK ICS Companies was in June 2003, when US$3,817 was billed. A further US$13,808 was billed in October 2003.

8

On September 19, 2003 MWP served statutory demands at the registered offices of each of the UK ICS Companies. In each of those demands, the amount alleged to be due and owing by the UK ICS Companies is US$1,133,044.18. The UK ICS Companies are alleged to be jointly and severally liable for the alleged debt, which represents the legal fees of MWP alleged to have been incurred between about January 23, 2001 and September 8, 2003 in respect of the joint venture in Kazakhstan.

9

The invoices originally addressed to Transnational Capital Limited and ICS Kazakhstan CJSC or ICS Kazakhstan LLP were re-issued and sent addressed to the UK ICS Companies on October 7, 2003.

10

The UK ICS Companies allege that neither of them is liable for the alleged debt, or any part of it. They claim that if the debt is owed by anyone, it is owed by its co-joint venturer Mr Batalov, or one or more of the Batalov Companies.

11

The originating applications were issued on October 9, 2003. Undertakings were given by MWP at a hearing on that day before Lightman J not to present petitions pending the final determination of the applications, and directions for the further determination of the applications were given. Those directions were in part varied by a number of orders. On 13 December 2004, after the filing of the evidence in support, answer and reply, Mr Registrar Baister, on the application of MWP, opposed by the UK ICS Companies, gave MWP permission to file further evidence in rejoinder, and the UK ICS Companies permission to file evidence in surrejoinder thereafter. As a result the evidence before the court for an application of this nature is now immense, and no doubt the costs are enormous.

12

The only issue on these applications is whether the UK ICS Companies can demonstrate that the alleged liability for the debt claimed in the demands is subject to a substantial or bona fide dispute. Even if the dispute is "shadowy", an injunction should normally be granted if any part of the alleged debt is due, even if the court is not in a position to determine the exact amount of the debt due to MWP.

II The joint venture

13

In setting out the background, I should make explicit what should in any event be plain, namely that I am making no findings of fact in this or any part of this judgment.

14

Mr Sultan says that he was first introduced to Mr Batalov in around April or May 2001 by the previous owner of the ICS Group who had been working with Mr Batalov on the proposed joint venture. He understood that Mr Batalov was a very successful and well connected businessman in Kazakhstan with lots of experience in dealing with the Kazakhstan government. The ICS Group was keen to join forces given Mr Batalov's contacts and business acumen.

15

Mr Batalov's task, as the Kazakhstan-based joint venture partner, was to procure the award of the contract for the provision of such services to the joint venture, and use his political and local knowledge of and expertise in relation to the Kazakhstani authorities to promote the interests of the joint venture.

Tender for Service contract

16

On May 16, 2001, the Kazakhstan government announced a tender for submission of offers for the award of a service contract for the provision of customs services to the government ("the Service Contract": sometimes referred to as "the TSA" or "the Price Contract" in the papers).

MOU

17

The first formalisation of the joint venture was by a Binding Memorandum of Understanding dated June 6, 2001 ("the MOU"). That was entered into, on the one hand, by three companies in the ICS Group, namely Public Warehousing Corporation KSC (a Kuwaiti company, the ultimate parent of the ICS Group), Inspection and Control Services Ltd (Bermuda) and one of the two UK ICS Companies, ICS Incorporation Ltd. The other party to the MOU was a company called MWP Corporate Finance Ltd ("MWPCFL"). The three ICS companies which were parties to the MOU will be called "the three ICS MOU companies."

18

MWPCFL is a company which is, according to Mr Wilson, "indirectly controlled" by Mr Wilson. Until Mr Wilson's most recent statement, it was apparently common ground that MWPCFL entered into the MOU as nominee for Mr Batalov, or one of the Batalov Companies.

19

The MOU recorded that the parties had agreed to form an incorporated joint venture in order to obtain a contract with the Kazakhstan government for the operation of PICAP. The parties agreed that the MOU was to serve as the basis for the formation of the joint venture companies below ICS Kazakhstan LLP (which was the company intended to enter into and operate the PICAP contract) and for the negotiation of definitive joint venture documentation to be concluded within 30 days of June 6, 2001. The parties agreed that, although ICS Incorporation Ltd had already formed and was the sole shareholder of ICS Kazakhstan LLP, the shares in that company were held on trust as to 50% for MWPCFL (i.e. Batalov/the Batalov Companies). ICS Incorporation Ltd agreed to transfer that 50% to MWPCFL, and to appoint nominees of MWPCFL to management positions and the board of ICS Kazakhstan LLP, with equal rights to management and control.

20

ICS Kazakhstan LLP was ultimately to be owned 50% between the three ICS MOU companies and the nominee of MWPCFL through one or more offshore holding companies.

21

The three ICS MOU Companies, on the one hand, and the nominee of MWPCFL, on the other, were to have equal representation on all of these joint venture companies, with appropriate deadlock provisions (clause 4). Clause 4 provided: "As a practical matter, however, it is envisaged that [the three ICS MOU companies] will take the lead in technical matters relating to the ICS PICAP Programme while [MWPCFL] will take the lead in matters relating to in-country and political issues."

22

Clause 5 provided, inter alia, that "[MWPCFL], with assistance from [the three ICS MOU companies], shall facilitate the entry into by ICS Kazakhstan LLP of a service contract (the 'Service Contract') with the Ministry of State Revenues of the Government of the Government of the...

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4 cases
  • Emmott v Michael Wilson and Partners Ltd
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 12 March 2008
    ...conduct of this and other litigation by judges in England (including me): ICS Incorporated Ltd v Michael Wilson & Partners Ltd [2005] EWHC 404 (Ch), at [82], [111]; Celtic Resources v Arduina Holdings [2006] EWHC 2553 (Comm), at [46]; Arduina Holdings v Celtic Resources [2006] EWHC 3155 (Co......
  • Arduina Holdings Bv v Celtic Resources Holdings Plc
    • United Kingdom
    • Queen's Bench Division (Commercial Court)
    • 10 October 2006
    ...about the conduct of MWP and also the observations of Lawrence Collins J in ICS Incorporation Limited v Michael Wilson & Partners Ltd [2005] EWHC 404 (Ch) that there were genuine issues about Mr Wilson's evidence in that case, I should not be prepared to take his word for anything or to acc......
  • Ross & Craig (A Firm) v Robert Williamson
    • United Kingdom
    • Chancery Division
    • 9 March 2006
    ...in the hearing in this case is the judgment of Lawrence Collins J. in ICS Incorporation Limited v. Michael Wilson & Partners Limited [2005] E.W.H.C 404 (Ch). 7 In this case, Ross & Craig plainly dispute the debt which Mr. Williamson asserts against the firm. The questions before me are whet......
  • Perfect Direct Ltd And Another v Dejin Resources Group Co Ltd
    • Hong Kong
    • High Court (Hong Kong)
    • 19 June 2015
    ...more appropriate forum. This principle was reflected by Lawrence Collins J in ICS Incorporation Ltd v Michael Wilson and Partners Ltd [2005] EWHC 404 (Ch) at paragraph 87 where he “Where there is a substantial dispute as to the whole of the debt (or, in other formulations, a bona fide dispu......

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