Joyvio Group Company, Ltd v Isidoro Ernesto Quiroga Moreno

Hearing dates: 5–6 June 2024

Approved Judgment

This judgment was handed down remotely at 10.30am on 3 rd October 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

Mr Nigel Cooper KC:

Introduction

The Defendants applied by an Application Notice dated 15 September 2023 (“the Application Notice”) for a stay of the claims brought in this action on the grounds that Chile is a more appropriate forum (“the Application”). By a further Application Notice dated 07 May 2024, the Defendants sought permission to amend the Application Notice to encompass a dismissal or strike out of the action in the alternative to a stay. The Claimants do not oppose the amendments sought by the Defendants but say that the Court should not order the striking out or dismissal of their claims in any event.

The Application Notice also contains applications (i) by the First Defendant for a stay under s.9 of the Arbitration Act 1996 of claims against him by the First to Third Claimants and (ii) by all the Defendants, for a case management stay in the alternative. These two applications are to be heard at a separate hearing on 08 October 2024. The parties agreed for the purposes of this Application that the Court will need to assume that the Chilean Courts are not “unavailable” on the grounds that the First to Third Claimants' claims against the First Defendant are subject to arbitration.

The Defendants submit that the present claims are overwhelmingly connected with Chile and have no real connection with England and say that the Chilean courts are clearly and distinctly the more appropriate forum. The Defendants further say that the Chilean courts are available and the Court is presented with a classic case in which this Court can and should decline jurisdiction in favour of the natural forum. The Claimants dispute that the Chilean courts are available and also dispute whether the Chilean courts are clearly and distinctly the more appropriate forum. The Claimants say that they have served the Defendants within this jurisdiction and are entitled to have their claims heard by the English courts.

Background

The background facts which are relevant for the purposes of this Application were largely common ground.

The Fourth Claimant, Australis, is a substantial Chilean company engaged in salmon farming, which was sold in 2019 (“the Sale”) pursuant to a Chilean law-governed stock purchase agreement (“the SPA”). The Fourth Claimant had a number of subsidiaries, which included the Fifth to Ninth Claimants (collectively, with the Fourth Claimant, “the Australis Claimants”).

At the relevant times prior to the Sale, the Australis business was owned and controlled by the Quiroga family (including Mr. Isidoro Ernesto Quiroga Moreno, the First Defendant), through various corporate vehicles (“the Sellers”). The Second and Third Defendants are both sons of the First Defendant and were directors of the Fourth Claimant (the Second Defendant was also a director of the Ninth Claimant) whilst the Fourth Defendant is the long-time manager of the Quiroga family office and was a director and (from 2016) Chairman of the Fourth Claimant.

Prior to the Sale, the Fourth Claimant owned nearly 90 salmonid concessions (known by their Spanish acronym “CES”) in Chile and employed more than 1600 people. Australis was a Chilean business in every sense; apart from a tiny marketing operation in Florida, the entirety of its business took place in Chile, whilst all decision making at board and management level took place in Santiago or in Puerto Varas (where Australis has its headquarters).

Chilean law relating to salmon farming requires each CES to submit a concession application containing a “technical project” or “PT” to the regulator which details the physical structures to be installed and the production programme to be implemented at that CES. The latter includes an annual stocking limit (i.e. the maximum number of juvenile salmon, known as smolts, stocked within the CES) and an annual projected harvest (being an estimated production figure by reference to mature salmon weight). Each CES must also obtain an RCA (an environmental qualification resolution) which replicates the estimated maximum production figure requested in the PT. Both the PTs and the RCAs are publicly available documents.

Events leading up to and including the Sale

During 2017 and 2018, the representatives of Australis and its owners were approached by third parties to consider possible business opportunities. One of those interested was Legend Holdings Corporation (“Legend”), a major Chinese investment group, acting through its food and agribusiness subsidiary, Joyvio, the First Claimant. The First and Second Claimants, both Chinese companies, and the Third Claimant, a Chilean company and indirect and wholly owned subsidiary of the Second Claimant, are referred to collectively as “the Joyvio Claimants”.

For the purposes of this Application, the key milestones relating to the Sale were as follows:

i) On 04 April 2018 Legend entered into a Chilean law NDA with Australis, following which various confidential information concerning its business was provided, including harvest projections and related information.

ii) On 18 November 2018 the Sellers and the First Claimant entered into a Chilean law “purchase promise agreement” (“PPA”) pursuant to which the First Claimant could acquire up to 100% of the shares in the Fourth Claimant, through a public takeover bid (the Fourth Claimant being a public company at that time). The price was USD 880 million, subject to adjustments.

iii) A formal due diligence process took place between 23 November 2018 and 17 January 2019. Joyvio was represented during this process by inter alia Chilean lawyers, PwC (as financial advisor), and by experienced Chilean salmon-industry professionals, including Mr José Gago (as negotiator and technical advisor). Between 08 and 14 December a team of around 10 representatives of Joyvio (including lawyers, financial advisors and accountants) visited Chile for the purpose of conducting interviews and site visits. Further, more than 10,000 documents were uploaded into a virtual data room (“VDR”). This included information concerning production limits, historic and projected harvest numbers, and various notifications received from regulators.

iv) Following due diligence satisfactory to Joyvio, the SPA (which superseded and replaced the PPA) was executed on 28 February 2019 in Santiago, Chile. Pursuant to the SPA the Sellers agreed to sell, and the Second Claimant agreed to acquire, up to 100% of the shares in the Fourth Claimant, with the First Claimant acting as guarantor of the Second Claimant's obligations. As is usual, the SPA contained various representations and warranties. The SPA also contained a widely drawn arbitration agreement.

Before completion, the Second Claimant assigned its rights and obligations under the SPA to the Third Claimant, a Chilean company and indirect (and wholly owned) subsidiary of the Second Claimant. Completion of the Sale took place on 01 July 2019, with the Third Claimant paying the purchase price to the Sellers.

Legal proceedings

Since the Sale, the Claimants have initiated various legal proceedings, against the Defendants and others, including:

i) arbitral proceedings commenced in Chile in January 2023 against the First Defendant and others pursuant to the arbitration agreement in the SPA (“the Arbitration”); and

ii) two criminal complaints (“the Criminal Complaints”) made against the Defendants (and others) in April 2023 and June 2023 by various of the Claimants, alleging “disloyal administration” of Australis (“the Disloyalty Complaint”) and fraud in respect of allegedly deliberate circumvention of Chilean environmental law (“the Fraud Complaint”).

There are also other proceedings including proceedings commenced by some of the Claimants in Florida and Delaware.

It is not in issue that both the Arbitration and the Criminal Complaints are born out of the same underlying facts as the present claims. Essentially, the Claimants allege that the Sellers and the Defendants engaged in a fraudulent scheme to breach Chilean environmental regulations through overproduction and by making false representations or concealing the same in connection with the Sale. Those allegations are denied by the Defendants who say that extensive disclosure was given of both the relevant production forecasts and the RCAs (which figures could therefore be compared with ease).

In the Arbitration, claims are brought by the First to Third Claimants against the Sellers and the First Defendant in contract, with damages and rescission in excess of USD 1 billion being sought. The Arbitration is already well progressed, with thousands of pages of memorials (including a Statement of Claim, Defence, Reply and...