Koza Ltd v Koza Altin Isletmeleri as
| Jurisdiction | England & Wales |
| Judge | Mr Justice Trower |
| Judgment Date | 28 July 2021 |
| Neutral Citation | [2021] EWHC 2131 (Ch) |
| Docket Number | Claim No HC-2016-002407 |
| Court | Chancery Division |
[2021] EWHC 2131 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
THE HONOURABLE Mr Justice Trower
Claim No HC-2016-002407
Claim No BL-2021-000516
Siward Atkins QC and Andrew Trotter (instructed by Latham & Watkins (London) LLP) for the Claimants
Jonathan Crow QC and David Caplan (instructed by Mishcon de Reya LLP) for the First to Fifth Defendants
Hearing dates: 17 th and 18 th May 2021
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 HONOURABLE Mr Justice Trower
The applications with which this judgment is concerned are made in two separate but linked actions. The first action in point of time was commenced by claim form issued on 17 August 2016 (the “2016 proceedings”). The second action was commenced more than 4 1/2 years later by claim form issued on 22 March 2021 (the “2021 proceedings”). Both actions relate to a dispute over the control of an English company, Koza Ltd (“Koza”), which was incorporated in March 2014 for the purposes of pursuing international mining operations.
In both actions the claimants are Koza and Hamdi Akin Ipek (“Mr Ipek”), Koza's sole director and the holder of one of its two “A” shares. Koza's only ordinary shareholder, Koza Altin Isletmeleri AS (“Koza Altin”), a Turkish listed company incorporated by Mr Ipek in 2005, is now the sole defendant in the 2016 proceedings and one of six defendants in the 2021 proceedings. Koza Altin is part of a group of companies founded by Mr Ipek's father which was, until 2015, managed under the ultimate control of the Ipek family. It seems that 41% of the ordinary shares in Koza Altin are still held directly or indirectly by members of the family.
The remaining defendants in the 2021 proceedings are the four existing Turkish directors of Koza Altin (the “individual defendants”), each of whom is resident in Turkey, and Persons Unknown, intended to be the persons who may be appointed as directors of Koza Altin from time to time. The principal issue with which these applications are concerned is whether the authority of the individual defendants to cause Koza Altin to take steps as a shareholder of Koza, should be recognised in England.
At the time of issue of the 2016 proceedings, there were five further individual defendants (the “trustees”) who had been appointed in Turkey as trustees in relation to Koza Altin. They are no longer parties to the 2016 proceedings in circumstances which I will describe in due course.
Background to the Dispute
The background to the dispute is complicated and contentious, but for present purposes can be stated quite shortly. The claimants contend that in 2013 President Erdogan and his Justice and Development Party, the AKP, began what they called his campaign to purge Turkey of a “parallel state” comprised of the Hizmet organisation of Fethullah Gülen, an Islamic preacher resident in the USA. At that stage some of the Koza-Ipek group's newspapers reported on corruption allegations against the AKP and President Erdogan himself.
On 1 September 2015, the Koza-Ipek group's Bugün newspaper published a story critical of the Turkish government claiming that arms were being transferred from Turkey to the Islamic state in Syria with the full knowledge of Turkish customs officials. On the same day there was a police search of the group's headquarters conducted under a search warrant issued by a judge of an investigating court known as a criminal peace judge. The allegations said to justify the search related to what were said to be unlawful transfers and receipts of money that had been acquired illegally. The illegality relied on included accusations that the Koza-Ipek group had financed and promoted terrorism, an offence that has a wide meaning in Turkish law.
Mr Ipek and the Koza-Ipek group contended that the search was part of a sustained campaign by the Turkish government to silence criticism made by its political opponents and to expropriate their assets. They sought to challenge the warrants, and contended that the allegations on which they were founded were wholly baseless. They were unsuccessful on grounds that are said by the claimants to be unconstitutional.
Shortly thereafter, steps were taken which had the effect of strengthening Mr Ipek's control of Koza. It allotted two newly issued £1 “A” shares to Mr Ipek and his brother and amended its articles of association to entrench the rights of the “A” shareholders. Pursuant to a newly formulated article 26, Koza's “A” shares now confer on their holders a class right by which certain resolutions (including a resolution to appoint or remove members of the board) cannot be passed without their consent.
At about the same time Koza took the first steps to preserve £60 million which had been introduced by Koza Altin in March 2014 by way of payment of a capital contribution for its ordinary shareholding and which was held in the Luxembourg branch of Garanti Bank, a Turkish subsidiary of the Spanish bank, BBVA. This led to proceedings in Luxembourg in the course of which Garanti Bank informed the Luxembourg court that the Luxembourg Financial Investigation Bureau had frozen the relevant accounts while they investigated allegations of financing terrorism. The trustees also took proceedings in Turkey to freeze the £60 million in Luxembourg and to cancel amendments to Koza's articles of association and the allotment of the “A” shares.
The next stage in what is said by Mr Ipek to be the Turkish government's campaign against him and his family was that, on 26 October 2015, Judge Yunus Süer, a criminal peace judge sitting in the 5 th Ankara Criminal Court of Peace, appointed a number of individuals, including the trustees, as directors of various companies in the group controlled by Mr Ipek, including Koza Altin. He did so pursuant to article 133 of the Turkish Criminal Procedure Code (“TCPC”), which permits the court to appoint trustees for the administration of a company with the aim of running its business. There must be strong grounds of suspicion that one or more of a number of scheduled crimes is being committed within the activities of the company and it must be necessary for revealing the factual truth during a criminal investigation or criminal case.
I shall revert later in this judgment to the criticisms made of the Süer judgment by the claimants, but in summary it is said by them to be contrary to Turkish law and corrupt. It is also said that the basis of the Süer judgment was the evidence of Professor Doctor Safak Ertan Çomakli, and that the report he prepared was both partisan and deeply flawed.
On 12 November 2015, an appeal against the decision of Judge Süer was determined on the papers by another criminal peace judge, Judge Savas Sahinbey, and rejected. Mr Ipek then appealed to the Turkish Constitutional Court and on 8 April 2016 filed an application with the European Court of Human Rights (“ECtHR”) seeking to challenge the appointment of the trustees as a breach of the European Convention on Human Rights (“ECHR”). The application to the ECtHR was declared inadmissible on 11 May 2017 for failure to exhaust all domestic remedies, and eventually, in a judgment delivered on 24 May 2018, Mr Ipek's appeal to the Turkish Constitutional Court was dismissed. Since that dismissal he has filed a further application with the ECtHR, seeking to challenge the appointment of the trustees. This was filed on 12 December 2018 and is still pending.
Meanwhile, on 28 October 2015, i.e. shortly after the Süer judgment, police entered the Koza Group media headquarters and shut down its media operations, albeit that the operations were subsequently resumed for a short period under the editorial control of the individuals who had been appointed to the relevant companies at the time the trustees were appointed in respect of Koza Altin.
More generally, the composition of the body of trustees appointed as directors of Koza Altin has changed from time to time. Thus, orders made by the criminal peace court on 13 January 2016 and 3 March 2016 increased and then reduced the number of trustees and directors of Koza Altin. By the time of the commencement of the 2016 proceedings, some but not all of the trustees were the same individuals as those appointed by the Süer judgment.
In July 2016 a state of emergency was declared in Turkey after the failure of an attempted coup. One of the consequences of this was that the Koza-Ipek media companies were shut down and their assets were transferred to the Turkish treasury. At about the same time the Luxembourg litigation in relation to the £60 million used to capitalise Koza came to a head. On 19 July 2016, the Luxembourg court ordered Garanti Bank to release the £60 million to Koza.
Steps were then taken by Koza Altin, as sole ordinary shareholder of Koza, to attempt to replace Koza's current board. On the day on which the Luxembourg order was made, Koza Altin, acting through the trustees, served notice under section 303 of the Companies Act 2006 (the “2006 Act”) seeking to require Koza to call a general meeting with...
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Koza Ltd v Koza Altin Isletmeleri as
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