Koza Ltd v Koza Altin Isletmeleri as
|England & Wales
|Sir Julian Flaux C,Lady Justice Simler,Lord Justice Newey
|07 October 2022
| EWCA Civ 1284
|Case Nos: CA-2021-000042 and 000047
|Court of Appeal (Civil Division)
 EWCA Civ 1284
Sir Julian Flaux CHANCELLOR OF THE HIGH COURT
Lord Justice Newey
Lady Justice Simler
Case Nos: CA-2021-000042 and 000047
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICEs
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Royal Courts of Justice
Strand, London, WC2A 2LL
Andrew Scott KC and Andrew Trotter (instructed by Oakstead Solicitors) for the Appellants
Jonathan Crow KC and David Caplan (instructed by Mishcon de Reya LLP) for the Respondents
Hearing dates: 29 and 30 June 2022
The claimants appeal with the permission of Newey LJ against the Order of Trower J dated 8 September 2021 (i) dismissing the claimants' application in BL-2021-000516 (“the 2021 proceedings”, to which Appeal CA-2022-000047 relates) for permission to serve those proceedings out of the jurisdiction in Turkey and (ii) allowing the defendants' application in HC-2016-002407 (“the 2016 proceedings”, to which Appeal CA-2022-000042 relates) to summarily dismiss the claimants' application in those proceedings to strike out the defence and counterclaim.
The underlying dispute concerns the control of an English registered company, the first claimant (“Koza”), incorporated in March 2014 to pursue international mining operations. The second claimant, Mr Ipek, is Koza's sole director and the holder of one of its two “A” shares. The only ordinary shareholder is Koza Altin, a Turkish listed company incorporated by Mr Ipek in 2005. Koza Altin is now the sole defendant in the 2016 proceedings and the first defendant in the 2021 proceedings. There were originally five additional individual defendants to the 2016 proceedings (“the trustees”) who had been appointed in Turkey as trustees in relation to Koza Altin. Koza Altin is part of a group of companies founded by Mr Ipek's father which until 2015 was managed under the ultimate control of his family. The other defendants in the 2021 proceedings are the four Turkish directors of Koza Altin at the time that those proceedings were commenced and any other persons who may be appointed as directors. The principal issue in both sets of proceedings is whether the authority of those individual defendants to cause Koza Altin to take steps as a shareholder of Koza should be recognised in England.
Factual and procedural background
I gratefully adopt and summarise the judge's synopsis of the complicated background to the dispute set out at  to  of the judgment. The claimants contend that in 2013 President Erdogan and his party the AKP launched a campaign to purge Turkey of a “parallel state” consisting of the Hizmet organisation of Fethullah Gulen, an Islamic preacher resident in the United States. At that time some of the Koza group newspapers were reporting on corruption allegations against President Erdogan and the AKP. On 1 September 2015 the group's Bugun newspaper published an article critical of the Turkish government claiming that arms were being transferred to Turkey from Islamic State in Syria with the knowledge of Turkish customs. The same day there was a police search of the group's headquarters pursuant to a search warrant issued by a judge known as a criminal peace judge. The allegations which were said to support the warrant were of unlawful transfers of money acquired illegally, including financing by the group of terrorism, an offence with a wide meaning under Turkish law. Mr Ipek and the group contend that the search was part of a campaign by the Turkish government to silence political opponents and expropriate their assets. Their attempt to challenge the warrants on the grounds that the allegations were baseless failed.
Soon thereafter, Mr Ipek sought to strengthen his control of Koza which allotted two newly issued £1 “A” shares to him and his brother and amended the articles of association to entrench the rights of the “A” shareholders by conferring under article 26 a class right under which certain resolutions, including to appoint or remove members of the board, cannot be passed without their consent. Koza also took steps to preserve £60 million introduced by Koza Altin in 2014 as capital contribution for its ordinary shareholding, which was held in the Luxembourg branch of a Turkish bank, Garanti Bank. In proceedings in Luxembourg, Garanti Bank informed the Luxembourg court that the Luxembourg Financial Investigation Bureau had frozen the relevant accounts whilst investigating allegations of financing terrorism. The trustees also issued 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.
On 26 October 2015, a criminal peace judge in Ankara, Judge Suer, appointed a number of individuals including the trustees as directors of group companies including Koza Altin. This was done pursuant to article 133 of the Turkish Criminal Procedure Code (“TCPC”) which allows the court to appoint trustees to administer a company with a view to running its business. There have to be strong grounds for suspicion that one or more of a number of scheduled crimes is being committed within the activities of the company and the appointment of trustees must be necessary for revealing the factual truth during a criminal investigation or case. The claimants allege that the judgment of Judge Suer was corrupt.
On 12 November 2015 an appeal against that judgment was determined on the papers by Judge Sahinbey, another criminal peace judge, and dismissed. 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”) challenging the appointment of the trustees as a breach of the European Convention on Human Rights (“ECHR”). That application was declared inadmissible on 11 May 2017 for failure to exhaust all domestic remedies. By a judgment delivered on 24 May 2018, the appeal to the Turkish Constitutional Court was dismissed. On 12 December 2018 Mr Ipek filed a further application to the ECtHR which was still pending at the time that the judge's judgment was delivered on 28 July 2021. Since his judgment, the ECtHR has handed down judgment on 21 October 2021 dismissing that application. The defendants sought to put that judgment before this Court in an application to adduce fresh evidence. That application was not opposed and the parties made submissions as to the effect of that judgment with which I will deal hereafter.
Soon after the Suer judgment, the Turkish police entered the group's headquarters and closed down its media operations, although they resumed for a short period under the control of individuals appointed to the relevant companies at the same time as the trustees were appointed in respect of Koza Altin. In fact, the composition of the trustees appointed as directors of Koza Altin changed from time to time, by various orders of the criminal peace court. By the time the 2016 proceedings were commenced, some but not all the trustees were those appointed by the Suer judgment.
In July 2016 there was an attempted coup in Turkey which failed and a state of emergency was declared. The Koza media companies were shut down and their assets transferred to the Turkish treasury. At around the same time, on 19 July 2016, the Luxembourg court ordered Garanti Bank to release the £60 million to Koza. On the same day, Koza Altin, acting through the trustees, served notice under section 303 of the Companies Act 2006 seeking to require Koza to call a general meeting with a view to removing its directors including Mr Ipek and replacing them with three of the trustees. The trustees also sought to direct the board of Koza to freeze the £60 million in Luxembourg pending their own appointment as directors.
On 10 August 2016, Koza Altin, acting by the trustees, served a statutory notice under section 305 of the Companies Act convening a general meeting of Koza to be held on 17 August 2016 to pass the resolutions proposed in the section 303 notice. This was the catalyst for the 2016 proceedings issued on 17 August 2016 in which the claimants sought declaratory relief that the notices under sections 303 and 305 of the Companies Act were ineffective and an injunction restraining Koza Altin from taking any other steps to remove any director of Koza without “A” shareholder consent. The claimants contended that the resolutions in the section 303 notice cannot properly be moved because if passed they would be ineffective by reason of article 26 of the articles of association. It is convenient to refer to that head of claim, as did the judge, as “the English company law claim”. The 2016 proceedings also raised the so-called “old authority claim” under which the claimants sought an injunction to restrain the trustees from holding themselves out as having authority to act for or bind Koza Altin as a shareholder of Koza or permit the doing of anything as a shareholder of Koza in England including the service of the section 303 and 305 notices.
On 16 August 2016, the day before the 2016 proceedings were issued, the claimants obtained an ex parte interim injunction from Snowden J (as he then was) restraining the holding of the meeting called for by the section 305 notice. Snowden J also made an order for alternative service permitting the claimants to serve Koza Altin and the trustees by service on their solicitors, Mishcon de Reya, even though the...
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