Preventing Abuse of Process: Joinder of Minority Shareholders under CPR 19.2(2)

Introduction

This commentary examines the Court of Appeal’s decision in Betta Oceanway Company v SC Tomini Trading SRL ([2025] EWCA Civ 595), delivered by Lord Justice Males (with whom Lady Justices Asplin and King agreed) on 8 May 2025. The dispute arose out of a cross-border debt claim and arbitration between two companies ultimately controlled by the same individual, Mr Nemr Diab. A former majority shareholder and director of the defendant company, Mr Georgios Vatistas, challenged the creditor’s claim as part of what he alleged was a scheme to strip him of his minority shareholding for no value. When he applied to be joined as a defendant under CPR 19.2(2), the High Court refused. On appeal, the Court of Appeal allowed joinder subject to security for costs, developing guidance on when it is “desirable” to add a third party in order to prevent an abuse of process.

Summary of the Judgment

The Court of Appeal held that:

Under CPR 19.2(2) the court has wide power to add a person as a defendant if it is “desirable” so that “all matters in dispute” can be resolved or an issue involving the new party and an existing party is connected to the proceedings.
Here, Mr Vatistas was directly affected by the claim because a declaration of Tomini’s debt would be used to depress the value of his shares in Romanian valuation proceedings, enabling the majority shareholder to acquire them for nothing.
There was a real risk of abuse of process, given that the claimant and defendant were controlled by the same individual and everyone agreed Tomini could not pay the debt it admitted.
The High Court judge had not addressed these features or the arbitral tribunal’s finding of abuse risk, and therefore had erred in refusing joinder.
Joinder was ordered, conditional on Mr Vatistas providing £400,000 security for costs, after which he must serve his statement of case and the Commercial Court will case-manage the proceedings.

Analysis

1. Precedents Cited

In re Pablo Star Ltd [2017] EWCA Civ 1768: CPR 19.2(2)’s phrase “matters in dispute” must be read broadly as “matters in issue,” so that persons whose rights may be affected can be joined even when there is no literal dispute between existing parties.
Stanhope [1994] BCC 84 & Blenheim [2000] BCC 554: The joinder power must be exercised with care—only those whose interests will be directly affected should be joined, not every indirect stakeholder.
Dunwoody Sports Marketing v Prescott [2007] EWCA Civ 461: Joinder powers extend even after judgment if rights remain to be adjudicated.
ED&F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472 and Okpabi v Royal Dutch Shell Plc [2021] UKSC 3: The court may test whether a case has real prospects of success and may refuse summary treatment where evidence is complex or disputed.
Lungowe v Vedanta Resources Plc [2019] UKSC 20: Summary disposal is inappropriate where a “mini-trial” would be required to resolve complex evidence.
In re Sprintroom Ltd [2019] EWCA Civ 932: The appeal court’s scope when reviewing a discretionary case-management decision is limited to errors of principle or failure to take material factors into account.

2. Legal Reasoning

Lord Justice Males structured the analysis around three questions: (1) What are the “matters in issue”? (2) Is it “desirable” that Mr Vatistas be added to resolve them? (3) Should joinder be ordered in the exercise of the court’s discretion?

He identified the central “matter in issue” as the existence and validity of the alleged debt of 194 million lei, which under the defendants’ admissions would go uncontested unless Mr Vatistas were joined. Citing Pablo Star, he held that “matters in issue” must be given a wide interpretation so as to allow all those affected to be heard.

On whether joinder was “desirable,” Males LJ found that the litigation was unusual: both parties were controlled by Mr Diab, and a declaration of debt would be used in Romania to value Mr Vatistas’s shares at zero. This feature, together with the arbitral tribunal’s similar concern about abuse of process, meant Mr Vatistas was directly affected and deserved the opportunity to contest the claim.

The judge below had relied on forum-conveniens, internal corporate governance (that only Tomini’s board could decide how to defend the claim), potential cost and complexity, and the availability of Romanian remedies. The Court of Appeal rejected those points:

The English court must determine if there is an abuse of its process.
Joinder does not usurp board authority: Mr Vatistas would not be running Tomini’s defence but challenging the entire scheme as fraudulent.
Practical complications and additional costs are inherent in multi-party litigation and manageable under the Overriding Objective.
If Mr Vatistas’s allegations are correct, denying him joinder would risk a false English declaration being used to mislead Romanian courts.

Finally, rather than strike out the proceedings for abuse, the appropriate “remedy” at this stage was to allow joinder, so that the court could conduct a full adversarial inquiry.

3. Impact on Future Cases

This decision clarifies that:

CPR 19.2(2) joinder powers must be given full effect where a third party’s rights are directly at stake, even if the existing parties agree on liability.
Court and arbitral tribunals alike will be vigilant to prevent single-person control of related entities from producing a façade of litigation, used to strip minority interests or secure judgments for ulterior purposes.
Courts will examine the real motive and commercial context of a claim, not merely its formal face, when deciding whether non-parties should be permitted to join.
Joinder may be made conditional on security for costs to ensure good-faith participation without exposing existing parties to open-ended expense.

Complex Concepts Simplified

Abuse of Process: Using court proceedings dishonestly or for an ulterior purpose rather than to resolve a genuine dispute.
Call Option: A contractual right to acquire shares at a determined price upon specified events (here, Mr Vatistas’s removal as director).
CPR 19.2(2): The Civil Procedure Rule allowing the court to add a new party if it is desirable to resolve matters in dispute or a connected issue.
Procedural Orders Nos. 5 & 6: LCIA tribunal directions requiring Betta to commence court proceedings and permit Mr Vatistas’s joinder to avoid a with-prejudice discontinuance.
Section 68 Arbitration Act: Allows challenge to arbitral awards on grounds of serious procedural irregularity. It did not apply to Order No. 6 as it was not an award.
Natural Forum: The most appropriate jurisdiction for resolving a dispute. The judge below regarded Romania as natural for shareholder disputes, but the appellate court held the abuse question belonged to the English forum.
Real Prospect of Success Test: A summary‐dismissal threshold requiring a case to have more than a fanciful chance of success.

Conclusion

The Court of Appeal’s decision in Betta Oceanway v Tomini establishes that where related companies controlled by the same person use English proceedings to obtain a declaration for ulterior purposes—here, to devalue and expropriate a minority shareholding—the courts will not allow such a “sham” litigation to proceed unopposed. CPR 19.2(2) must be interpreted purposively: third parties whose rights are directly implicated must be joined if “desirable” to ensure fair adjudication and prevent abuse of process. The decision underscores the court’s willingness to look beyond formal corporate structures, examine the real commercial context, and safeguard the integrity of English justice.