Christopher Moran Energy LTD for interdict and interdict ad interim (Court of Session)

Factual and Procedural Background

The Petitioner seeks interdict and interdict ad interim against Company A, its director, and a director of Company B. The Petitioner and Company A are partners in Company B, a joint venture company. Company B was served as an interested party but was not made a respondent. [1]

The dispute concerns memorandums of understanding relating to the construction of a windfarm in Scotland. The Petitioner alleges that these were entered into without proper authority and breached clauses 4.5, 4.7 and 5.6 of the shareholders’ agreement. [2]

The Respondents raised preliminary pleas challenging the jurisdiction of the Scottish courts, including exclusive jurisdiction and forum non conveniens. [3][4][5]

Legal Issues Presented

1. Whether the proceedings concerned the validity of Company B’s constitution, such that the courts of England and Wales had exclusive jurisdiction under Schedule 4, paragraph 11(b), of the Civil Jurisdiction and Judgments Act 1982. [3][4][6]
2. Whether the proceedings concerned the validity of a decision of a company organ and therefore fell within exclusive jurisdiction in England and Wales. [7][8]
3. Whether Scotland was an inappropriate forum under the doctrine of forum non conveniens. [9][10]

Arguments of the Parties

Respondents’ Arguments

• The courts of England and Wales had exclusive jurisdiction because the proceedings allegedly concerned the validity of Company B’s constitution. [3][4]
• The shareholders’ agreement and the relevant sub-committee were said to involve constitutional matters and the validity of decisions of Company B’s organs. [6][7][8]
• Scotland was said to be forum non conveniens, including because the Respondents might rely on estoppel and English estoppel might differ from the Scottish doctrine of personal bar. [9]

Petitioner’s Arguments

• The Petitioner accepted that proceedings challenging the validity of Company B’s constitution would belong in England and Wales, but argued that the petition instead sought to prevent conduct contrary to the shareholders’ agreement. [6]
• The Petitioner submitted that Scotland was the suitable forum because the windfarm, most witnesses, and apprehended wrongs were located there. It also argued that the relevant contractual and company-law principles were materially the same on both sides of the border. [9]
• The Petitioner noted that no corresponding English proceedings had been raised and that there was no evidence that litigation in England would be cheaper. [9][11]

Table of Precedents Cited

Court's Reasoning and Analysis

The Court examined the meaning of “constitution” in paragraph 11(b). Section 17 of the Companies Act 2006 was treated as useful guidance because it identifies articles and certain fundamental resolutions and agreements as constitutional documents. The common feature of those documents is that they are fundamental to the company’s structure or operation. [12][13]

The shareholders’ agreement had not been registered with Companies House, which supported the inference that it had not been regarded as constitutional when made. [14][15]

The Court considered the provisions relied upon by the Petitioner. Clauses 4.5, 4.7 and 5.6 dealt with board meetings, approval requirements, and the operating sub-committee. They were operational or administrative provisions, not provisions going to Company B’s constitution. The reference to an act being “null and void” did not alter that conclusion because the alleged nullity arose from breach of an operational requirement. [16][17][18]

The shareholders’ agreement itself distinguished between the agreement and the company’s constitution. The delegated services agreement was also treated as operational, and the Respondents had not identified any provision in either agreement that was constitutional in nature. [19][20]

The Court interpreted “validity of the constitution” in light of the neighbouring references to nullity and dissolution. Applying the ejusdem generis principle, it concluded that paragraph 11(b) concerned fundamental issues affecting a company’s makeup, rather than incidental arrangements governing its operations. [21][22]

The Court rejected the argument concerning decisions of company organs. Under Schedule 4, paragraph 4, proceedings concerning such decisions could be brought in Scotland; the provision did not confer exclusive jurisdiction on the courts of the company’s seat. [23][8]

Finally, the Court declined to stay or dismiss the petition on forum non conveniens grounds. The Scottish location of the windfarm, witnesses, and apprehended wrongs supported Scotland as a suitable forum. The possible relevance of estoppel was too uncertain to justify preventing the petition from progressing, and there was no evidence that England would be a cheaper forum. [9][11][10]

Holding and Implications

The Court repelled both of the Respondents’ preliminary pleas. It held that the petition was not subject to the exclusive jurisdiction of the courts of England and Wales and that the jurisdictional averments were sufficient for the petition to continue in Scotland. [5][24]

The case was put out by order for submissions on expenses and further procedure. The Court also directed that the parties clarify whether an interim order was sought. [24]

The decision permitted the Petitioner to elect to litigate in Scotland despite the shareholders’ and delegated services agreements conferring non-exclusive jurisdiction on the English courts. No broader implication beyond continuation of the Scottish proceedings was stated. [5]