PIAM v Upper Brook (A) Ltd & Ors (18 November 2019)

International sanctions were imposed by the United Nations in respect of Libya in 2011. The UN resolutions were given effect in the Cayman Islands through the Libya (Restrictive Measures) (Overseas Territories) Order 2011) (“the Order”). Article 10(4) of the Order provides that, absent a licence, a person shall not “deal with” funds or economic resources which are owned, held or controlled by a person designated under the Order. 

PIAM brought claims against three Cayman Islands investment funds, whose assets were frozen under the Order, and their directors. PIAM alleged that shareholder resolutions which replaced it as a director of the Cayman investment funds violated the international sanctions regime. PIAM’s case was that the exercise of voting rights to appoint and/or remove directors of a company constituted “dealing with” funds, or, alternatively, that the shareholder resolutions allowed access to, or enabled use, of the assets of the companies.

Both arguments were rejected at first instance by Justice Segal in a 223-page judgment handed down on 5 February 2019. That decision was upheld by the Court of Appeal (Field JA, Morrison JA and Beatson JA). The Court of Appeal concluded that “[t]he passing of the resolutions did not dissipate or affect the value or character of the shares as financial assets or the value of the underlying assets of the respondent companies in any way” and that “the exercise of the voting rights in the shareholder resolutions were not in themselves a dealing with the funds and did not in themselves allow access to or make a change that ‘would enable use’ of the assets of the companies” (§105). The appeal was dismissed on all grounds.

Dinah Rose QC and Jason Pobjoy acted for the Upper Brooks companies, instructed by Appleby (Cayman) Ltd.

Brian Kennelly QC acted for PIAM, instructed by Stewarts Law and Kobre & Kim.