In a rare decree, the Maltese Courts have denied a demand for a warrant of prohibitory injunction due to the absence of a real connecting link with Malta.
On the 26th March 2024, SBK Art LLC, a sanctioned Russian subsidiary of Sberbank, applied to the Maltese Courts for a warrant of prohibitory injunction against six respondents, made up of one Maltese limited liability company called Open Pass Ltd, four Dutch companies, Fortenova Group STAK Stichting, Fortenova Group TopCo B.V., Iter STAK Stichting, and Iter Bidco B.V, and a Croatian citizen, Pavao Vujnovac.
SBK and Open Pass were both holders of securities in the Fortenova Group, a conglomerate with operations in food production, retail chain management and agriculture, directly operating in Southeast Europe, with its holding structure set up in the Netherlands. Through the injunction, SBK sought an order to restrain the sale of shares in the Fortenova Group to a newly incorporated Dutch structure, in which only non-sanctioned entities would be entitled to participate. As a sanctioned entity, SBK would be excluded from the transaction and only entitled to receive fair value. This, it argued, would deprive it of the right to enjoy its property.
The respondents raised a number of pleas, including the lack of jurisdiction of the Maltese Courts to issue such provisional relief, and a complete absence of the basic requirements for the injunction. On the merits, the sale was essential for the Fortenova Group, whose financing had been seriously threatened by the presence of sanctioned entities in its structure.
The jurisdictional plea could only be analysed against the substantive action the injunction was sought to secure. SBK refused to state where it would file its lawsuit, only asserting that its cause of action was in tort. However, the First Hall of the Civil Court, presided over by the Honourable Judge Mark Simiana, found that this could not be the case. The sale had already been voted through by meetings of the Dutch Fortenova entities, and therefore any action SBK might contemplate to prevent the sale from happening would necessarily require a demand to impugn those decisions.
According to the Brussels Regulation Recast, any action attacking the validity of a decision of a company is subject to the exclusive jurisdiction of the EU Member State where that company has its seat. In this case, that was the Netherlands.
The same Regulation would allow a Maltese court to issue provisional measures in support of Dutch proceedings provided they are available under Maltese law, a condition which, the Court held, is a direct reference to national rules on jurisdiction. In Van Uden (C-391/95), the Court of Justice of the European Union also established an additional requirement for such provisional measures, that as a matter of EU law there must also be a ‘real connecting link’ between the provisional measure and the territory in which it is requested.
Applying these principles to the case at hand, the Court first found that it did, in principle, enjoy jurisdiction to order the injunction against the sole Maltese defendant, Open Pass Ltd, under Article 742(1)(b) of the Code of Organisation and Civil Procedure. However, this fact alone did not establish the ‘real connecting link’ required by the Court of Justice of the European Union. The injunction sought to restrain transfers of corporate assets situated in the Netherlands, not in Malta. The corporate meetings and votes on the transfers were all to take place outside of Malta. It would have been far more appropriate for Dutch courts to rule on, and implement, the protective measures sought by SBK.
The Court found that the absence of a ‘real connecting link’, coupled with the fact that SBK had repeatedly (albeit unsuccessfully) sought similar injunctive relief in the Netherlands, meant that SBK’s request for a Warrant of Prohibitory Injunction in Malta constituted vexatious and oppressive litigation. This led the Court to decline jurisdiction under Article 742(2) of the COCP.
The remaining co-defendants were all domiciled and resident outside of Malta, and the Court did not find jurisdiction over them under internal jurisdictional rules.
The injunction was denied, and on 9th July 2024 the sale of shares in the Fortenova Group went through.
In an increasingly globalised market, the ability to sue in one country, and seek interim relief in another where assets or people are located is often essential for effective redress. EU law has largely made this possible. However, it is a framework which can sometimes be unclear, and this can pave the way for abusive litigation tactics and forum shopping. This judgment marks a significant development in the assessment of jurisdiction to order provisional measures in support of foreign litigation, and confirms that the ‘real connecting link’ requirement will not necessarily be satisfied where only one of a number of co-defendants is situated here.
This article was first published in ‘The Malta Independent’ on 02/10/2024.