Levers J
```markdown # IN CHAMBERS ## IN THE GRAND COURT OF THE CAYMAN ISLANDS **CAUSE NO: 75 OF 2004** --- ### BETWEEN:
KAZAKHSTAN ASSET MANAGEMENT LTD.
OJSC CENTRAL ASIA CEMENT **Plaintiffs** AND:
KAZAKHSTAN INVESTMENT FUND, LTD.
CEMENT ENGINEERING CONSULTANCY LTD.
VISOR INVESTMENT SOLUTIONS OJSC
HOWARD I. GOLDEN
JOHN D. CHAMPMAN
EUROSYS CONSULTING LLP
KAUZHAR LLP
ATF BANK JSC **Defendants** --- ### Before: The Hon. Madame Justice Levers ### Appearance: - Counsel for the Plaintiffs: Mr. Eliot Simpson of Ogier & Boxalls - Counsel for the Defendants: Mr. Christopher Young of Applby ### Heard: 31 May, 2 & 4 June, 2004 --- ### JUDGMENT There are two summonses before the Court, one in which the Plaintiff asks for an Order that the Order of Madame Justice Levers dated 9 February 2004 --- **Judgment - Kazakhstan Asset Management Ltd. et al.** ```
```markdown as extended by Justice Henderson on 16 February 2004 and by Madame Justice Levers on 16 April 2004 and the Orders herein of Madame Justice Levers dated 1 April 2004 and 14 April 2004 be varied to extend the duration of the injunctions granted by those Orders until trial or further Order; Further and other reliefs and costs. The Second Summons before this Court is for an Order that the Plaintiffs do have leave to re-amend their Writ of Summons herein in the terms of the draft Re-Amended Writ of Summons annexed hereto, including leave to remove the Second Defendant, Central Engineering Consultancy Ltd as a Defendant and to add CEC as the Third Plaintiff; and the costs of the application to be costs in the Cause. The Orders referred to as granted by Madame Justice Levers and extended by the Honourable Justice Henderson were all ex-parte orders. They were for injunctions against the First Defendant disposing of its assets and the First and Third Defendants from enforcing a Promissory Note, with the Plaintiffs' usual undertakings as to damages. ```
```markdown # Background: The action concerns ownership and control of a cement plant in Karaganda, Kazakhstan owned and operated by the Second Plaintiff, Central Asia Cement (“CAC”). Prior to 15 January, 2004, the shares in CAC were held by the First Defendant, Kazakstan Investment Fund (“KIF”) 49% and the Second Defendant, Cement Engineering Consultancy (“CEC”) 51%. On 15 January 2004, KIF’s director and former director purported to transfer the shares, and this was recorded in the register of CAC (kept by a public registrar not by CAC itself) as a transfer to a nominee holding for the Third Defendant, VISOR Investment Solutions (“VISOR”). At about the same time, the directors transferred to the Sixth Defendant, Eurosys Consulting, a Promissory Note given by CAC to KIF. On 23 February 2004, VISOR transferred half of its purported holdings to the Seventh Defendant, Kauzhar. On 2 April 2004, CEC transferred its shares in CAC to the First Plaintiff, Kazakhstan Asset Management (“KAM”), save for one share which it transferred to Javier del Ser Perez. The transfer by CEC to KAM was pursuant to a Loan Agreement between KAM and CEC and pursuant to or the High Malay Courtia. ```
```markdown The action is brought by KAM and CAC, to challenge the transfer of shares by KIF to VISOR (1) as a breach of preemption right in a Shareholders' Agreement between CEC, KIF and CAC and (2) as part of a conspiracy between KIF, Golden, Chapman, VISOR, Kauzhar and the Eighth Defendant, ATF Bank (which financed the acquisition). KAM, CAC, (and CEC) seek (1) specific performance of the preemption rights in favour of KAM and CEC and/or (2) damages for breach of contract and/or conspiracy and (3) in junctions against KIF, VISOR, Eurosys Consulting, Kauzhar and ATF. For purposes of the application for the injunction to be extended, this Court intends to consider this matter de novo, as the ex parte injunctions were extended as long as they were extended because of the unavailability of counsel and dates. The evidence is now so much more substantial that the Court has to consider the granting of the injunction de novo. In order to obtain an injunction preserving the Defendants' assets pending trial as well as establishing the risk that if no order is made the assets will become unavailable to satisfy the claim, the Plaintiffs must show the main issue of liability. The Court must consider both the ability to satisfy the claim and the main issue of liability. ``` This transcription忠实于原文，使用了Markdown格式，并保留了原文的结构和内容。
```markdown and bound to consider the strength or weakness of the Plaintiffs and the Defendants cases. The case essentially against KIF is that it was in breach of a clause under the shareholders agreement between CAC, CEC and KIF and a Promissory Note for the money loaned by KIF to CAC. The Plaintiffs allege breach of contract. The case against the directors is a claim for personally inducing a breach of contract and a claim for conspiracy. It is alleged by the Plaintiff that Golden and Chapman conspired to use CAC funds extensively to payoff part of the debt under the Promissory Note. However, these funds were used by Golden and Chapman to pay CEC to payoff its debts to CAM. They allege this was a fraud on CAC and a breach of the duties owed by Golden and Chapman to KIF. The case against “Kazakhstan Defendants”, is that they were a party to the conspiracy to enter into a transaction and breach of the preemption rights at an under value involving breaches of duty by the directors of KIF and intending to use the shareholding and debt acquired either to bankrupt CAC and take the assets at a reduced or no price or to take over contrand dilute ol of CAC the hol that the Kazakhstan Defendants also mount a breach of contract. The Court reminds itself that at this stage the Court must conclude ```
```markdown that there is a good arguable case on behalf of the Plaintiffs. The evidence is not to be adjudicated upon on its merits. Mr. Young on behalf of the First Defendant, KIF claims the following:
That the present Plaintiffs not being parties to the shareholders agreement have no standing to bring the action;
That the claim that the transfers were invalid and ineffective by reason that they were allegedly in breach of the Shareholders Agreement and that there should be an order that the Shares and Note be transferred to KAM or CEC is untenable. He submits, that the ownership of the Shares is governed by the law of the place of incorporation of CAC or the lex situs of the Shares or possibly by the law of the place where the share register is kept. In any case, he submits that that is Kazakhstan;
The Promissory Note, he submits is assignable by KIF and governed by New York Law; and
The allegation that Golden lacks authority from KIF to join with Chape transfer: Witness does not afford any cause of action to plaintiffs. He ```
```markdown submits, that this is a non-point as it could only be an issue for the parties to the transfers.
He submits that it is inappropriate for this Court to make orders concerning the regulation of internal affairs of a Kazakhstan company or to make orders in vain. He submits that there were proceedings on foot in Kazakhstan in relation to the affairs of CAC. Therefore any injunction which in substance amount to an anti-suit injunction should not be continued and he relies on the case of *Airbus Industrie G.I.E v Patel* [1993] 1 AC 119 at 139. The Plaintiffs are seeking an equitable remedy and they must come with clean hands to Court. There are several factors that are pursued by Mr. Young in his submission that the Plaintiff have not come with clean hands. 1) there was non-disclosure by the directors. 2) there was no explanation given to the Court as to why CEC was merely a nominee of theirs. 3) He says, that the investment manager acted as a director of the other company and actively concealed the extent of his interests. The basic and fundamental requirement must be that the Plaintiffs must be the correct Plaintiffs and must have an entitlement to enforce the ```
```markdown shareholders agreement. That is the initial question this Court has to answer. The First Plaintiff KAM was not even a party to the shareholders agreement and therefore cannot claim to enforce this claim, not even as an assignee of CEC. Mr. Young makes a point and I agree that clause 8.8 of the Shareholders Agreement prohibits assignments without consent of the other parties which was not obtained in this case. Accordingly, the claim by the First Plaintiff to be entitled to enforce the shareholders agreement is hopeless. Indeed, it could be said on the evidence that the only party that could enforce the shareholders agreement would be CEC. Secondly, it cannot be said that the transfer of shares can be governed by any other law but Kazakhstan Law. Thirdly, the Promissory Note is governed by New York Law. And forthly, the conspiracy claim must depend on whether there was a breach of the shareholders agreement and if there is a good arguable case on that. The Plaintiffs rely on clauses 1.1 and 3.2 and the breach by the Defendants. If the Shareholders Agreement prevents transfer of shares in an open joint stock company by some documents it may well be that the Court shall recare the le view with equality c forum for the trial of this action. The Kazakhstan Defendants are not Judgment - Kazakhstan Asset Management Ltd. et al ``` The text appears to be a legal judgment or court document. It discusses the enforceability of a shareholders agreement, the legal standing of the First Plaintiff KAM, and the governing laws for various aspects of the case. The document also mentions the need for the Court to examine the evidence and determine the most suitable forum for the trial. The text is slightly fragmented, likely due to the transcription process.
```markdown submitting to this jurisdiction. These injunctions in substance may amount to anti-suit injunctions preventing the Kazakhstan Defendants from taking action in Kazakhstan and the Court now has to look at whether in all the circumstances these injunctions are sustainable. The purpose of an injunction is to prevent the injustice of a defendant’s assets been salted away, so as to deprive the fruits of any judgment that may be obtained. It has always been recognized that such orders are draconian and they would only be granted if a number of strict conditions are fulfilled. In this instance, the Court does not have to go too far beyond, whether there is there a good arguable case. The minimum threshold for the exercise of the Courts discretion is the establishment of a good arguable case. (Kerr L.J in *Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft mbH & Co. KG* [1983] W.L.R. 1412). The expression means ‘a case which is more than barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50 per cent chance of success’. In its discretion the Court can refuse an injunction even if the usual requirements are made out. In view of the (1) inability of the present Plaintiff and shareholders agreement; (2) and the Court’s finding that Kazakhstan Law ```
```markdown governs the Shareholders Agreement; (3) the lack of cleanliness of the Defendants' conduct, the injunctions as requested are refused. The Summons is dismissed. I now turn to the question of the amendment. I agree with the Defendants entirely that in view of the evidence before this Court it is difficult to see how CEC can be now added as a co-plaintiff in view of the evidence as it stands. The evidence contains allegations of conspiratorial conduct against CEC but, the Plaintiff now wishes to join CEC as a Co-Plaintiff. I refuse this application. As a result of the discharge of the injunctions I order an enquiry into damages to be conducted. Costs of the application to discharge the injunction to the First Defendant to be agreed or taxed. Costs of the amendment application to the First, Fourth and Fifth Defendant to be agreed or taxed. Dated this 11 th day of June 2004 Levers J. Judge of the Grand Court