LIC Telecommunications SARL & Anor v VTB Capital Plc & Ors

A shareholders’ agreement may authorise non-conflicted directors to pursue a company’s claims arising from a shareholder’s breach, including claims against third parties involved in that breach. However, under Luxembourg law, an actio mandati by a SARL against its managers belongs exclusively to the shareholders and that allocation is a rule of corporate public policy which cannot be waived. Corporate decisions must also be taken through the company’s prescribed board procedures. Decisions made without the required shareholder approval, board meeting or quorum are invalid. A manager with a potential material financial interest in ratification is conflicted and cannot vote. The court also held that the proposed proceedings were not an abuse of process, but removed V2 from the existing proceedings because of the exclusive Luxembourg jurisdiction clause and the absence of authority.

The judgment concerned applications arising from claims challenging the sale of shares in InterV Investments SARL following enforcement of security by VTB Capital plc. The original claimants sought relief in existing proceedings, while managers purportedly acting for V2 Investment SARL commenced Part 20 and Part 7 proceedings seeking recovery of the alleged undervalue.

The defendants challenged the managers’ authority, the validity of later ratification resolutions, jurisdiction, abuse of process and V2’s continued presence as a defendant. The principal issues were whether the shareholders’ agreement displaced Luxembourg company-law rules, whether the proceedings had been validly authorised or ratified, and whether the claims could proceed in England.

1. Clause 32. On its proper construction, clause 32 of the shareholders’ agreement applied to the proceedings against Delta, Mr Veltchev, Maze and Viva Luxembourg. Its words were not confined to claims against the shareholder or its shareholder group. The clause excluded directors appointed by the impugned shareholder, but did not require the remaining directors to act unanimously.
2. Actio mandati. The claims against Delta, Maze and Mr Veltchev were characterised under Luxembourg law as actiones mandati. The power to bring them against managers of a SARL belonged exclusively to V2’s shareholder, V Telecom. That rule applied notwithstanding the greater flexibility of a SARL, reflected the separation of corporate powers, was a rule of Luxembourg public policy and could not be waived by the shareholders’ agreement.
3. Board procedure. V2’s articles required management decisions to be taken by the board. Clause 32 did not dispense with the need for a properly convened board meeting. The July 2018 decisions were therefore unauthorised: shareholder approval was required for the claims against Delta, Maze and Mr Veltchev, and a board resolution was required for the claims against Viva Luxembourg and Mr Roussev.
4. Ratification and conflicts. The LICT Managers had a potential material financial interest in ratification because it could reduce their exposure to costs. They were therefore conflicted and could not vote. A quorum had to exist throughout the meeting. The later meetings were inquorate, and the purported resolutions were invalid under Article 100-22(1)(3) of the Luxembourg Company Law. Article 100-22 did not validate the original decision, because no board resolution had ever been made.
5. Other issues. The court declined a CJEU reference and held, provisionally, that the jurisdiction evidence did not establish England as the place of performance or harmful event. The proposed proceedings were not Henderson abuse. V2 was nevertheless removed from the original proceedings under CPR 19.2(3), because its claims engaged an exclusive Luxembourg jurisdiction clause and its purported wish to remain was unauthorised.