Uconinvest LLC v Jysan Holding LLC & Ors

The petitioner issued a s.994 Companies Act 2006 petition alleging that the company and its directors, supported by the majority shareholder, had extracted and dissipated the company’s valuable Kazakhstan assets and cash for themselves, to the prejudice of the petitioner as a minority shareholder, and sought urgent freezing relief. The court considered whether the petitioner was bound by various LCIA arbitration clauses and whether the without-notice freezing injunction should stand in light of alleged failures of full and frank disclosure.

The judge held that the petitioner was bound by arbitration clauses in two sale and purchase agreements it had signed but was not bound by the shareholders' agreement (SHA) or the deeds of adherence because one continuing shareholder (QAZ42) had not executed those deeds and there was insufficient evidence that the parties had agreed the deeds should take effect regardless. Applying the two-stage Privinvest test, the court found that only the "Wrongful Settlement" aspect might have fallen within the SHA arbitration clause and accordingly refused a s.9 Arbitration Act 1996 stay of the court proceedings.

The court found serious failures of fair presentation at the without-notice hearing by the petitioner, notably omissions about the petitioner’s prior involvement in negotiations, approval of settlement proposals, knowledge of proposed director payments and the attempted sale of the petitioner’s shares. For that reason the original without-notice freezing injunction was discharged. In the interests of justice the judge nevertheless granted a more limited replacement freezing injunction: a freeze of up to US$8.4 million in the Bangladesh bank account, with limited permitted outgoings and an option for the company to pay that sum into court.

Background and parties:

• The petitioner (Uconinvest LLC) held about 2.3% of the shares in Jusan Technologies Limited. The first respondent, Jysan Holding LLC, was the 97.7% majority shareholder. The second, third and fourth respondents are directors appointed in mid‑2022. The dispute arises from the sale/settlement of Kazakhstan‑based assets and various alleged payments and loans.

Nature of the application and relief sought:

• The petitioner presented a s.994 Companies Act 2006 petition for relief for unfairly prejudicial conduct and sought urgent without‑notice freezing injunctive relief (including ancillary disclosure and service out of the jurisdiction on Jysan).

Issues before the court:

1. Whether the petitioner was bound by arbitration agreements said to arise from the SHA or deeds of adherence, and whether the matters in the petition were within the scope of any arbitration agreement such that a s.9 Arbitration Act 1996 stay should be ordered;
2. Whether the without‑notice freezing injunction and service out should be set aside for failures of full and frank disclosure;
3. Whether, notwithstanding any failure of disclosure, injunctive relief should be continued or re‑granted (including pursuant to s.44 Arbitration Act 1996 in support of arbitration); and
4. Whether the return‑date and related hearings should be held in private.

Court’s reasoning and findings:

• Evidence and arbitration: the court analysed five arbitration clauses arising in the SHA, two sale and purchase agreements and two deeds of adherence. The petitioner had signed and was bound by arbitration clauses in the two sale and purchase agreements it executed (29 December 2022 and 26 January 2023). However, the SHA and the two deeds of adherence were not shown to bind the petitioner because QAZ42 had not executed the deeds and there was insufficient evidence that the parties had agreed the deeds should take effect notwithstanding that omission. Estoppel/detrimental reliance arguments were not proved on the limited evidence before the court.
• Scope under Privinvest: applying the two‑stage Privinvest approach, the court held that none of the matters in issue fell within the sale and purchase agreements. Had the petitioner been bound by the SHA, only the "Wrongful Settlement" complaint (sale of Kazakhstan assets) would have been within its arbitration clause; the remaining allegations were breaches of fiduciary duty/unlawful distributions by directors and were outside the SHA arbitration scope.
• Stay applications: for these reasons the court refused to stay the proceedings under s.9 Arbitration Act 1996 and declined a case‑management stay.
• Full and frank disclosure: the court concluded there had been serious and material omissions and partial account in the petitioner’s without‑notice affidavit. The omissions included the petitioner’s prior consulting role and involvement in settlement negotiations and approvals (including awareness of a US$150m proposal), knowledge and some involvement in proposed payments/agreements (including a proposed US$12m termination payment), and the attempted sale of the petitioner’s shares to a third party (Safin Vienna). The failure amounted to a serious breach of the high duty to give a fair presentation and required discharge of the original without‑notice freezing injunction.
• Re‑granting relief: notwithstanding discharge, the court exercised its discretion in the interests of justice to grant a narrower freezing order limited to up to US$8.4m in the Bangladesh bank account, with permitted ordinary course payments subject to short notice, and left service out on Jysan intact as Jysan remained a necessary and proper party.
• Hearing in private: the judge explained why earlier stages were heard in private to avoid prejudicing a potentially confidential arbitration, but as the stay was refused the judgment was published in open court.

First instance. The court refused to stay the proceedings under s.9 Arbitration Act 1996 because the petitioner was not shown to be bound by the SHA or the deeds of adherence; only the arbitration clauses in sale and purchase agreements were binding. The original without‑notice freezing injunction was discharged for a serious failure of full and frank disclosure, but the judge in the exercise of his discretion granted a narrower freezing injunction (up to US$8.4m in the Bangladesh account). Service out on Jysan was not set aside. The petition will proceed to trial in the High Court. The court’s reasoning rested on (i) the escrow/novation analysis of the deeds of adherence and absence of evidence of detrimental reliance or agreement to waive QAZ42’s signature, (ii) the Privinvest two‑stage test on arbitration scope, and (iii) the established principles governing fair presentation in without‑notice injunction applications.