- May 18, 2017
- Posted by: Josiah Hincks Solicitors
- Category: Business Law Updates
Commercial disputes can move very fast but the High Court has power to hold the ring and ensure that no irreversible losses are suffered pending a resolution. Exactly that happened in one case concerning a loss-making overseas oil drilling project.
The rights of those participating in the project were governed by a joint operating agreement which provided for various sanctions that could be taken against those who defaulted on cash calls. Amongst other things, defaulters stood to lose their voting rights and to have their interests in the project transferred to others.
Two wells were already operating at a loss and the underlying dispute concerned whether the development of two others had been properly approved. An arbitration of that matter was pending. In order to maintain the status quo for a brief period pending the outcome of those proceedings, the Court issued an injunction.
At the behest of a company that had invested heavily in the project, other participants were, amongst other things, ordered not to take any steps under the operating agreement that would have the effect of divesting the former of its interest in the venture or preventing it from exercising its voting rights.
After the injunction was issued, however, the other participants purported to convene a meeting at which various cash calls were made with a view to developing the two disputed wells. The company was not invited to the meeting, of which it was given only three minutes’ notice by email. In the circumstances, the Court found that the other participants were in clear contempt of the injunction. The Court heard further argument as to the consequences of its decision.