THE HIGH COURT
2001 No 90 Cos
IN THE MATTER OF INTERCARE LIMITED, ALLIED SALES CORPORATION LIMITED, WINDVALE ENTERPRISES LIMITED, TITAN TRADING LIMITED, ARMALO TRADING LIMITED, SOLENT TRADING OVERSEAS LIMITED and CARROWPARK LIMITED AND IN THE MATTER OF THE COMPANIES ACT, 1963 to 1999

BETWEEN
CARLOS HIDALGO GONZALEZ
Applicant

and 

KURT KONRAD MAYER, MAJESTIC SALES CORPORATION, WINSTON SERVICES LIMITED, INTERCARE LIMITED, ALLIED SALES CORPORATION LIMITED, WINDVALE ENTERPRISES LIMITED, TITAN TRADING LIMITED, ARMALO TRADING LIMITED, SOLENT TRADING OVERSEAS LIMITED and CARROWPARK LIMITED
Respondents

JUDGMENT of Mr Justice Kelly delivered the 25th day of July, 2003. 

Introduction
This judgment concerns a spat in an international war of litigation which has been conducted for years between the petitioner (Mr Gonzalez) and the first named respondent (Mr Mayer).

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On the 8th  March 2001 Mr Gonzalez presented a petition to this court seeking relief under s.205 of the Companies Act, 1963 in respect of the fourth to tenth named respondents. Alternatively a winding up order is sought in respect of those companies on the basis that it would be just and equitable that such an order be made. All of these companies are incorporated in the State.
The first three respondents to the petition have external addresses, at Chile in the case of the first respondent and Mauritius in the case of the second and third.
Having presented the petition Mr Gonzalez applied to Butler J. on the 16th July, 2001 and obtained an order permitting service to be effected upon Mr Mayer by ordinary prepaid post to his address in Chile. The order indicated that such would be good and sufficient service and furthermore permitted service on the first, second and third respondents by serving a copy of the petition on the registered address of the fourth to tenth named respondents.
The petition recited that the court was empowered under the Jurisdiction of Courts and Enforcement of Judgments Act, 1998 to hear and determine the claims made in it. It further recited "The court shall assume jurisdiction under Article 16 of the Brussels Convention of 1968. No proceedings between the parties concerning the same cause of action are pending in another contracting State ".
Mr Mayer now applies to court to set aside the order made by Butler J., to set aside the service of the proceedings on him or alternatively to stay or strike them out on the basis of forum non conveniens and/or lis alibi pendens. Alternatively an order is sought pursuant to Article 21 or Article 22 of the Brussels Convention.
The Petition
Mr Gonzales is a businessman who resides in Tenerife. Mr Mayer is a dual Spanish and Chilean national. He is domiciled in Chile.

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The first eight paragraphs of the petition identify the parties to it. It alleges that the shares in the fourth to tenth named companies (the Irish companies) are owned by the two Mauritian companies which are the second and third respondents. Mr Mayer is alleged to be the ultimate beneficial owner of the shares owned in the Irish companies by the Mauritian companies.
The petition goes on to set forth the business relationship which has existed between Mr Gonzalez and Mr Mayer for the last thirty years. It alleges that on the 23rd  June, 1973 a company called Kurt Konrad y Cia S.A. was incorporated under the laws of Spain. Its shareholding was controlled as to 50% by Mr Gonzalez and his family with the other 50% being controlled by Mr Mayer. It is said that it was intended that the business of that company would be jointly managed by Mr Gonzalez and Mr Mayer and would be treated as a form of partnership.
The petition alleges that in the years following 1973 an alteration in the shareholding of that company occurred. As of the date of presentation of the petition it contends that Mr Gonzalez controls 44.46% of the shares whilst Mr Mayer controls the remainder. Since 1973 it is alleged that a number of companies related to the original have been incorporated under the laws of Spain. The shares in some of these are controlled directly by Mr Gonzalez whilst others are controlled by Mr Mayer. Others of these companies are subsidiaries or are partly controlled by the original. All of these companies including the original company are referred throughout the petition as "the Spanish companies". That is the nomenclature I adopt for the purposes of this judgment.
The Spanish companies have engaged in the business of land ownership and development in Spain. They run hotels, own real estate and engage in development activities. The petition alleges that in 1992 the Irish companies, were acquired by agreement between Messrs Gonzalez and Mayer. The shareholdings in the Irish companies roughly reflect

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the shareholding controlled by Mr Gonzalez and Mr Mayer in the original Spanish company. The business of the Irish companies has been similar to the Spanish companies and it is said that these Irish companies either own directly or, alternatively, have a significant shareholding in companies that own valuable real estate in Spain.
The petition contends that all of these companies both Irish and Spanish were to operate as a form of partnership between Mr Gonzalez and Mr Mayer.
Paragraph 15 of the petition recites that prior to the 23rd  June, 1997 disagreements arose between the Gonzalez and Mayer families as to the way in which the business of the companies ought to be managed. On that date an agreement was entered into between the disputing parties which has been called the "unionisation agreement". On the same day amendments to the statutes of Kurt Konrad y Cia S.A. were made by means of a deed of conversion. The terms of that unionisation agreement which Mr Gonzales contends for are set out in the petition. There then follows a series of complaints concerning non-compliance with the terms of the agreement. They include an alleged wrongful refusal to vote in favour of an alteration of the articles of the Irish companies so as to achieve the purpose described in the unionisation agreement; a failure to vote in favour of the appointment of joint attorneys in respect of the companies and the wrongful defeat of resolutions proposed at an extraordinary general meeting of the Irish companies held on the 21st  March, 2000.
The petition then continues
"24. The respondents have accordingly specifically refused to accept that the affairs of each of the Irish companies should be conducted and the powers of the directors exercised in the future in accordance with the provisions of the unionisation agreement, and have specifically refused to amend the articles of association of the said companies so as to bring the same in compliance with

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the unionisation agreement and the deed of conversion. They have specifically refused to allow the nominee of the applicant to be appointed as joint attorney of each of the said companies, and have thereby indicated clearly that they do not intend to allow the applicant any role in the management of the said companies. They have insured (sic) that Ms Revilla continue to act as attorney of each of the said companies, notwithstanding the specific reservations expressed at the meeting and otherwise both as to the actions of Ms Revilla and as to the terms of the power of attorney granted in her favour.
25.	In the premises, the applicant charges that the affairs of the Irish companies are being conducted and that the powers of the directors of the said companies are being exercised in a manner oppressive to him and in disregard of his interests as a member.
26.   Further in the alternative, it is just and equitable that the company should be wound up ".
Somewhat curiously the primary relief sought in the prayer to the petition is, notwithstanding an acceptance that all of the Irish companies are solvent, an order for their winding up. The second relief sought in the prayer is for orders pursuant to s.205 of the 1963 Act. The orders sought under that rubric are for the articles of association of the Irish companies to be amended so as to conform to the unionisation agreement of the 23rd June, 1997; an order for the affairs of the Irish companies to be conducted and the powers of the directors exercised in accordance with the unionisation agreement of the 23rd June, 1997; an order directing the revocation of the power of attorney granted in respect of the companies in favour of Ms Revilla and her removal; an order providing that Mr Gonzales and Mr Mayer be entitled to nominate a

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person to act as joint attorneys of those companies in accordance with the agreement of the 23rd June, 1997 and finally further and other relief as to the court may appear appropriate.
This Application
The application is brought by Mr Mayer and by no other respondent.
He seeks to set aside the order of Butler J. of the 16th July, 2001 and also the service of the proceedings on him pursuant to that order.
Further or in the alternative he seeks an order staying or striking out the proceedings on the grounds of forum non conveniens and/or lis alibi pendens.
As a further or alternative relief orders are sought pursuant to articles 21 and/or 22 of the Brussels Convention.
The final order which is sought is one adjourning these proceedings in their entirety pending the outcome of an action which is pending in the courts of the Kingdom of Spain.
For reasons which will become apparent in a moment I propose to deal with the application by reference to Article 22 and/or forum non conveniens.
The Thrust of the Petitioner's Case
The various allegations which are contained in the petition appear to me to find their roots in the unionisation agreement and deed of conversion of the 23`d June, 1997. Leaving aside the winding up order which is sought, the other reliefs seek to have the affairs of the respondent companies aligned so as to conform to the terms of the unionisation agreement and deed of conversion.
The winding up order is sought on the just and equitable basis. In seeking that order no new or additional facts separate or distinct from those relied upon in respect of the other reliefs are asserted.

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I am of opinion that on any fair reading of the petition the substance of the dispute between the parties is the alleged failure to carry out obligations imposed under the unionisation agreement and deed of conversion. This court is being asked to adjudicate upon that failure and if satisfied that it is has occurred to give effect to the terms of the agreement by means of the orders prayed for under s.205 of the Act.
Despite attempts made to suggest otherwise in some of the voluminous affidavits which were filed it seems to me that the object of the present petition is to bring about a compliance with the unionisation agreement and deed of conversion. Only if that proved impossible would the court make a winding up order given that the companies are solvent.
At this stage it is pertinent to mention that there are proceedings before the courts of the Kingdom of Spain between Mr Gonzalez and Mr Mayer (record no. 395/98) where the issue of the validity and efficacy of the unionisation agreement is in issue. In those proceedings Mr Mayer contends that the agreement was executed in circumstances where it ought not to be enforced. Those proceedings have been extant for a considerable period of time and regardless of outcome are, I am told, likely to be the subject of an appeal by the unsuccessful party. The unionisation agreement and deed of conversion are governed by Spanish law. The Spanish courts were seised of that dispute long before this petition was presented. The outcome of that litigation will determine the legal validity of the unionisation agreement which in turn is the sheet anchor for this petition. The validity of these agreements will be the first issue raised by way of defence by Mr Mayer in this petition.
Counsel for Mr Mayer asked the court to make one of a number of alternative orders on this application.
In light of the view which I have formed as to the substance of the dispute between the parties I propose to deal with matters by reference to Article 22 of the Brussels Convention or if that is not applicable the general law on forum non conveniens.

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I do not propose to make any finding in respect of the other matters that were advanced and it is not necessary to do so.
I do however find that the application cannot succeed insofar as it relies on Article 21 of the Brussels Convention. That article has no relevance to the petition as the petition does not involve the same cause of action as the Spanish proceedings.
Article 22.
Article 22 of the Convention provides
"Where related actions are brought in the courts of different Contracting States, any court other than the court first seised may, while the actions are pending at first instance, stay its proceedings.
A court other than the court first seised may also, on the application of one of the parties, decline jurisdiction if the law of that court permits the consolidation of related actions and the court first seised has jurisdiction over both actions.
For the purposes of this Article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. "
I will deal with this aspect of the application on the assumption that the Article is applicable even though Mr Mayer is domiciled in Chile.
In the Tatry case [1994] ECR I-5439 the European Court of Justice took the view that the concept of related actions should be given an independent interpretation because the term "related actions" does not have the same meaning in all of the Member States. It went on

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"In order to achieve proper administration of justice, that interpretation must be broad and cover all cases where there is a risk of conflicting decisions, even if the judgments can be separately enforced and their legal consequences are not mutually exclusive ".
That approach of the European Court of Justice fell to be considered by the House of Lords in the case of Sarrio SA v Kuwait Investment Authority [ 1999] 1 AC 32.
There the House of Lords reversed a decision of the Court of Appeal and restored the original judgment of Mance J. (as he then was) in the Commercial Court. Lord Saville of Newdigate delivering the leading speech in the House of Lords, having carried out a detailed analysis of the wording of Article 22, concluded as follows
"I am of the view that there should be a broad common sense approach to the question of whether the actions in question are related, bearing in mind the objective of the article, applying the simple wide test set out in Article 22 and refraining from an over-sophisticated analysis of the matter ".
It appears to me that that is the approach which I ought to adopt here. The validity of the unionisation agreement is pivotal to the proceedings in Spain and, in my view, to this petition. The Spanish courts were seised of the dispute concerning its validity long before the presentation of the petition. The risk of irreconcilable judgments is patent. The object of the convention would clearly not be achieved if two courts in different Member States were asked to consider the same question, namely, the validity of the unionisation agreement, only to come to different conclusions in that regard.

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It must be borne in mind that the present application seeks a stay of the proceedings only insofar as they relate to the first named respondent. It is he who is common to the Spanish and the instant proceedings.
In my view the question of the validity of the unionisation agreement is a matter which has to be determined before one can consider whether or not it has been breached. The appropriate place for that to be done is in the court fist seised of the dispute namely the courts of the Kingdom of Spain.
Insofar as the first named respondent is concerned therefore, I am satisfied that I ought to exercise the discretionary jurisdiction conferred under Article 22 and stay this petition insofar as it relates to the first named respondent.
The petition will be stayed until such time as the dispute as between Mr Mayer and Mr Gonzalez has been determined by the competent courts in Spain.
Forum Non Conveniens
Quite apart from the jurisdiction conferred under Article 22 I was asked to stay the proceedings on the grounds of forum non conveniens. In this regard my attention was drawn to the decision of Finnegan J. (as he then was) in D. C. v W.O'C. [2001] 2 IR l. In that case that judge indicated that the courts discretion to stay proceedings on the basis of forum non conveniens did not survive the incorporation of the Brussels Convention into Irish law. At the conclusion of the judgment at p.5 the judge however, made it clear that that case was one in which both the plaintiff and the defendant were domiciled in Ireland. In my view his judgment is limited to cases where the parties are both domiciled in a contracting State. That is clear from a consideration which he gave to the decisions of In Re Harrods (Buenos Aires) Limited [ 1992] Ch 72 and Intermetal Group Limited v Warslade Trading Limited [1998] 2 IR 1. He said

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"The former case was concerned with the entitlement of a person being sued to have proceedings stayed on the basis of forum non conveniens where the plaintiff is not domiciled in a contracting State. It was there held that the common law jurisdiction to stay survived in such circumstances. The decision is of no assistance to the plaintiff for each of the parties in this action is domiciled in a contracting State. Likewise in the latter case the first plaintiff was domiciled in a non-contracting State and in these circumstances upon the basis of In Re Harrods (Buenos Aires) Limited it was held that the Convention had no application. These decisions are in accord with Article 4 of the Brussels Convention of 1968 ".
It appears to me therefore that the forum non conveniens jurisdiction exists insofar as Mr Gonzalez and Mr Mayer are concerned. Mr Mayer is domiciled in Chile. Accordingly, if Article 22 is not applicable because of Mr Mayer's domicile in a non contracting State, I am satisfied that the common law forum non conveniens jurisdiction applies. On the facts of this case these proceedings ought to be stayed as against Mr Mayer pending the determination of the issue as to the validity of the unionisation agreement in Spain. Spain is quite clearly in my view the more appropriate jurisdiction for the determination of those issues. The contracts in question are governed by Spanish law and the Spanish courts were seised of the dispute prior to the courts of this jurisdiction.
In these circumstances I propose to accede to the application to stay these proceedings insofar as they are directed against Mr Mayer. He is the person who sought this order and is entitled to it.
Insofar as the Irish companies are concerned it is quite clear that the petition is properly brought as against them. Indeed the Irish court appears to be the only court with jurisdiction to make orders under s.205 or s.213 of the Companies Act as against these

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companies. On the other hand it must be borne in mind that the true substance of the dispute has its genesis in the unionisation agreement and deed of conversion. Until such time as the issues concerning the validity of those agreements has been disposed of there is no practical reality in this petition being able to proceed further. However, no application for a stay of any sort has been made other than by Mr Mayer and consequently this order relates only to him.
There is however, a second motion before the court which seeks directions as to the hearing of the petition. In the light of the views which I have expressed I will adjourn the petition pending the result of the litigation in Spain.
There will be liberty to all sides to apply.