Ex parte Liquidity Technologies Ltd (MA 195 of 2022) [2022] SCSC 827 (22 September 2022)

Key Facts

Transaction Type

Issues

• Whether the court could grant a worldwide injunction despite an existing arbitration agreement at the Hong Kong International Arbitration Centre (HKIAC), as the terms of the arbitration agreement were not provided, making it impossible to assess if emergency relief provisions exist.
• Whether the applicant's legal representative had valid authority under the Seychelles Code of Civil Procedure and the International Business Companies Act to initiate proceedings on behalf of the company, given that the power of attorney was executed by a former co-founder and not the current director.
• Whether the applicant established the existence of a valid contract and a breach thereof, as required under section 304 of the Seychelles Code of Civil Procedure, to justify the issuance of an injunction, given the absence of the actual contract in the court's records.

Holdings

• The court determined that the Applicant's ex parte application for a writ of injunction pendent lite was defective due to the lack of valid authorization. The Power of Attorney relied upon was not executed by the company's director, as required by Seychelles law, rendering the application invalid. The court emphasized that a party must establish proper authority to institute proceedings, and failure to do so disqualifies the application.
• The court found the Applicant failed to provide the contractual agreement necessary to substantiate claims of breach. While the Applicant alleged a contractual liability of US$83,840,578.53, the absence of the actual contract or manual margin arrangement documents prevented the court from assessing the validity of the claim or the existence of a serious question to be tried. The court reiterated that parties seeking injunctive relief must present admissible evidence, not merely references to unspecified documents.
• The court concluded the Applicant could not establish jurisdiction for injunctive relief as the arbitration agreement's terms were not disclosed. The Applicant's reliance on Hong Kong International Arbitration Centre (HKIAC) procedures was insufficient without submitting the arbitration clause from the main agreement. The court noted that emergency relief provisions in arbitration rules are critical for determining its authority to intervene, but such information was absent in this case.

Remedies

• Writ of injunction pendent lite declined. No order in respect of costs.
• No order in respect of costs.

Legal Principles

• The court applied the principles for interim injunctions as outlined in American Cyanamid Co v Ethicon Ltd [1975] AC 396 and subsequent Seychelles cases. Key considerations included whether there was a serious question to be tried, whether damages would be an adequate remedy, and the balance of convenience. The court emphasized that the applicant must present sufficient evidence to demonstrate a real prospect of success and that the balance of convenience favors granting the injunction.
• The Applicant failed to meet its burden of proof by not providing the actual contract or arbitration agreement. Section 74 of the Seychelles Code of Civil Procedure requires annexing relevant documents to the plaint, and the court held that reliance on unverified allegations without supporting evidence does not satisfy this requirement. The Applicant's lack of documentation prevented the court from assessing the validity of the claim or the arbitration clause.

Precedent Name

• American Cyanamid Co v Ethicon Ltd
• Standard Bank of Namibia Limited v Nekwaya
• Roselie v Seychelles Chamber of Commerce and Industry
• Uvanga v Steenkamp
• Dorab Cawasji Warden vs Coomi Sorab Warden
• Exeter Trust Com v Indian Ocean Tuna Limited
• Hammad Ahmed Vs. Abdul Majeed

Key Disputed Contract Clauses

• The court analyzed the Manual Margin Arrangement clause in the Applicant's contract with the Respondent, which provided for a grace period to post additional collateral before liquidation. The Applicant alleged the Respondent breached this agreement by failing to indemnify losses from liquidated positions, but the court could not assess the clause's validity due to the missing contract documentation.
• The Applicant claimed the Respondent was contractually obligated to indemnify them for shortfalls of US$83,840,578.53 arising from liquidation under the manual margin arrangement. The court emphasized the need for the actual contract to evaluate this indemnification clause but found the Applicant failed to provide it, preventing assessment of the breach claim.

Cited Statute

• Seychelles Code of Civil Procedure
• International Business Companies Act
• Commercial Code, 2014

Judge Name

Passage Text

• I am of the view the Applicant has failed to convince this Court that interim relief in the form of an injunction pendente lite should be granted.
• The Applicant rightly states that he is given authority, but such authority is defective as the instrument in writing is not signed by the director of the company.
• This court is of the view that a party wishing to rely on a breach of contract must allege, and then prove such breach of contract.

Damages / Relief Type