Isle of Man: "Hirco v Hiranandfani" – The Isle Of Man Is The Correct Forum

Last Updated: 16 June 2014
Article by Hannah Skillicorn

On February 21 2014, His Honour Deemster Doyle, First Deemster and Clerk of the Rolls, delivered his judgment in Hirco v Hiranandani1, in which the issue was whether in all the circumstances the Isle of Man was the appropriate forum for the trial of the dispute. Deemster Doyle identified that his principal task was to resolve the place that would be in the best interests of all parties involved, and where justice would be delivered. This, of course, mirrors the overriding objective under Rule 1.2 of the Rules of the High Court 2009, the principle on which the so called "new litigation" culture in the Isle of Man Courts is based, that is to deal with cases justly and efficiently.

The Facts

Potentially competing jurisdictional agreements existed, between the relevant parties, dealing with their inter-relationships. The first claimant Hirco plc ("Plc") was incorporated in the Isle of and subsequently listed on AIM. The second claimant Hirco Holdings Limited ("Holdings") was a company registered in Mauritius and a wholly owned subsidiary of Plc. The Defendants were Niranjan Hiranandani (who was the chairman and non-executive director of Plc between December 2006 and December 2010) and who resides in India, and Priya Hiranandani-Vandrevala (director and chief executive of Plc between December 2006 and December 2010) and who resides in London.

The expressed purpose of the floatation of Plc on AIM was to raise funds for Plc's proposed investment into Indian real estate development. The flotation of Plc was promoted using an AIM Admission Prospectus which included five pipeline projects, of which Plc and Holdings eventually invested in four. Holdings did not itself have the funds necessary to make these investments and so Plc advanced funds to Holdings under documented loan agreements. The overall money invested was around £350.8 million in the four projects. Mr Hiranandani had signed an agreement with Hirco and Plc in December 2006 (the "Appointment Letter"), which stated that he submitted to the non- exclusive jurisdiction of the Isle of Man Courts should any disputes arise. However there was also an agreement in place between Holdings and Mr Hiranandani setting out the terms of the relationship between Holdings and Mr Hiranandani, which contained an arbitration clause should disputes arise, and that arbitration proceedings should be held in Singapore.

The Claimants alleged that the Defendants made and conspired in making fraudulent misrepresentation to them which induced them to invest the £350.8 million in the Indian real estate projects to be developed by entities associated with the Hiranandani family. The Claimants also alleged that the two Defendants had breached their fiduciary duties of loyalty to them as they had failed to disclose the fact the development periods were unrealistic and unachievable and that the valuations were flawed.

The Submissions

The Claimants argued that the alleged fraud was on an Isle of Man company and the alleged wrongs were at least in part committed in the Isle of Man and that these were further reasons as to why any trial should be held in the Isle of Man. By contrast, Mr Hiranandani's preferred forum was the Singapore arbitration. In summary, the Claimants argued:

  • Mr Hiranandani had contractually agreed to submit to the jurisdiction of the Isle of Man should any disputes arise showed his willingness to litigate in the Isle of Man
  • There was a need for one single factual enquiry in order to serve the ends of justice
  • The Isle of Man was the appropriate forum for the resolution of the dispute as the Defendants alleged fraud was on an Isle of Man company of funds held in the Isle of Man
  • The location of witness and documents was not a factor that favoured any particular jurisdiction in this case. Potential witnesses were located in England, India, France, Australia, as were the documents however this did not affect where the trial should be heard
  • Expert evidence was required for this case and so no particular jurisdiction possessed the specialist knowledge required, so again this was not a factor to consider
  • Depriving Plc the benefit of Isle of Man proceedings would be unjust. Here the Claimants were referring to the limitation period available in India for this dispute (a possibly forum), compared to that of the Isle of Man. The claim for breach of director's duties would be time barred if the proceedings were to be held in India
  • Confining Plc to remedies before the Indian court would effectively deny it justice, as realistically a trial in India would not take place before 2024 at the earliest.

However, the Defendants argued that:

  • There was no substantial connection to the Isle of Man, the only connection was that Plc was incorporated in the Isle of Man
  • The Appointment Letter only contained a non-exclusive jurisdiction clause, which thereby anticipated the possibility another forum would be appropriate
  • The links to India were more significant than those to the Isle of Man, as the business of Plc had to take place in India since that is where the projects were being developed.

Mr Hirandani sought that the Isle of Man proceedings issued against him be set aside or alternatively, that due to another agreement he had entered into with Hirco which contained an arbitration clause, the proceedings against him should be stayed pending the outcome of that arbitration (which was to take place in Singapore).

The Determination

In his determination, Deemster Doyle referred to the Privy Council decision arising from a Manx Appeal, Altimo Holdings v Kyrgyz Mobil Tel Ltd2 applying the guidelines established in Spiliada Maritime Corporation v Cansulex Ltd3, that in order to have served the Defendants out of the jurisdiction the Claimants had to satisfy the requirements that:

  1. There was a serious issue to be tried
  2. There was a good arguable case
  3. That in all the circumstances the Isle of Man was clearly the appropriate forum for the trial of the dispute.

Deemster Doyle decided that the Defendants had submitted to the jurisdiction by virtue of the Appointment letter, despite the fact it was a non-exclusive jurisdiction clause, and also that the case had very real and significant Manx connections as the case involved Manx companies and the breaches of duties towards those companies, in particular Plc.

Rejecting the Defendants' submission that the Indian Courts would be better placed to deal with the issues, (as any trial in that jurisdiction could take 10 to 15 years to resolve at first instance and so this substantial delay would mean the trial could not be conducted expeditiously), Deemster Doyle cited Lord Bingham in Donohue v Armco Inc4 in which he stated "in a situation of this kind the interests of justice are best served by the submission of the whole dispute to a single tribunal which is best fitted to make a reliable, comprehensive judgment on all the matters in issue".

Had the claim been heard in India where the Claimants would face a more disadvantageous limitation regime, Deemster Doyle agreed with the Claimants that this would have a prejudicial effect on their claim and would deprive them of practical justice. The Deemster again referred to the Kyrgyz Mobil Tel case5 where Lord Collins stated "where the claim is time barred in the foreign jurisdiction and the Claimant's claim would undoubtedly be defeated if it were brought there, practical justice should be so done."

Deemster Doyle also referred to the overriding objective under rule 1.2 of the Rules of the High Court of Justice 2009, reminding the Advocates involved in this case of the need to deal with cases justly and that they have a duty to the court to endure in the public interest that the proper and efficient administration of justice is achieved.

Summary

The Manx courts are no strangers to heavyweight commercial litigation which, invariably, have issues of foreign law. Parties that litigate before the Manx Courts do so with confidence that their proceedings will be dealt with expeditiously and fairly before a judiciary familiar with complex multi-jurisdictional issues.

Footnotes

1. ORD 2013/4

2. [2011] UKPC 7

3. [1987] AC 460

4. [2001] UKHL 64

5. [2011] UKPC 7

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Hannah Skillicorn
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.