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Andrew George QC and Timothy Lau successfully represented the Claimant in an application brought by the Defendant (“BGEO”) for a declaration that, for the purposes of disclosure (under PD 51U), BGEO does not control documents held by two subsidiaries (both incorporated in Georgia), one in which it held a 100% direct shareholding and the other in which it held an indirect shareholding.

The Court had to consider the circumstances in which a parent would have control over documents held by a subsidiary. Such control would arise in two distinct circumstances:

1. First, where there was an existing arrangement or understanding that in practice provides the parent with a right of access to documents held by its subsidiary. The Claimant argued that there were letters sent between BGEO and its subsidiaries which evidenced such an arrangement. BGEO argued that no such arrangement existed or to the extent it did it had been terminated.  

2. Second, where the parent company had a presently enforceable legal right to obtain the documents from its subsidiary. The parties adduced expert Georgian law evidence relating to shareholder rights to access documents.

The Court found that, on both grounds, BGEO did control documents held by its subsidiaries. The case demonstrates that the Court will analyse the evidence of an arrangement or understanding for itself and that it is not sufficient on its own for a parent or its subsidiary to assert that no arrangement or understanding exists or existed.

The underlying claim – involving the alleged wrongful sale by the Defendant bank of one of Georgia’s most successful companies (which the Claimant beneficially owned) – has been listed for an eight week trial in the Commercial Court in 2021.

The judgment can be read here.

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