The uncontradicted evidence of Kyrgyzaltyn and the Republic is that:
• the Centerra shares have been accounted for as an asset on Kyrgyzaltyn’s financial statements;
• the Centerra shares have not been listed on the registry of state property maintained by the State Property Fund (the entity that manages the Republic’s shareholdings in companies such as Kyrgyzaltyn). There is no evidence of any accounting or other record that identifies the Centerra shares as assets of the Republic;
• all dividends on the Centerra shares have been paid by Centerra to Kyrgyzaltyn; and
• Kyrgyzaltyn attends and votes at meetings of Centerra shareholders.
The second recital to the ANT (on which the Applicants rely as discussed below), describes the existing shareholders of Centerra. It reads (my emphasis in this and following clauses added in bold):
Whereas, Cameco, directly or through its subsidiary Kumtor Mountain Corporation, which is in turn wholly owned by Cameco Gold Inc., a wholly-owned subsidiary of Cameco, and Kyrgyzaltyn, which holds shares in Centerra on behalf of the Government (Kyrgyzaltyn, together with the Government, the "Kyrgyz Side") are the largest shareholders in Centerra;
Section 2.1(a) is the operative section of the ANT with respect to the Cameco Contributed Shares:
Cameco shall (out of its existing holding of Centerra common shares) deposit in escrow with the Custodian 25,300,000 common shares in Centerra (the "Cameco Contributed Shares") (without any off-setting, contribution, payment or issuance by Centerra in Cameco’s favor) to be held for the benefit of and on behalf of Kyrgyzaltyn and/or Cameco, as the case may be. The Cameco Contributed Shares shall be held and transferred by the Custodian as provided in this Agreement on New Terms and the Custodian Agreement.
Section 2.2(a) is the operative section of the ANT with respect to the Treasury Shares. The first sentence reads:
On the Completion Date, the Treasury Shares shall be issued by Centerra to Kyrgyzaltyn so that Kyrgyzaltyn will beneficially own and be entitled to all the benefits arising from (including the exercise of all rights attaching to) such shares, subject only to the terms of this Agreement on New Terms and the Restated Shareholders’ Agreement.
While the ANT provides that the Additional Shares are to be transferred or issued to Kyrgyzaltyn, the Applicants rely on the fact that there are references in the ANT to "the Kyrgyz Side" in relation to the Centerra shareholdings, including:
• The Kyrgyz Side shall have no restrictions on the transfer or encumbrance of any Centerra common shares it holds... (Section 2.4(c));
• Any Centerra shares held by the Kyrgyz Side shall be subject to the provisions of Section 3.8 of the 2004 Shareholders Agreement... (Section 2.4(d));
• Nominees [to be elected to the Centerra board of directors] shall include two individuals selected by the Government..., provided, however, that (i) if the Kyrgyz Side’s ownership in Centerra is less than 10% but is greater than 5%, Centerra shall only be required to include one nominee selected by the Government...; and (ii) if the Kyrgyz Side’s ownership in Centerra is equal to or less than 5%, without limiting any rights the Kyrgyz Side may have as a shareholder under applicable law, Centerra shall not be required to include any nominees selected by the Government... (Section 3.3(a));
• The Restated Shareholders’ Agreement shall not include any restrictions of the transfer or encumbrance of any shares in Centerra held by the Kyrgyz Side other than as provided in this Agreement on New Terms. (Section 5.8(c)).
On April 24, 2009, the Prime Minister of the Republic signed the ANT for the Government and the President of Kyrgyzaltyn signed the ANT for that company. On the same day and in accordance with the conditions of the ANT, the Prime Minister signed a government resolution ("Resolution 254") requesting approval of the ANT from the Kyrgyz Parliament, the Jogorku Kenesh. Paragraph 5 of Resolution 254 reads:
To authorize the open joint stock company "Kyrgyzaltyn", on behalf of the Government of the Kyrgyz Republic, to receive and hold shares in the company "Centerra Gold Inc." which are owned by the Government of the Kyrgyz Republic in accordance with the Agreement mentioned under 1 of this Resolution [the ANT], and to exercise other rights with regard to said shares.
The Jogorku Kenesh approved the ANT on April 30, 2009. Pursuant to the "Law on Ratification", the ANT acquired the status of law.6 That same day, the Jogorku Kenesh also passed Decree No. 1141-IV, which instructed the Government to submit information to the Jogorku Kenesh regarding the ANT, including information concerning:
ordinary shares received under the project "Kumtor" to the benefit of the Kyrgyz Republic from the company "Cameco Corporation" amounting to 25300000 and the additionally issued ordinary shares amounting to 18232615 shares, in the period before 1 July 2009.
The Applicants did not argue or suggest that the Law on Ratification ranks ahead of or supersedes the property rights established by the Code.
As noted above, the ANT is to be interpreted in accordance with New York law. Both sides presented expert evidence on New York law. The experts agree on the following principles of contract interpretation:
• The fundamental principle is that agreements are construed in accordance with the parties’ intent, and the best evidence of what parties to a written agreement intend is what they say in their writing.
• A written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms. Extrinsic evidence of the parties’ intent may be considered only if the agreement is ambiguous, which is an issue of law for the courts to decide.
• Recitals in a contract do not control the operative clauses of the contract unless the latter are ambiguous. Where a recital clause and operative clause are inconsistent and the recital clause is clear, but the operative clause is ambiguous, the recital clause should prevail. Where a recital clause and an operative clause are inconsistent, the operative clause, if unambiguous, should prevail.10
Each of the experts also provided his own interpretation of the ANT applying these principles. I have not relied on those interpretations but rather have conducted my own analysis using the applicable New York legal principles.
The conduct relied on by the Applicants, and the Republic’s response, are summarized as follows:
• Disposition 610-p (2004). The Applicants rely on this Disposition, pursuant to which the Government ordered that all proceeds from the sale of 7.5 million Centerra shares be assigned to the state budget. The Republic responds that the actual text of Disposition 610-p simply directs the State Property Fund to "bring to the consideration of the general meeting of shareholders" of Kyrgyzaltyn the issue of allocating the proceeds to the state budget, and that this was done in accordance with the JSC Law and the Charter of Kyrgyzaltyn.
• Government Resolutions 239 and 247 (2006). Resolution 239 established a working group to address issues relating to the sale of the Centerra shares. Resolution 247 directed the State Property Fund to prohibit the sale of the Centerra shares without an appropriate Government resolution and to use the sale proceeds in the manner determined by the Government. The Republic argues that these acts are consistent with Kyrgyz law and the Republic’s rights as the sole shareholder of Kyrgyzaltyn.
• Establishment of Working Group (2007). In May 2007, the Prime Minister of the Republic created an expert group that considered options for transferring Centerra shares held by Cameco. On August 30, 2007, the Government passed Resolution 382, which approved a draft agreement on new terms. The parties to the draft agreement were the Government and Centerra, but not Kyrgyzaltyn. A recital to the agreement states "Cameco and the Government are the largest shareholders in Centerra". The resolution was ultimately declared null and void when the ANT was signed. The draft agreement was never signed.
• Disposition No. 495-r (2011). Disposition 495-r established an interagency commission to advise Kyrgyzaltyn’s shareholder on issues relating to the Centerra shares. The Republic argues that obtaining advice on a major asset of its subsidiary is consistent with the Republic’s role as the sole shareholder and that any proposals raised by the commission would have had to go through the usual decision-making procedures for Kyrgyzaltyn.
• Disposition 180-p (2011). The Applicants rely on Disposition 180-p, pursuant to which dividends declared by Centerra and received by Kyrgyzaltyn were transferred to the Government on account of "future dividends" on three occasions. The Applicants submit that this transfer was contrary to the JSC Law. The Republic argues that the Disposition only instructed the State Property Fund to put the issue of the transfer of dividends on the agenda for an extraordinary shareholders meeting of Kyrgyzaltyn, that there was nothing illegal about the arrangement, and that the dividends were treated as income of Kyrgyzaltyn, which paid tax on that income. The Republic also notes that the minutes of the 2012 shareholders meeting of Kyrgyzaltyn state "the shares of Centerra Gold Inc. belong to Kyrgyzaltyn JSC with the right of ownership; dividends received by Kyrgyzaltyn JSC on these shares belong to Kyrgyzaltyn JSC with the right of ownership".
• Statements of the Government in various resolutions, reports and news articles that refer to its interest in the Centerra shares.16 The Republic argues that these statements were made in a highly politicized context and that, in any event, none of these statements can have the legal effect of altering the property rights of Kyrgyzaltyn in the Centerra shares.17
• The conviction in 2016 of the former Chairman of Kyrgyzaltyn on criminal charges relating to a dividend paid to Centerra by its subsidiary. The Applicants point to statements made to the court in that proceeding that refer to the Government’s ownership of Centerra. The Republic argues that the case involved a charge of abuse of official duties and the court did not consider or determine the issue of the ownership of the Centerra shares.
For example, the Applicants rely on, among other reports and statements, a 2007 report of the Government that refers to "[Revenues from the sale of shares and the privatisation of state property including Centerra Gold shares"; a 2009 report from the Prime Minister that states "[w]ith account of the increase in the paid shares of Centerra, 33% of the shares in that company are now in ownership of the Kyrgyz Republic"; a statement of the Prime Minister in 2011 that "..we have 33% stake in Centerra and should have influence in operational, financial and other management to that degree"; a statement of the Prime Minister in 2014 that "Kyrgyzstan received dividends of $12 million only. After payment of 5% taxes, we obtained only $11.4 million"; a statement by the Prime Minister in 2016 with respect to a potential dilution of "Kyrgyzstan’s stake in Centerra Gold Inc... We are shareholder number I having more than 32% of stocks."
The Applicants also rely on reports by Centerra that conflate the interests of the Government and Kyrgyzaltyn. The Republic argues, relying on the evidence of Mr. Herbert, General Counsel of Centerra, that any reference to ownership interest of the Republic was to ensure proper disclosure under Ontario securities law, which deems a parent corporation to own shares that are legally owned by its affiliates.
Accédez à la source d'information la plus complète et la plus fiable en arbitrageDEMANDEZ UN ESSAI GRATUIT
Déjà enregistré ?