On Wednesday 28 July 2021, the High Court handed down its most recent judgment in the case of Koza Ltd & Akin Ipek v Koza Altin, refusing permission for the Claimants, Koza Ltd and Mr Ipek, to serve new proceedings on Mishcon de Reya's clients, Koza Altin and its directors. The Court also granted the relief sought by Koza Altin, summarily dismissing an application made by the Claimants on the grounds that it was not arguable.
Koza Altin is a publicly listed gold mining company and a part of the Turkish Koza group of companies. It is alleged that the Koza group backed the Gülenist Terror Group (FETÖ) whilst under the control of Mr Ipek. Criminal proceedings against Mr Ipek and his companies prompted the Turkish Court to appoint trustees to take control of the group and its assets in 2015.
The English litigation centres on a fight for control of Koza Ltd, an English wholly-owned subsidiary of Koza Altin. In 2015, Mr Ipek purported to amend the constitution of Koza Ltd to give himself entrenched rights and control over the company. Koza Altin considers these amendments invalid and is attempting to resume control over its subsidiary. Koza Ltd and Mr Ipek commenced proceedings against Koza Altin in the English courts, trying to stop Koza Altin's attempts to resume control of Koza Ltd. Mr Ipek also argued that the English courts should not recognise the authority of the management of Koza Altin because he claimed they were appointed in breach of the rules of natural justice and infringed his Human Rights - the so-called 'authority claim'.
Mr Ipek and Koza Ltd suffered a significant blow in the litigation in July 2019, when the Supreme Court held that the English courts did not have jurisdiction to determine the claims against Koza Altin's former trustees or the 'authority claim' against Koza Altin itself. In March 2020, Koza Altin obtained an injunction preventing Mr Ipek from using Koza Ltd's funds to pay for an investor-state arbitration brought on behalf of the Ipek family against the Republic of Turkey. In March 2021, Koza Altin obtained a further injunction, preventing Mr Ipek from misusing Koza Ltd's funds to pay for the English proceedings, which the court held were ultimately for his (and not the company's) benefit.
This latest decision of the High Court firmly rejects Mr Ipek and Koza Ltd's attempts to revive the 'authority claim', which the Claimants had sought to resuscitate in two ways. Firstly, Mr Ipek and Koza Ltd had issued fresh proceedings against Koza Altin and its current directors, arguing that the English courts should not recognise the latter's authority over Koza Altin. Mr Ipek sought permission from the court to serve those proceedings on the Defendants outside of the jurisdiction. Second, Mr Ipek and Koza Ltd had invited the Court to strike out Koza Altin's Acknowledgment of Service and Defence because (they argued) those instructing Mishcon de Reya on behalf of Koza Altin should not be recognised as having the authority to do so. Koza Altin asked the Court to summarily dismiss the Claimants' strike out application.
In his judgment, a copy of which can be found here, Mr Justice Trower found that the fresh proceedings raised no serious issue to be tried and that Mr Ipek's arguments were "misconceived". The Court dismissed the Claimants' service out application (thereby quashing the new proceedings) and granted Koza Altin's request to summarily dismiss the strike out application. The Judge held that Koza Altin's rights as a shareholder of Koza Ltd existed wholly independently of the decisions of the Turkish courts appointing Koza Altin's directors. The appointment of the directors was indisputably valid under Turkish law and the Judge declined to review or interfere with those decisions.
This latest ruling means that a significant part of Mr Ipek's case has been dismissed. The only remaining substantive issue in the proceedings, which will be subject to trial in due course, is whether Mr Ipek's attempt to entrench his rights over Koza Ltd is permissible under English company law.
Hugo Plowman, the Partner at Mishcon de Reya LLP representing Koza Altin, commented: "This is an important decision, which prevents the current management of Koza Altin being dragged into wasteful and unmeritorious proceedings, and which brings Koza Altin one step closer to regaining control of its subsidiary from Mr Ipek. My client is delighted with this result which follows its successful application last year for an injunction to prevent Mr Ipek from misusing Koza Ltd's funds."
The Mishcon team comprises Hugo Plowman, Naomi Simpson, Oli Gepfert and Sofia Berggren.