Dillon Eustace Cayman successfully defend injunction application

In a recent judgment delivered in Al Jomaih Power Limited & Denham Investment Limited v. IGCF SPV 21 Limited & KES Power Limited[1], the Grand Court of the Cayman Islands has clarified that “a contract breaker cannot at the same time seek an injunction to enforce performance of the contract by his counterparty – that is the antithesis of doing equity”. The Grand Court found that the English decision in Chappell v. Times Newspapers Ltd[2], which – until now – did not appear to have been cited in the Cayman Islands, represents the law of the jurisdiction.

Dillon Eustace’s Cayman Litigation team of Conal Keane (Partner), Niall Dodd (Counsel) and Alan Quigley (Senior Associate) acted for the successful party, IGCF SPV 21 Limited. The team was led by Graham Chapman KC of 4 New Square Chambers.

The contract in question is a shareholders agreement between: (i) Al Jomaih Power Limited and Denham Investment Limited (the Plaintiffs); and (ii) IGCF SPV 21 Limited (SPV 21), regulating their conduct as shareholders of KES Power Limited (the Second Defendant) – a company holding the majority stake in Pakistan’s largest energy company, K-Electric. Pursuant to the proceedings, the Plaintiffs seek, amongst other things, a permanent injunction restraining SPV 21 from permitting or taking any action in breach of the KESP SHA.

Following the issuing of the proceedings, the Plaintiffs sought an interim injunction pending the trial of the action, including an injunction restraining SPV 21 from making any changes to the composition of the board of directors of K-Electric.

SPV 21 was part of the Abraaj group of companies whereby its single voting share (the Voting Share) has been registered to Abraaj Investment Management Limited (now in official liquidation) (AIML) since 2014. Following the collapse of the Abraaj group, including AIML, in 2018 amid allegations of fraud and mismanagement by Mr Arif Naqvi (the founder and CEO of the Abraaj group) and his associates, the liquidators appointed over AIML entered into a transaction (the Transaction) to, amongst other things, dispose of an interest in the Voting Share. Pursuant to the Transaction, which was completed following a sanction application acceded to by the Grand Court, the beneficial ownership of the Voting Share has been acquired, with AIML retaining the legal title.

The Plaintiffs complain that the Transaction amounted to a breach of a change of control-related provision in the KESP SHA which therefore disentitles SPV 21 from exercising certain powers under the contract, including in relation to the appointment of directors to the board of KEL. SPV 21 disputes this complaint and it contends that the Plaintiffs are aggrieved at having failed to themselves acquire the interests at the centre of the Transaction, with the proceedings part of a desire by the Plaintiffs to challenge and unwind the Transaction (with SPV 21 suggesting that the Plaintiffs may be associated with Mr Naqvi, with Mr Naqvi acting behind the scenes).

These proceedings are “one aspect of hotly contested disputes between the parties and their proxies” arising out of the Transaction. In October 2022, the Plaintiffs commenced proceedings in Pakistan and obtained an ex parte injunction restraining SPV 21 from making any changes to the composition of KEL’s board of directors (which injunction, SPV 21 contends, was “founded on spurious and untrue allegations…abandoned in these proceedings”). Following the commencement of the Pakistan proceedings, SPV 21 issued proceedings in the Cayman Islands (the Anti-Suit Proceedings) seeking anti-suit injunctive relief to restrain the pursuit of the Pakistan proceedings in breach of a jurisdiction clause in the KESP SHA and requiring the setting aside of the Pakistan injunction.

Both the Grand Court and the Cayman Islands Court of Appeal have held that the Pakistan proceedings were a breach of the KESP SHA by the Plaintiffs and the anti-suit injunctive relief sought by SPV 21 has been granted against the Defendants. The Anti-Suit Proceedings are subject to an appeal to the Judicial Committee of the Privy Council (the JCPC), with the appeal to be heard on 6 October 2025. However, the JCPC appeal is not challenging the finding that the Plaintiffs breached the jurisdiction clause in the KESP SHA but is founded on an argument that, notwithstanding the Plaintiffs’ breach, the First Defendant subsequently submitted to the jurisdiction of Pakistan by applying to set aside the injunction and to stay the Pakistan proceedings.

In dismissing the Plaintiffs’ application for interim injunctive relief to restrain SPV 21 from exercising certain rights under the KESP SHA, the Grand Court found that “[t]he Plaintiffs are deliberate contract breakers” and came to the court “with unclean hands, disentitling them to the equitable relief that they seek”. The Grand Court considered and followed the English decision in Chappell, whereby a party’s unclean hands in seeking injunctive relief to enforce a contract it has itself broken is alone a basis for dismissing an injunction application. While the Grand Court’s finding is logical and long established in England, it is nevertheless a welcome decision in the absence of previous authority in the Cayman Islands confirming the position.

Along with a finding of unclean hands, the Grand Court also dismissed the Plaintiffs’ application for an injunction on the basis that: (i) there was no serious issue to be tried that the Plaintiffs will obtain at trial a permanent injunction; (ii) it appeared very unlikely that the Plaintiffs will suffer any damage if an injunction is refused and, even if they do, it should be easy to quantify; and (iii) whilst insufficient on its own to justify refusing an injunction, the Plaintiffs are guilty of significant and unjustified delay in seeking injunctive relief which, in the overall balancing exercise, weighed in favour of refusing to grant the relief.

Footnotes:
[1] [2025] CIGC (FSD) 74
[2] [1975] 1 W.L.R. 482