The Supreme Court has struck out a petition alleging shareholder oppression at Via Net Works Ireland Limited, finding that the two petitioners no longer had standing to bring the case and that their dispute was in any event subject to arbitration.
The proceedings were brought by Stuart Fogarty and Aubrey Fogarty Associates Limited against majority shareholder Via Net Works Europe Holding BV. They alleged that the company's affairs had been conducted in a manner oppressive to them or in disregard of their interests under section 205 of the Companies Act 1963.
The company, formerly Medianet Ireland Limited, had been incorporated in 1995 to design, operate and service computer networks. In March 1999, Via Net Works acquired 60% of its shares. A shareholders' agreement signed the same day gave Via Net Works a right, within a specified period, to buy the remaining shareholders' interests and required disputes arising from the transaction documents to be resolved by binding arbitration.
By March 2000, Via Net Works had increased its holding to 77.45%. On February 5, 2001, it notified the respondents that it would purchase their remaining shares on March 8. The respondents later alleged, among other matters, that the company had been badly managed, that their interests had been diluted and that they had been excluded from meaningful participation. Those allegations were strongly disputed.
The High Court refused Via Net Works' application to dismiss the petition or alternatively stay it for arbitration. On appeal, Chief Justice Keane held that decision was wrong.
The Supreme Court found that, under the shareholders' agreement governed by New York law, the respondents were contractually bound to transfer all of their shares from March 8, 2001. Their continued appearance on the company's register did not preserve standing to bring a section 205 petition once they had voluntarily divested themselves of their shareholder rights.
The court also found that the allegations, even if proved, would largely concern wrongs to the company rather than oppression of the respondents individually. It further held that the arbitration clause covered the dispute and would independently have required the proceedings to be stayed.
The Supreme Court allowed the appeal and substituted an order striking out the petition.