CL-2025-000376 - [2025] EWHC 2875 (Comm)

The RAE Parties accept that the NPP Parties have a good arguable case and/or that there is a serious issue to be tried in both the English Proceedings and in the Arbitration.

However, the Applicants submit that they do not merely have a good arguable case in the English Proceedings, but rather that they have clearly and distinctly the better of the arguments. This is, they say, because the Cooperation Agreement expressly provides that NPP is entitled to receive any proceeds from the sale of the Projects in priority to RAE:

The Applicants submit that Clause 2.1 of the Second Amendment requires RAE to take “any and all other actions” required for the compliance of “its obligations and liabilities under the Cooperation Agreement”, and that this includes an obligation to ensure compliance with the Waterfall Mechanism. Thus, on a proper construction of the Cooperation Agreement, they say that RAE is required to take any and all actions, including giving instructions to any relevant third parties (including TMF, FIP Coremas and FIP Rio Alto), to ensure that proceeds are distributed in accordance with Waterfall Mechanism.

There is an issue between the Parties as to the amount of the Actual Investment. The NPP Parties contend that it was around R$680m. It is, however, asserted in the RAE Parties’ evidence that the Actual Investment is only R$296,862,000. This was the amount of the Actual Investment as at 31 December 2017 (R$80,609,754.44, as recorded in Clause 2.3.1 of the First Amendment), uplifted by inflation and ROI. This calculation assumes that no further investment was made by the NPP Parties after 31 December 2017. The NPP parties say that this is incorrect and that they have made further investments in the Projects since the date of the First Amendment. The definition of “Actual Investment” assumes that the NPP Parties would make further investments in the Projects. The entire scheme of the First Amendment was designed to ensure that the NPP Parties would receive a return on the investments that would be made over the course of the Projects. As at the date of the First Amendment, none of the Projects had commenced commercial operation. The Projects therefore needed further investment. The NPP Parties referred me to evidence showing that RAE has acknowledged in submissions to the Brazilian court that such investment came from NPP.

I consider that the NPP Parties have a compelling case that the Actual Investment significantly exceeds the Sale Proceeds and that they are entitled to 100% of the Sale Proceeds in priority to the RAE Parties.

The NPP Parties seek specific performance of RAE’s obligation to ensure that the Sale Proceeds are distributed in accordance with the Waterfall Mechanism. Specific performance may be granted where the defendant may not be “good for the money”: Gravelor Shipping Ltd v GTLK Asia M5 Ltd [2023] 1 CLC 272, per Foxton J at [99].

The Rio Alto Group entered into the reorganisation process because, the evidence shows, it is in “financial crisis” and “at serious risk of default regarding the payment of certain debts with their main creditors”. The NPP Parties contend that there is a real risk that the Rio Alto Group’s reorganisation process will fail and RAE will enter insolvency, such that RAE would be unable to satisfy an award of damages. The RAE Parties state, for their part, that the Rio Alto Group “fullyexpects and intends the implementation of the Plan to generate a business that is viable and able to satisfy any potential future arbitral awards or judgements”. This, the Applicants say, is no more than wishful thinking and there is no basis for concluding that the Reorganisation Plan is likely to succeed.

I am asked by the NPP Parties to assume that the Reorganisation Plan is in fact likely to fail. This Plan is predicated on the sale of the business to the third party: see e.g. Recital G (a sale to third parties “is a necessary and indispensable condition for the… implementation of this Plan”). The Reorganisation Plan was prepared on the basis that the business would be sold on terms equal to or better than the terms of a non-binding offer made by IG4 Capital (“IG4”). The NPP Parties became aware that IG4 had informed Rio Alto Group’s financial advisers, LAPLACE, that it would not be making a binding offer. The RAE Parties’ solicitors, Culbert Ellis, confirmed on 17 September 2025 that this could be treated as agreed. Accordingly, it appears that a sale to IG4 (or another third party on the same or better terms) – a “necessary and indispensable condition” for the success of the Reorganisation Plan – is unlikely to be achieved. IG4 has withdrawn and there is no reason to think that an alternative buyer could be found who is willing to proceed on the same or better terms. The RAE Parties have adduced no evidence of the existence of an alternative buyer.

Further and in any event, the NPP Parties submit that even if an alternative buyer could be found, it would provide no assurance about the position of RAE and its ability to satisfy an award of damages. RAE and its interests in the Projects fell outside the scope of IG4’s non-binding offer. There is no reason to think that an alternative buyer would wish to broaden the scope of the transaction. This would not resolve the uncertainty as to what might happen to RAE at the end of the reorganisation process. Even if the Reorganisation Plan were (somehow) to succeed, in the sense of salvaging some part of the Rio Alto Group, it does not mean that RAE – the putative judgment debtor – will survive. I find these submissions to be compelling.

For these reasons, it is likely that the Reorganisation Plan will fail and that the Rio Alto Group and/or RAE will enter some form of insolvency, with the consequence that the NPP Parties will only be able to recover, at best, a fraction of the Disputed Proceeds to which they are entitled. At the very least, there is a real risk that such a scenario will arise. It follows that damages would not be an adequate remedy for the NPP Parties.

The RAE Parties contend that damages would not be an adequate remedy in the event that the injunction turns out to have been wrongly granted, because the receipt of the Disputed Proceeds is critical to the success of the Reorganisation Plan such that, without the Disputed Proceeds, they will go out of business. Mr Lomas for the RAE Parties said in argument that these Disputed Proceeds “are a shot of adrenaline needed to keep the patient alive”.

The RAE Parties’ submission depends on the proposition that the success or failure of the Reorganisation Plan depends entirely on whether RAE receives the Disputed Proceeds of R$44m. I do not consider this submission to be realistic on the evidence before me. The Rio Alto Group is already in a perilous position. The central plank of Reorganisation Plan – the non-binding offer from IG4 – has disintegrated. As matters stand, therefore, the Reorganisation Plan is likely to fail in any event. Furthermore, the total debts of the Rio Alto Group set out in the Reorganisation Plan amount to over R$1.7 billion. The Disputed Proceeds (R$44m) would cover approximately 2.5% of those debts. The receipt of the Disputed Proceeds would not make a material difference to the Rio Alto Group’s ability to pay its creditors. The RAE Parties were unable to point to any evidence that would enable me to conclude that the contrary is arguable.

Accordingly, I agree with the NPP Parties that the Rio Alto Group / RAE Parties had no justification for seeking to pin the success of the Reorganisation Plan on receipt of the Disputed Proceeds.

I am satisfied there is at least a significant risk that the Rio Alto Group and the RAE Parties will go out of business such that the NPP Parties will be unable to recover the Disputed Proceeds to which they have established a strong case that they are entitled. I reject the RAE Parties’ suggestion that, if they receive the Disputed Proceeds, the business will survive, but if they do not receive the Disputed Proceeds, the business will fail.

The question of determining which“course seems likely to cause the least irremediable prejudice” largely overlaps with the matters addressed above. I have concluded that refusing the injunction would most probably result in irremediable prejudice to the NPP Parties. I think it unlikely that granting the injunction would itself result in the Rio Alto Group or RAE going out of business.

A further important factor is the relative strength of the parties’ cases, to the extent that it is possible to form a view as to the merits at the interlocutory stage: American Cyanamid, per Lord Diplock at 409; Series 5 Software Ltd v Clarke [1996] CLC 631, per Laddie J at 640-641; Quick Draw LLP v Global Live Events LLP [2012] EWHC 233 (Ch) per Nicholas Strauss QC at [6], citing the unreported judgment of the Court of Appeal in Guardian Media Group v Associated Newspapers Ltd (20 January 2000); and Sportsdirect.Com Retail Limited v Newcastle United Football Club Limited [2024] EWCA Civ 532, [2024] 1 WLR 4324, per Sir Geoffrey Vos MR at [17] and [41].

I can form a view as to the merits of the NPP Parties’ claim under the Cooperation Agreement. The meaning and effect of the Cooperation Agreement is a straightforward question of contractual construction. The language of the Cooperation Agreement is clear and unambiguous and the RAE Parties did not, in either their written or oral arguments, identify any reason why the NPP Parties’ construction should be rejected. I am also satisfied that the RAE Parties’ position that the “Actual Investment” is effectively frozen in time as at 2017 is not credible.

I do therefore take into account the strong likelihood that the NPP Parties will succeed at trial. Although I do not consider that there is any risk that the non-receipt of the Disputed Proceeds might result in the Rio Alto Group going out of business, any such risk would not be caused by my granting of the injunction but rather because of the fact that the RAE Parties were never entitled to the Disputed Proceeds in the first place.

The factors addressed above point clearly in favour of granting the injunctions. To the extent that there is any doubt, the Court should take the safest course and preserve the status quo, which is that neither party has received the Disputed Proceeds.

The RAE Parties placed particular emphasis upon the Reorganisation Plan and the proceedings in Brazil. They argue that I should decline to contine the injunctions on the grounds of comity, in circmstances where the Injunction Applications overlap with or intrude on the reorganisation process and/or matters over which the Brazilian court has exercised jurisdiction. The RAE Parties submit that the Disputed Proceeds are assets that fall outside the grasp of the English court and that the Brazilian Court was the court first seized of the matters with which the Injuction Applications are concerned.

The RAE Parties contend that NPP, as a creditor of RAE, is subject to the reorganisation process in Brazil. NPP is named as a creditor in the Reorganisation Plan in respect of two “Illiquid” debts. These appear to be references to the NPP Parties’ claims under the loan agreements rather than the Disputed Proceeds. The NPP Parties’ entitlement to receive the Disputed Proceeds does not seem to me to be a “Subject Credit” within the meaning of the Reorganisation Plan. This is because it is not a debt owed by RAE to NPP. Any future liability that RAE might incur to the NPP Parties would post-date the filing of the Reorganisation Plan. The RAE Parties accept that “credits that originated after 14 July 2025” fall outside the scope of the Reorganisation Plan. In any event, the Reorganisation Plan has not received judicial approval (and may perhaps be unlikely to do so, given the withdrawal of IG4). It is therefore not binding on NPP.

Nor do the Injunction Applications seem to me to fall within the scope of the Suspension Order, by which the Brazilian court ordered “the suspension of all actions, executions and acts of constraint against the Plaintiffs, for credits subject to recovery and submitted to mediation…”. The NPP Parties’ entitlement to the Disputed Proceeds is not a “credit subject to recovery”. Nor is it a debt owed by RAE to NPP and it has not been “submitted to mediation”. Furthermore, any future liability RAE might incur would post-date the Suspension Order and therefore likely fall outside its scope.

I am satisfied that the NPP Parties are correct when they submit that the reorganisation process and the Suspension Order are concerned with the enforcement of debts by creditors of the Rio Alto Group and that the Injunction Applications are not concerned with the enforcement of a debt. They are rather concerned with the RAE Parties’ entitlement to receive the Disputed Proceeds in accordance with the Waterfall Mechanism in the Cooperation Agreement i.e. directly from FIP Coremas and in priority to the RAE Parties; and the NPP Parties’ exercise of their right to acquire the Disputed Quotas under the Quotaholders’ Agreement. I reject the RAE Parties’ submission that the subject matter of the Injunction Applicatons is firmly before the Brazilian courts. I do not consider that any issues of comity arise on the present application. I consider that the Disputed Proceeds fall squarely within the jurisdiction of this Court.

During the course of the Projects, the NPP Parties entered into various loan agreements with the RAE Parties. RAE defaulted on those loans and NPP has taken steps to enforce the debts (the “Loan Enforcement Proceedings”) including obtaining attachment orders over the receipt of the Disputed Proceeds (the “Attachment Orders”).

Following the Suspension Order, the RAE Parties obtained a stay of the Loan Enforcement Proceedings. The Attachment Orders therefore have been, or are likely to be, set aside. On 10 July 2025, the NPP Parties called a General Meeting of the Quotaholders of FIP Coremas to vote on a proposed amendment to FIP Coremas’ byelaws, which was scheduled for 25 July 2025. The purpose of the proposed amendment to the byelaws was to allow the proceeds to be re-invested into other projects and thereby to prevent the distribution of the Disputed Proceeds to FIP Rio Alto. On 23 July 2025, the RAE Parties applied for an urgent ex parte injunction to block the proposed meeting. On 24 July 2025, the NPP Parties filed short written submissions in which they asked for time to respond to the RAE Parties’ application. However, on 25 July 2025, the court granted an order which restrained the scheduled General Meeting (the “AGM Injunction”). The NPP Parties have appealed.

The RAE Parties have suggested that there is little difference between what the NPP Parties attempted to achieve in Brazil and what they seek to achieve by way of the Injunction Applications. I do not agree. The RAE Parties’ submissions to the Brazilian court repeatedly referred to NPP as a “creditor” and gave the impression that the amendment of the byelaws formed part of the Loan Enforcement Proceedings. It seems to me that the picture painted in the RAE Parties’ submissions (to which the NPP Parties have not had a proper opportunity to respond) means that it is hardly surprising that the Brazilian court concluded that the NPP Parties appeared to be attempting to enforce debts that fell within the scope of the Suspension Order and thereby circumvent the reorganisation process. However that may be, the Brazilian court did not in my judgment decide or purport to decide whether the enforcement of the NPP Parties’ rights under the Cooperation Agreement, which is governed by English law and subject to English jurisdiction, would constitute a circumvention of the Suspension Order or the Reorganisation Plan. Plainly it would not since, as I have already found above, the NPP Parties’ entitlement to the Disputed Proceeds is not a debt which falls within the scope of the Suspension Order and the Reorganisation Plan.

Furthermore, although the RAE Parties sought an order restraining NPP from taking any steps to prevent the distribution of the Disputed Proceeds, the Brazilian court declined to grant such wide relief. The court only suspended the General Meeting and any future meetings with a similar agenda. I do not consider that these Injunction Applications in any way breach the AGM Injunction.

On 15 September 2025, the RAE Parties applied to the Brazilian court for an urgent injunction to (among other things) restrain the NPP and TMF Parties from preventing the distribution of the Disputed Proceeds to the RAE Parties. The NPP Parties submit that this application flies in the face of the Injunction Orders.

In a letter to the Court dated 16 September 2025, the RAE Parties suggested that their application to the Brazilian court was a reason why the English Court should not accept the TMF Undertakings, because compliance with the TMF Undertakings would constitute a breach of the putative Brazilian injunction. In effect, therefore, the RAE Parties appear to submit that this Court should not continue the injunctions or accept the TMF Undertakings because they would be inconsistent with an application made by the RAE Parties after the Injunction Orders were made, after the TMF Parties agreed to give the TMF Undertakings, and in circumstances where the RAE Parties’ application has not even been granted.

This seems to me nothing more than an attempt by the RAE Parties to tie the hands of the English Court in determining whether the Injunction Orders should be continued. I consider that the pre-existing Injunction Orders, which were made by the English Court in the exercise of its exclusive jurisdiction over disputes under the Cooperation Agreement (and its supervisory jurisdiction over the Arbitration) should take priority.

Moreover, if (as requested by the RAE Parties) the Brazilian court orders an injunction without giving the NPP and TMF opportunities a proper opportunity to be heard, any such injunction will in my view have been ordered on a false premise. For example, the RAE Parties have asserted in their application to the Brazilian court that the Injunction Applications form part of the NPP Parties’ efforts to enforce a “bankruptcy claim”. This a mischaracterisation of the NPP Parties’ claim to be entitled to the Disputed Proceeds. The application fails to explain the NPP Parties’ position that they are entitled to the Disputed Proceeds pursuant to the Waterfall Mechanism in the Cooperation Agreement and instead gives the, what I consider to be misleading, impression that the Injunction Orders were only made in support of the Arbitration.

In conclusion, I do not consider that comity requires the English Court to defer to an order of the Brazilian court in circumstances where that order conflicts with pre-existing orders of the English Court, where it was sought with the apparent purpose of circumventing the English Court’s jurisdiction to determine whether the Injunction Orders should be continued, and where it was obtained on the basis of what seems to me to be misleading and incomplete information provided to the Brazilian court.