CL-2025-000010 and CL-2025-000091 - [2025] EWHC 1842 (Comm)

On 2 January 2025, JPM commenced proceedings against the Directors before the Multi-Member Court of First Instance of Athens. The claim was brought under Article 919 of the Greek Civil Code (“GCC”) which provides:

“Infringement against good morals (bonos mores)

Whoever intentionally caused damages to another against good morals (bonos mores) is liable to compensate them.”

Article 332 of the GCC provides:

“Any agreement made in advance which excludes or limits liability from intentional conduct or gross negligence shall be null and void.”

While the Greek law experts (Professor Valtoudis for WRL/the Directors and Professor Gortsos for JPM) failed to sign up to a single joint memorandum (an unsatisfactory state of affairs which does little to assist the court) the following matters regarding Articles 919 and 332 are common ground:

It is also common ground that Article 919 claims can be made by shareholders of companies against the directors where the directors’ conduct causes “direct damage” to the shareholders. Examples of cases in which such claims have succeeded include the violation of a shareholder’s right of first refusal which had the effect of diluting or nullifying the shareholder’s shareholding; the failure to distribute dividends; and the stripping of assets which prevented the shareholders from benefitting from expected future growth. It is clear that liability will be easier to establish in these circumstances where a direct intention on the part of the directors to harm the minority shareholder(s) can be proved. I was referred by Ms Phelps KC to an article by Associate Professor Eleftheriadis, discussing a number of cases deploying Article 919 in minority shareholder contexts.

Finally, I should record that it is common ground between the Greek law experts that a director has no relationship with the shareholder who nominates the director to the board and the shareholder is not liable for the acts of such a director nor liable to indemnify the director in respect of any liability the director incurs. Rather the director’s duties are owed solely to the company. A Greek commentator has stated of a director appointed by a shareholder that the director:

“is not linked by any particular legal relationship with the shareholder or shareholders who nominated him or her to the Board, nor is he or she certainly a representative of them.”

So far as the factual case in the Greek Proceedings is concerned, in very brief summary, it is alleged that the Directors had “co-ordinated with each other in order to ‘dominate’ the Board of Viva and therefore Viva itself …” and “through a number of actions and omissions contrary to the legislative and regulatory framework … and to the accepted principles of morality … have violated and circumvented the rights of the plaintiff company as a shareholder in Viva” and “impaired the very essence of the plaintiff’s shareholding rights in Viva”. JPM has itself summarised the effect of its claims as follows:

“[Mr Karonis], assisted by the other [Directors], has planned and implemented a series of wrongful actions concerning the administration, operation, business activities and transactions of Viva, as well as the relationship with the supervisory authorities of Viva, in order to:

(a)

on the one hand, purposefully and systematically deprive [JPM] of any ability to exercise influence over Viva, through the exercise of its statutory and contractual rights, in accordance with the Articles of Viva, Law 4548/2018, and the SHA; and

(b)

on the other hand, deprive [JPM] of its economic rights in Viva.”

The damages sought in the initial complaint filed in the Greek Proceedings are EUR 916,939,161.45 (the total amount invested by JPM in Viva). This is said to constitute JPM’s loss on the basis that the conduct of the Directors has effectively deprived JPM of the benefits of its shareholding, given the limited means by which JPM can derive economic value from the shareholding. While it would be very surprising if JPM’s shareholding turned out to have no value (the premise of the quantification in the Greek Proceedings to date), the argument that the rights attached to a shareholding have been so curtailed as to amount to “constructive expropriation” is one which is encountered in legal argument (e.g. in “disguised expropriation” cases in investment treaty arbitration), and the argument that a minority shareholding has a lower value to the extent that the shareholders are at the mercy of the majority shareholder is a recognised principle of share valuation. While WRL may well be right that the quantum of the case advanced against the Directors in the Greek Proceedings is exaggerated, that is not a matter on which I can reach a final decision in these proceedings. Insofar as it is said that the size of the claim of itself reflects a subjective intention to vex the Directors or WRL, ambitious quantum claims are a common feature of litigation, and their effect on the recipient undermined when, as here, the pleaded case offers limited explanation or justification for the amount claimed.

Finally, there is a dispute between the parties as to whether a Greek court will apply Greek or English law to the claims. I return to this issue later.