Cukurova Finance International Limited & Anor v Alfa Telecom Turkey Limited ([2013] UKPC 20) has been occupying the BVI Commercial Court, the Eastern Caribbean Court of Appeal, and the Privy Council, for the last six years, having made several appearances in each.
At issue was the right of Alfa Telecom Turkey Limited ("ATT") to call in a loan made to Cukurova Finance International Limited ("Cukurova"), its right to "appropriate" the Cukurova shares over which it held charges, and, ultimately, whether Cukurova was entitled to recover the appropriated shares under the equitable doctrine of relief from forfeiture.
In previous judgments the Privy Council had held that ATT had been entitled to call in the loans and to appropriate the shares, but that Cukurova was entitled to relief from forfeiture. That left the difficult and entirely new question (at least in the context of share charges) of what conditions ought to be imposed on the grant of relief. This issue divided the board of the Privy Council, with the majority favouring a broad equitable discretion, and the minority viewing the equitable jurisdiction as confined to the alleviation of harsh contractual terms, such that the surviving terms of the loan contract dictated the conditions on which relief would be granted.
In this eAlert we consider the reasoning in support of both conclusions, and the implications of this decision for those taking BVI share charges governed by English law as security for commercial loans.
To read this eAlert click here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
