Opinion ID: 78007
Heading Depth: 2
Heading Rank: 1

Heading: Interpretation of BTL Articles of Association

Text: Appellants argue that the Government's appointment of four C directors in February 2005 violated the share pledge agreement and the BTL Articles of Association. Appellants contend that they are entitled to damages for their wrongful loss of control of the board as a result of the Government's appointments. The parties do not dispute that at the time in question the Government owned a majority of the B shares, entitling it to the two B directorships, and that appellants owned the special share, entitling them to the two special share directorships. Thus, the only directorships contested before this Court are the C directors appointed pursuant to Articles 90(D)(i) and 90(D)(ii).
Appellants assert that the interpretation of Article 90(D)(i) was not properly before the district court, and the court therefore ruled on a non-justiciable question when it interpreted Article 90(D)(i). We find this argument to be entirely without merit. Courts may consider issues antecedent to . . . and ultimately dispositive of the case before them. U.S. Nat'l Bank of Or. v. Indep. Ins. Agents of Am., 508 U.S. 439, 447, 113 S.Ct. 2173, 2178, 124 L.Ed.2d 402 (1993) (quoting Arcadia v. Ohio Power Co., 498 U.S. 73, 77, 111 S.Ct. 415, 418, 112 L.Ed.2d 374 (1990)). The propriety of appellants' appointment of the Article 90(D)(i) directors was relevant to whether the Government had improperly replaced those directors in February 2005. The interpretation of Article 90(D)(i) was therefore antecedent to and dispositive of part of the case before the district court, and the court did not err in ruling on it. Because appellants do not challenge the merits of the district court's ruling, we affirm the district court's interpretation of Article 90(D)(i). [6]
Our affirmance of the district court's interpretation of Article 90(D)(i) means that the Government is entitled to the two C directors appointed pursuant to that article. This leaves only the two C directors appointed pursuant to Article 90(D)(ii). The proper interpretation of Article 90(D)(ii) was resolved by litigation in Belize. The trial courtthe Belize Supreme Courtissued a decision on the interpretation of Article 90(D)(ii), which was later reversed by the Belize Court of Appeals. This resolution of the status of the two Article 90(D)(ii) C directors is described below. Because the Belize court resolved the status of these C directors in favor of appellants, as opposed to the district court's contrary resolution in favor of the Government, we must decide whether to defer to the Belize court. The district court refused to recognize either Belizean decision, and the parties in their initial briefs did not contest the district court's decision not to defer. Because this Court was concerned about the international comity implications of any decision we issued, we asked the parties to submit supplemental briefing on what deference we should give to the Belize Court of Appeals decision, pursuant to the principles of international comity. [7] After reviewing the parties' briefs, we conclude that international comity principles indicate that deference to the Belizean decision is appropriate. [8] In general, federal courts have an obligation to exercise the jurisdiction conferred upon them. Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 817, 96 S.Ct. 1236, 1246, 47 L.Ed.2d 483 (1976). However, as this Court stated in Turner Entertainment Co. v. Degeto Film GmbH, 25 F.3d 1512, 1518 (11th Cir.1994), abstention from the exercise of jurisdiction is appropriate in some private international disputes. We note that the posture of the instant case is very similar to Turner, and we find its analysis helpful in reaching the correct result here. [9] In Turner, this Court considered whether to stay or dismiss domestic litigation after a German court issued a judgment on the merits in parallel proceedings. Id. We identified three factors for determining whether abstention is appropriate: (1) international comity; (2) fairness to litigants; and (3) efficient use of scarce judicial resources. Id.
International comity encompasses the principle of respect for the acts of sovereign nations. Id. As the Supreme Court has explained [t]he comity thus extended to other nations. . . is the voluntary act of the nation by which it is offered, and is inadmissible when contrary to its policy, or prejudicial to its interests. But it contributes so largely to promote justice between individuals, and to produce a friendly intercourse between the sovereignties to which they belong, that courts of justice have continually acted upon it as part of the voluntary law of nations. Bank v. Earle, 38 U.S. (13 Pet.) 519, 589, 10 L.Ed. 274 (1839). Consistent with this explanation of the principles and limitations of international comity, this circuit identified the primary concerns in an international comity analysis: (1) whether the judgment was rendered via fraud; (2) whether the judgment was rendered by a competent court utilizing proceedings consistent with civilized jurisprudence; and (3) whether the foreign judgment is prejudicial, in the sense of violating American public policy because it is repugnant to fundamental principles of what is decent and just. Turner, 25 F.3d at 1519 (internal citations omitted). We also identified the relative strengths of the foreign and domestic interests in the litigation as relevant to a consideration of international comity. Id. at 1521. In this case, neither party has argued that the Belizean judgments were rendered via fraud or that the Belizean proceedings lacked any element of civilized jurisprudence. We see no evidence that the Belizean judicial system affords litigants treatment that is inconsistent with American notions of due process. Our analysis therefore turns to whether the Belizean judgment violates American public policy. [10] The Belize Court of Appeals ruled on the proper interpretation of Article 90(D)(ii), which reads: [t]he holder of the Special Share shall so long as it is the holder of C Ordinary shares amounting to 37.5% or more of the issued share capital of the Company be entitled . . . to appoint two of the Directors designated C Directors and by like notice to remove. Appellants argued that under a proper interpretation of the article, only a special shareholder with the required amount of shares could remove a director appointed pursuant to the article; if the special shareholder ceased to own enough C shares, the Article 90(D)(ii) C directors could not be removed. In contrast, the Government argued that the so long as language meant that the Article 90(D)(ii) C directors were entitled to their positions only so long as the special shareholder owned the requisite amount of shares. If the special shareholder's C stockholdings dropped below 37.5% of the total issued stock, the Article 90(D)(ii) C directors would lose their positions. The Belize Court of Appeals agreed with appellants, finding that the plain language of Article 90(D)(ii) did not speak to the tenure of the Article 90(D)(ii) directors, but only to their appointment and removal. Construing the article consistent with its language, the court held that directors appointed under Article 90(D)(ii) remain in office until they are removed by a special shareholder with the required amount of shares. Thus, under the Belize Court of Appeals decision, the two C directors appointed under Article 90(D)(ii) may only be removed by a special shareholder who also owns C shares amounting to 37.5% or more of the issued share capital of the company. If the special shareholder does not have the requisite amount of shares, the two C directors appointed under Article 90(D)(ii) remain in office until the special shareholder obtains the required amount of shares or the special share passes into the hands of a shareholder who owns the requisite amount of shares. This interpretation allows for the possibility of entrenched directors. This is so because directors appointed pursuant to Article 90(D)(ii) can only be removed by a special shareholder owning C shares amounting to 37.5% of the total issued stock. Thus, if the special shareholder sells C shares resulting in ownership of less than the requisite amountand retains the special share, the Article 90(D)(ii) directors cannot be removed by any shareholder. The district court considered this result to be commercially unreasonable, which informed its decision to rule that the Article 90(D)(ii) directors only stayed in office while the special shareholder owned the requisite amount of shares. While we acknowledge the potential difficulty created by the possibility of entrenched directors, we cannot say that the Belize Court of Appeals decision violates American public policy. The Court of Appeals decision merely gives effect to the plain language of the BTL Articles of Association. Under Belize law, which the parties agree governs this case, corporate articles of association are interpreted under contract law principles. Under federal law, the plain meaning of a contract's language governs its interpretation. [11] Textron Def. Sys. v. Widnall, 143 F.3d 1465, 1469 (Fed.Cir.1998); Leicht v. Bateman Eichler, Hill Richards, Inc., 848 F.2d 130, 133 (9th Cir.1988). In this case, Article 90(D)(ii) states when and how C directors can be appointed or removed pursuant to that article. Article 90(E), which discusses removal of directors generally, specifically exempts the Article 90(D)(ii) directors. While the so long as language in Article 90(D)(ii) is arguably ambiguous, we cannot find that the Belize Court of Appeals decision to construe that article's terms strictly violates our public policy. The final element in our consideration of international comity is the relative strengths of the domestic and foreign interests in the litigation. In this case it is clear that the interests of Belize far outweigh the American interests. This case involves the interpretation of the articles of association of a Belizean corporation pursuant to Belize law. The consequences of the litigation affect Belizean parties, and to the extent that the litigation might have any effect on the delivery of telecommunications services, the effect would be on the citizens of Belize. None of the parties to the litigation is an American corporation; the lawsuit's connection to the United States results from the renegotiated payment arrangements involving, tangentially, the International Bank of Miami. Therefore, the Belizean interests easily outweigh the American interests in this case. Accordingly, we find that all of the international comity factors clearly favor deference to the Belizean decision.
Three considerations are relevant to the second factori.e., fairness to litigantsin the international abstention analysis: (1) the order in which the suits were filed; (2) the more convenient forum; and (3) the possibility of prejudice to parties resulting from abstention. Turner, 25 F.3d at 1521-22 (internal citations omitted). Here, appellants filed suit in the district court in February 2005 and the Government commenced the action in Belize in March 2005. Therefore, the order in which the suits were filed tilts somewhat towards the American forum. However, as the Turner court noted, the location of the first-filed suit is not dispositive of this factor. Id. at 1522. The other two considerations favor the Belizean forum. The above discussion indicating that the interests of Belize far outweigh any American interestsalso leads to the conclusion that the Belizean forum was more convenient than the American forum. With respect to the prejudice factor, this consideration focuses on whether the party opposing deference to the foreign forum will receive a fair and impartial trial in the foreign forum. Turner, 25 F.3d at 1522. We readily conclude that the Government received a fair and impartial trial and appeal in Belize. Indeed, we note that it was the Government that initiated the litigation in Belize. Thus, in weighing the three considerations under the fairness factor, we conclude that in the overall they weigh in favor of deference to the Belizean decision.
Finally, the considerations for the third factor, efficient use of judicial resources, are: (1) the inconvenience of the federal forum; (2) avoidance of piecemeal litigation; (3) whether the actions have common parties and issues; and (4) whether the alternative forum will issue a prompt decision. Turner, 25 F.3d at 1522 (internal citations omitted). As noted above, of the two forums, Belize was the more convenient. Deference to the Belizean court will minimize the chances of piecemeal litigation and inconsistent judgments. [12] The actions do have common parties and issues; the Government and appellants were parties to the Belizean and American suits, and the proper interpretation of Article 90(D)(ii) was at issue in both cases, although the American litigation included some additional claims as well. Finally, the Belizean court has already issued a prompt decision at the appellate level. Overall, we conclude that considerations of efficient use of judicial resources favor deference to the Belizean decision. In sum, the international comity factor weighs heavily in favor of deference while the fairness and judicial efficiency factors also point in that direction. In deciding whether to defer to the Belize Court of Appeals decision, the district court did not apply the Turner factors. Failure to apply the correct legal standard is an abuse of discretion. Ass'n of Disabled Ams. v. Neptune Designs, Inc., 469 F.3d 1357, 1359 (11th Cir.2006). We conclude that the district court abused its discretion in failing to apply the Turner analysis and refusing to defer to the Belizean judgment. As our discussion here makes clear, abstention in regard to the interpretation of Article 90(D)(ii) was warranted. Therefore, we hold that, as the Belize Court of Appeals determined, appellants were entitled to the two Article 90(D)(ii) C directorships. Appellants may be entitled to damages as a result of the wrongful loss of these two directorships. [13] We thus remand the case to the district court for further proceedings. Because the briefs mentioned in passing that an appeal has been taken to the Privy Council, we leave for the district court to determine whether a hearing on damages should proceed or a stay should be granted pending the outcome of the appeal, a matter with respect to which we have received no briefing.