Outer House rules Scottish courts can hear windfarm joint venture dispute involving English-registered company

About this case:

• Citation:
  [2026] CSOH 109
• Judgment:
  External link
• Court:
  Court of Session Outer House
• Judge:
  Lord Summers

The court found that the provisions of the shareholders’ agreement relied upon by the petitioner were operational rather than constitutional and that the dispute therefore did not fall within the exclusive jurisdiction rule in paragraph 11(b) of Schedule 4 to the Civil Jurisdiction and Judgments Act 1982.

D Thomson KC and R Anderson KC, instructed by Brodies LLP, appeared for the petitioner. Tosh, instructed by Lindsays LLP, appeared for the respondents.

Windfarm joint venture

Christopher Moran Energy Ltd and Galileo Empower Ltd are partners in a joint venture company, Dorenell Windfarm Extension Ltd, or DWEL. The second respondent, Diarmuid Twomey, is a director of Galileo Empower and the third, Colin Williams, is a director of DWEL. DWEL was not itself a respondent but was served with the petition as an interested party.

The dispute concerns memorandums of understanding entered into in connection with construction of a windfarm at Dufftown, Moray. Christopher Moran Energy avers that the respondents, acting through DWEL, were not entitled to enter into those arrangements and that Galileo Empower breached clauses 4.5, 4.7 and 5.6 of a shareholders’ agreement between the joint venture partners and DWEL. It also contends that the contracts in question were not approved by DWEL’s board and that its operating sub-committee lacked authority to enter into them.

The petitioner seeks interdict preventing the respondents from carrying out acts said to be contrary to the shareholders’ agreement. The substance of those contractual allegations has not yet been determined.

The respondents challenged the jurisdiction of the Scottish courts. They relied on paragraph 11(b) of Schedule 4 to the 1982 Act, which gives exclusive jurisdiction over proceedings having as their object “the validity of the constitution, the nullity or the dissolution” of a company to the courts of the part of the United Kingdom in which that company has its seat.

DWEL is registered in England and Wales. Christopher Moran Energy accepted that if the object of the proceedings was indeed a challenge to the validity of DWEL’s constitution, the case would require to be brought there. It maintained, however, that there was no dispute concerning the validity of DWEL’s constitution. Its case was instead that the respondents had acted inconsistently with the shareholders’ agreement.

Operational rather than constitutional

Lord Summers first considered the meaning of a company’s “constitution”. The respondents invited the court to apply a broad dictionary meaning encompassing how a company was constituted or made up. The petitioner relied on section 17 of the Companies Act 2006, which provides that references to a company’s constitution include its articles and certain resolutions and agreements falling within section 29.

Lord Summers considered that section 17 provided useful guidance even though no equivalent statutory definition existed when the 1982 Act was enacted. He observed that documents identified by sections 17 and 29 shared the characteristic of being fundamental to the workings of a company. Articles of association were an obvious example, while matters requiring special resolutions or unanimous agreement by members could similarly be regarded as fundamental to the company’s structure or operation.

He acknowledged that some agreements could have a hybrid character, containing both constitutional and non-constitutional provisions. The shareholders’ agreement at issue had not been sent to Companies House for registration. Lord Summers inferred that it had not been considered constitutional at the time.

He then examined the particular clauses on which Christopher Moran Energy relied. Clause 4.5 addressed matters including the frequency and location of board meetings. Clause 4.7 required certain board decisions to have the approval of at least one director appointed by each shareholder. Clause 5.6 provided that certain matters required approval of the board and that purported approval by the operating sub-committee would be null and void.

Lord Summers characterised those provisions as “operational or administrative in nature”. Although clause 5.6 used the language of nullity, the nullity arose from breach of an operational requirement rather than a provision going to the constitution of the company. The shareholders’ agreement itself also referred separately to decisions being made in accordance with “this Agreement and the Constitution”, which suggested that its authors regarded the two as distinct.

Lord Summers also considered the related delegated services agreement to deal with operational rather than constitutional matters. He said that the other subjects identified in paragraph 11(b), namely nullity of the constitution and dissolution of a company, concerned matters fundamental to a company’s makeup. That supported interpreting “validity of the constitution” as likewise directed towards fundamental issues rather than matters incidental to the company’s internal arrangements.

Scotland a competent forum

The respondents separately argued that the proceedings challenged the validity of decisions taken by an “organ” of DWEL, namely its operating sub-committee, and that this also conferred exclusive jurisdiction on England and Wales.

Lord Summers rejected that submission. He noted that Article 24(2) of the recast Brussels I Regulation expressly gave exclusive jurisdiction to the courts of a company’s seat not only in disputes about its constitution, nullity or dissolution but also concerning the validity of decisions of its organs.

The domestic Schedule 4 regime was different. Paragraph 4 provided that proceedings concerning a decision of an organ of a company may be brought in the part of the United Kingdom where the company has its seat, but paragraph 11(b) did not make that jurisdiction exclusive.

Lord Summers said that the respondents’ proposed interpretation “flies in the face of Schedule 4”. He relied on Lord Reed’s decision in McGowan v Summit at Lloyds, in which the omission of decisions of company organs from the exclusive jurisdiction rule had been held to be deliberate. Accordingly, even if the proceedings concerned the validity of a decision of an organ of DWEL, that would not prevent them from being raised in Scotland.

The court also rejected the respondents’ alternative plea of forum non conveniens. Christopher Moran Energy pointed to the windfarm being located in Scotland, most witnesses being in Scotland and the interdicts being sought against apprehended wrongs in Scotland. The relevant principles of contractual construction were common on both sides of the border and the applicable company legislation was UK-wide.

The respondents suggested that English law on estoppel could differ from the Scots doctrine of personal bar, but Lord Summers said there was no sufficient basis at that stage to conclude that personal bar would become an issue. No equivalent proceedings had been raised in England and no evidence had been provided to suggest that litigation there would be less expensive.

Lord Summers therefore held that the petition was not subject to the exclusive jurisdiction of the courts of England and Wales and that the Scottish jurisdictional averments were sufficient for it to continue. The non-exclusive jurisdiction clauses in the shareholders’ and delegated services agreements did not prevent the petitioner electing to litigate in Scotland.

Both respondents’ preliminary pleas were repelled.

The case was put out by order for submissions on expenses and further procedure. Lord Summers noted that it remained unclear whether Christopher Moran Energy continued to seek interim interdict, an issue which could also be addressed at that hearing.