Tether Investments, S.A. de C.V. & Anor v Electric Solidus, Inc. (t/a Swan Bitcoin) [2026] EWHC 1652 (Comm)

[2026] EWHC 1652 (Comm)Case No CL-2025-000016
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (KBD)
Venue 7 Rolls Buildings, Fetter LaneDate Friday, 26 June 2026
London
EC4A 1NL
Before
MR SEAN O’SULLIVAN KC(sitting as a Deputy High Court Judge)
Between
TETHER INVESTMENTS, S.A. de C.V.Claimant2040 ENERGY LIMITEDClaimantELECTRIC SOLIDUS, INC.(t/a SWAN BITCOIN)Defendant
Mr S Houseman KC and Mr E Mordaunt (instructed by Skadden, Arps, Slate, Meagher & Flom LLP) for Claimant.Mr E Levey KC, Mr L Brock and Mr W O’Hara (instructed by Quinn Emanuel Urquhart & Sullivan LLP) for Defendant.Hearing Hearing dates: 25 and 26 June 2026
JUDGMENTMR SEAN O’SULLIVAN KC (sitting as a Deputy High Court Judge):
[1]The first claimant (“TINV”) and the second claimant (“2040”) seek declaratory and especially injunctive relief against the defendant (“Swan”), in respect of certain foreign proceedings.[2]The primary target is Swan’s application filed in the BVI on 23 March 2026 seeking leave to bring a derivative action in the name of and on behalf of 2040. However, the claimants also seek relief in respect of Swan’s pursuit of discovery orders in certain US courts in support of that potential derivative action.

The background

[3]I described some of the background to the parties’ wider dispute in my short judgments dealing with various procedural matters on 22 June 2026.[4]TINV is the majority (79 per cent) shareholder in a joint venture entity (i.e. 2040) specialising in bitcoin mining, originally managed by its minority (20 per cent) shareholder, Swan. TINV provided more than $400 million of financing to 2040, the majority of which is said to remain outstanding.[5]The relationship between the parties is governed by a shareholders’ agreement, or “SHA”, dated 28 July 2023 as novated from Zettahash Inc to TINV. TINV says that the structure of the SHA and joint venture was that:(a) TINV, as investor, provided finance for the whole venture and, pending repayment of all the finance advanced to it, exercised control over 2040.(b) 2040 owned the entire stock in trade and commercial estate of the mining business, namely, the asset mining chips and other inventory, as well as the technological/IP aspects.(c) Swan received a 20 per cent interest in 2040, by way of what is called “sweat equity”, and until 2024 managed and operated 2040’s mining business via a team of personnel who were then employed by Swan, known as the “mining team”.[6]2040 developed a bitcoin mining business between mid-2023 and mid-2024. The original focus was an equity investment in a Tasmanian mining site, but the joint venture broadened into a proprietary mining operation belonging to 2040. TINV approved investment memos for the purchase and deployment of ASIC computer chips at various sites, under hosting agreements, for the mining of bitcoin.[7]The parties’ relationship broke down in mid-2024. The team at Swan responsible for managing 2040’s business, the so-called “mining team”, resigned en masse and joined another company called Proton.[8]The repayment date has not occurred and the SHA remains on foot.[9]The claimants commenced the present action in January 2025. At that stage, the primary aim was to restrain Swan from obtaining or using any of 2040’s assets, in respect of which assets Swan was seeking relief against its ex-employees (the minging team) in proceedings commenced in California. That concern was disposed of when Swan accepted that the assets belonged to 2040 and that Swan could not pursue the California proceedings in its own name.[10]Having made that concession, Swan indicated an intention to pursue a derivative action in the name of 2040 in respect of the alleged diversion of business opportunities by TINV and others to third parties, including the company, Proton, which had replaced Swan as manager of 2040’s business.[11]On 23 March 2026, Swan filed the BVI leave application pursuant to s184C of the BVI Business Companies Act. It was brought in the BVI because 2040 is a BVI company and the BVI court has the supervisory role for such companies that the English Companies Court would have for companies registered in this jurisdiction. I am told that the leave application is due to be heard in the next few weeks, and hence that it is urgent this matter is resolved.[12]The proposed defendants to the derivative claim include TINV itself, the directors appointed by TINV to serve on the board of 2040, and some others, such as two members of the mining team, two senior TINV executives, and Proton. The allegations in broad summary are as follows:(a) first, that there was a wrongful sale of computers used for bitcoin mining and related assets by 2040. Some of those assets, it is said, were sold to a related party (i.e. TINV itself) without obtaining a suitable independent valuation. All of them were sold in circumstances where, on Swan’s case, 2040 would have earned significantly more money by deploying the relevant ASICs and other items in its bitcoin mining business than it did by selling them;(b) second, that there was a wrongful diversion from 2040 to other entities of contracts and corporate opportunities, such as mining site hosting agreements and other mining opportunities, including the opportunity to invest in a joint venture in Ethiopia; and(c) third, that there was a wrongly use of confidential information and/or trade secrets which properly belonged to 2040.[13]Four points are, as I understand it, common ground in relation to this application for leave. First, Swan is seeking leave to bring claims “in the name of and on behalf of” 2040 and to control the conduct of such proceedings. Second, the substantive claims will need to be brought in England by virtue of the exclusive jurisdiction clause in the shareholders’ agreement. Third, the alleged claims belong to 2040, which is alleged by Swan to have suffered losses running to hundreds of millions of dollars. Fourth, TINV has made clear beyond doubt that it does not, and will not, give consent for 2040 to become a claimant in, or pursue, any derivative action at the behest of Swan.[14]I should mention that Swan is also seeking an order from the BVI court that 2040 indemnify it against liability for the costs incurred in applying for permission to bring the derivative claim and then incurred pursuing those claims. The claimants say that this indemnity would, if granted by the BVI court, result in funds which were loaned by TINV to 2040 being used to pursue claims against TINV and others at the behest of Swan.[15]Against that background, the claimants are seeking injunctions preventing Swan from pursuing that application for leave.[16]In addition, Swan filed a petition late last year in Delaware against Synteq Digital for discovery under USC s.1782. On the same day as it issued the BVI leave application, i.e. on 23 March 2026, Swan sought similar relief in New York against Cantor Fitzgerald. Both of those USC 1782 applications were made in support of the BVI derivative proceedings. I am asked to make orders in respect of those petitions as well, on the basis that they were and are pursued in support of the derivative action, which the claimants say is not open to Swan.[17]By way of postscript to that description of the background, I observe that there were various complaints made on behalf of Swan about the pleadings and about fluctuations in the claimants’ case on this application. In the light of the limited way the case ended up being presented on behalf of the claimants, those complaints do not matter to my analysis and I will say no more about them.

The law in relation to anti-suit relief

[18]I need to start by identifying the legal context for this application, which is seeking a form of anti-suit relief. It is not, however, the most common type of such application, where reliance is placed upon an exclusive justification clause and an injunction is sought to prevent the other party from seeking relief in another jurisdiction which should be sought in the contractually agreed forum. There is an exclusive jurisdiction clause in favour of the English court, but it is no longer suggested that the BVI leave application should be brought in England. TINV’s position is more absolute than that. It says no such leave application can properly be made by Swan anywhere in the world.[19]Notwithstanding that deviation from the ordinary case, Mr Houseman KC for the claimants presents this as, in essence, an ordinary application for anti-suit relief. He relies upon s.37 of the Senior Courts Act 1981 and says that the court should exercise its discretion to grant relief. That relief was originally sought on two grounds: first, on the basis that the foreign proceedings constitute a breach of a clause in a contract between the parties, and, second, on the basis that the foreign proceedings are otherwise vexatious or oppressive. That second ground was not pursued before me at all in oral submissions. It was said that it has not been abandoned, but it is no longer suggested that I should grant any injunction by reference to it.[20]As to the contractual basis, Mr Houseman says that, if he is right that it would involve a breach of the SHA for Swan to pursue or succeed on the BVI leave application, or to pursue the proceedings which would be brought in the event of that application succeeding, then an injunction should be granted unless there is a strong reason not to do so: see Donohue v Armco Inc & Ors [2001] UKHL 64.[21]His submission is that the mere fact that enforcing that covenant would mean that a particular claim or remedy (i.e. a remedy which would be available in a foreign court) cannot be pursued, is not a strong reason to refuse ASI relief to enforce such a covenant. I accept that submission.[22]In RiverRock Securities v IBSP International Bank of St Petersburg (Joint Stock Company) [2020] EWHC 2483 (Comm), Foxton J observed that, while there were cases in which the availability of a particular claim in the arbitration had been held to be relevant to whether the arbitration clause extended to such a claim, if it did so, then that was not a reason for refusing anti-suit relief: see [57]-[61]. It might be noted that, in answer to the concern that the effect of an ASI might be to prevent the avoidance claims being pursued at all, on the basis that those claims were not available in an LCIA arbitration, an undertaking was offered promising not to contend before the arbitration tribunal that it was not open to IBSP to pursue in the arbitration the claims which it had been advancing in St Petersburg.[23]Similarly, in Croda Europe Ltd v Agform Ltd [2025] EWHC 2462 (Comm), the same judge held that the fact that relief could not be claimed under certain US and Delaware statutes in this jurisdiction was not a reason for concluding that the claims were not subject to the exclusive jurisdiction clauses: see [33]. In that case, I note that the learned judge appears to have gained some comfort from the fact that equivalent relief could nevertheless be obtained in the English court via claims for breach of contract or confidence.[24]These cases neatly illustrate that, if the wording of the exclusive jurisdiction clause makes clear that the claims must be brought in a particular place, the parties cannot complain that the forum to which they have agreed provides different legal mechanisms or remedies, as compared with other jurisdictions which they did not choose. These cases cannot really be said to be examples of parties giving up any right to make a claim, although I do not doubt that, where it is clear that that is what has been agreed, that bargain will be enforced.[25]In Elektrim SA v Vivendi Holdings 1 Corp [2009] 2 All ER (Comm) 213, ASI relief was granted to enforce a no-action clause in a bond trust deed governed by English law. It was accepted by the respondent that:
“... if the no-action clause was applicable, an injunction was the appropriate remedy, because the court would ordinarily enforce a negative covenant by injunction.”
See [81]. The effect of enforcement would be to require the bondholders to act through the trustee, and therefore avoid them competing with one another. It might be noted that the “no action” clause in issue provided that “bondholders cannot proceed directly against the issuer unless the trustee fails to take action in accordance with the bond documentation”, so it was not absolute as a bar to claims.[26]The Court of Appeal took the view that such a prohibition on bondholders’ enforcement actions ensured the central role of the trustee. As a matter of analysis, they decided that the Florida proceedings were within that contractual prohibition. Proceedings were in fact being brought by the trustee seeking overlapping relief in the Chancery Division in London.[27]In Whitesea Shipping and Trading Corporation & Anor v El Paso Rio Clara Ltd & Ors(The Marielle Bolten) [2009] EWHC 2552 (Comm), ASI relief was granted, restraining proceedings commenced in Brazil by subrogated cargo insurers, who commenced claims in respect of the loss of cargo against the vessel’s manager, P&I insurers and other third parties. Flaux J held that the Brazilian claim could not proceed against the third parties because the bill of lading contract prohibited claims against subcontractors: see [53]-[55]. Given the wording of the particular clause, that conclusion was unsurprising. Of course, that did not prevent the claims being pursued by cargo interests at all. They just had to be brought against the carrier in the contractual jurisdiction.[28]In Thomas Raphael’s book on Anti-Suit Injunctions, the following is said at para.7.38:
“It is rarer but not unknown for parties to provide that no litigation at all may take place in relation to a particular matter. The court is unlikely to conclude that this was what was agreed without unusually clear language. Even if an immunity has been contracted for, it will generally mean only that any claim should fail if brought, not that it would be a breach of contract for a claim even to be made before any court or tribunal. Nevertheless, where clear language is used, the court can give effect to such a clause by an injunction restraining foreign proceedings.”
[29]Mr Houseman did not dissent from that summary.[30]For his part, Mr Levey KC, for Swan, did not go so far as to say that if the relevant clause falls to be construed as Mr Houseman said it should, the putative unfairness inherent in that agreement would amount to a good reason why the agreement should not be enforced. But he did say that, when considering the meaning of the clause, it was legitimate to ask whether it was likely that the parties had intended to prevent the bringing, in any jurisdiction, of what would otherwise be a valid derivative claim.

The Litigation Prohibition

[31]TINV relies solely on what it calls the “Litigation Prohibition.” Specifically, clause 2.4 of the shareholders’ agreement states:
“Swan undertakes to the Investor that no Group Company shall, without Investor Consent, carry out any of the Reserved Matters.”
Those Reserved Matters are listed out at Part A of Schedule 2, with paragraph 19 from that list providing as follows:
“At any time prior to the Repayment Date except with Investor Consent, no Group Company shall ... institute, settle or compromise any legal proceedings, or submit to arbitration or alternative dispute resolution any dispute involving the company where the amount claimed (either by or against it) together with any costs incurred (or likely to be incurred) exceeds USD 20,000 (exclusive of VAT)…”
[32]The claimants say that this Litigation Prohibition is expressed in absolute terms. It is wide enough, they contend, to include a derivative action brought pursuant to the BVI statute in the name of and on behalf of 2040.[33]Swan says that the Litigation Prohibition covers claims instituted by 2040 or its subsidiaries, not claims, such as the proposed derivative claim, which is instituted by Swan. In the end, it is a short point. I am being invited by both sides to make a final decision on this issue of construction, as a route to determining whether anti-suit relief should be granted. Does bringing a derivative action pursuant to the BVI statute involve a group company instituting legal proceedings?[34]It is important to understand that 2040 is a Group Company. Swan is not.[35]In the BVI, pursuant to s184C of the BVI Business Companies Act 2004:
“the court may, on the application of a member of a company, grant leave to that member to: (a) bring proceedings in the name and on behalf of that company ...”
A derivative action, therefore, undoubtedly involves a claim being brought in the name of the company, here 2040, but the motive force behind the commencement of these proceedings is the member, here Swan. It is the member which is going to bring the proceedings, even if it will do so in the name of and on behalf of the company.[36]Just reading those words, therefore, I would not consider derivative proceedings being commenced by Swan in the name of 2040 to amount to 2040 instituting legal proceedings, just because the BVI statute envisages those proceedings being in the name of the company. That is not a matter of an implied term, nor does it involve construing any of the words other than naturally.[37]Mr Levy submits, and I agree, that since a derivative claim is a special kind of claim brought by a shareholder in the name of a company, such a claim is not or is not properly to be characterised as a claim instituted by the company. See, for example, the helpful and, I would suggest, accurate description of a derivative claim in Kallakis v AIB Group Plc & Ors [2020] EWHC 460 (Comm) at [27], where it was held by Moulder J that the fact a BVI company has been struck off does not prevent a derivative action being brought on behalf of that company. In that context, it was said that:
“... as a matter of English law ... the claim is brought by the Trustee as the shareholder and not the SPV.”
[38]In my judgment, the key words in that description, and again in the BVI statute, are, “bring” or “brought”; i.e. the various forms of the verb “to bring”. The point is that it is the member, or the shareholder, who is taking that active step, not the company. Mr Houseman says that the shareholder is just the “animating party”, but that seems to me to be another way of saying the same thing. The same might be said of the Group Company when instituting legal proceedings, as described in the Litigation Prohibition. When the Group Company institutes proceedings, it is the party “animating” those proceedings and bringing them to life. But the company does not have that same role in relation to a derivative claim.[39]As Mr Levey rightly says, derivative claims are brought by a shareholder precisely because the company has been disabled, usually by the majority shareholder, from bringing any claim itself. These are proceedings by the member of the company, albeit utilising a cause of action which is vested in the company.[40]Mr Houseman argued that the Litigation Prohibition should be read as a compendious description of doing anything in relation to a dispute, save simply being sued. He says the Litigation Prohibition draws no distinction based on the nature of legal proceedings, or the capacity in which 2040 originates or participates in such proceedings, or how this comes about, for example at the initiative or compulsion of another party or with judicial permission. The only conditions, he says, are the value threshold and the consent of TINV.[41]I do not read the provision quite as widely as he does. He says that the parties must have intended to catch everything and anything, because litigation might affect the investor’s cash position. But that rather begs the question. What the clause actually does is prohibit 2040 from instituting - or settling or compromising - any legal proceedings. The Litigation Prohibition comes as part of a long list of Reserved Matters, all concerned with positive actions by the company.[42]Mr Houseman says that both the active and the passive meanings of “institute” are covered. I struggle with that submission. It seems to me that “institute”, like “settle” and “compromise”, is here being used in the active form. The subject is the Group Company. If it were used in the passive voice, it would be the proceedings which would be the subject, being instituted, but that possibility is not mentioned in the paragraph. Accordingly, that word “institute” seems to me to envisage 2040 itself commencing proceedings. It really means the same as “brought” or “commence”. By contrast, it does not extend as far as words and phrases such as “take a step in” “pursue”, or “prosecute”.[43]As an example, Mr Houseman suggested tentatively that “institute” would extend to the company making a counterclaim. That seems ambitious to me, and perhaps reveals the extent to which Mr Houseman finds himself arguing for a purposive construction. At least as that procedural concept is understood in England, I would not consider entering a counterclaim to involve “instituting” legal proceedings. The legal proceedings would already exist.[44]In argument, we discussed another hypothetical example, namely an equitable assignment of a right previously held by 2040. If the third party assignee commenced proceedings which named the company as defendant, would that amount to the company instituting proceedings? I would suggest that the answer to that is “no.” Any other conclusion would seem to me to be a stretch. Indeed, if that amounted to the company instituting proceedings, then it is difficult to see why the company merely being sued does not.[45]I must ask myself whether my conclusion on that example is simply because the company would, at least as a matter of English procedure, be named only as a defendant with the equitable assignee as claimant. Would it matter if the equitable assignee were required, in a different jurisdiction, to bring the action in the name of the company? I would suggest not, because it is the substance, not the form, which matters. In either case, the reason why the proceedings are coming about is because they are being brought by the assignee, who has a right to do so, whatever view the company might take of the situation. It is therefore the assignee who is instituting the proceedings, not the company. That is consistent with the fact that, as I have said, all of the Reserved Matters seem to me to involve active decisions being made by the company. The concern is with controlling those decisions, even where effective control of the board might not be sufficient for that purpose.[46]I emphasise that the language here, by which I mean the words “institute”, “settle” “compromise” and, indeed, “submit to”, target certain specific ways that legal or other proceedings can be started or finished. It does not cover all of the ways in which legal proceedings might begin; most obviously by being sued by the other party. Nor does it cover all of the ways in which proceedings might end. It does not say, for example, “will not seek or consent to judgment”.[47]Having observed that this wording is concerned with the company taking active decisions of certain specified kinds, being named in a derivative action does not seem to me to qualify.[48]That is the view I would have taken in the absence of any authority, but that view is supported, at least to some extent, by the decision of Richard Millett QC, sitting as a deputy, in SDI Retail Services Limited v King & Ors [2017] EWHC 237 (Ch). In that case, it was held that a prohibition in similar terms to the one in the present case, again using the word “institute”, did not prevent the minority shareholder from bringing a derivative claim in the name of the company against the majority shareholder and its appointed directors. Mr Millett said:
“56. ... The whole point and purpose of the Company, and the concomitant shareholder relationships governed by the SHA, is the Company would exploit the rights granted to it under the IPLA. It cannot sensibly have been the intention of the parties that where the IPLA was terminated by TRFC the Company would have no ability to challenge it. I have noted that the Company is not a party to the SHA, and therefore it did not itself agree to give up all rights of suit against the world, including its own directors or TRFC. 57. It is true that on the plain words of the provision SDI and TRFC agreed that the Company cannot bring any action without the mutual agreement of the shareholders. Mr Hill sought to construe these words as limited to claims against third parties and not against TRFC or the directors of the Company. Although I see much sense in that construction the words used cannot take me there ... 58. ... Here the solution is not to be found in Mr Hill’s restrictive rewriting of sub-clause (n) but in standing back and seeing the clause as a whole in the context of the wider commercial relationship. The parties agreed between themselves that they would not procure the Company to sue. But the Company is not suing anyone. SDI is suing, as claimant, to vindicate a claim by the Company for alleged damage done to it. The interesting debate under the old common law as to whether the derivative action is a representative action brought in reality by the company has no place after the codification of this part of company law in 2006 ... 59. I do not read clause 12.1(n) as an agreement between the shareholders that no derivative actions would be brought. Mr McCormick’s submission amounted, as he appeared to accept and indeed asserted, to saying that the Company was merely a look- through with no real corporate personality of its own separate from its shareholders and its interests could effectively be ignored. I cannot accept that submission. The terms of (indeed the need for) the SHA are inconsistent with it, and it goes against the whole point of having TRFC grant rights under an arm’s length contract to the Company. A proper balance between ‘textualism’ and ‘contextualism’ produces a reading of the SHA that respects rather than ignores the separate corporate personality ...”
At [60], he went on to explain the interrelationship with another agreement, which does not have any parallel here.[49]The claimants suggest that this case can be distinguished for three main reasons. First, because the company in the SDI Retail case was not party to the relevant shareholders’ agreement, whereas 2040 is a party to the SHA. The claimants say that, in the present case, because it was a party to the shareholders’ agreement, 2040 did agree to give up all rights of suit against the world, including its own directors, to the extent that consent was not given by TINV for such claims. I see the point, but it does not seem to me that the fact that the company in SDI Retail was not party to that shareholders’ agreement formed an especially important part of the judge’s reasoning. Indeed, it is not easy to see what role that observation ended up playing, if any. It is clear that the learned deputy’s more fundamental point, with which I agree, was that a derivative action is not properly characterised as a claim by the company, because it does not amount to the company suing anyone.[50]Second, the claimants suggested that it makes all the difference that the company in SDI Retail was incorporated in England, whereas 2040 is incorporated in the BVI. That is said to matter because, if the BVI leave application is successful as a matter of local BVI procedure, a fresh claim form would then be issued in the BVI or other court naming the company as claimant, whereas, in England, the shareholder commences a derivative action by a claim form naming the company as defendant, and then goes on to seek the permission of the court to continue that derivative action.[51]Although this point gave me pause, in the end I do not see that this distinction is of any real importance either. If, as a matter of English law and procedure – which is the law of the SHA – a derivative action would not be caught by the words of the Litigation Prohibition, it would be surprising if an equivalent action was caught, just because of procedural differences in the jurisdiction of incorporation, and the way that local procedure requires such claims to be brought.[52]Indeed, Mr Houseman’s primary submission was that the parties cannot have intended such procedural differences in different jurisdictions to matter to the effect of the Litigation Prohibition. I agree. I should add that it was not clear to me what bringing the claim “in the name of” the company actually means, in terms of BVI procedure, especially in the event of the BVI court giving permission for a claim to be brought in England. Does that necessarily require that 2040 is identified as claimant, or can Swan be named as claimant in the heading, perhaps with a bracket referring to the fact that it is suing “in the name of and on behalf of 2040”? In any event, the form of the heading for the derivative action cannot (surely) make a material difference to the effect of the clause in relation to such an action. If anyone had been suggesting that that was the key to the whole thing, there needed to be some evidence put before the court about BVI procedure in that regard.[53]In my judgment, it would be bizarre if a form of words which is commonly used in English law shareholder agreements, and, hence, must have been formulated with at least an eye to English companies, should have a completely different and much wider effect if it happens to be used in the context of a foreign company, just because the procedural form for a derivative action in the BVI happens to be slightly different.[54]More generally, it does not seem to me that this procedural difference alters the fundamental fact, latched onto by Mr Millett KC, that it is not the company which is instituting the proceedings. Whatever the jurisdiction, the company would not be giving the instructions to solicitors or signing the equivalent of any statement of truth or, at least in the first instance, paying any court fee. This is the point: in neither England nor in the BVI does the bringing of a derivative action involve compelling the company itself to take such steps. In both jurisdictions, it is the member which is taking that step, albeit with the permission of the court to rely upon a cause of action which belongs to, and/or to use the name of, the company.[55]The third distinction pointed to by Mr Houseman was Mr Millett’s reference to the interrelationship with another agreement at [60]. I accept that that is, in an absolute sense, a distinguishing feature, in that it is a feature which seems to have played a role in Mr Millett’s thinking, but which has no parallel here. That said, I do not read his judgment as suggesting that this consideration was conditioning his approach to the meaning and width of the word “institute”.[56]The decision in SDI Retail could not be said to bind me in the sense used in cases such as Willers v Joyce & Anor [2016] UKSC 44. It concerns a completely different statutory context, involves a rather different suite of agreements, and a different type of relationship. But I take the view that the court’s reasoning in that case was correct and provides considerable support for the view that I have reached as to the meaning of the Litigation Prohibition.[57]For completeness, although the absence of any reasoning means that it does not add very much to the analysis, I will also mention Shandong Offshore Investment v Andresen [2018] EWHC 2874 (Ch), where there appears to have been a prohibition of a similar kind. At [4], Arnold J recorded:
“The claimant is one of two shareholders in SDTM and is now the majority shareholder. The other shareholder is Kamp LLP, which is indirectly majority-owned by Mr Andresen. Pursuant to a shareholders’ agreement between the claimant and Kamp, SDTM cannot commence litigation without Kamp’s consent. Accordingly, the only practical means by which SDTM can bring a claim against Mr Andresen is by means of a derivative claim such as this.”
It was not suggested that the claimant was prevented from bringing such a derivative claim, despite SDTM not being able to commence litigation without consent. As I say, that adds very little, but what little it does add is supportive of Swan’s case.[58]My third reason, or set of reasons, for preferring Mr Levey’s reading of the Litigation Prohibition is that, like him, I would consider it surprising and unattractive if this kind of relief was effectively precluded by an anodyne prohibition of this kind.[59]Prohibitions of this kind are not uncommon in shareholders’ agreements. They are not, I would suggest, aimed at limiting liability. They are not included for the purpose of protecting the majority shareholders or their appointed directors from derivative claims. They have a much more general purpose. All of these restrictions are about controlling what the company does. This list of Reserved Matters recognises that directors might, whatever their instructions from their appointing party, consider it in the company’s best interests to take steps of this kind, but it is nevertheless agreed that there will be a right of veto. Such prohibitions are not really directed, I would suggest, at taking away the substantive rights of the minority shareholders, as provided in the SHA, or as a matter of company law. If that was the intention, different words would be used.[60]Reading what is said here, it is hard to believe that those drafting, or including, this kind of prohibition had the rather niche concept of a derivative action in mind at al. I agree with Mr Levey that, even in the particular circumstance of this asymmetric agreement, it would be surprising if TINV and the TINV-appointed directors could do untold damage to the company and yet, without TINV’s consent, Swan would be prohibited from pursuing a remedy it might expect to have in such a case, namely, the bringing of a derivative claim. Mr Houseman suggested that there is nothing surprising about parties canalising claims down a certain jurisdictional route. That may be right as far as it goes, but here you have a statutory remedy available both in the jurisdiction in which the company has been incorporated, and in the parties’ chosen jurisdiction (in terms of the law of the SHA), yet the suggestion is, not that the remedy is sent down a particular jurisdictional route, but that it is effectively blocked.[61]To the extent that Mr Houseman’s carefully explained arguments about the nature of the SHA, about which I will say a little more in a moment, are said to justify a purposive and extended construction of the Litigation Prohibition, so as to have this effect, I am not ultimately persuaded. The fact that an agreement gives a lot of power to a majority shareholder does not suggest to me that the parties would have intended to deprive other members of the company of their statutory right to bring a derivative action in circumstances where damage has been caused to the company by the majority shareholders’ appointed directors. Far from starting from the position that that must have been what the parties intended, even if they did not express that intention very clearly, I would expect to see clear words if that was really what was going on. I do consider this consideration of the starting point to be relevant to the construction of the Litigation Prohibition, even if it would probably not amount to a strong reason for refusing ASI relief if the meaning of that prohibition was clear.[62]Mr Houseman argues that there is not really a blockage in respect of that remedy, just the selection of an alternative route. He says that the Litigation Prohibition does not leave Swan without any remedy as an aggrieved minority shareholder. On the contrary, Swan, he says, is free to bring whatever claims or counterclaims it considers it has in its own name, or to seek minority shareholder relief, so long as it does so consistently with the exclusive jurisdiction clause and other terms of the SHA.[63]It seems to me that there are three answers to that. The first is that it is far from obvious that Swan can bring claims or seek other relief which would fully address the complaints it is making in this context. The principles about reflective loss seem to me to be potentially problematic to the extent that Swan were claiming in its own name. If Mr Housman’s reference to minority shareholder relief envisages the bringing of an unfair prejudice petition, then such a petition deals with a different type of complaint and provides for different relief. At least as a matter of English law, these are not considered to be duplicative procedures, even if they do overlap in places. There is no BVI law expert evidence before me as to the extent of overlap in that jurisdiction.[64]Second, if Mr Houseman is right that other matching relief is available, my understanding is that leave to pursue the derivative claim will not be granted in the BVI court. Derivative relief in BVI, as elsewhere, is intended to be a remedy of last resort. Leave should not be granted if the shareholder has other means of vindicating its rights, such as an unfair prejudice petition: see s184C(2)(e) of the relevant Act. There was much discussion, albeit not really by reference to any evidence, in the course of submissions yesterday as to whether such a petition is really an equivalent option in a case of this kind. Plainly, the best place for that issue about BVI law to be decided is in the BVI court. If Mr Houseman is right as a matter of BVI law, his client should not need the injunctions they seek, because leave will be refused. None of this alters the fundamental point that TINV is arguing that the effect of the prohibition is that Swan is deprived of even the opportunity to seek the obvious statutory remedy for the specific complaints which it makes.[65]Third, if Mr Houseman is right about the reflective loss principle having no relevant application to a counterclaim by Swan, or when he asserts (or, I might say, speculates) that an unfair prejudice petition would work in exactly the same way, it becomes hard to see why any of this really matters. I will come on in a moment to Mr Houseman’s point about the potential indemnity for costs, but it might be said that, as the argument shaped up before me, the parties are not actually fighting over “jurisdiction”, as that word is usually understood. Everyone seems to be agreeing that any substantive claim will have to be resolved in England. Indeed, it might be said to be ironic that the greatest scope for TINV to be (as it might put it) “harassed with yet further foreign litigation”, would be if Swan must now switch to filing an unfair prejudice petition in the BVI.[66]Mr Houseman said that the merits of such a petition would be fought in England. I confess it is not clear to me quite how that would work in practice, but, if I assume that is true, one might then ask why this court is being asked to prevent the BVI court from deciding the leave application (in a way which is likely to engage principles of comity), if TINV’s own position is that materially the same relief will be available to Swan via a counterclaim in the present action, or by way of a slightly different application in the BVI. That would suggest that all of this is just shadow boxing, albeit to an Olympic standard.[67]I would add that I do not accept Mr Houseman’s submission that, in the context of this unusual agreement, there could be no scenario in which the investor, TINV, might have a motive to harm the company, such that an inability on the part of Swan to bring a derivative claim is of no practical importance. In argument, I posited a hypothetical scenario in which everything was going very well with this joint venture, and almost all the investment had been repaid, such that Swan would, perhaps in a matter of months, become 48 per cent, rather than 20 per cent, owner of a successful bitcoin mining enterprise. In that scenario, there might well be a powerful commercial motive for TINV to strip the assets and know-how from the company. That is not to say that it would actually do so, but I cannot accept that it is an unrealistic possibility, or one that can be safely ignored when deciding what the parties must have intended at the time of entering into the SHA. For what it adds, I am doubtful as to whether, in such a scenario, an unfair prejudice petition would be the same for Swan as a derivative action, since Swan might not want to be bought out of its shares in 2040. Put at its lowest, none of this stops it being surprising if the effect of the Litigation Prohibition is that the statutory route to a derivative claim was completely blocked, at least until the repayment date.[68]TINV says that a key rationale for requiring Investor Consent in this context is to prevent 2040 becoming embroiled in costly and risk-laden legal proceedings without TINV’s approval, as sole financing party and hence de facto underwriter of such speculative activity. I agree that the prohibition presupposes that 2040 may have suffered loss as a result of the wrongdoing of others: why else would it consider suing anyone? But none of that can be said to justify a complete prohibition on claims of this very special kind, the bringing of which is already carefully controlled by the operative statute and reserved for extreme cases. At the risk of repeating myself, I consider the idea that the parties were agreeing to the Litigation Prohibition, with derivative claims actually in mind, unrealistic. On the contrary, it seems to me that they had the ordinary type of legal action which might be instituted by 2040 in their minds. I accept that it is difficult to carve out of “any legal action” a claim against TINV and note that Mr Millett QC took the same view in SDI Retail, but it does not follow that an action which is in fact being instituted by Swan should be treated as being instituted by 2040. That is not what the words which the parties chose to use mean and, for the reasons I have already given, if the parties really had in mind closing off derivative actions, it seems to me they would have used different words.[69]I do not see that much is added to this by the factual background in relation to funding and TINV’s role as Investor. Mr Houseman made a series of emotive points in this regard. He said that TINV is the sole founder of the joint venture. Swan put no capital into the business and took zero investment risk. It obtained a 20 per cent stake in lieu of fee income or commission in return for managing the business on behalf of 2040, i.e., in the speculative hope of it becoming debt free and creating a lucrative dividend stream. The whole operation took place in the shadow of enormous indebtedness for which TINV took sole credit risk. TINV’s role and investment entitled it to exercise an enormous amount of control over 2040, resulting in asymmetric rights under the SHA. Mr Houseman said that the SHA could be described as a “bad contract” for Swan, but that was the deal to which it signed up.[70]All of that may be true, but as Mr Levey says, it does not follow that the parties considered that TINV and its appointed directors should be entitled to do as they wished with 2040 and its assets without consequence. Swan had, and has, a 20 per cent interest in 2040. The background may explain why the Litigation Prohibition was included in the SHA, but it is not a justification for reading it in an expansive way, so as to protect TINV or its directors from an otherwise legitimate claim.[71]Finally, but importantly, TINV points out that the BVI Business Companies Act provides, at s.184D.(1):
“If the Court grants leave to a member to bring or intervene in proceedings under section 184C, it shall, on the application of the member, order that the whole of the reasonable costs of bringing or intervening in the proceedings must be met by the company unless the Court considers that it would be unjust or inequitable for the company to bear those costs.”
The fact that Swan is seeking indemnity in relation to the proceedings, if permitted, does not suggest to me that the Litigation Prohibition should be read more expansively. If anything, the assumption underlying this section of the statute must be that, without an order, the costs of the proceedings will fall to the member – here, Swan – which suggests that these are indeed proceedings instituted by Swan, not 2040.[72]Mr Houseman said that, taking this section into account, a derivative claim walks like a duck and talks like a duck, and therefore it is a duck. By which he means that, if 2040 is ordered to pay the costs of an action from which it will benefit, these must be legal proceedings which it has instituted. But, to my mind, this section of the statute is envisaging an order of the court which will artificially bring the situation into line, in that respect, with legal proceedings which were actually brought by the company. To continue Mr Houseman’s cartoonish metaphor, it is like having the power to fit a sparrow with a plastic duck’s bill. The existence of such a power recognises that this will not, in fact, be a duck, which is precisely why additional orders about the payment of costs may need to be made.[73]Moreover, seeking an indemnity under this provision cannot itself involve any breach of the Litigation Prohibition. That prohibition says nothing specific about the payment of costs. However, it might well be that the BVI court will not consider an indemnity to be appropriate, given the special circumstances of this case and especially the extent of the indebtedness of the company to TINV. If the BVI court were to make such an order, that might also engage other protections and prohibitions in the SHA, but those are problems for another day.[74]For all of those reasons, I differ from Mr Houseman as to the application of the Litigation Prohibition to a derivative action. Accordingly, I am not satisfied that the declarations sought by the claimants should be granted. I am not persuaded that I should make a finding that the bringing of derivative proceedings by Swan is now, or will inevitably give rise to, a breach by 2040 of the Litigation Prohibition. It follows that I am not persuaded that taking this course involves, or will inevitably result in, a breach by Swan of clause 2.4 of the SHA.[75]All of that being so, I am not going to grant an anti-suit injunction in relation to the BVI leave application. The other anti-suit relief sought by the claimants in relation to Delaware and the New York applications was presented to me as being premised upon success in relation to the BVI leave application, and therefore I need say no more about that.[76]I would like to finish by expressing my thanks for the skilful and efficient way in which the streamlined submissions were presented to me by Counsel yesterday, and to their wider teams for all their hard work on preparing the evidence.

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[77]I am asked to do two things: to award indemnity costs in relation to two aspects of the applications, and also to confirm that two of those applications were totally without merit.[78]In relation to indemnity costs, I am not going to set out the test, but it is obvious that I am looking for something that is considerably out of the norm in relation to the conduct of the claimants.[79]Swan’s particular focus is on the fact that the “vexatious” limb of the anti-suit injunction was abandoned, or at least was said not to be pursued, on the morning of the hearing yesterday. Mr Levey KC for Swan says that a party to heavy commercial litigation cannot advance an application and then abandon it on the day of the hearing. It seems to me that that is not a universal principle. It is somewhat unattractive when that happens, but it does happen.[80]Mr Levey also makes the point that there were serious allegations made here, particularly allegations that things were not being done in good faith and that evidence has been presented which is dishonest. He also complains about assertions that matters are terribly urgent. He refers to the extensive evidence that was entered about all of these various aspects of the dispute.[81]I have to say, a lot of those complaints seem to me to go both ways. There is no doubt that these two parties are currently locked in something of a death roll. Serious allegations are made in both directions. Everything is urgent when it suits the particular party saying so, and less so when it does not. Huge swathes of evidence are being filed which appear to be largely irrelevant, again, it seems to me, at least to some degree, on both sides.[82]I took somewhat with a pinch of salt what Mr Houseman said yesterday about the decision to abandon the vexatious limb of the application being on the basis that there was “not enough time” to deal with it orally. I understood him really to mean that he was streamlining the case that he was going to be presenting and deciding how best to use the time which he had available to him.[83]It seems to me that if Mr Houseman had chosen to pursue that “vexatious” element of the application, the likelihood is that that would have failed, but my impression is that I would not have said it was without any merit in the sense used in CPR 23.12.[84]I can see that it wasunlikely that the claimants would have reached the high standard required to show foreign proceedings are vexatious. Cases like Star Reefers v JFC [2012] EWCA Civ 14 make it clear that it is only unusual cases where it can be said that it is plain that the case is bound to fail. I doubt that this was one of them. That said, the background here is a bit unusual and some aspects of Swan’s behaviour are undoubtedly surprising. The same might fairly be said about some aspects of TINV’s behaviour.[85]If we had gone through it all, therefore, I am reasonably confident I know what the ultimate answer would have been on the vexatious limb. But I do not think I would have taken the view that the claimants were misbehaving by raising these points with me. For example, my impression was that they did have some interesting points to make about the terms of the SHA and how that might impact on at least some of the allegations made by Swan in the BVI proceedings.[86]I would not want to make it harder for advocates to persuade their clients to drop points, even at a late stage, where applications or allegations are properly made, but ultimately thought unlikely to succeed. It would be a shame if parties were forced to fight on simply for fear of indemnity costs. It seems to me the correct approach is that the fact of abandonment should not itself lead to the conclusion that the allegation or application was hopeless.[87]Ultimately, what I see here – and I agree with Mr Mordaunt’s submission to this effect – is hard-fought commercial litigation. Different people might take different views of whether it represents a good use of the parties’ money, but certainly what I have read and heard is not out of line with other JV-type disputes of this kind, proceeding in this Court.[88]There is, to my mind, an analogy with what happened in relation to the trial about the ownership of the Business Assets, where it was Swan that abandoned its position at a relatively late stage. The claimants there sought, but did not obtain, an order for indemnity costs. It was refused on the basis that it was not possible to say that the position Swan had taken was hopeless.[89]In the same way, I do not see how I can conclude that any of these ingredients of the claimants’ applications were completely misconceived. In relation, for example, to the question of whether the BVI leave application was prevented or precluded by the exclusive jurisdiction clause, it does seem to me that there were interesting questions about how an application of that kind interacts with such a clause. I have already dealt with the question of whether the vexatious element of the antisuit application could be said to be wholly without merit and made clear that I am not able to make that finding.[90]So, for those reasons, I am not going to order indemnity costs. The applications have failed. They must be dismissed, and the claimants must pay the costs. That order to pay costs is, to my mind, sufficient punishment both for pursuing the applications and the manner in which that was done. It is worth noting, in that context, that Swan must be entitled to recover costs by reference to the applications which it actually faced, which may mean that it will recover a great deal more than if those applications had been streamlined from the outset. That said, I do not see why Swan should recover costs that were, even in that context, disproportionately incurred, or unreasonably incurred. Swan have the benefit, from a costs assessment perspective, of the fact that they were dealing with a widely-drawn application. But if they chose to deal with it in an unreasonable way then, in that respect, those costs they must bear themselves.

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[91]I remind myself that the Court is not required to set the payment on account at the level of an irreducible minimum, which will inevitably be recovered on detailed assessment. Rather, I am concerned with identifying a sum which is reasonable in all the circumstances, allowing for matters such as margin for error in the estimation of likely recovery: see Excalibur Ventures LLC v Texas Keystone Inc & Ors [2015] EWHC 566 (Comm).[92]I have not got a schedule of Swan’s costs. I do have a summary, which shows quite a lot of hours being incurred. There is no doubt that it is a little difficult for me to tell how some of that time is being spent, especially when, on the face of it, one has lots of fee earner time and partner time across two highly powered firms. I am told that the involvement of two firms is just a matter of history, but on the face of it, it does seem to be playing a role in the amount of hours being incurred.[93]More importantly, the hourly rates that are shown here are well above the guideline hourly rates. I acknowledge that one might expect those rates to be exceeded to a degree in a case of this kind, which is multi-jurisdictional, and factually and procedurally complex. But I am looking here at hourly rates for Grade A fee earners of £1,215 and £1,085, which are, respectively, more than, and close to, double the guideline rate for the most complex type of litigation.[94]It has been said that a party claiming hourly rates in excess of the guideline must provide a “clear and compelling justification”: per Males LJ in Samsung Electronics v LG Display [2022] EWCA (Civ) 466 at [6]. I am sure that both sides are paying very high rates. These parties have chosen to instruct absolutely top-rank commercial firms. But we are concerned here with inter partes recovery, and I am doubtful that recovery will be permitted by the costs judge at that level.[95]There are also some very substantial fees for counsel for both advice and then brief fees for three counsel for the hearing. Again, I have no doubt that the fee levels can be explained as between the clients, the solicitors and counsel in a commercial sense, but it seems to me it will take some justifying on a detailed assessment, even given the nature and extent of this dispute. My assumption is that there will be some fairly significant deductions to be made to those numbers.[96]Having regard to all of that, and doing the best I can in circumstances where I only have this schedule to work with, it seems to me that £200,000 is a figure which is reasonable in all the circumstances and allows an appropriate margin for error. I am, as I arrive at that figure, undoubtedly being more cautious than I might be in a case where I had more information about how the hours were being spent ,and was better able to tell there was no duplication or other factors playing a role, or in a case where the hourly rates were not quite so far out of line with what one might anticipate being recovered on detailed assessment. But there it is. I am going to order an interim payment of £200,000. ______________