Philip Embiricos-Coumoundouros, described a Greek shipping legend, died peacefully at his home on 20 November 2021. However, the aftermath of his death is proving less than peaceful.

Mr Coumoundouros left two daughters, Nitzia Logothetis and Adriana Embiricos-Coumoundouros. The latter is married to Olivier Desmarais, a prominent Canadian businessman who is also the executor of Mr Coumoundouros’s will along with the husband of Nitzia.

One of the companies that formed part of Mr Coumoundouros’s estate was Misbourne Investment Corporation (Misbourne), registered in Liberia, which seems to be an investment vehicle. Under Panamanian law (Mr Coumoundouros was habitually resident in Panama at the time of his death) Adriana is entitled to at least 50% of the shares in Misbourne.

In early December 2024 a Cyprus company called GSI (controlled by Nitzia and her husband) demanded repayment of a loan of EUR 45m allegedly granted by it in 2015 to Misbourne (subject to English law). It was alleged by Adriana and Olivier that the GSI loan was a sham, entered into for the benefit of Nitzia’s husband as part of a complex arrangement, and Misbourne was not liable to repay it.

Also in late 2024, both directors of Misbourne resigned. This was suspected to be orchestrated by GSI and/or Nitzia and her husband to leave Misbourne unable to defend GSI’s claim, although no direct evidence of this was available. Adriana and Olivier therefore attempted to bring a derivative claim, i.e. a claim on behalf of Misbourne, to obtain a declaration to that effect, protecting Misbourne from a claim by GSI.

Derivative claims

Under s 260 Companies Act 2006 a shareholder of a UK company may bring a claim on behalf of a company (a “derivative claim”) with the court’s permission. The need for such a claim usually arises where the company is controlled by someone who is involved in the wrongdoing. In some cases the right to bring a claim may extend beyond shareholders.

Interestingly, a shareholder of a foreign company also has the right to bring such a claim under the Civil Procedure Rules. 

Decision

The judgment was handed down on 4 April 2025.

The judge held that the principles relevant to deciding whether or not Adriana and Olivier may claim on behalf of Misbourne are those of English common law (rather than s 263 of the Companies Act which applies for English companies). In particular, Adriana and Olivier had to establish that there was a valid reason to permit them to make the claim, instead of leaving it to Misbourne to decide whether it wished to do so. 

One such valid reason would be if fraud had been committed on Misbourne for the benefit of majority shareholders, in control of the company, and there was no other remedy (so-called “fraud on the minority”). The innocent minority shareholders are permitted to bring a derivative action to recover the company's loss because the company, under the wrongdoers’ control, is disabled from doing so.

However, Misbourne was not said to be controlled by the wrongdoer (GSI and/or Nitzia and her husband). On the contrary, Adriana and/or Olivier conceded that they have rights to participate in Misbourne’s management, and it is only the resignation of the directors which has created a temporary difficulty.

That was fatal to Adriana’s and Olivier’s attempt to step into Misbourne’s shoes. Adriana and Olivier argued that if a derivative action were not allowed, an injustice might result since Misbourne is paralysed in the absence of directors. However, English law does not typically operate using such wide categories. A derivative claim is, the Court held, designed to deal not with potential injustice generally, but with a specific situation where “those who are responsible for or benefit from the wrong [to the company] that the derivative action seeks to address” themselves control the company. In this case, there was insufficient evidence that GSI, which benefited from the wrong, controlled Misbourne.

Adriana and Olivier sought permission to appeal which was refused by the first-instance court, but which they could renew to the Court of Appeal.