Former Liverpool owners Tom Hicks and George Gillethas been given the limited chance to launch a damages claim against the Royal Bank of Scotland (RBS), former Reds chairman Sir Martin Broughton and New England Sports Ventures (NESV) over the sale of the club. The move comes after orders barring the action in the United States were varied and partially lifted by Mr Justice Floyd, a High Court Judge in London.
An anti-suit injunction is an order issued by court that prevents an opposing party from commencing or continuing a proceeding in another jurisdiction. Hicks along with his former co-owner and business partner, George Gillet, wanted to lift anti-suit orders in the Texas courts to halt the sale of the club back in October 2010 in which they believe they lost around out on about $1bn (£620).
After Broughton, NESV and RBS filed a request that the courts prohibit the former owners from commencing legal action against themselves outside of the EU, Mr Justice Floyd dismissed Hicks and Gillet’s application to lift the injunction and has varied the anti-suit injunction to allow Hicks to make an application in the US to support any proceedings in this country. The condition of this is that Hicks would have to give seven days notice to the parties that he is intending to sue.
Perhaps more importantly, the pair must now bring any claims they have in the UK and are not able ‘play at home’ in the sense that they are now prevented from pursuing a lawsuit in the United States, where it is worried that the US courts would be much more liberal on the issue, without the permission of an English court who will arguably take a stricter view.
To make matters worse for the American duo, Mr Justice Floyd also dismissed an application to strike out claims by Sir Martin Broughton who is seeking damages against Mr Hicks for his actions whilst club owner.
The background to this matter is the sale of Liverpool to NESV now renamed the Fenway Sports Group, owners of the Boston Red Sox, for £300m last year. Hicks believes that he was the victim of an “epic swindle” when the sale was forced against his wishes. We at Front Row legal covered the sale and the High Court battle that ensued in great detail.
Hicks and Gillet bought the club back in 2007 for £220m. After an initial investment, the club was hit by the financial crisis in 2008 and it soon became clear that they did not have the financial muscle to compete in the premier league. They both reluctantly agreed to sell the club but were looking to make a handsome profit. Fellow board members took the view that the price they were asking, reported to be around £800m, was ridiculous and forced through the sale with NESV.
NESV bought the club after repaying a loan Hicks and Gillet took out with RBS. Hicks and Gillet at the time sought a temporary restraining order in Texas with the intention of stopping the sale. The anti-suit injunction was granted at this stage “on the basis of what appeared to be the unconscionable conduct of the former owners in seeking to undermine the English proceedings”.
Mr Justice Floyd in his decision not to discharge the injunction said “the reality of the situation is that the former owners have already started two sets of proceedings and openly asserted their intention to start more…there is a real threat that those proceedings will be in the US.”
“The disputes concern an English asset, duties owed by English directors under English law to English companies, and corporate governance arrangements governed by English law.” By varying the order only, Mr Justice Floyd was of the opinion that the former owners should be free to make applications in the US courts that would serve to aid proceedings in the UK.
Now at risk of potential legal action, a spokesperson for RBS defiantly said; “The courts described similar claims made last year by Hicks and Gillet as ‘not realistic and abusive’. Any further claims against RBS will as such be vigorously opposed”
Speaking today to Sky News on the issue, Richard Cramer said that the start of any legal action by Hicks would not likely cause any day to day disruption to the running of the club. “Liverpool have been striving for stability on and off the field, and now for the first time in a long time they have stability off the field. What it will do is mean the dirty linen that hovered over the club during the Hicks and Gillet era will now be aired and the true extent of the turmoil will be revealed.”