Philip Morris Products Inc & Anor v Rothmans International Enterprises Ltd & Anor [2001] EWCA Civ 1049 (4 July 2001)

Philip Morris Products Inc & Anor v Rothmans International Enterprises Ltd & Anor [2001] EWCA Civ 1049 (4 July 2001)

The Court of Appeal held that the issue of the Special Share to Richemont SA constituted a change of direct control of RIE within the meaning of clause 14.4.1 of the Master Agreement, regardless of Richemont SA's prior indirect control. The contractual test for change of control was satisfied, entitling Philip Morris to terminate the Licence Agreement. The arrangements did not prevent the operation of the change of control provisions, and the court rejected the argument that only a change from outside the group could trigger the clause.

Citation
[2001] EWCA Civ 1049
Parties
Respondents: Philip Morris Products Inc and Philip Morris International Inc; Appellants: Rothmans International Enterprises Ltd and The Rothmans (UK) Partnership
Jurisdiction
England and Wales
Judgment Date
04 July 2001
Procedural Posture
Civil Appeal / Appeal From Chancery Division to Court of Appeal
Outcome
Appeal dismissed; declarations granted in favour of Philip Morris.
Legal Topics
Change of Control Clauses, Interpretation of Commercial Contracts, Corporate Control, Takeovers and Mergers, Voting Rights, Trusts and Equitable Interests
Contract Law Commercial Law Company Law Change of Control Clauses Interpretation of Commercial Contracts Corporate Control Takeovers and Mergers Voting Rights +1 more

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Parties

Philip Morris Products Inc and Philip Morris International Inc

Respondents

Rothmans International Enterprises Ltd and The Rothmans (UK) Partnership

Appellants

Procedural Posture

Civil Appeal / Appeal From Chancery Division to Court of Appeal

Legal Issues

  1. 1 Whether the acquisition of Rothmans International BV by British American Tobacco plc constituted a 'change of control' of Rothmans International Enterprises Ltd (RIE) within the meaning of the relevant agreements.
  2. 2 Whether the issue of a Special Share to Richemont SA effected a change of control of RIE.
  3. 3 Whether Richemont SA held the Special Share as nominee or trustee for RIL, thus negating a change of control.

Ratio Decidendi

The Court of Appeal held that the issue of the Special Share to Richemont SA constituted a change of direct control of RIE within the meaning of clause 14.4.1 of the Master Agreement, regardless of Richemont SA's prior indirect control. The contractual test for change of control was satisfied, entitling Philip Morris to terminate the Licence Agreement. The arrangements did not prevent the operation of the change of control provisions, and the court rejected the argument that only a change from outside the group could trigger the clause.

Court Disposition

Appeal dismissed; declarations granted in favour of Philip Morris.

Orders

  • Declaration that there was a change of control of RIE on 10 March 1999 within the meaning of clause 14.2.1 of the Master Agreement.
  • Declaration that there was a change of control of the Partnership on 10 March 1999 within the meaning of clause 14.2 of the Master Agreement.