Tigris was a joint venture company formed by two individuals, Mr Koolhaas (K) and Mr Pakdaman (P), who essentially ‘fell out’ during the course of their business venture. Tigris’ plan was to buy aircraft from China Southern Airlines Company Limited (CSN) and sell them in Iran, a delicate commercial transaction given the UN sanctions at the time and the company’s lack of experience – Tigris had no market history, assets or published accounts.
Tigris’ agent, Mr Ventner, was appointed to represent the company in all technical matters relating to the sale and purchase of the aircraft in return for 20 per cent of the net profits.
In July 2009, Tigris and CSN entered into a sale and purchase agreement for the purchase of six aircraft, with the first three to be delivered by July 31, 2009 and the remaining three to be delivered by August 27, 2009. Payment was to be made in three stages: a deposit of approximately US$10.8 million (paid prior to entering into the purchase agreement), the first instalment of approximately US$57.2 million before July 31, 2009 and the second instalment of approximately US$55.8 million before August 27, 2009.
Tigris had difficulty obtaining financing and was unable to pay the full amount of the first instalment by 31 July 2009. The relationship between P and K began to deteriorate. Given that P had the business contacts to secure the back-to-back contracts to sell the aircraft in Iran, which is how Tigris would fund the purchases from CSN, the venture was dependent on P’s ongoing involvement.
In August 2009, P began making arrangements to take over Tigris’ responsibility to purchase the aircraft. Several emails were exchanged between P and K in which K stated that P was not authorised to act on behalf of the company as P was a shareholder and not a director (whereas K was a director of the company).
Eventually, the first aircraft was delivered on September 1, 2009. However, the relationship between P and K finally broke down and, in late September 2009, P and Mr Ventner took steps to incorporate another company, Thesa, to replace Tigris.
K alleged that P had entered into a secret agreement with CSN to divert the sale contract.
In October 2009 CSN gave notice to Tigris that it would terminate the purchase contract unless payment was made for delivery of the remaining five aircraft and Tigris took delivery at the rate of one aircraft per week.
In November 2009, Tigris asserted that CSN was in repudiatory breach on the basis that CSN’s conduct demonstrated that it did not intend to be bound to perform the terms of the purchase agreement. On December 4, 2009 Tigris sent a letter confirming that it accepted CSN’s repudiatory conduct as having brought the contract to an end. CSN purported to terminate the purchase agreement on December 19, 2009.
In 2010 CSN entered into aircraft sale agreements with another company, GALink, to sell two of the aircraft that had been the subject of the arrangement with Tigris. Ultimately, only one was sold to GALink and the remaining aircraft were eventually sold back to the manufacturer, Airbus SAS.
Tigris started proceedings claiming the return of its deposit (as well as other costs such as parking charges for the aircraft) amounting to approximately US$10.5 million. CSN’s counterclaim was for the amounts due but not paid to it by Tigris pursuant to the purchase contract less the amounts it had received following the sales to GALink and Airbus.