Court orders feuding 2GO investors to submit to arbitration

A local court has directed the feuding shareholders of logistics company 2GO Group Inc. to proceed to an arbitration court in Singapore to avoid multiplicity of suits and unnecessary delay.

The group of Phoenix Petroleum chief executive office Dennis Uy through holding company Udenna Investments, the Tagud family-led Negros Holdings Management Corporation (NHMC) and KGLI-NM Holdings Inc. were directed by the Regional Trial Court of Manila to submit to arbitration, noting that the dispute involved the parties’ investment and shareholders agreement.

KGLI-NM is a holding company that owns majority of 2GO’s parent company, Negros Navigation Co.

The dispute arose from Udenna’s petition to enforce its rights as a shareholder of defendant KGLI-NM.

Last September, Uy’s Udenna announced the acquisition of a 21-percent stake in 2GO Group through the purchase of shares held by KGL Investment B.V. (KGL-BV), a Dutch company, which also has a beneficial ownership of about 60 percent of KGLI-NM Holdings Inc. that in turns control local shipping firm Negros Navigation Co.Inc. Negros Navigation, in turn, owns 88.31 percent of 2Go Group, an integrated transport solutions provider.

Udenna claims to control 21 percent of 2GO’s registered shares while its beneficial ownership was estimated at 31 percent.

Defendants NHMC and KGLI-NM argued for the dismissal of the case as the parties should instead resolve their dispute through arbitration following the arbitration clause in their agreement. Udenna countered that NHMC and KGLI-NM could not insist on referral of the case to arbitration while contesting Udenna’s privity to the agreement.

In a Nov. 29 decision, the court resolved to direct the parties to proceed to arbitration in a decision.
The court said “judicial efficiency and economy require a policy to avoid multiplicity of suits.”

This was taken by Udenna to mean that the local court had effectively upheld its standing as an investor.

In a press statement, it cited the provision in the court ruling that NHMC and KGLI-NM, in invoking the arbitration clauses contained in the agreement, were “estopped from questioning Udenna’s standing to arbitrate.”

“In other words, NHMC and KGLI-NM cannot contest Udenna’s personality as a party to the agreement and shareholder of KGLI-NM, and thus, indirectly, an investor and shareholder in KGLI-NM’s subsidiaries, which includes 2GO,” Udenna said.

The RTC ruling said that generally, only parties to the agreement were bound by the arbitration clause. However, it said there were instances when non-signatories to the agreement containing the arbitration clause were bound by such clause and may be compelled to submit to arbitration.

In this case, although defendant KGLI-NM was not a signatory to the agreements, the court said it was also bound by such agreements.