Hotel Group Loses Bid For Quick Trial Over €93M Apollo Deal

By Joanne Faulkner
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Law360, London (October 8, 2020, 7:54 PM BST) -- A London judge on Thursday said it would not be possible to squeeze in a fast trial between a Spanish hotel group and Apollo Capital Management because of conflicting jurisdiction clauses used in a stalled €93 million ($110 million) resort deal.

Lopesan Touristik SA lost its bid for an expedited trial in the hope its dispute with the U.S. investment firm could be resolved by the end of the year. The company fears a clause in one of the contracts governing the sale of its Buenaventura hotel in Spain could see the deal collapse if funding issues are not resolved by Jan. 1.

The issue centers around two contracts; one has exclusive jurisdiction in Spain while the other is governed by the English courts.

Lawyers for Lopesan had proposed a two-week trial in December. However, High Court Judge David Foxton said that while Lopesan's claim is urgent, the uncertainty as to what issues would arise at trial, the potential need for Spanish translators and a very tight timetable runs the risk that proceedings could not be undertaken fairly before the year is over.

"I have concluded that this timetable is simply too tight for a fair trial of all the issues to take place before the end of term, and that embarking on the attempt would carry a very high risk either of failure ... or a risk of unfairness to both parties if the case ploughed on regardless" Judge Foxton wrote.

The judge said it was too difficult to determine the precise scope of the dispute at this stage, and that the issues are potentially wide-ranging, particularly as the effects of the COVID-19 pandemic on a contract will play a part.

Apollo Capital Management also failed Thursday in its application to stay proceedings under a European Union regime. The U.S. investment firm argued that concurrent proceedings in the Spanish and English courts means the dispute should be paused. Judge Foxton said the exclusive jurisdiction choice by each side meant there was no real possibility of the two actions being heard together, dismissing the application.

Lopesan began proceedings against special purpose vehicle Oldavia ITG SLU in Madrid in August to try to force the completion of the deal, but the outcome will not be determined for at least 12 months.

Lopesan says in its September suit that it entered into a share sale and purchase agreement with Oldavia, the unit through which Apollo Capital Management acquired the hotel in November 2019. Under the terms of the equity commitment letter — which is governed by English law — Apollo promised to provide Oldavia with the funding needed if the terms of the sale and purchase agreement were completed, Lopesan alleged. This obligation automatically terminates in January.

Only the Spanish courts can force Oldavia to complete the sale and purchase agreement, which is governed by Spanish law and contains an exclusive jurisdiction clause. Apollo disputes that Oldavia is under any obligation to complete the deal and that it is under any corresponding obligation to put up the funds.

Lopesan argues the condition precedent — a contractual term that, if breached, may allow a claim to be rejected — was fulfilled when the European Commission approved the deal in April.

The hotel group is seeking a declaration that the defendants are obliged to transfer €93 million to Oldavia so the deal can be completed.

Representatives for the parties did not immediately respond to requests for comment Thursday.

Lopesan Touristik is represented by Huw Davies QC and David Peters of Essex Court Chambers, instructed by Addleshaw Goddard LLP.

The defendants are represented by Laurence Rabinowitz QC, Richard Mott and Michael Watkins of One Essex Court, instructed by Latham & Watkins LLP.

The case is Lopesan Touristik SA v. Apollo European Principal Finance Fund II (Dollar A) LP and others, case number CL-2020-000597, in the Commercial Court of the High Court of Justice of England and Wales.

--Editing by Marygrace Murphy.

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