Bernie Ecclestone has not had much in the way of good news over the past few months as he has been on the receiving end of multiple lawsuits connected to the sale of Formula One in 2006. One glimmer of light came two weeks ago when New York's Supreme Court dismissed a $650m lawsuit against him by American investment fund Bluewaters Communications. However, there is now even a cloud hanging over that as Bluewaters has lodged an appeal against the court's decision according to an article in American motoring magazine Autoweek by Christian Sylt.
It remains to be seen whether Bluewaters intends to bring new evidence before the court to help its case but if it doesn't do this it is hard to imagine how the decision in the appeal could be any different to the recent ruling as it raised some significant hurdles.
To recap, Bluewaters claims that it was the highest bidder when F1 was sold to private equity firm CVC for $2bn. Bluewaters' lawsuit claimed that Ecclestone and his Bambino family trust paid a $44m bribe to Gerhard Gribkowsky, the German banker in charge of the sale, so that he would steer F1 to CVC. The private equity firm was allegedly Ecclestone's preferred bidder as it had agreed to retain him as the boss of the sport.
Bluewaters sued Ecclestone, Gribkowsky, Bambino and three key Jersey-based F1 companies: Alpha Prema, Alpha Topco and Delta Topco. It demanded $650m in damages from the defendants because it claimed that CVC's profits from F1 "rightfully belong to Bluewaters and its financial backers".
This argument in itself seems flawed as Pitpass pointed out when it revealed that the Bluewaters lawsuit had been filed. Just because Bluewaters allegedly offered to outbid CVC that does not mean to say that it would have made anything like the same level of return that CVC has made. However an even bigger question is whether Bluewaters really did outbid CVC.
Bluewaters claims that its offer was submitted with a cover letter to Gribkowsky saying that it "is prepared to pay 10 percent more in cash consideration...above any genuine bona-fide offer put forward by any other accredited buyer." However, in her ruling, Eileen Bransten, Justice of the Supreme Court, said that "no party has submitted a copy of this alleged cover letter." You would expect that this issue would need to be resolved before the case could possibly succeed. Even if this hurdle can be surmounted, there is a question over whether the case is relevant to the New York courts.
Bluewaters' lawsuit was dismissed due to a legal principle known as forum non conveniens. This enables a court to refuse to hear a case if it believes there is a more appropriate jurisdiction. Justice Bransten ruled that "the 'critical events' underlying the claims in this lawsuit took place in Germany, England and elsewhere in Europe." Crucially, she added that Bluewaters' offer stated that it was "governed by the laws of England, and that all claims and matters arising out of it would exclusively in English courts."
However, on Thursday Bluewaters filed an appeal under the Individual Assignment System (IAS) which allows for the continuous supervision of each case by a single judge. It stated that "the trial court dismissed the above-captioned action for forum non conveniens, as well as lack of personal jurisdiction with respect to Defendants-Respondents Alpha Prema, Alpha Topco, Delta Topco, Ecclestone, and Bambino. Plaintiff-Appellant seeks reversal of the Orders and Memorandum Decision on the grounds that the IAS Court erred in (1) dismissing the case for forum non conveniens and (2) dismissing the case for lack of personal jurisdiction over Defendants-Respondents Alpha Prema, Alpha Topco, Delta Topco, Ecclestone, and Bambino."
Given the hurdles against its case in New York, one wonders why Bluewaters is persisting there rather than lodging its lawsuit in a different country.
Even if its lawsuit hits the buffers again, Ecclestone still faces the prospect of further litigation. He is due to be put on trial in April in Germany for paying the alleged bribe and he is currently awaiting the verdict of another lawsuit connected to the sale to CVC. German media rights firm Constantin Medien sued him in London claiming that other bidders would have paid more than CVC. However, the only one which has come forward is Bluewaters and in the absence of its cover letter, it remains to be seen whether its offer was indeed higher.
If there is no proof that anyone offered more than CVC then it is hard to see how Gribkowsky could have breached is duties by selling F1 to it. Likewise, it raises the question of whether there really were any higher bidders as Constantin claims. Time will tell.
Business news from @formulamoney