“This ruling contains serious and multiple errors of appreciation, both in fact and in law.”
That was how French mutual insurance group Covéa described the judgment rendered by the Paris Commercial Court yesterday (November 10) in the case against global reinsurer SCOR. Civil actions – aside from criminal proceedings at the Criminal Court of Paris – were initiated by SCOR last year in relation to Covéa’s unsolicited takeover proposal in 2018.
Covéa chair and chief executive Thierry Derez, who resigned from SCOR’s board two years ago, was accused of serious breach of his legal and fiduciary duties and obligations as a SCOR director in his personal capacity, as well as breaching the firm’s trade secrets. Covéa, meanwhile, was taken to court for its alleged direct participation in, and benefit from, the supposed breaches.
Now the Paris Commercial Court has ruled that “Mr Derez committed a breach of contract for which he is civilly liable, by violating the commitments he made to SCOR SE as a director of the company in his personal capacity relating to conflicts of interest, confidentiality, and loyalty.”
Additionally, the court found that Covéa SGAM and Covéa Coopérations “were complicit third parties in Mr Derez’s misconduct as a SCOR director, which consisted of violating his obligation of confidentiality with regard to the information communicated to the SCOR board of directors.”
Covéa was also deemed civilly liable for its September 2018 press release which the court said constituted a tortious fault as a complicit third party.
The losing camp was ordered to pay SCOR around €20 million, plus interest, in damages.
In response to the outcome, Covéa asserted that the judgment disregarded an ‘essential truth’.
“It is for the corporate interest of both SCOR and its shareholders that Covéa expressed the wish to submit a proposal for a combination between the two companies,” declared the insurer in a statement. “Such project would have notably guaranteed the financial soundness of SCOR and would have promoted its development.
“Thierry Derez and Covéa strongly contest having been disloyal and having been in a conflict of interest.”
Covéa went on to lament: “If this ruling sets a precedent, it would significantly limit the directors’ rights in exercising their mission to defend, freely, the corporate interest of a company and its shareholders.
“It is now up to the Court of Appeal, before which an appeal is brought, to restore the truth, to state the law, and decide whether it is allowed for any director to give themselves the means to submit to a board of directors a project that would not be approved by the chairman of the board.”
SCOR, meanwhile, welcomed the win while reiterating that other legal proceedings, including the criminal ones set for July 2021 in France, are still underway. In the UK, the London High Court of Justice will hear the civil case against Covéa’s financial advisor and financing bank Barclays in June of next year.
The tussle between Covéa and SCOR stemmed from 2018’s rejected takeover offer of €43 per share.