Tuesday, 24 May 2016
Last updated 4 hours ago
Aug 16 2013 | 1:16am ET
A dispute between two hedge funds has no place in Florida federal court, an appeals panel has ruled.
Xena Investments accuses Magnum Fund Management of fraudulently securitizing $21 million in shares, and would like that case to be heard in a federal court in Florida. The only problem, according to both a lower court and now a three-judge panel of the U.S. Eleventh Circuit Court of Appeals, is that none of the parties live in or are based in the state, and a forbearance agreement specifies that disputes must be heard in British courts.
"If the forbearance agreement is in effect, it appears that the parties must go to the English courts," the panel ruled. "If the forbearance agreement is not in effect, then perhaps the parties must go to the courts of the British Virgin Islands. Either way, they have no day in court in Florida."
Xena had argued that, because Magnum has a consulting agreement with Magnum US Investments, which is based in Florida, it should be permitted to bring the case in that state.
"This is a simple case involving sophisticated international parties and an international fund," the Eleventh Circuit said. "The parties appear to be free to litigate on foreign soil—but that issue is not before us. What is before us is the correct decision by the district court—the parties are not free to litigate in Florida."