Changyou.com Ltd v Fourworld Global Opportunities Fund Ltd & Ors

In Changyou.com Ltd v Fourworld Global Opportunities Fund Ltd & Ors, the Judicial Committee of the Privy Council had to consider whether minority shareholders in a “short-form” merger under Part XVI of the Cayman Islands Companies Act (i.e. a merger of a parent company with its subsidiary where the parent company holds at least 90% of the voting power) had a right to be paid a judicially determined fair value for their shares instead of the merger consideration offered under the terms of the merger (known as “appraisal rights”).

Jonathan Adkin KC and Adil Mohamedbhai (instructed by Collas Crill, with a team led by Rocco Cecere) acted for the successful respondent minority shareholders in the appeal. In its judgment delivered on 11 March 2025, the Judicial Committee held that “short-form” minority shareholders did have appraisal rights under section 238 in Part XVI of the Companies Act.

The Judicial Committee found that Parliament plainly intended “short form” minority shareholders to have such rights. Although the legislation had failed to give effect to that intention as a matter of statutory construction, Sir Christoper Nugee (giving the opinion of the Board) held that, in the absence of appraisal rights, the legislation would constitute interference in the peaceful enjoyment of property as mandated by section 15 of the Cayman Islands Bill of Rights and the Court had the power to modify and adapt the legislation pursuant to section 5 of the Cayman Islands Constitution Order 2009 to make it compatible.

In reaching its decision, the Judicial Committee gave important guidance on:

1. The Court’s ability to correct mistakes in the drafting of legislation as a matter of statutory construction (the so-called “Inco” principle following Lord Nicholls’ seminal judgment in Inco Europe Ltd v First Choice Distribution [2000] 1 WLR 586).
2. The operation of the Cayman Islands’ Bill of Rights. The approach the Board took to section 15 indicates that the Bill of Rights is capable of having some ‘horizontal’ effect.
3. What constitutes an interference with property rights. In a decision which is likely to be relevant to human rights legislation across the common law world more generally, the Board found that the possibility that a piece of property might be compulsorily acquired pursuant to statute on the occurrence of future events did not mean that there was no interference with property rights on the occurrence of such events.
4. Which laws fall within the scope of section 5 of the Constitution Order.

The decision is therefore of interest not only to those advising minority shareholders in Cayman Islands companies, but to practitioners more generally in its approach to the construction of statutes and human rights laws.