Former Australis Seafoods owners must pay US $292m to buyer Joyvio

The former owners of Chilean farmer Australis Seafoods have been ordered to pay US $292 million to Chinese company Joyvio, which bought the company in 2019, reports Fish Farming Expert's Chilean sister site, Salmonexpert.cl.

The ruling against Isidoro Quiroga Moreno and his family members comes after more than two years of litigation and has been issued by an arbitration tribunal composed of three attorneys who reached a majority decision over Joyvio’s claims that the seller had over-valued the company by not fully explaining its position with regard to “overproduction”.

Quiroga and his family, it was reported, were ordered to reimburse Joyvio with $217m of the purchase price, plus interest since 2019, which amounts to nearly $75m. Isidoro Quiroga was also ordered to pay the costs of the proceedings.

'No crime committed'

Isidoro Quiroga's team asserted that the tribunal's decision ruled out any fraudulent conduct in the sale of Australis and dismantles any criminal case against the former owner.

“The ruling clearly states that there was never any fraud or scheme to deceive the buyers, which reaffirms our position on the criminal cases currently under way,” said the lawyers.

“Despite the unusual nature of the order to return a portion of the price, an amount that represents 15% of the compensation requested by Joyvio, the ruling reflects the main arguments of Isidoro Quiroga’s defence: that after the transaction, the regulator changed its approach regarding overproduction, that the sellers did not conceal information, and that the buyers were always aware of the production regime and its risks.”

Ruling is 'inconsistent'

Defence attorney Alex van Weezel said: “The arbitration ruling confirms that this is a 100% commercial and civil dispute. The majority vote is completely inconsistent. On the one hand, it categorically rules out any fraud on the part of the sellers, reaffirms that no information was withheld, and acknowledges that in 2021 - two years after the sale - the SMA (Chile’s environment agency) changed its criteria regarding overproduction, that the company always adhered to the previous criteria, and that the sellers made no false statements in either the promise or the purchase agreement.”

The tribunal rejected Joyvio’s request to terminate the purchase agreement, said the lawyer. Instead, it determined a price adjustment “that was not even requested in the complaint. This reduction is linked to an alleged incompleteness in a contractual representation and warranty, a conclusion that has no basis. Therefore, we will appeal to the Court of Appeals to annul that part of the award.”

Contradiction

He added: “Despite all this, it orders the payment of a ‘price adjustment’ based on the economic impact supposedly produced by the change in criteria and on the communications between some company executives who allegedly had a ‘suspicion’ that such a change might be coming. The strong dissenting opinion of (tribunal member) Professor Ramón Cifuentes clearly exposes this contradiction. On this basis and on many other violations of public order contained in the ruling, we will ask the Court of Appeals to declare the ruling null and void.”

The arbitration award (majority vote) “is manifestly contrary to public policy: despite recognising all of the plaintiffs’ defences, it unusually orders them to pay a sum of money that violates the contract. That said, this ruling, in its core, reflects the main arguments of Isidoro Quiroga's defence. The arbitration tribunal eliminated all doubts about the existence of fraud: there was no deceit, fraud, or scheme to deceive the buyers in the sale of Australis Seafoods,” the defence team emphasised.