Supreme Court orders halt to New York case

  • Chief Justice Narinder Hargun (File photograph by Akil Simmons)

    Chief Justice Narinder Hargun (File photograph by Akil Simmons)


The Bermuda Supreme Court has ordered a temporary halt to a lawsuit filed in New York by a shareholder of Bermudian-based life reinsurer Athene Holding.

US-based investor Central Labourers’ Pension Fund made the derivative complaint against private-equity firm Apollo Global Management LLC and Athene Asset Management LLC last month.

The plaintiff, on behalf of Athene shareholders, is demanding damages for what it describes as “looting” of Athene through “extravagantly expensive” fees paid for managing the reinsurer’s investment portfolio, according to the complaint, filed in the Supreme Court of New York on June 18.

The fees agreed for managing the portfolio of about $130 billion run into hundreds of millions of dollars per year.

Bermuda Chief Justice Narinder Hargun granted an ex parte temporary injunction on July 5, ordering a halt to the New York action.

Athene is domiciled in Bermuda and listed on the New York Stock Exchange. Athene maintains that the suit should have been filed in Bermuda, which, according to the company’s by-laws has sole authority to adjudicate matters relating to the conduct of directors.

The pension fund argues that this argument does not apply, as it is suing Apollo, rather than the Athene board.

The injunction has attracted international attention, with the Financial Times suggesting that the decision could have implications for investors in companies that are traded on US exchanges and registered elsewhere.

It is not yet clear whether the Bermuda court’s injunction will prevent the lawsuit from proceeding in New York.

“US courts often will respect the judgments of foreign courts, though they may not be obligated to do so,” Aryeh Portnoy, a partner at law firm Cromwell & Moring, told the FT.

Mr Portnoy added that “context matters”, since judges will likely consider things such as when the foreign lawsuit was filed and whether any constitutional rights are engaged.

If Athene’s efforts to bar the New York case are successful, more companies could be attracted to a Bermuda domicile, according to Neil Wertlieb, a lecturer at the UC Berkeley School of Law.

“No company enjoys having a group of shareholders dictate its fate by suing its contractual counterparties on its behalf,” Mr Wertlieb told the FT.

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