On 20th December 2022, the Cayman Islands Court of Appeal (“CICA”) delivered its second judgment in the matter of Changyou.com Limited v Fourworld Global Opportunities Fund Ltd & others (Changyou.com case). The CICA provided guidance on the distinction between an interlocutory and a final decision for the purpose of determining whether an appeal lies to the Judicial Committee of the Privy Council (“Privy Council”) as of right.

Pursuant to section 3(1)(a) of the Cayman Islands (Appeals to Privy Council) Order 1984 (“CI Appeal Order”), appeals lie to the Privy Council as of right in respect of certain ‘final’ decisions in civil proceedings. However, if the decision is interlocutory, leave to appeal is generally required pursuant to section 3(2) of the CI Appeal Order (“discretionary leave”).

Background of the Changyou.com case

Minority shareholders (“Petitioners”) of Changyou.com Limited (“Changyou”) filed a petition in the Cayman Islands Grand Court (“Grand Court”) against Changyou, after Changyou merged with its parent company in 2020. The merger was a “short-form merger” pursuant to section 233(7) of the Companies Act (i.e. a merger between a parent company and a subsidiary where the parent holds shares carrying 90% or more of the voting rights in the subsidiary). “Short-form mergers”, in contrast to “long-form mergers”, do not require a special resolution of the members of each constituent company (provided that a copy of the plan of merger is given to every member of the subsidiary).

The Petitioners sought the Grand Court’s appraisal of the fair value of their shares pursuant to section 238 of the Companies Act. The Grand Court, with the consent of the parties, ordered a trial, as a preliminary issue of the question whether a dissenting shareholder in a short-form merger was entitled to petition the court to have the fair value of their shares appraised by the court pursuant to section 238 of the Companies Act.

The Grand Court concluded, in an Order dated 15 April 2021, that: (i) dissenting shareholders in a short-form merger, effected pursuant to section 233(7) of the Companies Act, are entitled to have  the fair value of their shares appraised by the court pursuant to section 238 of the Companies Act; (ii) dissenting shareholders must give notice of dissent within 20 days of receiving the copy of the plan of merger (effectively re-writing the Companies Act); and (iii) the Petitioners had taken the necessary steps to dissent from Changyou’s merger and were therefore entitled to prosecute their petition.

Changyou appealed to the CICA. In a judgment dated 16 September 2022, the CICA dismissed Changyou’s appeal (“Primary Judgment”), and concluded that the Grand Court’s decision was correct. In its interpretation of section 238 of the Companies Act, the CICA had to apply section 25 of the Bill of Rights which provides that legislation should be interpreted, as far as possible, in a manner which renders it compatible with the Bill of Rights, since the CICA held that, as originally enacted, the Companies Act did not provide appraisal rights in a short-form merger. Accordingly, the CICA held that section 238 should be “read” in a manner which provides dissenting shareholders in short-form mergers with an appraisal right and that the section would otherwise be incompatible with the right to property set out at section 15 of the Bill of Rights. A detailed analysis of the Primary Judgment is discussed in our previous article: Cayman Islands Court of Appeal Effectively Rewrites Section 238 of the Cayman Islands’ Companies Act.

CICA’s guidance on leave to appeal to the Privy Council

The Privy Council is the final and highest appellate court for the Cayman Islands. Pursuant to the CI Appeal Order, litigants wishing to appeal to the Privy Council from the Cayman Islands must appeal as of right or first obtain leave from either the CICA or the Privy Council. A detailed summary of the rules governing appeals to the Privy Council is discussed here.

Changyou applied to the CICA for leave to appeal the Primary Judgment to the Privy Council, on the basis that it was entitled to leave as of right or alternatively that discretionary leave should be granted by the CICA.

In deciding whether the Primary Judgment was final or interlocutory, the CICA examined two English decisions: White v Brunton [1984] QB 570 and Holmes v Bangladesh Biman Corp [1988] 2 Lloyd’s Rep 120. The CICA relied on the following extract from Bingham LJ’s judgment in Holmes v Bangladesh Biman Corp, on whether the determination of a preliminary issue may be considered ‘final’:

“…a decision is not to be regarded as interlocutory simply because it will not be finally determinative of the action whichever way it goes. Instead, a broad common-sense test should be applied, asking whether (if not tried separately) the issue would have formed a substantive part of the final trial.”

The CICA, having applied the test in Holmes v Bangladesh Biman Corp, held that the Primary Judgment was in fact a final decision, and would have been a substantial issue at trial had it not been dealt with separately. This is further supported by the fact that if the Primary Judgment had been against the Petitioners (i.e. that they had no right to have the fair value of their shares appraised by the court in a short-form merger) it would mean that they had no legal standing to file the petition, which would have been dismissed. In the circumstances, the CICA rightly concluded that its Primary Judgment should be treated as a final and not interlocutory decision, and that Changyou was entitled to appeal as of right.

Even if Changyou was not entitled to appeal as of right, the CICA further stated that Changyou would still be granted discretionary leave pursuant to section 3(2)(a) of the CI Appeal Order as the question on appeal was one of “great general or public importance.”


The CICA’s guidance on the distinction between a final and interlocutory decision (which follows English case law in this area) is welcomed guidance for those seeking leave to appeal to the Privy Council.

Changyou’s appeal against the Primary Judgment is pending before the Privy Council, and, once heard, it is expected to decide the preliminary issue along with several important statutory and constitutional issues such as:

(i)    the true meaning and effect of section 233(7) and 238 of the Companies Act;

(ii)   the extent (if any) that section 15 (the right to property) of the Constitution and the Bill of Rights applies; and

(iii) if in the case of a short form merger, there is an incompatibility between section 233(7) and 238 of the Companies Act on the one hand and section 15 of the Constitution on the other hand, should the Court resolve this by a declaration of incompatibility under section 23 of the Constitution or by reference to the exercise of an Interpretive Obligation under section 25 of the Constitution.

In remains to be seen how these important questions will be resolved by the Privy Council. The decision will no doubt be a significant one in the area of appraisal rights and statutory interpretation more generally.

Conyers acts for Changyou in these proceedings.


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