A London judge agreed to appoint a receiver to sue French paper maker Sequana SA on behalf of a British American Tobacco Plc unit in a dispute linked to the cost of cleaning up two U.S. rivers polluted by chemicals.
BAT Industries is trying to force Windward Prospects Ltd. to sue Sequana, its former parent, over $778 million in five-year-old dividend payments, Judge Nicholas Hamblen said. BAT is seeking to protect Windward’s assets because it claims the company agreed to cover its share of the $1 billion clean-up of the Fox River in Wisconsin and the Kalamazoo River in Michigan.
“I have concluded that justice and convenience does require the appointment of a receiver,” Hamblen said. The claim against Sequana risks being lost if action isn’t taken before December, he said in a written judgment.
The U.S. has sued nine companies, including NCR Corp., over leaks of carcinogens in the production of paper from the mid-1950s until 1971. BAT is liable because it owned NCR paper divisions in the 1990s through a series of mergers and de-mergers that resulted in the creation of Windward, according to Hamblen’s ruling.
Windward denies it is liable for the environmental work at the rivers, which could cost about $1 billion, Hamblen said.
Windward’s lawyer, Duncan Aldred, didn’t immediately respond to an e-mail seeking comment.
“Sequana sold its investment in Windward Prospects Ltd. on May 18, 2009, and believes that dividends distributed by Windward Prospects Ltd. to Sequana prior to the sale were paid in compliance with all relevant legal requirements,” said Claire Doligez, a spokeswoman for Sequana.
BAT said in an e-mailed statement it was pleased steps had been taken to protect the claims against Sequana.
Windward could avoid the appointment of a receiver if it filed the lawsuit itself, Hamblen said. The judge said the effect of a receiver on Windward would be minimal, while the loss to BAT if no claim against Sequana was issued would be “very great.”
BAT said Windward shouldn’t have paid dividends totaling about 578 million euros ($778 million) to Sequana in 1998 and 1999 because it didn’t have sufficient assets to pay its share of the river cleanup, Hamblen said.
The case is BAT Industries Plc v. Windward Prospects Ltd & Anr, High Court of Justice, Queen’s Bench Division, Commercial Court, 12-213.