EGYPTIAN SALT AND SODA CO, LIMITED Vs. PORT SAID SALT ASSOCIATION, LIMITED

JUDGEMENT

(1.) The sole question at issue in this appeal is whether it is permissible for the appellant company, having regard to the terms of its Memorandum of Association, to engage in the business of exporting salt from Egypt. The respondent company is a shareholder of the appellant company and as such asks and has obtained from His Britannic Majesty's Supreme Court for Egypt, an injunction restraining the appellant company from engaging in this branch of business. The present appeal is against the order so obtained. To place the controversy in its due setting it is necessary to refer to the agreed documents in the case. From these the essential facts may be briefly extracted. It appears that by decree of 26 August, 1886, the Khedive established a monopoly in Egypt of the extraction, manufacture and sale of salt and natron or native sodium carbonate. In 1897 an Egyptian limited company, the Societe Anonyme des Soudes Naturelles d'Egypte, which it will be convenient to call "the Egyptian Soda Company," was formed to operate a concession obtained by it from the Egyptian Government. This concession conferred on the Egyptian Soda Company the exclusive right to exploit the minerals and natural products in the lands or lakes of a domain known as Wadi- Natron, which is situated to the west of the Nile in lower Egypt, and in particular to manufacture and export soda. The concession expressly stipulated that the Egyptian Soda Company should on no account sell or export salt, this being a monopoly of the State. Thereafter an English syndicate, known as the Egyptian Syndicate Limited, acquired the undertaking of the Egyptian Soda Company, including its Wadi-Natron concession, and shortly afterwards entered into an agreement with the Egyptian Government whereby the latter ratified the transfer to the Syndicate of the Egyptian Soda Company's Wadi-Natron concession and further conferred on the Syndicate the Government's monopoly right of manufacturing and selling salt in Egypt, the two concessions to be merged into one in the hands of the Syndicate. The salt was to be obtained by the Syndicate exclusively from the salines or salt deposits of Mex in the western part of Lake Mariout, and the sole right to export the salt so obtained was conferred on the Syndicate. In this agreement with the Syndicate the Egyptian Government expressly reserved the right on six months' notice to abolish the salt monopoly, in which case, however, the Syndicate was to continue to have the right of exploiting the salines of Mex and the Wadi-Natron concession was to remain in full force. The Syndicate thus came to hold both the Wadi-Natron concession with the right to manufacture and export soda and the Mex concession with the right to exercise the Government's monopoly of selling salt in Egypt and for export.

(2.) The Syndicate next proceeded to promote the appellant company and an agreement between the Syndicate and the company about to be formed was prepared, being the agreement referred to in Head 3 (A) of the appellant company's Memorandum of Association quoted below. The appellant company was duly incorporated under the English Companies Acts on 27 October 1899, and the agreement was executed three days later on 30 October 1899. It provided for the purchase by the appellant company from the Syndicate of: (1) the undertaking of the Egyptian Soda Company and its Wadi-Natron concession and (2) the rights of the Syndicate under the Mex concession: "but with the reservation that the company shall not do any export trade in salt, such right of export being reserved by the Syndicate from the sale to the company. The Syndicate in exercise of such reserved rights of export of salt being bound by all the conditions imposed by the Government upon the export of salt under the terms of the said concessions."

(3.) Consequently, while the appellant company acquired the Syndicate's right to manufacture and sell salt in Egypt it did not acquire its right to export salt from Egypt, and was disabled from engaging in the exportation of salt so long at least as the Government monopoly continued in force. The monopoly right of exporting salt which the Syndicate had obtained from the Government and which it excluded from the sale to the appellant company was however subject to the Government's expressly reserved right to terminate the salt monopoly. This reserved right the Government subsequently exercised and from 1 January 1906, the salt monopoly was entirely abolished, whereupon the reservation of the right of export in the agreement between the Syndicate and the appellant company ceased to operate as a restriction disabling the appellant company from engaging in the export of salt, except in so far as it had any contractual effect.