You'll never walk alone (even in Texas)

For those who love football, Liverpool FC's plight, although originally a source of amusement, is now a cause of sympathy from those, such as me, who follow a different colour. (Even though it is perhaps a welcome distraction from Tuesday's events, although in truth England are still in a very strong position and it is too early to wonder where you last put away the panic button.)

From that point of view my last article, about the conflict of laws was quite prescient.

So we have a judgment of Mr Justice Floyd in the High Court in London on Tuesday that it is within the power of the board of directors of Liverpool FC to proceed with a sale of the club (to John Henry who happens to be the current owner of the Boston Red Sox baseball franchise), and a temporary injunction from the District Court in Texas restraining the sale on amazingly lurid allegations stated in Hicks' and Gillett's application. On the grounds that extraordinary claims require extraordinary evidence, and that if true they would certainly have defeated the proceedings in London, those allegations probably require to be treated with considerable suspicion.

Then today we have an injunction from the High Court of England and Wales requiring Hicks and Gillett to withdraw their suit in Texas by 4pm tomorrow.

The main purpose of the temporary injunction in Texas appears to have been to delay the sale beyond the closing date for the Henry deal, which is tomorrow. Whilst the board of Liverpool FC can give a fan's two fingers to the injunction of the District Court in Texas, the American purchaser cannot since contempt of court warrants issued by the court in Texas can be executed in all of the states of the US.

However, it looks doubtful if this delaying tactic will now succeed. First, Henry has indicated that he will extend the closing date until the Texas injunction is discharged. Secondly, Gillett and Hicks are in a very weak position both for geographical reasons - Liverpool, and therefore their investment, is situated in England - and also for legal reasons - a judgment in proceedings to which they were parties and to which they have already submitted to jurisdiction (as in truth they had to) has been issued against them which will be recognised according to the principals of private international law. The board of Liverpool FC are very well advised (Slaughter and May are about the best you can get) and they have attacked this weakness.

Were Hicks and Gillett to fail to meet tomorrow's 4pm deadline given by the High Court in London, any warrant of arrest for contempt of court is unlikely to be executable in Texas, although it would preclude the pair attending further board meetings. Unfortunately for Hicks and Gillett however, any monetary penalty imposed on them, and any damages awarded for losses arising to the club caused by the continuation of the Texas injunction in defiance of the court in London, will be executable against their assets in the UK, and in particular against their interests in Liverpool FC. So they are going to lose on either count.

This regrettable saga does yet again show the folly of the vogue two and three decades ago for clubs to float themselves publicly on the stock exchange, thus making themselves vulnerable to highly "leveraged" take over bids ("highly leveraged" means "heavily indebted" to those who don't like euphemisms). It also again illustrates the dangers of foreign ownership of English football clubs, and of American owners in particular, who don't understand what they are getting into. Let us hope for Liverpool FC that this particular deal is not just jumping from the frying pan into the fire.

On the subject of American sport, what a fine display of bear-down pitching in this week's divisional series of the baseball play offs, particularly by Roy Halladay, Cliff Lee, Tim Lincecum and Derek Lowe, play-off pitching at its absolute best. We still have Halladay, Lee and Lincecum to enjoy in the championship series. My prediction? For the world series, Philadelphia representing the NL and New York representing the AL (but Texas taking them to the last game), and beyond that, too close to call.

Update (Friday 15th October)
Hicks and Gillett complied with the injunction issued by the English court, and apparently the deal with Henry has now been completed. That part of the proceedings now seems to be over, but the pair have indicated they intend to bring, or continue with, a $1billion lawsuit against the other directors of the club and RBS. Given that they bought the club originally for £174m in 2007 and have since done little more than increase the debt, that seems a somewhat preposterous figure, but everything comes big in Texas.

Now there will be disputes about venue no doubt, and whether that should be Dallas or London. If the directors are not resident in the US and do not have assets there, and do not submit to the jurisdiction of the court in Dallas, then they can ignore any judgment of the Dallas court as it would not be enforced in England, and the same would apply to the club itself if they do not have a place of business there. But that luxury would not apply to RBS. No doubt they will apply for proceedings to be removed to London, which is the natural forum for the matter, but American courts do have a tendency to think that there is nothing wrong with telling the rest of the world how to do their business, so that will be the next saga to have played out.