Holiday Inn 2013 Annual Report Download - page 174

Legal proceedings
Group companies have extensive operations in the UK, as well
as internationally, and are involved in a number of legal claims
and proceedings incidental to those operations. It is the
Company’s view that such proceedings, either individually or
in the aggregate, have not in the recent past and are not likely
to have a significant effect on the Group’s financial position or
profitability. Notwithstanding the above, the Company notes the
matters set out below. Litigation is inherently unpredictable and,
as at 17 February 2014, the outcome of these matters cannot be
reasonably determined.
A claim was filed on 9 July 2013 by Pan American Life
Insurance Company against Louisiana Acquisitions Corp. and
Inter-Continental Hotels Corporation (IHC). The claimant identified
eight causes of action: breach of contract; breach of partnership,
fiduciary duties and good faith obligations; fraud; civil conspiracy;
conversion; unfair trade practices; unjust enrichment; and alter
ego. As at 17 February 2014, the likelihood of a favourable or
unfavourable result cannot be reasonably determined and it is
not possible to determine whether any loss is probable or to
estimate the amount of any loss.
On 20 August 2012, two claimants filed a class-action claim in
California against several online travel companies and hotel
companies, including a Group company, InterContinental Hotels
Group Resources, Inc., in connection with alleged anti-competitive
practices. Several similar claims were filed across the US by other
claimants alleging similar complaints. All of these cases were
consolidated in a multidistrict litigation proceeding in the U.S.
District Court for the Northern District of Texas for the purpose
of pre-trial proceedings (with the exception of cases which were
voluntarily dismissed). On 1 May 2013, claimants filed a Consolidated
Amended Complaint alleging federal and state antitrust and unfair
trade practices associated with online hotel-room booking. On 1 July
2013, the defendants moved to dismiss the Consolidated Amended
Complaint. The motion to dismiss is fully briefed and argued, and the
parties are awaiting a decision. The Court has stayed all discovery in
the action pending a ruling on the motion to dismiss. It is not possible
to determine whether any loss is probable or to estimate the amount
of any loss. The Group intends to defend against these claims
vigorously. As at 17 February 2014, the outcome of these matters
could not be reasonably determined.
On 10 August 2012, Shanghai Yaoda Real Estate Development Co.,
Ltd. (Yaoda), the owner of the InterContinental Shanghai Puxi hotel
filed an arbitration petition with the Shanghai International Economic
and Trade Arbitration Commission (SIETAC), which was formerly
known as China International Economic and Trade Arbitration
Commission Shanghai Sub Commission, containing numerous
allegations relating to IHC’s alleged mismanagement of the hotel
and the de-flagging of the hotel, which took place on 31 August 2012.
Yaoda sought approximately $46 million relating to the alleged loss
of value of the hotel, costs of compliance with the brand standards,
lost revenue at the hotel, costs and general damages. Pursuant to
the dispute mechanism specified under the management contract,
IHC filed a counterclaim with the China International Economic and
Trade Arbitration Commission in Beijing (CIETAC Beijing).
On 21 March 2013, SIETAC issued an arbitral award (the Award)
ordering IHC to pay Yaoda an aggregate amount of RMB 150,379,000
(approximately $25 million). On 15 May 2013, IHC filed a motion to
cancel the Award with the Shanghai 2nd Intermediate People’s
Court. On 27 July 2013, IHC and Yaoda settled their respective
claims, pursuant to a settlement agreement, and entered into a
new hotel support management contract.
On 31 July 2012, the UK’s Office of Fair Trading (OFT) issued a
Statement of Objections alleging that the Company (together with
Booking.com B.V. and Expedia, Inc.) had infringed competition law
in relation to the online supply of room-only hotel accommodation
by online travel agents.
The Company has co-operated fully with the investigation.
On 31 January 2014, the OFT announced its decision to accept a
series of commitments and to conclude its investigation without any
finding of infringement or wrongdoing, or the imposition of any fine.
A class-action claim was filed on 3 July 2012 by two claimants
alleging that InterContinental Hotels of San Francisco, Inc. and
InterContinental Hotels Group Resources, Inc. violated California
Penal Code 632.7, based upon the alleged improper recording of
cellular phone calls originating from California to IHG customer
care and reservations centres. The claimants subsequently
amended the claim to include Six Continents Hotels, Inc.
The Group intends to vigorously defend against these claims.
As at 17 February 2014, the likelihood of a favourable or
unfavourable result cannot be reasonably determined and it is
not possible to determine whether any loss is probable or to
estimate the amount of any loss.
On 20 April 2012, Sanya Huayu Tourism Co., Ltd. (Sanya), the owner
of the former Crowne Plaza Sanya hotel, filed an arbitration petition
against Holiday Inns (China) Limited (HICL) with CIETAC Beijing
seeking compensation for its alleged losses in the amount of
RMB 33,867,766.63 (approximately $5.2 million). The claims related
to HICL’s alleged mismanagement of the hotel. Sanya filed additional
damages claims on 20 November 2012, which increased the total
alleged losses to RMB 43,225,523.53 (approximately $6.9 million).
On 4 June 2012, and then by further amendment on 29 September
2012, HICL filed a statement of counterclaim seeking numerous
categories of counterclaims from Sanya totalling approximately
$7.25 million.
On 9 September 2013, HICL and Sanya settled their respective
claims, pursuant to a settlement agreement, and on 17 September
2013, CIETAC Beijing issued a ruling approving both parties’
requests to withdraw all claims against each other.
Exchange controls
There are no restrictions on dividend payments to US citizens.
Although there are currently no UK foreign exchange control
restrictions on the export or import of the capital or the payment
of dividends on the ordinary shares or the ADSs, from time to time
English law imposes restrictions on the payment of dividends to
persons resident (or treated as so resident) in or governments of
(or persons exercising public functions in) certain countries (each
of the foregoing, a Prohibited Person).
There are no restrictions under the Articles or under English law that
limit the right of non-resident or foreign owners to hold or vote the
ordinary shares. However, under current English law, ordinary
shares or ADSs may not be owned by a Prohibited Person. In addition,
the Articles contain certain limitations on the voting and other rights
of any holder of ordinary shares whose holding may, in the opinion of
the Directors, result in the loss or failure to secure the reinstatement
of any license or franchise from any US governmental agency held by
Six Continents Hotels, Inc. or any subsidiary thereof.
172 IHG Annual Report and Form 20-F 2013
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