1) Bank St Petersburg Ojsc and Another (Appellants/Claimants) v 1) Vitaly Arkhangelsky and Another (Respondents/Defendants) Oslo Marine Group Ports LLC (Respondent/Part 20 Claimant)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Longmore,Lord Justice Kitchin,Lord Justice McCombe,and |
| Judgment Date | 14 May 2014 |
| Neutral Citation | [2014] EWCA Civ 593 |
| Docket Number | Case No: A3/2013/3620 & A3/2013/3700 & A3/2013/1423 |
| Court | Court of Appeal (Civil Division) |
| Date | 14 May 2014 |
[2014] EWCA Civ 593
The Right Honourable Lord Justice Longmore
The Right Honourable Lord Justice Kitchin
and
The Right Honourable Lord Justice McCombe
Case No: A3/2013/3620 & A3/2013/3700 & A3/2013/1423
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
THE HONOURABLE MR JUSTICE HILDYARD
Royal Courts of Justice
Strand, London, WC2A 2LL
IN THE COURT APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
HIS HONOUR JUDGE MACKIE QC
Mr Philip Marshall QC & Mr Justin Higgo (instructed by Baker & McKenzie LLP) for the Bank St Petersburg OJSC & Mr Savelyev
Mr Alexander Milner (appearing Pro bono) (instructed by Withers LLP (also acting Pro Bono) for Mr and Mrs Arkhangelsky and Oslo Marine Group Ports LLC
Hearing dates: 8 th & 9 th April 2014
Introduction
The court has to consider 3 interlocking interlocutory appeals arising out of (apparently so far successful) attempts by the Bank of St Petersburg ("the Bank") and its chairman Mr Savelyev to wrest a large group of companies known as the Oslo Marine Group ("OMG") from the control and majority ownership of Mr and Mrs Arkhangelsky. One of the many assets owned by Mr and Mrs Arkhangelsky, through their company Oslo Marine Group Ports LLC ("OMG Ports") was part of the port of St Petersburg known as The Western Terminal. OMG had substantial debts owing to the Bank by the end of 2008; the Arkhangelskys assert that at about that time the Bank agreed to restructure the debts, not to demand repayment before the end of a six month moratorium, not to interfere in OMG's day-to-day commercial activities, not to dispose of the Arkhangelskys' shareholdings which were pledged in support of the loan and to return the pledged shareholdings once specified loans were repaid. They further allege that in breach of contract, the Bank demanded instant repayment, replaced the management of OMG companies and transferred the shareholdings to special purpose vehicles controlled by the Bank and/or Mr Savelyev who have obtained judgments in Russia in pursuance of these wrongful activities. They have sought to enforce those judgments in France and Bulgaria where it is believed there are assets. The Arkhangelskys by contrast brought claims against the Bank and Mr Savelyev and related parties in the British Virgin Islands and Cyprus for conspiracy, deceit and duress or intimidation pursuant to Article 1064 (the tort provision) of the Russian Civil Code. There were jurisdictional (or perhaps other) difficulties about those claims and it was agreed between the parties by an Exclusive Jurisdiction Agreement of 14 th December 2011 that the English court would have exclusive jurisdiction to determine the disputes between them.
Pursuant to this agreement the Arkhangelskys (who have now been granted a form of asylum in France) and OMG Ports began proceedings in the Commercial Court, issued by their then solicitors Bristows, on 22 nd December 2011 against the Bank, Mr Savelyev and other defendants but did not attempt to serve them until 23 rd July 2012. Meanwhile the Bank and Mr Savelyev instructed their solicitors, Baker & McKenzie, to issue proceedings against the Arkhangelskys in the Chancery Division claiming negative declaratory relief and also claiming sums allegedly due under loan agreements or guarantees which the Arkhangelskys say are forgeries. Those proceedings were issued on 20 th February 2012 and duly served. Morgan J granted a freezing order against the Arkhangelskys on 15 th March 2012. There has been an order for disclosure of assets with which the Arkhangelskys say they have substantially complied. The Bank disputes that but it is the fact that the Arkhangelskys were not represented by English solicitors and counsel in the proceedings below and it is only in this court for the first time that they have secured representation by counsel pro bono, Mr Alexander Milner. The court is most grateful to him.
The claim form issued by Bristows was marked Not For Service Outside the Jurisdiction and expired on 14 th April 2012. By this time Bristows were no longer instructed and the Arkhangelskys' French lawyers wrote to Baker & McKenzie on 8 th May 2012 asking if they had instructions to accept service of proceedings. Baker & McKenzie replied on the same day asking for the proceedings to be identified but adding that they saw no need for further proceedings. That was, on the face of it, a reasonable observation since the Arkhangelskys were already defendants in the Chancery proceedings and could counterclaim in those proceedings. The Arkhangelskys were, however, concerned about limitation if they and OMG Ports were confined to counter-claiming in the Chancery Division and on 18 th June 2012 Mr Arkhangelsky applied in person for an extension of time to serve the Commercial Court claim form on the Bank and Mr Savelyev. On 23 rd July Christopher Clarke J gave permission to serve the claim form (within the jurisdiction) on or before 29 th July 2012. A Mr Stroilov (an associate of the Arkhangelskys with a certain knowledge of legal matters who subsequently acted as the Arkhangelskys' McKenzie friend) then personally handed the claim form and Christopher Clarke J's order to Mr Thomas Yates of Baker & McKenzie who returned it two days later saying that Baker & McKenzie had no instructions to accept service.
That left Mr Arkhangelsky in something of a quandary. He had explained in the statement supporting his application that he had been told by Bristows it would be a lengthy and expensive procedure to serve the proceedings out of the jurisdiction. He said he did not have the resources for that and yet the Bank and Mr Savelyev refused to instruct Baker & McKenzie to accept service. He had worries about limitation. Those stemmed from the fact that there was a three year limitation period in Russia beginning from the time when he knew or ought to have known that his rights had been violated. That is agreed to have been sometime in March 2009. The Commercial Court proceedings were therefore in time having been issued on 22 nd December 2011. He seems to have thought that any counterclaim in the Chancery proceedings might be time-barred because he had not counterclaimed in those proceedings before 1 st April 2012. He therefore seems not to have been aware that pursuant to section 35(1)(b) of the Limitation Act 1980 he and Mrs Arkhangelsky could counterclaim at any time because the proceedings against them had been issued on 20 th February 2012 and their counterclaim would be deemed to have begun on that date, a few days before March 2012. Any worry about a claim by OMG Ports who were not defendants to the Chancery proceedings would, however, have been well founded, because any counterclaim begun by them would only be regarded as having begun when that counterclaim was made.
In these circumstances, Mr Arkhangelsky on 22 nd October 2012, with the help of counsel instructed on a direct access basis, applied for an order dispensing with service of the Commercial Court claim form under CPR 6.16 on the basis that it was sensible to avoid what might be a complex dispute about limitation and no prejudice could be caused to the Bank and Mr Savelyev since the Chancery proceedings were a mirror of the Commercial Court proceedings. That application was refused first by Teare J on paper on 10 th December 2012 and than on 30 th April 2013 at an oral inter partes hearing by HHJ Mackie QC (at which Mr Stroilov represented the Arkhangelskys and helpfully referred the judge to Magna Carta) on the basis that any counterclaim could be advanced in the Chancery action and that the existence of limitation issues was not a good reason for dispensing with service. On 23 rd July Lewison LJ granted permission to appeal observing that the decision of the Supreme Court in Abela v Baadarani [2013] UKSC 44; [2013] 1 WLR 2043 handed down on 26 th June 2013, showed that the appeal had real prospects of success. That case dealt with alternative service pursuant to CPR 6.15 rather than dispensing with service pursuant to CPR 6.16 but certainly discourages any legalistic or technical approach to service of proceedings, if they have been brought to the notice of a defendant.
Meanwhile the Arkhangelskys on or about 4 th July 2013 applied (inter alia) for permission to serve a counterclaim in the Chancery proceedings and for an injunction preventing the Bank and Mr Savelyev from enforcing the Russian (and other) judgments they had obtained. Those applications were opposed and so the Arkhangelskys also applied for the Russian 3 year limitation period to be disapplied pursuant to section 2(2) (the undue hardship provision) of the Foreign Limitation Periods Act 1984.
These applications (among others) came before Hildyard J who has been case-managing the Chancery litigation. He decided to allow the counterclaim made by the Arkhangelskys because that dated back to the date of the issue of the Chancery proceedings. He decided further that the objections to OMG Ports being joined were motivated by the wish to argue that the Arkhangelskys' claim was merely reflective of a loss suffered by...
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