1) United Company Rusal Plc and Others v 1) Hsbc Bank Plc and Others

JurisdictionEngland & Wales
JudgeMr Justice Tugendhat
Judgment Date01 March 2011
Neutral Citation[2011] EWHC 404 (QB)
CourtQueen's Bench Division
Docket NumberCase No: HQ11X00425
Date01 March 2011

[2011] EWHC 404 (QB)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Before : The Honourable Mr Justice Tugendhat

Case No: HQ11X00425

Between
1) United Company Rusal Plc
2) United Company Rusal Investment Management Llc
3) Maxim Sokov
Applicants
and
1) Hsbc Bank Plc
2) Citigroup Financial Markets Ltd
3) Debevoise & Plimpton Llp
Respondents

Mr Neil Kitchener QC and Mr David Caplan (instructed by Mishcon de Reya) for the Applicants

Mr Richard Handyside QC (instructed by Eversheds LLP) for the First Respondent

Mr Stephen Phillips QC and Mr William Edwards (instructed by Allen & Overy LLP) for the Second Respondent

Mr Timothy Dutton QC and Mr David Head (instructed by Debevoise & Plimpton LLP) for the Third Respondent

Hearing dates: 17 and 18 February 2011

Mr Justice Tugendhat

Mr Justice Tugendhat :

1

The Russian Federation is a civil law jurisdiction. The legal procedures available to litigants to obtain relevant documents from their opponents are different from the procedures available in England and other common law countries. In this application these Russian Applicants apply in London under the English Civil Procedure Rules Part 31.18 for an order of this court. The order they seek is one requiring the Respondents to give disclosure of documents and information. These Respondents are not, and are not intended to be, parties to any other proceedings, and the Applicants are not making any other claims against the Respondents. It is not suggested that the Respondents have done anything wrong. The application is made after the Applicants have commenced proceedings in other jurisdictions naming the persons against who they do make substantive claims, but there may be others so far unknown to them against whom they might wish to make claims. This form of application is commonly known as a Norwich Pharmacal application ( Norwich Pharmacal v Customs and Excise Commissioners [1974] AC 133).

2

The principle in Norwich Pharmacal is described in the speech of Lord Reid (at page 175):

"If through no fault of his own a person gets mixed up in the tortious acts of others so as to facilitate their wrongdoing he may incur no personal liability but he comes under a duty to assist the person who has been wronged by giving him full information and disclosing the identity of the wrongdoers. I do not think that it matters whether he became so mixed up by voluntary action on his part or because it was his duty to do what he did. It may be that if this causes him expense the person seeking the information ought to reimburse him. But justice requires that he should co-operate in righting the wrong if he unwittingly facilitated its perpetration."

3

This application gives rise to five issues:

i) Was there arguably wrongdoing?

ii) Was Debevoise, however innocently, involved in the arguable wrongdoing?

iii) Is disclosure of the information necessary?

iv) Is the information sought within the scope of the available relief?

v) Should the court exercise its discretion in favour of granting relief?

4

This application has many unusual features, including the following. The First and Second Applicants (together referred to as "Rusal") are part of one of the largest corporations in Russia. The application is made in the course of a long and bitter dispute between Rusal and a very large Russian investor, Interros International Investments Ltd ("Interros"). Mr Oleg Deripaska is the Chief Executive Officer of Rusal. Mr Vladimir Potanin controls Interros. The dispute is over the control and future management of a third very large Russian corporation, Open Joint Stock Company Mining and Metallurgical Company Norilsk Nickel ("Norilsk Nickel").

5

The First and Second Respondents are two banks, but they can now be ignored, since the application against them has been discontinued.

6

The third Respondent ("Debevoise") is described by Mr Scoville, its managing partner, as "one of the world's elite law firms, with over 700 lawyers based in offices spanning the Americas, Europe and Asia", including 25 lawyers in an office in Moscow. Debevoise's clients include both Norilsk Nickel and some of its subsidiaries, and Interros. There are few reported cases in which a Norwich Pharmacal order has been sought against a law firm. Any form of claim by one litigant against the lawyers retained by an opposing litigant is rare.

7

The fact that there are so many unusual features in this application does not of itself mean that the application must fail: see Ashworth Hospital Authority v MGN Ltd [2002] 1 WLR 2033. But it does mean that the application requires more scrutiny than it would if it had been indistinguishable from established authority.

8

There is already an arbitration in London between Rusal and Interros commenced in August 2010, and there is related litigation commenced recently by Rusal in other jurisdictions: Russia, St Kitts and Nevis ("the Nevis Injunction Proceedings"), and two of the United States of America, New York and Connecticut ("the New York Discovery Proceedings" and "the CT Discovery Proceedings").

9

The first basis for this Norwich Pharmacal application is in aid of the proceedings which Rusal has commenced in Russia and the Nevis Injunction Proceedings. This application is not in aid of the London arbitration. No substantive litigation is expected to take place in England. There have been only a small number of Norwich Pharmacal orders made in the past in aid of foreign legal proceedings.

10

There is a second basis for the application by Rusal, which is unprecedented. It is to enable Rusal (and the other shareholders of Norilsk Nickel) who are due to consider resolutions at an Extraordinary General Meeting of Norilsk Nickel schedules for 11 March ("the EGM") to be informed of the affairs of Norilsk Nickel, as, so Rusal submits, they are entitled to be. This basis was not referred to in the evidence relied on in support of the Application Notice, but emerged subsequently in the evidence in reply.

11

The application of the Third Applicant ("Mr Sokov"), is a separate application from that of Rusal, and is also unprecedented. He is a director of Norilsk Nickel, nominated by Rusal, and General Director of the Second Applicant. He makes this application with a view to enforcing the rights he claims in his capacity of a director of Norilsk Nickel.

12

Rusal describes itself as the world's largest producer of aluminium and alumina. It (through the Second Applicant) is also the holder of 25% plus 1 share in Norilsk Nickel. The First Applicant is incorporated in the Russian Federation. The Second Applicant is incorporated in Jersey. Norilsk Nickel is the world's largest producer of nickel and palladium and one of the leading producers of platinum and copper. It is a publicly quoted company with some 50,000 shareholders, said to have a market capitalisation of over $40 billion. But one of those shareholders is Interros and that company also holds 25% plus 1 share in Norilsk Nickel. By a Co-Operation Agreement ("the Co-Operation Agreement") dated 25 November 2008 Rusal and Interros agreed to use their best endeavours to ensure the election of the maximum number of directors to the board of directors of Norilsk Nickel from each of them equally. What is at stake in this dispute is said to be worth many billions of US Dollars.

CHRONOLOGY OF EVENTS

13

In 2008 Rusal acquired its shares in Norilsk Nickel for a consideration worth $12.7 billion. There soon arose differences between Rusal and the Board of Norilsk Nickel over a proposal approved by the Board for the buying back of 4% of Norilsk Nickel's shares at a premium over the prevailing market price. Rusal called an EGM of Norilsk Nickel to seek the dismissal of the Board. Rusal and Interros entered into discussions with a view them co-operating. But meanwhile Rusal obtained an injunction in Krasnoyarski Territory Arbitrazh Court ("the Russian Court") prohibiting Norilsk Nickel from proceeding with the buy back. On 25 November 2008 Rusal and Interros entered into the Co-operation Agreement. This agreement was to cover representation on the Board, and policies for Norilsk Nickel, including dividends, sources of finance, share transactions and mergers and acquisitions. Nevertheless, differences continued to occur.

14

In December 2009 the directors of Norilsk Nickel who had been nominated by Rusal voted against a resolution approving the budget for the coming year. The resolution was passed. In April 2010 Rusal nominated Mr Deripaska for election to the Board of Norilsk Nickel, and he became a director. He and the other directors nominated by Rusal proposed a resolution for the 2009 dividend. The resolution was not passed.

15

In June 2010, at the AGM of Norilsk Nickel, a total of four directors nominated by Interros were elected, but directors nominated by Rusal were reduced from four to three. Rusal responded in various ways in August and September 2010. First, it challenged the legality of the actions taken at the AGM in an application to the Federal Service for Financial Markets ("FSFM"). The FSFM rejected Rusal's complaint. Second, Rusal submitted a request for the EGM of Norilsk Nickel. Third, it commenced the arbitration proceedings in London at the London Court of International Arbitration ("LCIA"). Fourth, it commenced proceedings in the Russian Court (Action A33–14337/2010). Rusal sought the annulment of the resolutions at the AGM, but the Russian Court stayed these proceedings on grounds of procedural defects.

16

In 21 October an EGM was held. But a resolution by Rusal proposing the replacement of the Board of Norilsk Nickel was not passed. The next day Interros announced a tentative proposal to buy Rusal's shares in Norilsk Nickel. On 16 December 2010 Norilsk Nickel announced an offer to buy Rusal's shares for $12 billion, subject to...

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    • Singapore
    • Singapore Academy of Law Annual Review No. 2014, December 2014
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