Anatolie Stati v The Republic of Kazakhstan
| Jurisdiction | England & Wales |
| Judge | Mr Justice Jacobs |
| Judgment Date | 02 July 2019 |
| Neutral Citation | [2019] EWHC 1715 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2014-000070 |
| Date | 02 July 2019 |
[2019] EWHC 1715 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice,
The Rolls Building,
Fetter Lane, London, EC4A 1NL
Mr Justice Jacobs
Case No: CL-2014-000070
No attendance for the Claimant
Ali Malek QC and Paul Choon Kiat Wee (instructed by Herbert Smith Freehills LLP) for the Defendant
Hearing dates: 1 st July 2019
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
A: Factual background
There are two applications before the Court on behalf of the Defendant, the Republic of Kazakhstan (“Kazakhstan”). The applications arise from the discontinuance, in 2018, of proceedings commenced in February 2014 by the Claimants (who have been collectively referred to, and to whom I will refer, as “the Statis”). These applications are for (i) costs to be paid on an indemnity basis, and (ii) for a payment on account of their costs.
The present proceedings have given rise to two reported judgments of Robin Knowles J. in 2017 [2017] EWHC 1348 (Comm), [2017] 2 Lloyd's Rep 201 (“the 2017 judgment”) and in 2018 [2018] EWHC 1130 (Comm), [2018] 1 WLR 3225 (“the 2018 judgment”). The latter judgment was, in part, reversed by the Court of Appeal in August 2018: [2018] EWCA Civ 1896, [2019] 1 WLR 897. The background to the litigation is sufficiently described in those judgments, and it is not necessary to repeat it in detail here.
In summary, in February 2014 the Claimants issued an arbitration claim form seeking the enforcement of a Swedish arbitration award against Kazakhstan. On 28 February 2014, Burton J. granted permission to enforce the award on the Statis' without notice application. In April 2015, Kazakhstan applied to set aside the order of Burton J. At that time, there were three grounds for challenge: these “original grounds” concerned (i) the appointment process and composition of the tribunal, (ii) a failure to comply with a cooling-off period, and (iii) alleged procedural errors. In late June 2015, or shortly thereafter, Kazakhstan received various documents, as a result of proceedings in New York, which gave rise to a further and more significant ground for challenge, namely that the arbitration award had been procured by fraud. This further ground was the subject of an application within the present proceeedings, on 27 August 2015, to amend the grounds for challenging the award. The amendment application was made shortly before the hearing of the application to set aside the order of Burton J. was due to be heard, on 1 September 2015. At that hearing, Popplewell J. stayed the proceedings pending the outcome of Kazakhstan's challenge to the award which was at that stage underway in the courts of the Sweden, which was the seat of the arbitration. He ordered that both applications should be relisted once the Swedish court had ruled.
On 9 December 2016, the Swedish court handed down its judgment in the Swedish proceedings, and dismissed Kazakhstan's claim to invalidate or set aside the award, including on the basis that it had been obtained by fraud. The application to set aside, and to amend that application, which had been stayed by Popplewell J. then came back before the Commercial Court in February 2017. A hearing took place on 6–7 February 2017. This was a substantial hearing, and I was told that some 45 files of material were submitted to the court. Robin Knowles J. gave his 2017 judgment on 6 June 2017. The judgment records that the three original grounds of challenge were no longer maintainable in the light of the decision of the Swedish court: see paragraph [9].
However, the judge held, having reviewed the evidence in detail, that Kazakhstan had established a prima facie case that the award was obtained by fraud. He also held that Kazakhstan did not have, and could not with reasonable diligence have obtained, access to the evidence of the alleged fraud on which it now sought to rely, and that the evidence of the alleged fraud could not with reasonable diligence have been discovered before the award. He also rejected an argument based on issue estoppel arising out of decisions made, in favour of the Statis, in Sweden and the US. He therefore directed that Kazakhstan's claim, that the award was obtained by fraud, should proceed to trial, and he gave directions leading to trial by an order dated 27 June 2017.
The proceedings then continued, essentially in the usual way and with nothing remarkable, for the next 8 months. In July 2017, the trial date was fixed to commence some distance away, on 5 November 2018, with a time estimate of 8 days. Pleadings were served: Kazakhstan served Points of Claim in August 2017; the Statis served Points of Defence in September 2017; and Points of Reply were served on 7 November 2017. A Request for Further Information (“RFI”) was served in January 2018, and responded to on 22 February 2018, albeit inadequately (as the court later held). The parties were due to provide standard disclosure on 22 February 2018. But, on that date, and after having received Kazakhstan's disclosure list, the Statis said that they needed an extension of the deadline to 1 March 2018. This was agreed on the basis that there was voluntary disclosure of documents already identified as disclosable. On 23 February 2018, the Statis couriered copies of these documents to Kazakhstan.
Thereafter, the case took an unheralded and, on any view, unusual turn. Without prior warning, the Statis served notice of discontinuance on Kazakhstan on 26 February, just a few days prior to the extended deadline for disclosure. Kazakhstan challenged this discontinuance, and contended that the case should proceed to trial. In his 2018 judgment, delivered on 11 May 2018, Robin Knowles J. agreed with Kazakhstan. He set aside the notice of discontinuance. Later in the month, he gave various consequential directions, including an order for the provision of further information in response to the RFI. By this time, the Statis were representing themselves, since their former solicitors King & Spalding (“K&S”) had come off the record, albeit that Kazakhstan contends that they were clearly continuing to assist in the background.
The Statis obtained permission to appeal against the 2018 judgment on 6 July 2018, in part only, and the case came before the Court of Appeal on 31 July 2018. Judgment was delivered on 10 August 2018. The Court of Appeal allowed the Statis' appeal, and accordingly held that there had been a valid notice of discontinuance which should not be set aside. The order of the Court of Appeal records the undertaking of the Statis “not to seek to pursue further enforcement proceedings in this jurisdiction in respect of the Award”. The order of Burton J, who had originally granted permission to enforce the award in 2014, was set aside. Accordingly, it is clear that Kazakhstan has been completely successful in bringing about the termination of the present proceedings in this jurisdiction, albeit not on the original grounds of challenge. But litigation in relation to the award continues in other jurisdictions, where the Statis have achieved a measure of success.
In the period between the 2018 judgment of Robin Knowles J. and the decision of the Court of Appeal, when the present proceedings were still in existence, there were various developments. In June 2018, the Statis provided disclosure of a very large number of documents, albeit that a large number were also withheld from disclosure on the grounds of privilege. Kazakhstan contends that this was a “document dump” which included much irrelevant material, albeit that they contend that some of the documents are useful to their case on fraud. The deadline for exchange of witness statements was 10 July 2018. Kazakhstan served two witness statements of fact. The Statis said that they would not be serving any statements of fact. This meant that there was no witness, on their behalf, who would speak to the allegations of fraud.
The order of the Court of Appeal provided that there should be no order for the costs of the appeal, but that Kazakhstan should pay the Statis' costs of the application leading to the 2018 judgment of Knowles J. The judge had originally awarded such costs to Kazakhstan, and had summarily assessed them at £ 250,000. The costs of the Statis for that hearing were £ 217,862, and Kazakhstan accepts that some proportion of these costs (50%) should be taken into account and set off when computing the amount of any payment on account in their favour.
The Court of Appeal also ordered that the matter should be remitted to the Commercial Court for determination of Kazakhstan's application for an order that the Statis pay the costs of the proceedings prior to the date of the notice of discontinuance on an indemnity basis and for a payment on account. Kazakhstan's application for such costs was made on 22 November 2018, and was supported by a witness statement of Mr. Philip Carrington. Mr. Anatolie Stati, the First Claimant, responded (in his second witness statement) on 25 January 2019. Mr. Carrington served further statements, relevant to the present issues, in March and June 2019. Mr. Stati responded to the most recent statement with his fourth witness statement dated 28 June 2019. This was sent to Kazakhstan's solicitors, Herbert Smith Freehills LLP, under cover of an e-mail dated Friday 28 June 2019 from Mr. Grigore Pisica, the Head of the Legal Department of the Third Defendant. The email said: “We demand that these attachments should be added to the Bundle and shown...
To continue reading
Request your trial