Arcelormittal North America Holdings LLC v Ravi Ruia

JurisdictionEngland & Wales
JudgeMr Justice Picken
Judgment Date09 June 2022
Neutral Citation[2022] EWHC 1378 (Comm)
CourtQueen's Bench Division (Commercial Court)
Docket NumberCase No: CL-2021-000208
Between:
Arcelormittal North America Holdings LLC
Claimant
and
(1) Ravi Ruia
(2) Prashant Ruia
(3) Sushil Baid
(4) Andrew Wright
(5) Joseph Seifert
(6) Uday Kumar Gujadhur
(7) Nigel Bell
(8) Essar Global Fund Limited
(9) Essar Capital Limited
(10) Essar Capital Services (UK) Limited
Defendants

[2022] EWHC 1378 (Comm)

Before:

Mr Justice Picken

Case No: CL-2021-000208

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Lord Falconer, Harish Salve QC, Peter Head and Timothy Lau (instructed by Gibson, Dunn & Crutcher UK LLP) for the Claimant.

Ben Valentin QC and Ruth den Besten (instructed by Lewis Silkin LLP) for the Sixth Defendant.

Hearing dates: 13 April 2022. Judgment provided in draft: 26 May 2022.

Mr Justice Picken

Introduction

1

The Sixth Defendant, Mr Uday Gujadhur (‘Mr Gujadhur’), applies to strike out, alternatively for summary judgment on, the claim brought against him by the Claimant, ArcelorMittal North America Holdings LLC (‘ArcelorMittal Holdings’), as assignee, seeking damages for the tort of unlawful means conspiracy of up to US$1.5 billion.

2

The application is made either on the basis that the claim as pleaded in the Re-Amended Particulars of Claim is insufficiently pleaded, given the stringent requirements applicable to a claim in conspiracy, and does not disclose a claim in unlawful means conspiracy against him, or on the basis that the claim has no realistic prospect of success and there is no other compelling reason for it to go to trial.

Background

3

ArcelorMittal Holdings is a Delaware company which formerly owned the shares in ArcelorMittal USA LLC (‘ArcelorMittal’) until they were transferred to Cleveland-Cliffs Inc (a North American producer of flat-rolled steel). ArcelorMittal assigned its rights in these proceedings to ArcelorMittal Holdings on 8 December 2020.

4

Essar Steel Limited (‘Essar Steel’), a Mauritian company which is now in administration, is part of the Essar Group, a multinational group with interests in various industries including metals and mining. Other companies in the Essar Group include: Essar Global Fund Ltd (‘EGFL’), the Eighth Defendant and the ultimate holding company in the group; the Ninth Defendant (‘Essar Capital’), a subsidiary of EGFL which acts as its investment manager; and Essar Capital Services (UK) Ltd (‘ECS’), the former Tenth Defendant and a subsidiary of EGFL based in England.

5

Mr Gujadhur, along with the First, Second and Third Defendants, are individuals who are, or were, involved in the business of the Essar Group. The First and Second Defendants, Mr Ravi Ruia and Mr Prashant Ruia respectively, are members of the Ruia family and are the ultimate beneficial owners of the Group.

6

The claim concerns an alleged conspiracy by the Defendants to put Essar Steel in a position where it lacked the financial resources to be able to meet its liability to ArcelorMittal under an ICC arbitration award dated 19 December 2017 (the ‘Award’) in the sum of approximately US$1.5 billion.

7

The liability under the Award arises out of the breach of an iron ore supply contract known as the Amended Pellet Sale Agreement, which was entered into on 10 January 2014, specifically the failure of Essar Steel Minnesota LLC (which is a subsidiary of Essar Steel and was also a party to the agreement) to deliver iron ore pellets as it had contracted to do. On 27 May 2016, AMUSA served notice to terminate on grounds of material breach. On 9 August 2016, ArcelorMittal issued a request for arbitration against Essar Steel seeking damages for Essar Steel's failure to comply with its obligations under the Amended Pellet Sale Agreement, Essar Steel Minnesota LLC having filed for relief under Chapter 11 of the US Bankruptcy Code shortly after the Amended Pellet Sale Agreement was terminated.

8

No part of the Award has been paid.

9

The background to these proceedings is conveniently set out in Henshaw J's March 2020 Judgment ( [2020] EWHC 740 (Comm)) dismissing ArcelorMittal's application for on notice freezing relief against certain of the Defendants, at [2]–[12], and in Butcher J's December 2020 Judgment ( [2020] EWHC 3349 (Comm)) dismissing the claim against Mr Seifert, at [2]–[9]. I do not repeat everything that has there been set out. However, in summary, ArcelorMittal Holdings's case in these proceedings is that Essar Steel's inability to make the payment due under the Award is the result of a conspiracy unlawfully to strip Essar Steel of assets and render it a worthless shell. This is in circumstances where Essar Steel's net assets reduced from around US$3 billion to around US$2 million between September 2015 (when, so it is alleged, it was clear that Essar Steel would be liable to pay substantial damages to ArcelorMittal) and September 2016 (a month after the ICC arbitration had started).

10

As originally pleaded, ArcelorMittal had alleged a wide-ranging conspiracy by the Defendants involving wrongdoing said to have been engaged in between 2012 and 2016. However, Henshaw J held that ArcelorMittal's pleaded claim failed to disclose a good arguable case and so refused to grant freezing relief, whilst also requiring that, in order to continue with its claim, ArcelorMittal should provide draft amended Particulars of Claim to the Defendants.

11

This was done. One of the then Defendants, Mr Seifert, did not consent to the proposed amendments. The other Defendants, however, did, apart from in relation to three small categories of amendments, which were considered and determined by Butcher J in his judgment on 7 December 2020 at the same time as he considered the position of Mr Seifert.

12

The reasons for refusing permission to amend and dismissing the claim against Mr Seifert are set out in that same judgment at [26]–[36]. He had this to say, in particular, at [29]–[34]:

“29. In my judgment, the APOC does not plead an adequate factual basis for a case that Mr Seifert was party to the conspiracy alleged. Further, and to put the matter another way, I do not consider that a case that he is liable in conspiracy based only on the matters pleaded is one which stands a realistic prospect of success.

30. In this regard, the starting point is that: (i) no particulars are given as to when, with whom, or the means by which Mr Seifert entered the conspiracy; (ii) there are no particulars of any action which it is said that Mr Seifert took which was unlawful, nor is there an allegation that he was in a position in which he was able to procure anyone else to act unlawfully; (iii) the only pleading as to the actions which Mr Seifert took is that it is ‘reasonable to infer that Mr Seifert will have advised’ on the failure to call in the US$1.5 billion, the Waiver and the UAE Disbursements, without any allegations as to what advice Mr Seifert might have given; and (iv) there is no particularization as to how Mr Seifert could have procured ESL [Essar Steel] or its board to act unlawfully, or how, even if he knew of or acquiesced in the conspiracy that rendered him an active participant therein.

31. As to the specific matters which are relied upon in relation to Mr Seifert, AMUSA [ArcelorMittal] places considerable weight on Mr Seifert's role and responsibilities in the Essar Group, and in particular his role at ECL. However, the fact that Mr Seifert held the roles pleaded does not of itself give rise to the inference that he advised on the transactions which are said to form part of the conspiracy or procured, knew of or acquiesced in the unlawful means alleged. Moreover, Mr Seifert has put in evidence denying any role in relation to those transactions, and, while that cannot itself be taken as conclusive, AMUSA [ArcelorMittal] has adduced no documentary or other evidence to contradict what Mr Seifert has said.

32. As to the allegation involving Algoma, I do not accept that the pleaded reference to Mr Seifert's involvement in the recapitalization of that company in 2014 gives rise, in itself, to an inference that Mr Seifert advised on the transactions alleged to form part of the conspiracy now alleged.

33. The position is similarly in relation to the reference to Mr Seifert having been the board sponsor of the assignment of the Second Promissory Note. The assignment of the Second Promissory Note is no longer relied upon as part of a conspiracy against AMUSA [ArcelorMittal]. I do not consider that Mr Seifert's having been the board sponsor in relation to this matter in 2013, of itself gives rise to the inference that Mr Seifert advised on a different transaction in late 2015 or 2016 or that he procured, knew of or acquiesced in any unlawful means in relation thereto.

34. I am mindful of Mr Peto's exhortation that I should consider what evidence might reasonably be expected to be available at trial, and form some judgment about that. It is in this context that Mr Seifert has an apparently strong point that, given that he was planning to leave Essar and then left Essar during the period of the alleged conspiracy, he had no motive to involve himself in any action against AMUSA [ArcelorMittal]. That militates against the view that more evidence of involvement in the conspiracy is reasonably to be expected at trial.”

13

Before me, it was Mr Valentin QC's submission, on behalf of Mr Gujadhur, that the Court should reach a similar conclusion as to Mr Gujadhur and so, like Butcher J did in relation to Mr Seifert, put a halt to the proceedings insofar as they concern Mr Gujadhur. As will appear, I am not persuaded that this would be the right thing to do. However, continuing with the relevant background and focusing on the reformulated case advanced by ArcelorMittal Holdings, the claim entails the allegation that there was an agreement or combination entered into “on a date or dates unknown in the period between approximately 29 September...

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