Bayerische Landesbank v Ruschemalliance LLC

Friday. 28 June 2024 ( 14:01 pm)

Judgment by Mr Justice Butcher

This has been the trial of claims for final anti-suit injunctions (“ASIs”) and related relief against the Defendant, Ruschemalliance LLC (“RCA”) in two sets of proceedings. The Claimant in the first set of proceedings is Bayerische Landesbank (“BL”) and the Claimant in the second set of proceedings is Landesbank Baden-Wurttemberg (“LBBW”), together “the Banks.” The Banks' claims give rise to substantially identical issues, and are being managed together, pursuant to two orders of Mr Justice Foxton, dated 15 February 2024 (“the Interim Orders”). Interim anti-suit injunctive relief was granted ex parte by Mr Justice Foxton in the Interim Orders, and the anti-suit injunctive relief in the Interim Orders was continued by consent orders made by Mr Justice Bright on 28 February 2024.

RCA is apparently no longer legally represented in England, and it appears that it has not engaged in these proceedings since its former solicitors, Enyo Law, came off the record on 30 April 2024. RCA has not appeared at this hearing in front of me or been represented at it. It nevertheless appears from the material which is before me, to which I will refer in more detail in what follows, that RCA is on notice of this trial, and has been given the opportunity to participate in it, an opportunity which it has not taken up.

Introduction

The Banks' ASI claims arise from RCA's commencement in August 2023 and its continued pursuit of proceedings in Russia, referred to as the Russian proceedings, by which it claims over €320 million under various bonds granted by the Banks. Those bonds relate, as I will say in more detail in due course, to a project for the construction of liquefied natural gas and gas processing plant facilities in Russia — which has been described in this trial as ‘the project’ — and guarantee the obligations of RCA's contractual counterparties, Linde GmbH (“Linde”) and RenCons Heavy Industries LLC (“RCH”) in connection with the project. The bonds are expressly governed by English law and contain Arbitration Agreements (“AAs”) which provide for ICC arbitration in Paris. This trial forms part of a series of disputes which have been before this court arising from the project. This is because the Banks are only two of a number of financial institutions, including UniCredit, Deutsche Bank and Commerzbank, which were involved in the guaranteeing of Linde and/or RCH's obligations under the project, and which have turned to the English court seeking to protect their arbitral rights. It is, in that context, a matter of significance that at the time that Enyo were engaged to represent RCA, they said on RCA's behalf that the jurisdictional issues to which the Banks' ASI claims gave rise were materially identical to those in parallel proceedings brought by UniCredit against RCA under claim number CL2023000498, which have been referred to as ‘the UniCredit proceedings’.

It also emerges that the Banks' ASI claims are materially identical to those advanced by UniCredit as to their merits. Both sets of claims arise out of the same project and underlying facts and concern essentially identical contractual provisions and give rise to the same substantive issues. This is significant because, as I will explain, what appears to have been the only argument which had any prospect of success which was available to RCA to resist the grant of ASI relief against the Banks, was the jurisdictional point raised in the UniCredit proceedings, namely that the English court had no jurisdiction, in particular because the arbitration agreements were not governed by English law or that England was not the proper forum for the claim.

On 23 April 2024, however, the Supreme Court dismissed RCA's jurisdictional appeal in the UniCredit proceedings and upheld the declarations and final injunctive relief which had been granted by the Court of Appeal ( Unicredit Bank GmbH v Ruschemalliance LLC [2024] EWCA Civ 64). The Supreme Court made an order to that effect; although it stated that a written judgment was to follow, which has not yet been made available. Since the decision of the Supreme Court, it appears that RCA has disengaged from the current claim for an ASI but has instead pressed on with the Russian proceedings. At a hearing in Russia on 14 May 2024, RCA's counsel said, apparently, and I quote:

‘We believe that all those events that are developing in parallel proceedings in England have nothing to do with the consideration of the present case.’

RCA has also, apparently, very recently, namely on 5 June 2024, applied to the Russian court ex parte for freezing relief as security for its claims in the Russian proceedings. Such relief was granted on the following day, 6 June 2024, freezing or purporting to freeze the Banks' assets up to the total sum of some €324 million. A further hearing in the Russian proceedings is fixed for next Thursday, 4 July 2024. Evidence has been put before me from a Russian law expert, Mr Sergey Usoskin, to the effect and that there is a real prospect that the Russian court will grant judgment on the merits against the Banks at that hearing or shortly thereafter.

Finally, by way of introduction, I should refer to the fact that on 14 May 2024, which was after the Supreme Court's decision in the UniCredit proceedings to which I have referred, Jacobs J granted Commerzbank final anti-suit injunctive relief. His decision has a neutral citation number of [2024] EWHC 1474 (Comm). In para.8 of that judgment, Jacobs J referred to the fact that RCA's solicitors in that action, also Enyo, had said to Commerzbank that, and I quote:

‘The jurisdictional issues in the UniCredit proceedings are materially identical to those raised in the Commerzbank Proceedings (i.e. the governing law of the arbitration agreement, and the proper place for the claim).’

At para.20, Jacobs J said that the impact of the Supreme Court decision would ordinarily, if RCA were minded to comply with it, be to dispense with any real need for further significant hearings in that case, and at para.39 that, and I quote:

‘The effect of the Supreme Court decision upholding the Court of Appeal is that the only potential argument which has ever been identified, in response to Commerzbank's claim for injunctive and related relief, has been finally disposed of against RusChemAlliance.’

At paras.40 to the first sentence of para.44, Jacobs J said:

‘40. Secondly, and allied to that point, this is not a case where RusChemAlliance had ever made any suggestion that there is a potentially different point which they can raise as against Commerzbank, when compared to the points that were raised and decided against them in relation to UniCredit. On the contrary, if one goes back to the letter from Enyo law dated 25 September 2023, the point being made in that letter was that the only argument available to RusChemAlliance was indeed the point that was being litigated in the UniCredit proceedings. That, too, was the basis of the order which I made on 28 September 2023. So there was ever only one defence that was being advanced in this case, and the substance of that defence was that there was no jurisdiction on the part of the English court over RusChemAlliance and no jurisdiction to grant the injunctive relief which UniCredit had been seeking.

41. It was no doubt for that reason that the hearing before Teare J was a somewhat unusual hearing: in that it was both a hearing of the jurisdictional challenge by RusChemAlliance, and an expedited hearing of the trial of the claim which UniCredit was making. On appeal, final relief was granted by the Court of Appeal, whose decision was upheld by the Supreme Court. The important point, as Mr Millett submitted, is that if there had been a defence to the case it would have emerged in the UniCredit proceedings, and that there has never been any suggestion that there is any defence to the claim other than the point which has been argued and ultimately now resolved against RusChemAlliance.

42. The third point, which is significant in the present context, is that RusChemAlliance has been given a large number of opportunities to engage with the present case subsequent to the decision of the Supreme Court…

43. The position as it seems to me, at least not having heard anything from the Defendant, is clear. If one considers what has happened, both in these proceedings and in the Russian proceedings involving UniCredit, it is obvious, on the present material at least, that RusChemAlliance has decided that it will serve no useful purpose for it to continue to participate in the English proceedings. That is, no doubt, why Enyo law are no longer acting. It is also plain from RusChemAlliance's conduct in relation to UniCredit, and their failure to provide any confirmation that they will abide by undertakings previously given to the English court in these proceedings, that RusChemAlliance's intention is to seek to continue the Russian proceedings in ways which they think will advantage them.

44. It does seem to me that, against that background, it is appropriate for the court to take whatever steps can reasonably be taken, consistent with due process being followed, to ensure that the rights of...