BNP Paribas SA v Open Joint Stock Company Russian Machines and another
| Jurisdiction | England & Wales |
| Judge | Blair J. |
| Judgment Date | 24 November 2011 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 24 November 2011 |
Queen's Bench Division (Commercial Court).
Blair J.
Graham Dunning QC and Stephen Houseman (instructed by Clifford Chance LLP) for the claimant.
James Ramsden (instructed by Steptoe & Johnson) for the first defendant.
Vasanti Selvaratnam QC and Henry Ellis (instructed by Bryan Cave LLP) for the second defendant.
The following cases were referred to in the judgment:
Abela v BaadaraniUNK [2011] EWHC 116 (Ch).
AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower
Plant JSCUNK [2011] EWCA Civ 647; [2011] 2 CLC 51.
Aggeliki Charis Compania Maritima SA v Pagnan SpA (The Angelic Grace)UNK [1995] 1. Ll Rep 87.
AK Investment CJSC v Kyrgyz Mobil Tel LtdUNK [2011] UKPC 7; [2011] 1 CLC 205.
Amalgamated Metal Trading Ltd v BaronUNK [2010] EWHC 3207 (Comm).
Anderton v Clwyd County CouncilUNK [2002] EWCA Civ 933; [2002] 1 WLR 3174.
Bacon v Automattic IncUNK [2011] EWHC 1072 (QB).
Brown v Innovatorone plcUNK [2009] EWHC 1376 (Comm).
Canada Trust Co v Stolzenberg (No. 2) [1998] CLC 23; [1998] 1 WLR 547.
Cecil v BayatUNK [2011] EWCA Civ 135.
Cetelem SA v Roust Holdings Ltd [2005] 1 CLC 821; [2005] 1 WLR 3555.
Elektrim SA v Vivendi Universal SA (No. 2) [2007] 1 CLC 227.
Glencore International AG v Exter Shipping Ltd [2002] CLC 1090.
Greene Wood & McLean LLP v Templeton Insurance Ltd [2009] 1 CLC 123; [2009] 1. WLR 2013.
Habib Bank Ltd v Central Bank of Sudan [2006] 2 CLC 176; [2007] 1 WLR 470.
ISC Technologies v GuerinUNK [1992] 2 Ll Rep 430.
Kallang Shipping SA v Axa Assurances SenegalUNK [2007] 1 Ll Rep 160.
Kyrgyz Republic Ministry of Transport Department of Civil Aviation v Finrep GmbH [2006] 2 CLC 402.
Midgulf International Ltd v Groupe Chimiche Tunisien [2009] 1 CLC 984; [2010] EWCA Civ 66; [2010] 1 CLC 113 (CA).
Niagara Maritime SA v Tianjin Iron & Steel Group Co LtdUNK [2011] EWHC 3035 (Comm).
OT Africa Line Ltd v Magic Sportswear CorpUNK [2005] EWCA Civ 710; [2005] 1 CLC 923.
REC Wafer Norway AS v Moser Baer Photo Voltaic LtdUNK [2011] 1 Ll Rep 410.
Schiffahrtsgesellschaft Detlev von Appen GmbH v Voest Alpine Intertrading [1997] CLC 993.
Seaconsar (Far East) Ltd v Bank Markazi Jomhouri Islami IranELR [1994] 1 AC 438.
Sennar, The (No. 2)WLR [1985] 1 WLR 490.
Shiblaq v Sadikoglu [2005] 2 CLC 380; [2003] All ER (D) (428) (Comm).
Starlight Shipping Co v Tai Ping Insurance Co Ltd [2007] 2 CLC 440.
Tedcom Finance Ltd v Vetabet Holdings LtdUNK [2011] EWCA Civ 191.
Through Transport Mutual Insurance Association (Eurasia) Ltd v New India Assurance Co Ltd [2004] 2 CLC 1189.
Transfield Shipping Inc v Chiping Xinfa Huayu Alumina Co LtdUNK [2009] EWHC 3629 (QB).
Vale do Rio Doce Navegacao SA v Shanghai Bao Steel Ocean Shipping Co Ltd [2000] CLC 1200.
Arbitration — Anti-suit relief — Service out of jurisdiction — Russian parent guaranteed loan to subsidiary — Claimant bank sought to enforce guarantee in arbitration proceedings — Related Russian company brought Russian proceedings to invalidate guarantee — Anti-suit proceedings issued and served in London and out of the jurisdiction — Jurisdictional gateways for service out — Serious issue to be tried whether defendants colluding to impede arbitration — Delay not such as to preclude anti-suit relief — Retrospective validation of alternative service — Alternative service in Russia in person or by post not permitted, but neither was it illegal — Court could properly order service by such alternative means — Civil Procedure Rules 1998, r. 6.15(2), 6.36, 6.40(3), (4), Practice Direction 6B, para 3.1(3), 62.5(1)(b), (c)— Arbitration Act 1996, s. 44.
These were applications by the defendant Russian companies challenging the jurisdiction of the court and service of the proceedings, and by the claimant French bank for certain service-related relief depending on the outcome of the defendants' applications.
The first defendant had guaranteed certain liabilities of one of its subsidiaries to BNP. The guarantee was governed by English law, and provided for disputes to be referred to LCIA arbitration, with BNP having the option to bring proceedings in the English court instead. A dispute arose under the loan agreement, and the claimant sought to enforce the guarantee. It commenced arbitral proceedings against the first defendant claiming about US$80 million. The parties agreed to amend the arbitration agreement and in doing so deleted a provision for service of English court proceedings on the first defendant's agent within the jurisdiction.
The second defendant was the trust manager of a small holding of shares in the first defendant, and the two companies were related. The second defendant commenced proceedings before the Moscow Arbitrazh Court seeking invalidation of the guarantee on the basis that it was an “interested party transaction” and a “major transaction” under the Russian Joint Stock Company Law, which should have been approved at a general meeting of the shareholders. Both the claimant and the first defendant were defendants to those proceedings. The claimant applied unsuccessfully to dismiss the Russian proceedings on the basis of lack of jurisdiction by reference to the arbitration.
The claimant then obtained the arbitrator's permission for the purposes of s. 44(4) of the Arbitration Act 1996 to commence an anti-suit action against both defendants. The claimant then issued anti-suit proceedings and served them on the first defendant's service agent in London and on the second defendant out of the jurisdiction with the court's permission, by delivery by hand to its lawyers in Moscow and by registered post in Moscow.
The claimant's case was that the second defendant's Russian proceedings were part of a scheme involving the first defendant, designed to assist the first defendant's evasion of responsibility under the guarantee. It had erroneously relied on the first defendant's appointment of agents for the service of process in London, and sought retrospective validation of service, and in the alternative an order for service out of the jurisdiction.
Held, Ruling Accordingly:
1. The claim against the first defendant fell within the CPR r. 62.5(1)(b) gateway, since the claim involved an application for interim relief in relation to arbitral proceedings, and the application was made with the permission of the arbitrator. The claim against the second defendant, which alleged that it had been engaged in the unconscionable pursuit of litigation intended to prejudice the arbitration agreement, also fell within the r. 62.5(1)(b) gateway, even though it was not a party to the arbitration agreement. (Vale do Rio Doce Navegacao SA v Shanghai Bao Steel Ocean Shipping Co Ltd[2000] CLC 1200, Tedcom Finance Ltd v Vetabet Holdings LtdUNK[2011] EWCA Civ 191 and Starlight Shipping Co v Tai Ping Insurance Co Ltd[2007] 2 CLC 440considered.)
2. The claimant could also rely on the r. 62.5(1)(c) gateway in relation to the first defendant. The fact that the claimant's concerns related to enforcement, on the basis that an adverse decision in Russia might make an award in its favour much harder to enforce, did not mean that the question was not one affecting an arbitration, an arbitration agreement or an arbitration award. It plainly was because enforcement was an integral part of the process.
3. The second defendant could also be served under CPR r. 6.36 and PD 6B para. 3.1(3) as a necessary or proper party to the claim against the first defendant.
4. PD 6B para. 3.1(6) was applicable in the case of the first defendant, since the claims against it were in respect of a contract or contracts (namely the guarantee and/or the arbitration agreement) which was or were made in England and/or governed by English law.
5. The claimant had shown a serious issue to be tried that the first defendant had acted vexatiously, oppressively or unconscionably by supporting, procuring or encouraging the second defendant in its commencement and pursuit of the Russian proceedings with a view to frustrating the arbitration and hindering enforcement of any award in Russia, and that the second defendant had acted vexatiously, oppressively or unconscionably by its commencement and pursuit of the Russian proceedings.
6. The claim for an anti-suit injunction was not barred by delay. This was not the more usual bipartite situation in which one party began foreign proceedings allegedly in breach of an arbitration agreement, but a tripartite situation in which a connected party was alleged to have done so. That was a major complicating factor. On balance, it was reasonable for the claimant not to apply for an interim injunction at the time of seeking permission to serve the second defendant out of the jurisdiction.
7. Given that the seat of the arbitration was England, that was the proper place to determine the claims.
8. Service of the proceedings on the first defendant's agent under the (revoked) process clause should be retrospectively validated under CPR r. 6.15(2). Service on a party to the Hague Convention by an alternative method under r. 6.15 should be regarded as exceptional, to be permitted in special circumstances only. Some special circumstance was needed to amount to good reason, but the need for some flexibility had also to be acknowledged. The claimant had overlooked the fact that the service of process clause had been repealed. Had that been noticed, it was difficult to see why service in England on the first defendant's solicitors acting for it in the arbitration would not have been permitted. There would be no prejudice to the first defendant in making the order, and the result of declining to do so would be the unnecessary incurring of yet further expense.
9. Although service in Russia was required to take place exclusively through the official channels prescribed in art. 5 of the Hague Convention, the delivery by hand and/or registered post at the...
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