Cetelem SA v Roust Holdings Ltd

JurisdictionEngland & Wales
JudgeLord Justice Clarke,Lord Justice Neuberger,The Vice Chancellor
Judgment Date24 May 2005
Neutral Citation[2005] EWCA Civ 618
Docket NumberCase No: A3/2005/0055
CourtCourt of Appeal (Civil Division)
Date24 May 2005
Between
Cetelem S.A.
Claimant/Respondent
and
Roust Holdings Limited
Defendant/Appellant

[2005] EWCA Civ 618

[2004] EWHC 3175 (Comm)

Before

The Vice Chancellor

Lord Justice Clarke and

Lord Justice Neuberger

Case No: A3/2005/0055

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

COMMERCIAL COURT

The Hon Mr Justice Beatson

Royal Courts of Justice

Strand, London, WC2A 2LL

Michael Black QC and S Andrew, Solicitor Advocate (instructed by Andrews) for the Claimant/Respondent

Graham Dunning QC and Vernon Flynn (instructed by Jones Day) for the Defendant/Appellant

Lord Justice Clarke

Introduction

1

This is an application for permission to appeal against an order of Beatson J made on 29 December 2004 granting an interim mandatory injunction and continuing a freezing order made against the applicant ("RHL") without notice on 23 December 2004. The judge refused permission to appeal. When I considered the application on paper I refused it but directed that any renewed application should be on notice to the respondent ("Cetelem") before a three member court. This is the hearing of the renewed application.

Grounds of Proposed Appeal

2

The grounds of the proposed appeal are: (1) that the court had no jurisdiction to grant an interim mandatory injunction under section 44 of the Arbitration Act 1996 ("the 1996 Act"); (2) that the court was wrong (if it did) to exercise any power it might otherwise have to grant such an injunction; and (3) that the purported exercise of the court's jurisdiction was wrong in law.

The 1996 Act

3

The 1996 Act provides, so far as relevant, as follows:

"1. The provisions of this Part are founded on the following principles, and shall be construed accordingly –

(a) the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense;

(b) the parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest;

(c) in matters governed by this Part the court should not intervene except as provided by this Part.

….

44

(1) Unless otherwise agreed by the parties, the court has for the purposes of and in relation to arbitral proceedings the same power of making orders about the matters listed below as it has for the purposes of and in relation to legal proceedings.

(2) These matters are —

(a) the taking of the evidence of witnesses

(b) the preservation of evidence

(c) making orders relating to property which is the subject of the proceedings or as to which any question arises in the proceedings —

(i) for the inspection, photographing, preservation, custody or detention of the property, or

(ii) ordering that samples be taken from, or any observation be made of or experiment conducted upon, the property and for that purpose authorising any person to enter any premises in the possession or control of a party to the arbitration

(d) the sale of any goods the subject of the proceedings

(e) the granting of an interim injunction or the appointment of a receiver.

(3) If the case is one of urgency, the court may, on the application of a party or proposed party to the arbitral proceedings, make such orders as it thinks necessary for the purpose of preserving evidence or assets.

(4) If the case is not one of urgency, the court shall act only on the application of a party to the arbitral proceedings (upon notice to the other parties and to the tribunal) made with the permission of the tribunal or the agreement in writing of the other parties.

(5) In any case the court shall act only if or to the extent that the arbitral tribunal, and any arbitral or other institution or person vested by the parties with power in that regard, has no power or is unable for the time being to act effectively.

(6) If the court so orders, an order made by it under this section shall cease to have effect in whole or in part on the order of the tribunal or of any such arbitral or other institution or person having power to act in relation to the subject-matter of the order.

(7) The leave of the court is required for any appeal from a decision of the court under this section."

4

There are many other sections which are in the same or substantially the same terms as section 44(7). They include a plethora of different sections dealing with many different matters, including sections 12(6), 18(5), 24(6), 25(5), 42(5), 50(5), 56(7), 67(4), 68(4), 77(4) and 79(6).

The Supreme Court Act 1981

5

The Supreme Court Act 1981 ("the SCA 1981") provides, so far as relevant:

"37(1) The High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so."

(2) Any such order may be made either unconditionally or on such terms and conditions as the court thinks just."

Background

6

RHL is a company incorporated in the British Virgin Islands. Cetelem is a company incorporated in France and is a wholly owned subsidiary of BNP Paribas. It is said to be the largest consumer lending bank in the European Union. By a written agreement dated 22 July 2004 ("the SPA"), RHL agreed to sell and Cetelem agreed to acquire a 50% interest in a Cypriot company, RCL. The SPA was expressly governed by English Law and provided for the resolution of disputes by ICC arbitration in London.

7

The sale and purchase of shares in RCL were intended to effect at completion the indirect transfer to Cetelem of 50% of the shares in a Russian bank indirectly owned by RHL, namely Russian Standard Bank Limited ("RSB"). The ultimate beneficial owner of RHL, through a trust, is the Russian businessman Mr Roustam Tariko. There are a number of holding companies in the corporate structure between RHL and RSB, notably for present purposes Roust Trading Limited ("RTL"), which is a company incorporated in Bermuda and a wholly owned subsidiary of RHL.

8

Approval of the Russian Central Bank was a principal condition precedent to the SPA. Article 3.3 of the SPA provided:

"The parties will make their best efforts and provide mutual assistance so that the principal and other conditions precedent are satisfied as rapidly as practicable."

By article 3.5, the SPA was to be null and void in the event that the approval of the Russian Central Bank was not forthcoming by 31 January 2005. By 21 December 2004 the approval of the Russian Central Bank had not yet been obtained. Cetelem had earlier asserted in correspondence with RHL that the latest possible date for submitting documents to the Central Bank to secure approval of the transaction by 31 January 2005 was 10 December 2004. There is no express timetable or deadline in the SPA for submission of documents to the Russian Central Bank, although article 6.8 of the SPA provided:

"The parties hereto shall sign up and deliver all the documents, provide all information, and take all reasonable and lawful measures that may be necessary or appropriate to the achievement of the purposes of this agreement."

9

By clause 6.2 of the SPA the parties agreed that the SPA should be governed and construed in accordance with English law and by clause 6.3 they agreed that any dispute arising in connection with the SPA should be referred to ICC arbitration in London before three arbitrators. RHL says that Cetelem did not take any steps to commence arbitral proceedings before the passing of the deadline of 10 December 2004.

Applications made on 23 December 2004

10

There were three applications, which were supported by an affidavit of Catherine Olivier, as follows:

"1. a without notice application pursuant to section 44 of the 1996 Act for a freezing order, restraining RHL from disposing or otherwise dealing with its assets, including in particular its shareholding in RTL;

2. a with notice application pursuant to section 44 for an order requiring RHL by 1600 GMT on 29 December 2004 to procure that:

(1) all documents to be produced by RHL or on its behalf necessary to accompany the application for the authorisation by the Central Bank of the Russian Federation (the "CBR"):

(a) the transfer by RTL of all of its shares in RSC to RCL; and

(b) the acquisition by Cetelem and the sale by RHL of 499,500 shares in RCL representing 49.5% of the outstanding share capital and voting rights in RCL,

are delivered to the offices of Gide Loyrette Nouel Vostok of [an address in Moscow]; and

(2) the application is signed by it or on its behalf by its duly authorised representatives and also delivered to the offices of Gide Loyrette Nouel Vostok; and

3

an application for permission to serve the application at sub-paragraph 2 above out of the jurisdiction or, alternatively to effect alternative service on RHL's London-based lawyer."

Beatson J granted the application for the freezing order on 23 December at a without notice hearing at which RHL was not represented.

The order of 29 December

11

The matter came back before the judge on 29 December, when both parties were represented by leading counsel. Cetelem was represented by Mr Michael Black QC, who has represented it before us. RHL was represented by Mr Kenneth MacLean QC, whereas before us they have been represented by Mr Graham Dunning QC. Cetelem invited the judge to continue the freezing injunction and to grant an interim mandatory injunction in the terms set out above.

12

Mr Black submitted to the judge that the court had jurisdiction to grant such an injunction under section 44 of the 1996 Act. He relied upon the decision of Cooke J in Hiscox Underwriting Limited v Dixon [2004] EWHC 479 (Comm), [2004] 2 Lloyd's Rep 438. He submitted in the...

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