Integral Petroleum S.A. v Bank GPB International S.A.
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Moulder |
| Judgment Date | 24 March 2022 |
| Neutral Citation | [2022] EWHC 659 (Comm) |
| Docket Number | Case No: CL-2020-000486 |
| Court | Queen's Bench Division (Commercial Court) |
[2022] EWHC 659 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice
Strand, London, WC2A 2LL
THE HON. Mrs Justice Moulder
Case No: CL-2020-000486
Christopher Hancock QC AND Angharad M Parry (instructed by THOMAS MILLER LAW) for the CLAIMANTS
Michael McLaren QC AND Gillian Hughes (instructed by SHERRARDS SOLICITORS LLP) for the FIRST DEFENDANT
Hearing dates: 28 February and 1 March 2022
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.
THE HON. Mrs Justice Moulder
This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to Bailii. The date and time for hand-down is deemed to be 10:00am on 24 th March 2022.
Introduction
This is the judgment on the application (the “Application”) of the first defendant, Bank GPB International SA (the “Bank”) for summary judgment against the Claimants on its counterclaim for sums totalling approximately $25 million.
Evidence
In support of the Application the court had the following witness statements:
i) the second and third witness statements of Mr Alexander Zalivako, head of the Bank's legal department; and
ii) the first witness statement of Mr Dmitry Derkatch, CEO and a chairman of the management board at the Bank.
Opposing the application the court has a witness statement from Mr Seitnepesov, the Second Claimant in these proceedings and also one of the directors and the majority shareholder of the First Claimant, Integral Petroleum SA (“Integral”).
Sanctions
At the outset of the hearing counsel for the Bank addressed the court on the issue of sanctions. It was acknowledged that the Bank is a Luxembourg entity which is wholly owned by JSC Gazprombank, Moscow, which is owned by JSC Gazprom (para 5 of POC).
It was also accepted that Gazprombank is subject to sanctions which were originally imposed by the EU in 2014 and were given continuing effect in the UK after Brexit. However it was submitted that the existing sanctions do not prohibit the provision of legal services and as at the date of the hearing of the Application there was no asset freeze in place.
The court accepted the submission which was not opposed by the Claimants that the court should hear the Application as it was not affected by the current sanctions, but that should the Application be granted, any order for enforcement would have to be considered having regard to the position at the time.
Background
Integral's business at the relevant time included the purchase, through intermediate buyers (the 3rd to 6th claimants), and sale of commodities from production facilities in Turkmenistan.
In 2017 Integral entered into a commodity finance facility with the Bank to finance the purchase of commodities.
On 28 September 2017 Integral and the Bank concluded an Uncommitted Commodity Finance Facility (the “Facility Letter”) for the maximum amount of US$35,000,000.
Integral's obligations under the Facility Letter were guaranteed by the second to sixth Claimants.
Integral also signed a Security Deed which granted the Bank certain security interests in the cargoes financed by the Bank and Integral's receivables in respect of those cargoes.
On 20 December 2018 the Facility Letter was amended and restated (as so amended and restated, the “Facility Agreement”).
According to the evidence of Mr Seitnepesov:
i) In the summer and autumn of 2019, Integral faced a number of issues with the producers in Turkmenistan and Integral experienced significant delays in respect of certain commodities.
ii) Due to the delays, a large number of Integral's suppliers' purchase contracts from the Turkmen state producer entities expired before the cargoes could be loaded. The producers then charged penalties for the late lifting of the cargoes, despite the delays having been caused by them.
iii) In view of all these delays, Integral was unable to repay the Bank's financing for cargoes sourced from the relevant Turkmen state entities (maturing in September and October 2019) on time.
It is common ground that prior to the alleged default by Integral on its payment obligations under the Facility Agreement that is the subject of the Bank's counterclaim in these proceedings, the terms of (some of) Integral's loans were extended on four occasions, on 3 July 2018, 14 December 2018, 30 April 2019 and 28 June 2019.
It is further accepted for the Bank (paragraph 20 of Zalivako 2) that in August 2019, at Integral's request, Integral and the Bank began to discuss the possibility of agreeing a restructuring of Integral's debt.
The court has before it evidence in the form of WhatsApp messages between Mr Derkatch and Mr Seitnepesov during August 2019, but it also appears to be accepted by the Bank (paragraph 8 of Mr Derkatch's witness statement) that there were phone calls between the two men in August and September 2019.
From the contemporaneous emails it appears that in September 2019, the Bank provided an indicative draft term sheet to Integral which included a summary of the steps which would be involved in a restructuring process and the Bank's proposals as to the improvements to its security which it would require in exchange for agreeing a restructuring. In mid-October, those proposals were rejected by Integral.
It is the Bank's case (Zalivako 2 paragraph 16) that as at 29 October 2019, each of Integral's 32 loans under the Facility Letter had reached its maturity date and was therefore due for repayment by Integral.
However it is the Claimants' case that by 30 September 2019 an agreement had been reached on a repayment plan. Mr Seitnepesov's evidence is as follows:
“28 I cannot recall the precise content of the above calls, but by 30 September 2019 we had agreed on the repayment plan, because the repayment plan has already been referred to on 30 September 2019. The general restructuring plan would be as follows:
a. Integral would propose a payment schedule, which would provide for extended payment terms. The parties would discuss and agree this schedule. Integral would pay interest when it took it longer to repay the amounts advanced by GPB.
b. The schedule would be such as to enable Integral, in its reasonable assessment, to take delivery of cargoes under current (i.e. non-expired) contracts, sell them and repay GPB. Alternatively, if it were not possible to repay GPB from those sources, enable Integral to make profit elsewhere (i.e. on transactions not financed by GPB) and repay GPB from those sources.
c. There would then be the issue of the expired contracts, in respect of which GPB's financing was effectively blocked with producers. Here the parties envisaged that GPB could provide additional financing such that (i) Integral or its suppliers could conclude new contracts with producers (which required upfront payments); and (ii) funds blocked with the expired contract could then be transferred to those new contracts and utilised for the lifting of new cargoes.
d. GPB's position was that it would not be able to provide any such additional financing until a formal restructuring were agreed by its credit committee in Moscow. Mr Derkatch also said that such a formal restructuring would later be needed to protect his own back, since GPB Luxembourg is effectively overseen and/or controlled by GPB Moscow. Hence the terms of the formal restructuring had to be negotiated and submitted to the credit committee in Moscow. This was, in my understanding, separate from our agreement on the extended payment terms.” [Emphasis added]
The reference to a repayment plan being “ referred to on 30 September” appears to be a reference to a WhatsApp message exchange with Mr Derkatch on 30 September 2019 in which Mr Seitnepesov said:
“I'll tell you the payment plan in an hour”
Mr Derkatch responded:
“Waiting today. Tomorrow morning we have to give the plan in Risks”.
Mr Seitnepesov therefore draws a distinction between the agreement on the extended payment terms and the restructuring which involved the provision of additional finance.
Mr Derkatch's evidence is that the purpose of agreeing “interim repayment schedules” was merely for Integral to demonstrate its ability to repay its debt and was not an agreement on new terms for the repayment of the loans:
“12. In order for GPB to agree a restructuring of Integral's overdue debt, Integral, among other important elements, needed to demonstrate its ability to repay its debt and therefore that it would be in a position to enter a restructuring if that could be agreed (as opposed to a debt enforcement process)…”
13. One way that GPB expected this ability to make repayment to be shown was by Integral making repayments in accordance with interim repayment schedules that were exchanged between the parties on various occasions. Integral was told of this expectation by me and by others at GPB. This is why, in my communications with Mr Seitnepesov, I referred to the repayment schedules in connection with payments GPB expected to receive from Integral. It was very clear to Integral that this was the purpose for it complying with the interim repayment schedules. It was also very clear to Integral that the repayment schedules did not constitute an agreement on new terms for the repayment of the loans.” [Emphasis added]
It is not in dispute that further discussions took...
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