Joint Stock Asset Management Company and Another v BNP Paribas SA

Hearing dates: 24 th & 25 th April, 2012

Introduction

This is another case in which the grant of an anti-suit injunction against a foreign company restraining it from continuing to prosecute proceedings in its own jurisdiction falls to be considered.

The orders under appeal

We have before us the following appeals by Joint Stock Asset Management Company Ingosstrakh-Investments, a Russian company:

(1) Its appeal against the order made by Blair J dated 24 November 2011 dismissing its challenge to the jurisdiction. I shall refer to his judgment leading to that order, [2011] EWHC 308 (Comm), as his or the judgment.

(2) Its appeal against the Interim Order made by Blair J of the same date in which an anti-suit injunction was granted restraining it until further order from taking any further part in proceedings which it had commenced in Russia ("the Russian Proceedings") on the ground that those proceedings involved vexatious, oppressive and unconscionable conduct on its part. I shall refer to his judgment leading to that order, [2011] EWHC 3252 (Comm), as his second judgment.

(3) Its appeal against the order dated 20 April 2012 made by Teare J pursuant to CPR 6.15(2) declaring the claim form to have been validly served on it by reason of its having been provided to Bryan Cave, solicitors in London, on 20 June 2011.

The facts

I can take the facts from Blair J's full and careful judgment.

(a) The Guarantee

The Respondent, BNP Paribas S.A. ("the Bank") is a French bank. The First Defendant in these proceedings, Open Joint Stock Company Russian Machines (to which I shall refer as "D1"), like the Appellant a Russian company, entered into a Guarantee dated 1 October 2008 in favour of the Bank ("the Guarantee") by which it guaranteed certain liabilities of one of its subsidiaries, Veleron Holding BV. The guaranteed liabilities arose under a collateralised margin loan made by the Bank to the subsidiary. According to the Appellant's Statement of Claim in the Russian Proceedings, the credit amount under the Credit Agreement with Veleron to which the Guarantee related was up to US$1,229,000,000. The Guarantee is governed by English law, and provides for disputes to be referred to arbitration under the LCIA rules, with the Bank having the option to bring proceedings in the Courts of England instead. Recital (2) to the Guarantee is as follows:

"(2) The Board of Directors of the Guarantor is satisfied that entering into this Guarantee is for the purposes and to the benefit of the Guarantor and its business."

The relevant substantive provisions, in which the Bank is referred to as "the Beneficiary" are as follows:

"16. ARBITRATION

16.1 Subject to Clause 16.4, any dispute (a "Dispute") arising out of or in connection with this Guarantee (including any question regarding the existence, validity or termination of this Guarantee or the consequences of its nullity) shall be referred to and finally resolved by arbitration under the Arbitration Rules of the London Court of International Arbitration.

16.2 Procedure for arbitration

16.2.1 The arbitral tribunal shall consist of one arbitrator who shall be a Queen's Counsel of at least five years' standing

16.2.2 The seat of arbitration shall be London, England and the language of the arbitration shall be English.

16.3 Save as provided in Clause 16.4, the parties to this Guarantee exclude the jurisdiction of the courts under Sections 45 and 69 of the Arbitration Act 1996

16.4 Before an arbitrator has been appointed to determine a Dispute, the Beneficiary may by notice in writing to the Guarantor require that all Disputes or a specific Dispute be heard by a court of law. If the Beneficiary gives such notice, the Dispute to which that notice refers shall be determined in accordance with Clause 17.1

17. ENFORCEMENT

17.1 In the event the Beneficiary issues a notice pursuant to Clause 16.4, the following provisions shall apply:

17.1.1 Subject to Clause 16.1 the courts of England have exclusive jurisdiction to settle any Dispute

17.1.2 The Beneficiary and the Guarantor agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly neither the Guarantor nor the Beneficiary will argue to the contrary

17.1.3 This Clause is for the benefit of the Beneficiary only. As a result, the Beneficiary shall not be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Beneficiary may take concurrent proceedings in any number of jurisdictions

17.2 Without prejudice to any other mode of service allowed under any relevant law, the Guarantor:

17.2.1 irrevocably appoints Bryan Cave of 88 Wood Street, London EC2V 7AJ England (or, if different, its registered office) as its agent for service of process in relation to any proceedings before the English Courts in connection with this Guarantee; and

17.2.2 agrees that failure by a process agent to notify the Guarantor of the process will not invalidate the proceedings concerned."

(b) The proceedings

A dispute arose under the loan agreement, and the Bank sought to enforce the Guarantee. On 6 August 2010, it commenced arbitral proceedings against D1 claiming about US$ 80 million. D1 is represented by Steptoe & Johnson. On 6 September 2010, it served its Response. It alleged that the Guarantee was invalid for want of consideration. D1 also alleged that, contrary to Recital (2), it did not receive the approval of the Board.

On 16 November 2010, the Bank and D1 entered into an agreement to vary the arbitration agreement before substituting for arbitration by a Queen's Counsel arbitration before Professor Albert van den Berg or, in the event of his inability to act, a Queen's Counsel. The amendment agreement provides as follows:

"1. AGREEMENT TO ARBITRATE THE DISPUTES BEFORE PROFESSOR VAN DEN BERG

1.1 In consideration of the mutual promises as set forth below, the Parties agree that any disputes arising out of or in connection with the Guarantee (including any question regarding the existence, validity, enforceability or termination of the Guarantee or the consequences of its nullity) shall be referred to and finally resolved by arbitration under the Arbitration Rules of the LCIA in LCIA Arbitration No. 101665.

1.2 The arbitral tribunal shall consist of one arbitrator who shall be Professor van den Berg. If, for any reason, Professor van den Berg cannot act as arbitrator in LCIA Arbitration No. 101665, the arbitrator shall be a Queens Counsel of at least five years standing.

1.3 The seat of the arbitration shall be London, England and the language of the arbitration shall be English.

…

1.5 Clause 16 of the Guarantee shall be amended accordingly.

1.6 Clauses 17.1 and 17.2 of the Guarantee are repealed.

2 GOVERNING LAW

2.1 This Agreement shall be governed by and construed in accordance with English Law."

In addition to the appointment of Professor van den Berg, the Bank and D1 "repealed" the provision in the arbitration agreement as contained in the Guarantee by which the London office of Bryan Cave LLP was appointed by the D1 as agent for service of process in relation to any proceedings before the English Courts in connection with the Guarantee, on the basis, it seems, that since the dispute was to be determined by arbitration it was no longer required.

Professor van den Berg ("the Arbitrator") accepted his appointment and on 1 December 2010 the LCIA Court confirmed his appointment as sole arbitrator, and the arbitration got under way.

At the date of both orders of Blair J under appeal, the Appellant was the trust manager of a very small holding of shares in the D1 (about 0.14 per cent) that belongs to the Socium Non-Governmental Pension Fund. It no longer holds those shares; that may be relevant to the continuation of the injunction if its appeals fail, but it is common ground that it is otherwise irrelevant to the issues before this Court. In any event, Non-Governmental Pension Fund "Socium" ("D5"), to which the Appellant's shares have been transferred, and other companies holding shares in D1 have joined in the Russian Proceedings, and the Bank has obtained similar injunctions against them. The decisions of this Court on this appeal are likely to be of significance to the continuation of those injunctions.

On 27 December 2010, the Appellant 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, but had not been, approved by the Board of D1 and at a general meeting of the shareholders. Both the Bank and D1 are defendants to those proceedings. The proceedings were served on the Bank on 13 January 2011, and this was when it became aware of them.

Various procedural hearings took place in the arbitration...