Navigator Equities Ltd v Oleg Vladimirovich Deripaska
| Jurisdiction | England & Wales |
| Judge | Mr Justice Andrew Baker |
| Judgment Date | 17 July 2020 |
| Neutral Citation | [2020] EWHC 1798 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2018-000304 |
| Date | 17 July 2020 |
[2020] EWHC 1798 (Comm)
Mr Justice Andrew Baker
Case No: CL-2018-000304
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, Fetter Lane, London EC4A 1NL
Ian Mill QC, James Weale and Fraser Campbell (instructed by Clifford Chance LLP) for the Claimants
Nathan Pillow QC, Tim Akkouh and Freddie Popplewell (instructed by Reynolds Porter Chamberlain LLP) for the Defendant
Hearing dates: 8, 9, 10, 11 June 2020
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.
Introduction
By an Application Notice dated 14 November 2019, the claimants applied for an order that the defendant, Mr Oleg Deripaska, be committed to prison or sanctioned in any other manner the court might think appropriate for what they said were contempts of court. Mr Deripaska denied being in contempt of court and by Application Notice dated 18 February 2020 sought to have the contempt application struck out as an abuse of the process of the court.
The suggested contempts of court were breaches, as the claimants said there had been, of an undertaking given by Mr Deripaska to the court in June 2018. The claimants said that undertaking constituted or gave effect to an agreement with them that operated as a binding contract, so that the breaches of the undertaking (if proved) were also breaches of contract sounding in damages. The claimants' Application Notice sought, effectively by way of summary judgment, an order for damages to be assessed.
The parties were involved in a long-running dispute concerning valuable real property in Central Moscow owned through a joint venture vehicle, Navio Holdings Ltd (“Navio”). The main issue between them was whether the second claimant, Mr Vladimir Chernukhin, was party to a shareholder agreement relating to Navio that was concluded between Mr Deripaska and his company Filatona Trading Ltd (“Filatona”), on the one hand, and Ms Lolita Danilina and the first claimant, Navigator Equities Ltd, on the other hand. Mr Chernukhin said that Ms Danilina was acting throughout as his nominee, to the knowledge of Mr Deripaska. An arbitration tribunal decided that issue in favour of Mr Chernukhin. The issue was effectively re-litigated before Teare J at a trial of a challenge to the arbitration award under s.67 of the Arbitration Act 1996 (the “Section 67 Proceedings”). There were also issues between the parties over the value of Mr Chernukhin's interest in Navio, if indeed he was the interested party.
The arbitrators concluded that Mr Chernukhin was a party to the shareholder agreement and ordered Mr Deripaska and Filatona to buy Mr Chernukhin out, requiring them to pay c.US$95 million for his interest in Navio. In the Section 67 Proceedings, the arbitrators' award was upheld by Teare J who dismissed Mr Deripaska's s.67 challenges, [2019] EWHC 173 (Comm).
The hearing of the Application Notices before me took place over four days commencing on 8 June 2020. It was conducted remotely but still as a hearing in open court (i.e. in public) in accordance with CPR PD51Y during the currency of the Coronavirus Act 2020. Due to COVID-19 travel restrictions, Mr Deripaska, who was in Russia, could not travel to London for the hearing, so would have had to participate remotely, including to give evidence if the time came for him to elect whether to give evidence in his defence on the contempt charge and he elected to do so. Principally for that reason, meaning that sitting in a Rolls Building courtroom would have been a little like putting on Hamlet with no prince, but also for other reasons, I declined an application by the claimants to conduct the hearing in person.
There was live witness evidence at the hearing nonetheless, to take cross-examination by Mr Pillow QC for Mr Deripaska of Ms Marie-Emmanuelle Berard, a partner in Clifford Chance LLP, the claimants' solicitors, who has had conduct, with colleagues, of these proceedings, the underlying arbitration and the Section 67 Proceedings. Mr Chernukhin has also, it seems, been advised in connection with these matters in London by Quinn Emanuel LLP and Mishcon de Reya LLP, and by other advisers internationally. Ms Berard confirmed, without going into any privileged matters, that Clifford Chance and Quinn Emanuel at least have worked together or liaised since June 2018, albeit Clifford Chance have always been the solicitors on the record; the involvement of Mishcon de Reya, it seems from Ms Berard's cross-examination, was at a senior level with experience and expertise of international corporate law.
I was slightly surprised to find when Mr Mill QC moved to call Ms Berard for her oral evidence that this was to be from the conference room at Blackstone Chambers from which Mr Mill was addressing me, his juniors also in attendance (or it may be they were elsewhere in Chambers). I had no reason to think that those in the room were not adopting proper social distancing precautions under current circumstances. My surprise lay not in that direction, but in the fact that the court had not been notified or asked to approve that arrangement, no attempt had been made to ensure there was a Bible available so that Ms Berard could be sworn as she would have preferred (but thankfully she was content to affirm instead), the words for her oath or affirmation were not to hand (although I did notice when drafting this judgment that they were tucked away at the end of the authorities volume of the electronic hearing bundle), the conference room setup meant that I could not have both Ms Berard and Mr Mill QC on screen, and no representative of Mr Deripaska was present.
Mr Andrew McGregor of Reynolds Porter Chamberlain LLP (“RPC”), acting for Mr Deripaska, was also potentially to give evidence at the hearing. Having enquired of counsel, I understand that it was agreed between the solicitors that no one from RPC would attend upon Ms Berard when she gave her evidence, and no one from Clifford Chance would attend upon Mr McGregor if he gave evidence. RPC may have assumed, as I was assuming, that Ms Berard would be giving evidence from her own office or from home, but nothing was asked or said about that and Mr Mill QC told me that no decision had been taken on the claimants' side at the time of the relevant correspondence.
I do not suggest there is any reason to think anything inappropriate occurred or was likely to occur in this case, but nonetheless I do not regard what happened as entirely satisfactory. If a witness is to give evidence remotely, where he or she will be and who (if anyone) will be with them, and why, should be discussed between the parties in advance. That is always so, in my view, but especially it is so if the arrangement may be such that there could be interaction with the witness during their evidence that will not be visible to the court. Any arrangement other than that the witness will be on their own during their evidence should be approved by the court, in advance if possible, and parties should not assume that an arrangement will be approved just because (if it is) it is agreed between them. Sensible arrangements discussed and agreed in advance are likely to meet with approval if the court does not identify any difficulty of possible substance that the parties may have overlooked. But it must be for the court, not the parties, to control how it receives the evidence of witnesses called before it. I acknowledge that the parties were not asked by the court in advance to specify the witness arrangements here. They should have been, and that they were not is my responsibility, but equally parties should not wait to be asked.
That concern of mine aside, the hearing was prepared and conducted very effectively, despite having to take place remotely using video conferencing software and the internet, as the court has become used to over the last few months. The parties used Opus 2 to provide and maintain an electronic hearing bundle, to provide real time and daily final transcripts, and to organise and host the video conference itself, subject to my approval through my Clerk and liaison with her, using the Cisco WebEx platform on which they could integrate on-screen presentation of evidence as well. I am extremely grateful for that service.
Procedural Chronology
The parties were in substantive dispute about whether Mr Chernukhin was Mr Deripaska's true joint venture partner in respect of the Moscow real estate project from 2002. The shareholders' agreement by which the joint venture had been formalised dated back to 31 May 2005.
On 3 November 2015, the claimants initiated an LCIA arbitration to resolve the dispute. On 20 July 2017, the arbitral tribunal ordered Mr Deripaska and Filatona to purchase the claimants' shares in the joint venture vehicle at a price of US$95,181,285. By a further award dated 18 January 2018, the arbitral tribunal ordered the Deripaska parties to pay approximately £7 million in costs and interest.
On 11 May 2018, a worldwide freezing order was granted against Mr Deripaska by Robin Knowles J pursuant to the claimants' application of 8 May 2018 (“the WFO”). The return date hearing came before the same judge on 19 June 2018. During the course of that hearing, both sides became content in principle for...
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