Navigator Equities Ltd v Oleg Vladimirovich Deripaska
| Jurisdiction | England & Wales |
| Judge | Pelling |
| Judgment Date | 05 April 2023 |
| Neutral Citation | [2023] EWHC 788 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2018-000304 |
[2023] EWHC 788 (Comm)
HIS HONOUR JUDGE Pelling KC
SITTING AS A JUDGE OF THE HIGH COURT
Case No: CL-2018-000304
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (KBD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Jonathan Crow CVO, KC and James Weale (instructed by Quinn Emanuel Urquhart & Sullivan UK LLP) for the Claimants
Thomas Grant KC, Anna Dilnot KC and Katherine Ratcliffe (instructed by Quillon Law LLP) for the Defendant
Hearing dates: 21,22 and 23 March 2023
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.
HIS HONOUR JUDGE Pelling QC SITTING AS A JUDGE OF THE HIGH COURT
HH Judge Pelling KC:
Introduction
This is the trial of the liability issues that arise on this contempt application, commenced by an application notice dated 14 November 2019 and amended on 25 February 2022. The claimants submit that the application is “ straight forward” and is said to have been brought “… to bring to the attention of the court serious and deliberate breaches by Mr Deripaska….” of undertakings given by him in the circumstances I describe more fully below. The issues that arise broadly, therefore, are (a) whether in the circumstances that have happened, the defendant breached his undertakings to the court and (b) whether he did so contumeliously. This last point is relevant only to penalty if otherwise the alleged breaches are established, but all parties are agreed that the issue is to be determined at this trial if and to the extent it arises.
The trial took place between 21 and 23 March 2023. I heard oral evidence from Mr Andrew McGregor, the defendant's former solicitor while he was a partner at Reynolds Porter Chamberlain (“RPC”) and the defendant, who gave evidence remotely from his lawyers' offices in Russia in Russian via interpreters.
Procedural History
The contempt application arises in the context of a long running and bitterly fought dispute between the claimants and defendant concerning the redevelopment of a 10 hectare site in Moscow by a joint venture vehicle called Navio Holdings Limited (“Navio”) that has now been held to have been owned ultimately by the second claimant and the defendant. The claimants maintain that following a disagreement between the second claimant and the defendant, the defendant staged what the claimants characterise as an “ armed takeover” of the joint venture and/or its business. The claimants commenced arbitration proceedings against the defendant and a special purpose vehicle controlled by the defendant called Filatona Trading Limited (“Filatona”) pursuant to a shareholders agreement to which they were parties.
The arbitration culminated in an Award by the Arbitral Tribunal in which it found the claimants' case proved and directed the defendant and Filatona to buy out the second claimant's interest in Navio for approximately US$ 95 million. By subsequent awards, the Arbitral Tribunal ordered them to pay interest and costs in addition.
The defendant challenged these outcomes in these proceedings under s. 67 and s. 68 of the Arbitration Act 1996. These challenges failed following a five week trial before Teare J and although permission to appeal was granted to the defendant in relation to one ground, that appeal was dismissed on 6 February 2020. An application for permission to appeal to the Supreme Court was dismissed in December 2020.
On 16 April 2018, after the tribunal had published the substantive Award referred to above, but before the Commercial Court had heard the defendant's challenges, the United States Department of the Treasury imposed wide-ranging sanctions on the defendant and a number of companies controlled by him, including two material to this application being (1) EN+ Group PLC, a company registered in accordance with the laws of the Bailiwick of Jersey and (2) B-Finance Limited, a company registered in accordance with the laws of the British Virgin Isles (“B-Finance”). It is not necessary that I take up time setting out why the government of the United States considered these steps to be appropriate, nor is it appropriate to do so, not least because they are in dispute in proceedings in the United States.
On 19 April 2018, the claimants' then solicitors, wrote to the defendant's then solicitors, expressing concerns that, as a result of the imposition of sanctions, there would be no assets against which the Awards referred to above could be enforced, and seeking security for both the sums awarded and costs. No satisfactory response having been received, the claimants applied for and obtained a worldwide freezing order against the defendant, expressly on the basis identified by Ms Berard (a partner in Clifford Chance and one of the solicitors then acting for the claimants) in her affidavit in support of the application that:
“On 6 April 2018, and as has been widely publicised in the international press, Mr Deripaska was made the subject of sanctions by the United States authorities. Those sanctions have had a significant and direct impact on Mr Deripaska's assets, and it appears that Mr Deripaska is now taking steps to liquidate certain of his most significant assets in the short-term. Further, the claimants are concerned that the wider effect of the sanctions is to encourage Mr Deripaska to repatriate his assets to Russia, where for the reasons set out below, I believe he retains substantial influence and/or otherwise take unjustifiable steps to restructure his assets in a way which will make it more difficult for third parties to enforce against them.”
It was this concern that led to paragraph 7 of the worldwide freezing order being qualified by requiring that in determining the value of the defendant's assets for the purpose of managing the effect of the freezing order “… no account should be taken of any such assets based in Russia…” Thereafter the solicitors acting for the defendant obtained a licence under the US sanctions legislation permitting them to act for the defendant and they issued an application seeking the discharge of the worldwide freezing order on the basis of the undertakings that lie at the heart of this application.
Broadly, the undertakings were proposed on the basis that the defendant was the ultimate beneficial owner of a company called Fidelitas International Investments Corporation, a company registered in accordance with the laws of the Republic of Panama (“Fidelitas”), which in turn owned all or nearly all the shares in B-Finance, which in turn owned 245 million unencumbered shares in EN+ Group PLC. After negotiations, which I need not take up time setting out, the claimants withdrew their application to continue the worldwide freezing order on the basis of undertakings from the defendant, B-Finance acting by its director Mr Anton Vishnevskiy (“AV”) and RPC (by now the defendant' solicitors) acting by their then senior partner. It is common ground, but in any event I find and conclude, that the undertakings must be read together and each must be interpreted in the context of what the others provide.
Insofar as is material, the undertakings given by AV on behalf of B-Finance were in the following terms:
“…
2) I am the sole Director of B-Finance Limited, a company organised and existing under the laws of the British Virgin Islands … (the “Company”). The ultimate beneficial owner of the Company is Mr Deripaska.
3) I confirm and warrant that: (i) the Company is the legal owner of over 245,000,000 unencumbered shares in EN+ Group Plc (a company incorporated under the laws of Jersey) (“EN+”). Of these 45,500,000 are held in certificated form. (the “Shares”); and (ii) the Company does not have any current or contingent liabilities which could result in a claim being made against the Shares. The total value of the Shares using the share price as at close on 19 June 2018 was £186,730,506.16. In reality, that value is likely to be considerably more.
4) I consider it to be in the best interests of the Company to enter into the below undertakings and I confirm and warrant that I have authority to give the undertakings contained in this letter and to bind the Company in so doing. …
5) I further hereby undertake to the court in connection with the above proceedings, in my capacity as Director and on behalf of the Company, as follows:
(a) The Company will arrange for original share certificates in respect of the Shares (“the Share Certificates”) to be deposited at the offices of Reynolds Porter Chamberlain LLP (“RPC”) in London. (b) The Company will not dispose of the Shares or otherwise deal with them pending the final outcome of proceedings currently ongoing in the High Court of Justice under Claim Nos CL-2016-000775, CL 2017-000515, CL 2017-000638 and CL 2018-000121 between the Claimants on the one hand and Mr Deripaska, Filatona Trading Limited and Navio Holdings Limited on the other (the “Arbitration Claims”), or (if sooner) further order of the court or written agreement between Mr Deripaska and Filatona Trading Limited (on the one hand) and the Claimants (on the other) and the fulfilment of any obligation imposed on Mr Deripaska and/ or Filatona by the Court or such written agreement, following which all undertakings contained in this letter shall immediately lapse.
(c) I and the Company will irrevocably instruct RPC to (i) hold the Share Certificates and not to deal with or dispose of or otherwise deal with the Shares in any way pending the final outcome of the Arbitration Claims, or (if sooner) further order of the court or written agreement between Mr Deripaska and Filatona...
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