Novoship (Uk) Ltd and Others v Vladimir Mikhaylyuk and Others
| Jurisdiction | England & Wales |
| Judge | MR. JUSTICE CHRISTOPHER CLARKE |
| Judgment Date | 17 May 2012 |
| Neutral Citation | [2012] EWHC 1352 (Comm) |
| Date | 17 May 2012 |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Claim No 2006 Folio 1267 |
[2012] EWHC 1352 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Sitting at Rolls Building
Fetter lane
London
EC4A 1NL
Mr Justice Christopher Clarke
Claim No 2006 Folio 1267
RULING
I have before me an application on the part of the sixth, seventh and eighth defendants, Mr. Yuri Nikitin, Amon International Inc ("Amon"), and Henriot Finance Limited ("Henriot"), (together "the Nikitin defendants"), to strike out the proceedings against them on the grounds that they are vexatious and/or an abuse of the court's process.
The background to this action is very sizeable, and well-known to the parties. I do not intend to sketch out more than is absolutely necessary.
The first of the 15 claimants is Novoship (UK) Limited ("NOUK"). NOUK is an English limited company, which managed vessels for its parent, JSC Novorossiysk Shipping Company ("NSC"). Those vessels were owned by one-ship subsidiaries of NSC. NSC is now majority owned by OAO Sovcomflot ("Sovcomflot"), which is wholly owned by the Russian State.
The first defendant, Mr. Vladimir Mikhaylyuk, was, until 21 March 2006, employed by NOUK as its general manager. Mr. Nikitin is a successful Russian businessman who is now in exile, and who has successfully resisted extradition to Russia. Amon and Henriot are companies of his.
This action is a sequel to the actions heard by Mr. Justice Andrew Smith over several months from September 2009 in what is commonly known as the Fiona Trust litigation. This culminated in a judgment of 10 December 2010. That litigation comprised three actions, the first and second Fiona actions, and the Intrigue actions. The litigation embraced many claims against Mr. Nikitin and his companies, amongst others, which are summarised at paragraphs 47 and 49 of the judgment.
The Fiona actions are actions relating to the Sovcomflot Group, whose principal operating company was Fiona Trust and Holding Corporation ("Fiona Trust"). The Intrigue actions relate to claims by NSC and its subsidiaries. Intrigue Shipping Inc ("Intrigue") was NSC's principal operating company.
Mr. Justice Andrew Smith dismissed many of the claims against Mr. Nikitin and his companies, but upheld some of them.
Following his judgment, he made an order in an agreed form, lifting all freezing orders previously made against those companies which were known as the Standard Maritime defendants, a group of companies associated with Mr. Nikitin together with Mr. Nikitin, upon their providing security for the limited number of claims against them that had succeeded, and providing for a further order to be made in that event to that effect.
On 17 December 2010, that further order was made, the necessary security having been provided. It included a provision which required the claimants in the three actions to take:
"All reasonable steps to procure the discharge of all orders obtained by themor on their behalf in any other jurisdiction that prohibit or restrict the disposal or diminution of or dealing with any of their assets".
In consequence of that, freezing orders which had been obtained in Switzerland against Mr. Nikitin and his companies were lifted. But on 6 January 2011, the day after Mr. Nikitin and his companies received notice from the Swiss courts that those freezing orders had been lifted, the Swiss authorities froze or refroze the assets of some of the Standard Maritime defendants at the behest of the Russian authorities, those assets amounting to over US$250 million.
What happened is apparent from the documents. On 17 December 2010, a letter ("the civil claims letter") was written to what is described as the "competent court" in Moscow. The civil claims letter, which was not served on Mr. Nikitin or his companies, recited the discovery by an internal audit of Sovcomflot and NSC and their subsidiaries of fraudulent transactions and asserted that damage had been caused by the unlawful actions of a group of persons holding positions in the senior management of those companies, and by third parties.
The group was said to comprise Mr. Skarga, Mr. Izmaylov, Mr. Mikhaylyuk and Mr. Nikitin, and companies under their control. The letter records that Sovcomflot, NSC and the foreign subsidiaries under their respective control had been acknowledged as the victims under a criminal case then pending, and that the victims intended to demand full compensation for the damage incurred from the persons responsible for causing it, and that they declared the existence of the corresponding civil claim.
The criminal proceedings in question, in which Mr. Nikitin is a defendant amongst others, have been ongoing for about six years. They are in the investigative stage. The civil claims letter listed ten different claims of Sovcomflot and its subsidiaries, and four different claims of NSC and its subsidiaries, in respect of which compensation was demanded. The description of the claims shows that they consist almost entirely of claims which have been adjudicated on in the Fiona Trust litigation, including several on which the claimants had failed, or claims to a very similar effect.
One of the claims on which the claimants failed in the Intrigue action was a claim that Mr. Nikitin should disgorge the profits made on the charter out of the vessels by various NSC subsidiaries to Henriot, which is incorporated in the British Virgin Islands. That claim had been advanced in the Intrigue action on the footing that Mr. Nikitin had bribed Mr. Izmaylov, who was president of NSC until October 2005. That claim was found to be without foundation.
The civil claims letter thus sought recovery, as an adjunct to the criminal proceedings, both of claims on which the English court had already ruled in favour of the relevant claimant and those where the English court had dismissed the claim. The total figure claimed was nearly US$850 million. The letter stated that the victims requested that proper measures be taken with immediate effect to secure the declared demands and to seize the property of the accused in the criminal case.
The civil claims letter was signed on behalf of Sovcomflot, NSC, Fiona Trust, Intrigue and Sovcomflot Bulk Shipping Inc, but the victims were defined as including the subsidiaries of Sovcomflot and NSC. Those subsidiaries include NOUK and the other claimants in this action.
The loss claimed includes, as the fourth claim by NSC and its subsidiaries, a claim for profits made on the Henriot charters in the sum of $60,262,900. That was the sum which had been originally claimed in the Intrigue litigation. That claim has now increased to about $108 million, by the addition of claims in respect of the vessels Kuzbass and Kaspiy, which were not managed by NOUK, but by NSC in Russia.
The Russian civil claim, as I shall now call the claim put forward by the civil claims letter as an adjunct to the criminal proceedings, thus seeks to obtain the disgorgement of the Henriot charter revenues—the same relief as had been sought unsuccessfully in the Intrigue action, but to a greater extent.
The third such claim is for "at least" $19,238,575.82, being, "Receipt of unlawful revenue from the commercial operation of vessels belonging to OAO Novoship subsidiaries, in the period when the said vessels were managed by Novoship (UK) Limited".
It is not clear precisely what claim that relates to, but it may relate to improper payments said to have been made to Mr. Mikhaylyuk by Mr. Ruperti, one of the defendants in the present action, through two of his companies, in respect of vessels chartered to Mr. Ruperti's company, PMI Trading.
Also on 17 December 2010, the Office of the Prosecutor General of the Russian Federation ("the Russian prosecutor") wrote to the Swiss Department of Justice informing them of the criminal case against Mr. Nikitin, and the fact that the victims had filed a claim against Mr. Nikitin and members of his organised criminal group. The Russian prosecutor asked for preventative measures to freeze the accounts of Mr. Nikitin and his companies at certain private bankers in Switzerland in order to secure the rights of the victims and the filed Russian civil claim.
On 6 January 2011, as I have said, an interim decree was made by the Swiss authorities which froze the bank accounts in question. Not surprisingly, this action by the Russian prosecutor led to an application by the Standard Maritime defendants for an anti-suit injunction. That injunction was granted on 9 February 2011. Although it was not consented to, it was not seriously opposed by the claimants in the Fiona Trust litigation, and its terms were the subject of agreement. The respondents were all the claimants in the three actions in that litigation.
The order had certain definitions. Paragraph 1 of that order reads as follows:
"In this order:
1.1. 'The Russian proceedings' means the criminal proceedings in the Russian Federation against inter alios Mr. Yuri Nikitin.
1.2. 'The disputes' means the disputes between the respondents and the applicants that are or were prior to the judgment of this court, delivered on 10 December 2010, the subject of the Sovcomflot, Novoship and/or New actions.
1.3. 'The Russian civil claims' means the civil claims made in the Russian proceedings by or on behalf of any of the respondents (including in particular, but...
To continue reading
Request your trial
-
Fiona Trust & Holding Corporation and Others v Dimitry Skarga and Others (First Respondent) Yuri Nikitin and Others (Second to Twentieth Respondents)
...in Mahesan S/O Thambiah v Malaysia Housing Society [1979] AC 374, Bowstead and Reynolds, Agency (19 th ed. 2010) Article 49 and Novoship (UK) Ltd v Mikhaylyuk [2012] EWHC 3586 paras. 512–526, in which an appeal is apparently pending and which the above brief summary is not intended to preju......
-
Lu v Industrial and Commercial Bank of China (New Zealand) Ltd
...citing Karafarin Bank v Mansoury-Dara [2009] EWHC 1217 (Comm), [2009] 2 Lloyd's Rep 289 and Novoship (UK) Ltd v Mikhaylyuk [2012] EWHC 1352 (Comm). See also Société Nationale Industrielle Aerospatiale v Lee Kui Jak, above n 44, at 53 Trafigura Beheer BV v Kookmin Bank Company [2005] EWH......
-
Lu v Industrial and Commercial Bank of China (new Zealand) Limited
...428–429, citing Karafarin Bank v Mansoury-Dara [2009] EWHC 1217 (Comm), [2009] 2 Lloyd’s Rep 289 and Novoship (UK) Ltd v Mikhaylyuk [2012] EWHC 1352 (Comm). See also Société Nationale Industrielle Aerospatiale v Lee Kui Jak, above n 44, at Trafigura Beheer BV v Kookmin Bank Company [2005] E......