PJSC National Bank Trust v Boris Mints

JurisdictionEngland & Wales
CourtQueen's Bench Division (Commercial Court)
JudgeSir Nigel Teare
Judgment Date23 March 2021
Neutral Citation[2021] EWHC 692 (Comm)
Date23 March 2021
Docket NumberCase No: CL-2019-000412 & CL-2020-000432

[2021] EWHC 692 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Sir Nigel Teare

Sitting As A Judge Of The High Court

Case No: CL-2019-000412 & CL-2020-000432

Between:
(1) PJSC National Bank Trust
(2) PJSC Otkritie Financial Corporation
Claimants
and
(1) Boris Mints
(2) Dmitry Mints
(3) Alexander Mints
(4) Igor Mints
(5) Vadim Belyaev
(6) Evgeny Dankevich
(7) Mikail Shishkhanov
Defendants

Nathan Pillow QC, Louise Hutton and Anton Dudnikov (instructed by Steptoe & Johnson UK LLP) for the Claimants

Camilla Bingham QC and James Nadin (instructed by Boies Schiller Flexner (UK) LLP) for the Fifth Defendant

Charles Dougherty QC and Timothy Killen (instructed by Kennedys Law LLP) for the Sixth Defendant

Victoria Windle (instructed by Brown Rudnick LLP) for the Seventh Defendant

Hearing dates: 08 and 09 March 2021 Draft sent to Parties: 17 March 2021

Approved Judgment

I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Sir Nigel Teare SITTING AS A JUDGE OF THE HIGH COURT

Sir Nigel Teare
1

In recent years the Commercial Court has heard a number of cases which have concerned what are essentially Russian disputes. That has sometimes occurred because the defendants have taken up residence in London and so it has been possible to sue them in this jurisdiction and (on the basis of the law as it was until recently) no application for a stay has been able to be made. The present case is one which is essentially a Russian dispute. There are seven Defendants whom the Claimants wish to sue in this jurisdiction. All seven are Russians but all but one have left Russia. The first four Defendants reside in England and have been sued here. The Fifth and Sixth Defendants now reside in the United States and Israel respectively. The Seventh Defendant still resides in Russia. The Claimants' ground for suing the Fifth, Sixth and Seventh Defendants in this jurisdiction is that they are necessary or proper parties to the claim brought against the first four Defendants. The Fifth, Sixth and Seventh Defendants say, this being a Russian dispute, that they should be sued in Russia and the Commercial Court should decline the opportunity to hear the case against them. Whether or not the Commercial Court decides to hear the case against them depends upon whether the court in Russia or the Commercial Court in England is the forum conveniens. The first four Defendants have not sought a stay on such grounds. They are unable to do so because of the decision in Owusu v Jackson [2005] QB 801 and the circumstance that the proceedings against them were begun before the end of the transition period, following the UK's withdrawal from the EU.

The alleged claims

2

The Claimants are two Russian banks which lent sums of money to borrowers who have been described as “the O1 Group”. It is said that the O1 Group was ultimately owned or controlled by the First to Fourth Defendants, “the Mints Defendants”. At the time of the loans the Mints Defendants were resident in Russia but are now resident in England. Counsel for the Claimants have described the alleged claims against the Mints Defendants and the circumstances giving rise to them as follows:

“[The Claimant banks] were on the brink of collapse and, shortly afterwards, were taken over by the Central Bank of Russia (“the CBR”) and subject to “ sanation”, a form of temporary administration intended to prevent bankruptcy. The management of each bank was replaced and a “ Participation Plan” implemented, by which they were recapitalised with billions of US$ worth of public funds, effectively nationalising them.

These claims are principally concerned with some US$800m of loans to the O1 Group—which were performing, significantly secured, and relatively short-term—that were re-paid with the banks' own money and replaced with illiquid, unsecured, non-income producing and extraordinarily long-term O1 bonds worth (at best) a small fraction of the price [the Claimant banks] were caused to pay for them, and of the value of the loans they replaced (“the Otkritie Replacement Transactions” and “the Rost Replacement Transactions”).

[The Claimant banks] allege that the Mints Defendants dishonestly procured the Replacement Transactions in conspiracy with the banks' then controllers, to benefit the O1 Group at the expense of the banks (“the Replacement Transaction Claims”).”

3

The Fifth Defendant, Vadim Wolfson (described in the Claim Form as Vadim Belyaev), was in August 2017 the holder of over 28% of the shares in a company (Holding) which was a major shareholder in the Second Claimant, Bank Otkritie. He was also the Chairman and CEO of Holding.

4

The Sixth Defendant, Evgeny Dankevich, was in August 2017 the Chairman of the Board of Bank Otkritie.

5

The Seventh Defendant, Mikail Shishkhanov, was in August 2017 the sole shareholder and chairman of Rost Bank.

6

The Statement of Claim in the action against the Mints Defendants alleges a conspiracy between the Mints Defendants and Messrs. Wolfson, Dankevich and Shishkhanov to bring about the Replacement Transactions; see paragraph 32. However, when the proceedings were commenced on 28 June 2019 Messrs. Wolfson, Dankevich and Shishkhanov were not made party to them.

7

On 10 July 2020 the Claimants issued an application to join Messrs. Wolfson and Dankevich as Fifth and Sixth Defendants (in relation to the Otkritie Replacement Transaction) and Mr. Shishkhanov as Seventh Defendant (in relation to the Rost Replacement Transaction and what have been described as “patently uncommercial transactions with Stratola Investments” (“the Stratola Claims”)). At the same time new proceedings were commenced against the Second, Third, Fifth, Sixth and Seventh Defendants, making the same claims.

8

Unlike English law, Russian law (I was told) does not recognise conspiracy as a cause of action. Instead the cause of action relied upon is a breach of a statutory duty under Russian law. The allegation of conspiracy is, no doubt, an important factual averment but it is not a necessary element of the cause of action upon which reliance is placed.

9

The cause of action relied on as a matter of Russian law is a breach by each of the Fifth, Sixth and Seventh Defendants of their duty pursuant to article 53 of the Russian Civil Code, that is, a duty to act in good faith and reasonably. That duty applied, so it is alleged, to the Sixth and Seventh Defendants because of their formal positions as officers of Bank Otkritie and Rost Bank respectively and the duty applied, so it is alleged, to the Fifth Defendant because of his alleged de facto control of Bank Otkritie. The breaches of that duty which are alleged are set out in paragraphs 53, 53A and 53B of the Consolidated Particulars of Claim. In essence it is said that those Defendants, knowing that the bonds purchased as part of the Replacement Transactions were worth a fraction of the price paid, that the bank in question was in a precarious financial position and that it was unlikely that the O1 Group could meet its obligations under the Replacement Transactions, approved the Replacement Transactions and by doing so failed to act in the interests of the bank in question or in good faith. They are said to have acted dishonestly.

10

On 4 August 2020, following an ex parte hearing, HHJ Pelling QC, sitting as a Judge of the High Court, granted permission for service of the proceedings out of the jurisdiction on the Fifth, Sixth and Seventh Defendants. It is that permission which those Defendants now seek to have set aside.

Other proceedings

11

Before dealing with the clear and attractive submissions advanced by all counsel it is necessary to summarise the other proceedings which have been commenced in Russia, Cyprus, New York and in arbitration in London in the wake of the “sanation” procedures in respect of the Otkritie and Rost Banks which took place on 29 August 2017 and 21 September 2017 respectively. Very considerable sums of Russian public money were made available to rescue the banks from insolvency. I was told that Bank Otkritie required 927 billion roubles (about US$ 15 billion) to restore its liquidity and capital and that Rost Bank required 810 billion roubles (about US$13.5 billion) to restore its liquidity and capital. The Replacement Transactions were carried out shortly before the “sanation” of both banks; the Otkritie Replacement Transactions were carried out on 9–10 August 2017 and the Rost Bank Replacement Transactions were carried out on 21 August 2017.

12

As a result of the sanation of the two banks the CBR is the majority owner of Bank Otkritie and of Rost Bank. Certain “bad and dubious” assets were transferred to the First Claimant, “NBT”, which explains why it is the First Claimant. For the sake of simplicity (in so far as that is possible) I shall continue to refer to Bank Otkritie and Rost Bank and only refer to NBT when it is necessary to do so.

13

On 31 October 2017 Bank Otkritie commenced what have been described as “the Invalidation Proceedings” in Russia. These were brought against a number of O1 companies and their object was to set aside the Otkritie Replacement Transactions. Certain of those companies had the benefit of a London arbitration clause and an order restraining Bank Otkritie from pursuing the Invalidation Proceedings was obtained from this court in June 2018. Although Bank Otkritie filed a notice of discontinuance against those companies which had the benefit of the London arbitration clause the Russian court continued with...

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    ...to consider carefully where to bring their claims taking account of the whole picture. Footnotes 1 PJSC National Bank Trust v Mints [2021] EWHC 692 (Comm) 2 [37]. 3 [37]. 4 [73]. 5 [77]. The content of this article is intended to provide a general guide to the subject matter. Specialist adv......

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