PJSC National Bank Trust v Boris Mints
| Jurisdiction | England & Wales |
| Judge | Mr Justice Foxton |
| Judgment Date | 11 April 2022 |
| Neutral Citation | [2022] EWHC 871 (Comm) |
| Docket Number | Case No: Claims CL-2019-000412; CL-2020-000432 |
| Court | Queen's Bench Division (Commercial Court) |
[2022] EWHC 871 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Foxton
Case No: Claims CL-2019-000412; CL-2020-000432
Nathan Pillow QC, David Davies QC, Anton Dudnikov and Bibek Mukherjee (instructed by Steptoe & Johnson UK LLP) for the Claimants/Applicants
Philip Edey QC, Sarah Tresman and Tetyana Nesterchuk (instructed by Quinn Emanuel Urquhart & Sullivan UK LLP) for the First Defendant/Respondent
Laurence Rabinowitz QC, Simon Paul and Niranjan Venkatesan (instructed by Enyo Law LLP) for the Second and Third Defendants/Respondents
Richard Greenberg (instructed by Stephenson Harwood LLP) for the Fourth Defendant
Hearing dates: 24 and 25 February 2022 Draft judgment to the parties: 31 March 2022
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.
This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to BAILII and The National Archives. The date and time for hand-down is deemed to be Monday 11 April 2022 at 10:30am.
A INTRODUCTION
This judgment concerns the Claimants' ( the Banks') applications:
i) for permission to amend the Particulars of Claim, to allege that the First to Third Defendants ( D1, D2 and D3 and collectively the Respondents) are precluded in this action from challenging certain findings made by an LCIA arbitration tribunal ( the Tribunal) in an arbitration between the Banks and three companies alleged to be under the Respondents' control ( the LCIA Award), either on grounds of issue estoppel or to prevent an abuse of process ( the Preclusion Arguments); and
ii) for summary judgment (or at least a summary determination) of the Preclusion Arguments in the Banks' favour, alternatively for orders requiring the Respondents to pay money into court as a condition of being permitted to defend the Preclusion Arguments.
While it will be necessary to consider aspects of the chronology in a little more detail, in broad terms:
i) D1 founded a group of companies held through O1 Group Limited ( the O1 Group), which operated real estate and other businesses in Russia, and in which D2 and D3 (D1's sons) were also involved.
ii) The O1 Group obtained financing from the Second Claimant ( Bank Otkritie) which was secured by various pledges including pledges provided by three Cypriot companies associated in some way with the O1 Group: Nori Holdings Limited ( Nori), Centimila Services Limited ( Centimila) and Coniston Management Ltd ( Coniston) (collectively the LCIA Claimants).
iii) On 9–10 August 2017, Bank Otkritie entered into certain transactions ( the Otkritie Replacement Transactions) which purported to have the effect of releasing the pledges granted by the LCIA Claimants. The Banks claim that the Otkritie Replacement Transactions involved a fraud on Bank Otkritie, in which (inter alios) the Respondents were implicated.
iv) The Otkritie Replacement Transactions were subject to LCIA arbitration agreements. When Bank Otkritie commenced proceedings against the LCIA Claimants in Russia to impugn the Otkritie Replacement Transactions, Nori and Centimila commenced LCIA arbitrations against Bank Otkritie (on 2 January 2018), seeking (a) a declaration that the Pledge Agreements they had entered into with Bank Otkritie had been validly terminated by the Otkritie Replacement Transactions; and (b) a declaration that they had no liability in damages. Coniston also commenced an LCIA Arbitration (on 14 February 2018), and the arbitrations commenced by the LCIA Claimants were consolidated (on 5 June 2018) ( the LCIA Arbitrations).
v) The LCIA appointed Sir Stephen Tomlinson, Sir Christopher Clarke and Sir Rupert Jackson as the Tribunal. The particular eminence of the Tribunal has understandably been emphasised on more than one occasion during the course of this litigation.
vi) On 15 January 2018, Nori and Centimila applied for without notice injunctive relief in Cyprus in support of the LCIA Arbitrations.
vii) On 19 January 2018, Bank Otkritie commenced proceedings in Cyprus against various O1 Group entities and others. The affidavit of Anton Smirnov for the Banks alleged that the Otkritie Replacement Transactions formed part of a dishonest scheme in which D1 was involved.
viii) Following an application issued by the LCIA Claimants on 20 February 2018, on 6 June 2018 Males J granted an anti-suit injunction restraining the pursuit by Bank Otkritie of the Russian proceedings against those parties. In due course, Bank Otkritie attempted to discontinue its claims in those proceedings but was refused permission by the Russian court to do so.
ix) On 7 September 2018, Bank Otkritie counterclaimed in the LCIA Arbitrations for damages for fraud against the LCIA Claimants. That counterclaim was advanced on the basis that the (allegedly) dishonest acts and intentions of (inter alios) the Respondents were attributable to the LCIA Claimants and gave rise to claims in dishonesty against the LCIA Claimants under Cypriot law.
x) On 28 June 2019, the Banks commenced these proceedings against the Respondents, and also the Fourth Defendant ( D4) and obtained a without notice worldwide freezing order against them. Those claims, which were advanced under Russian law, involved allegations of dishonesty against the Respondents and D4 in relation (inter alia) to the Otkritie Replacement Transactions and also another set of transactions entered into with another Russian bank, Rost Bank ( the Rost Replacement Transactions).
xi) In August 2020, D5 to D7 were joined to these proceedings.
xii) The arbitral hearing took place over 5 weeks, at a cost of at least £16m.
xiii) On 23 June 2021, the Tribunal handed down the LCIA Award on liability, dismissing the claims for declaratory relief made by the LCIA Claimants, and upholding the Banks' counterclaims.
xiv) On 28 June 2021, D8 was joined to these proceedings.
xv) The applications before me were issued on 30 September 2021.
These applications raise a number of issues for determination, in the context of two different procedural frameworks:
i) The Banks' application for permission to amend requires the Banks to persuade the court that the Preclusion Arguments, or either of them, give rise to a serious issue to be tried (i.e., one which is not susceptible to summary determination in the Respondents' favour).
ii) The Banks' application for summary judgment or determination (assuming it is open to the Banks to seek such an order) requires the Banks to persuade the court that the relevant Respondent's (individual) answer to the Preclusion Arguments does not have a realistic prospect of success.
In my summary of the issues below, the expression “the requisite degree of arguability” is intended to embrace both of these points. While it might be thought surprising that each side should contend that the other's case was unarguable, that reflects the nature of the issues raised, which have the capacity to generate a visceral reaction to one or other effect, well captured in the opening paragraphs of the parties' skeleton arguments.
It will be apparent that the Preclusion Arguments arise in a context in which:
i) The determination which is said to give rise to them is an arbitral award, rather than a court decision.
ii) The Respondents were not parties to the LCIA Arbitrations.
iii) The counterclaims advanced by the Banks in the LCIA Arbitrations asserted causes of action against the LCIA Claimants under Cypriot law, while the present action is concerned with Russian law claims against the Respondents personally.
Against this background, the issues capable of arising for determination are as follows:
i) By way of a threshold question, in circumstances in which the Banks accept that the court cannot give summary judgment on the Respondents' liability at this hearing, is it open to the Banks to seek a summary determination that the Respondents (or some of them) are precluded from disputing certain issues?
ii) Is the LCIA Award capable of giving rise to an issue estoppel against the Respondents in circumstances in which the Respondents were not parties to the LCIA Arbitrations? That breaks down into a number of sub-issues:
a) Is the test to be applied when determining whether an arbitration award gives rise to an issue estoppel against a non-party in subsequent court proceedings the same as that which applies when determining the effect of a prior court judgment in such circumstances?
b) If the test is the same, what is the correct test?
c) Having regard to the appropriate test (at either (a) or (b)), has the requisite degree of arguability been made out?
iii) Are there any issues arising between the Banks and the Respondents in these proceedings which were determined in the LCIA Arbitrations ( Relevant Issues), and, if so, what are they?
iv) If the relevant test is satisfied in respect of some Relevant Issues, in what circumstances would it nonetheless be open to the Respondents (or any of them) to re-argue the Relevant Issues:
a) What is the scope of any exception to the doctrine of issue estoppel?
b) Is the exception engaged (or engaged to the requisite degree of arguability) here?
v) If and to the extent that there is no issue estoppel, would it be an abuse of process for the Respondents to seek to litigate any of the Relevant Issues:
a) Can the doctrine of abuse of process be engaged by attempts to litigate issues...
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