PJSC Vseukrainskyi Aktsionernyi Bank v Sergey Maksimov and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Blair |
| Judgment Date | 16 August 2013 |
| Neutral Citation | [2013] EWHC 3203 (Comm) |
| Date | 16 August 2013 |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2013-57 |
[2013] EWHC 3203 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
7 Rolls Building
Fetter Lane
London
EC4A 1NL
Mr Justice Blair
Case No: 2013-57
Mr Charles Samek QC and Mr Rupert D'Cruz (Instructed by Eversheds LLP) appeared on behalf of the Claimants
Mr Harris Bor (Instructed by W-Legal) appeared on behalf of the Second to Fourth Defendants
Approved Judgment
Friday, 16 August 2013
This is an application by Carlsbad Enterprises Limited (the 27 th defendant) to discharge a worldwide freezing injunction made against it on 2 May 2013 by Field J. Carlsbad is a Cyprus company. The injunction was made ex parte in support of London arbitration proceedings against Mr Sergey Maksimov and ancillary to a freezing order against him and the second to fourth defendants made by Cooke J on 17 January 2013.
The claimant, PSJC Vseukrainskyi Aktsionernyi Bank does not assert a cause of action against Carlsbad, but claims relief against it on the grounds that its assets are, in truth, the assets of Mr Maksimov and are amenable to enforcement in the event that it obtains an award in its favour.
Carlsbad's discharge application is made on four broad grounds: (1) The court has no jurisdiction to make or serve the injunction out of the jurisdiction; (2) Carlsbad's assets are not owned by Mr Maksimov and/or are not amenable to enforcement; (3) it is not just and convenient to maintain the injunction; and (4) there has been material non-disclosure by the Bank.
The facts are set out in judgments of Popplewell J of 7 March 2013 and Field J in granting the injunction. I need only summarise them.
The Bank is a joint stock company incorporated under Ukrainian law. Mr Maksimov was President of the Bank and Chairman of its Supervisory Board from 12 April 1996 until 2 November 2010. In December 2011 criminal proceedings in Ukraine were commenced against him, relating to his management of the Bank. Mr Maksimov's position is that he has been the victim of a campaign to discredit and weaken him, conducted through the media and the Ukrainian courts after a majority share in the Bank was acquired by Mr Oleg Bahmatiuk who is a Ukrainian businessman.
The position as regards the arbitration is as follows. On 4 July 2012, the Bank commenced arbitration proceedings against Mr Maksimov for recovery of amounts under a Framework Agreement dated 19 November 2009. This agreement is governed by English law and provides for arbitration in London under the LCIA rules. The parties to the framework agreement were Mr Maksimov, a company called TBIF Financial Services BV and the Bank. Under the Framework Agreement, TBIF agreed to purchase Mr Maksimov's shares in the Bank if certain conditions precedent were fulfilled. I am told that the Framework Agreement was never implemented.
In the arbitration, the Bank is seeking damages of approximately US$80 million, alleged caused by the failure of Mr Maksimov to use his best efforts to fulfil the conditions precedent. These involved the repayment of loans allegedly made to companies owned or controlled by him while he ran the Bank. On 1 October 2012, Professor Kaj Hobér was appointed as sole arbitrator and there is a hearing taking place in November.
The injunction came about as follows. On 17 January 2013, Cooke J granted the Bank an injunction against Mr Maksimov and the second to fourth defendants pursuant to section 44(3) Arbitration Act 1996. The second to fourth defendants are English registered companies. The injunctions against those three companies was granted on the basis of the jurisdiction confirmed in the case of TSB v Chabra [1992] 1 WLR 245. The principles have not been in dispute before me.
The Bank claimed that these companies, which hold shares in a Ukrainian company, PJSC Odeskyi Portovyi Holodylnyk ("OPH"), were, in reality, owned by Mr Maksimov via Carlsbad. OPH provides transport, stevedore and cold storage services in Odessa.
The second to fourth defendants each own a substantial block of shares, as does Carlsbad. As I shall state shortly, it was not seriously disputed as Popplewell J noted in his judgment that there is a good arguable case that the OPH shares are held by these defendants as nominees for Carlsbad. He explains the reasons for this in paragraphs 8 and 9 of his judgment. On this basis, the 94 per cent holding in OPH held by the four companies is in the same beneficial ownership and subject to the same control. This has not been in dispute in front of me either.
On 8 February 2013, the second to fourth defendants applied to discharge the injunction on the basis that the companies were beneficially owned by Mr Oleg Nemyrovskyy, an independent third party, and not Mr Maksimov.
On 26 February 2013, Popplewell J heard these defendants' discharge application. On 7 March 2013, he handed down his judgment rejecting the discharge application on the basis that there was a good arguable case that the companies are beneficially owned by Carlsbad, which is itself beneficially owned by Mr Maksimov. The Chabra principles are summarised in paragraph 7 with both parties accepted before me was accurate.
On 13 April 2013 the Bank applied, in effect, for an extension of the injunction to cover the 5 th to 29 th defendants (including Carlsbad). The injunction was granted by Field J ex parte on 2 May 2013. He also gave permission to serve Carlsbad out of the jurisdiction. Carlsbad was not served with the injunction until 17 May 2013.
On 13 June 2013, it made the present application to discharge the injunction. It applied for the matter to be heard as soon as possible, which is why it is being heard this week. I should say that, although Carlsbad has complied with the disclosure provisions in the order, albeit inadequately according to the Bank, the other non-UK defendants, including Mr Maksimov, have not.
The Bank's preliminary objection
The Bank has a preliminary objection as follows. It applies to Carlsbad's second contention, namely that its assets are not owned by Mr Maksimov and are not amenable to enforcement. The Bank says that this is not a point which it is open to Carlsbad to take on this application. The issue of whether there is good reason to suppose that Carlsbad is owned and controlled by Mr Maksimov was decided by Popplewell J on 7 March 2013 and Carlsbad, the Bank submits, is estopped under the doctrine of privity of interest from contending otherwise on this application. Alternatively, it would be an abuse of process to allow it to raise this issue.
Carlsbad submits that Popplewell J's judgment is not binding on this court now. Carlsbad was not a respondent to the initial injunction proceedings or a party to the proceedings before Popplewell J. It says that different considerations were also at stake. It points out that Popplewell J commented adversely on the absence of corroborative evidence. There is no significantly more material supporting Carlsbad's case than was available at the earlier hearing. The court must, Carlsbad submits, consider matters afresh in view of all the evidence now before it.
As it says, there is considerably more evidence now before the court. It includes witness statements from persons who worked at the bank at the relevant time and associates, family and trading partners of Mr Nemyrovskyy and Carlsbad. Mr Nemyrovskyy, Carlsbad says, has also produced extensive contractual and corporate documentation showing his ownership of and control over the company.
There is no doubt about the extent of the material before the court. The court has 16 files of evidence on this application and further evidence came in just before and during the hearing. However, the preliminary question is whether it can be deployed in the manner in which Carlsbad seeks to use it.
The matter arises in this way. The issue before Popplewell J can be explained by reference to three paragraphs of his judgment. The term "corporate defendants" is a reference to the second to fourth defendants. In paragraph 6 the judge said as follows:
"For reasons I shall explain, the critical issue for the purposes of this application is as to who is the ultimate beneficial owner of Carlsbad. The Bank contends that Carlsbad is, like the Corporate Defendants, a nominee company for Mr Maksimov and under his substantial control. The Corporate Defendants contend that Carlsbad is a company beneficially owned and controlled by Oleg Nemyrovskyy."
In paragraph 8 the judge said:
"It was not seriously disputed before me that there is a good arguable case that the OPH shares are being held by the Corporate Defendants as nominees for Carlsbad; and that those shares are therefore in the beneficial ownership and subject to the substantial control of whoever is Carlsbad's ultimate beneficial owner exercising substantial control over Carlsbad."
In paragraph 10 the judge said:
"The critical question on this application is therefore whether there is good reason to suppose that Mr Maksimov is the ultimate beneficial owner of Carlsbad, using Mr Nemyrovskyy as his nominee and acting through him in exercising control."
The conclusion which he reached is at paragraph 37. He said:
"It is important to keep in mind that the exercise upon which the Court is engaged is not the trial of an issue as to whether Mr Maksimov substantially controls Carlsbad, but a determination whether the evidence establishes that it is more than...
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