Renaissance Securities (Cyprus) Ltd v Chlodwig Enterprises Ltd
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Dias DBE |
| Judgment Date | 03 November 2023 |
| Neutral Citation | [2023] EWHC 2816 (Comm) |
| Court | King's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2023-000787 |
[2023] EWHC 2816 (Comm)
Mrs Justice Dias
Case No: CL-2023-000787
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, WC4A 1NL
Mr Paul Lowenstein KC (instructed by CANDEY Limited) for the Claimant (instructed by) for the Defendant
Hearing dates: 3 November 2023
The Honourable
On Friday 3 November 2023 I heard an urgent without notice application by the Claimant for both an anti-suit injunction (“ASI”) and an anti-anti-suit injunction (“AASI”) against the Defendants. I granted the application, giving brief oral reasons for doing so and indicating that I would provide written reasons in due course. These are those written reasons.
Background
The Claimant (“RenSec”) is an investment services company incorporated and registered in Cyprus. It provides investment and brokerage services to companies and individuals worldwide and is part of the Renaissance Capital group.
The First Defendant (“Chlodwig”) was incorporated in Cyprus in 2009. It is wholly owned by the Fifth Defendant, which in turn is beneficially owned by Mr Andrey Guryev and his wife and daughter. According to new reports, Mr Guryev used to live in London and has a number of properties in England. Chlodwig's General Director is a Mr Sergey Tarakhnenko.
The Second Defendant (“Adorabella”) was likewise incorporated in Cyprus in 2009. It is wholly owned by the Fourth Defendant, which in turn is also beneficially owned by Mr Guryev and his wife and daughter. Its General Director is a Mr Sergey Ryzhikov.
In June 2021, both Chlodwig and Adorabella re-domiciled from Cyprus to Switzerland. On 19 April 2022, they re-domiciled again from Switzerland to Russia, becoming ILLC Chlodwig Enterprises and ILLC Adorabella respectively with adjacent offices at the same registered address in Kaliningrad.
On 6 April 2022, Mr Guryev was designated as a sanctioned person by the Office of Financial Sanctions Implementation in the UK. On 2 August 2022, he became a US sanctioned individual and on 14 November 2022, both Chlodwig and Adorabella became US sanctioned entities on the basis that they had been designated as companies holding assets for trusts that benefitted Mr Guryev and his family.
The Third Defendant (“Gekolina”) was incorporated in Cyprus in 2017 and is a 100% subsidiary of Chlodwig. It is therefore ultimately owned and controlled by Mr Guryev and his wife and daughter. Its director is Ms Stella Konstantinou. As a subsidiary of Chlodwig, Gekolina is an indirectly US sanctioned entity.
The Fourth Defendant (“Dubhe”) and the Fifth Defendant (Owl”) were both incorporated in Cyprus in 2003. Ms Konstantinou is also the director of Dubhe, while a Ms Georgia Georgiou is the director of Owl. Although beneficially owned by Mr Guryev and his wife and daughter, neither company has apparently yet been sanctioned, although RenSec is concerned that they may be indirectly sanctioned in light of their ownership structure and are accordingly treating them as such in the absence of clear evidence to the contrary.
The Sixth Defendant (“Perpecia”) was incorporated in Cyprus in 2019 and is a 100% subsidiary of Adorabella. It is therefore likewise ultimately owned and controlled by Mr Guryev and his wife and daughter. Its director is Ms Georgiou. As a subsidiary of Adorabella, Perpecia is an indirectly US sanctioned entity.
Each of the Defendant was a client of RenSec and party to an Investment Services Agreement (“ISA”), pursuant to which RenSec would arrange and execute various investments on the instructions of the relevant Defendant. The ISAs with Chlodwig and Adorabella were dated 11 April 2019, while the other ISAs were dated 21 December 2020 (Owl), 22 December 2020 (Dubhe) and 23 December 2020 (Gekolina and Perpecia).
These ISAs were in materially identical terms and contained governing law and dispute resolution provisions as follows:
“43.1 This Agreement and any non-contractual obligations arising in connection with it shall be governed by and interpreted in accordance with the laws of England and Wales.
43.2 If any dispute should arise in relation to the Customer Document Pack 1 and it cannot be resolved within thirty (30) Business Days by negotiation between the Parties, such dispute shall be referred to and finally resolved by arbitration under the rules of the London Court of International Arbitration which are deemed to be incorporated by reference into this Clause 43. Such arbitration shall take place in London and shall be conducted by a single arbitrator appointed by agreement between the Parties or, failing agreement, by the London Court of International Arbitration. The language in which such arbitration shall be conducted shall be English. Any award rendered shall be final and binding on both Parties and may be entered in any court having jurisdiction and application may be made to such court for an order of enforcement as the case may require.”
It is not in dispute that RenSec currently holds substantial sums and securities for each of the Defendants. Some of those assets were held at Euroclear Bank SA/NV in a sub-custody account of the Russian National Settlement Depositary (“NSD”) which in turn held them in a sub-custody account for RenSec. After Chlodwig and Adorabella were sanctioned, Euroclear wrote to RenSec seeking information about assets held by RenSec on their behalf. Following provision of that information, Euroclear segregated and froze the assets of these companies in specially designated accounts for each entity.
NSD itself has also been sanctioned by the EU with the result that any of the Defendants' assets held in or via NSD are now inaccessible.
In these circumstances, RenSec took the decision to block the Defendants' trading accounts and to freeze their assets.
On 26 June 2023, each of the Third to Sixth Defendants wrote to RenSec referencing its particular ISA and requesting that its assets be transferred to bank accounts in Russia in aid of a corporate restructuring. Gekolina and Owl requested transfer to an account held by Chlodwig, while Dubhe and Perpecia requested transfer to an account held by Adorabella (Dubhe and Perpecia). RenSec did not comply with these demands, taking the view that to do so would involve a breach of US and/or EU and/or UK sanctions.
On 4 July 2023, RenSec received further letters from each of the Third to Sixth Defendants, again referring to their respective ISAs and asking for information as to why their accounts had been blocked and assets frozen. RenSec responded to each company on the same day acknowledging the requests for consolidation of funds but stating that it could not comply as to do so would involve a breach of sanctions. On 11 July 2023, RenSec received letters from Chlodwig and Adorabella in materially identical terms.
On 26 July 2023, RenSec received yet further letters from each of the Third to Sixth Defendants, requesting transfer of any balances/assets held on its behalf by RenSec to an account in Russia with Raffeisen Bank and giving notice of termination of the ISA.
Shortly thereafter, RenSec received letters before action from Chlodwig and Adorabella on 15 and 16 August respectively and from the other Defendants on 21 August. All the letters were in materially identical terms. Each referred to the applicable ISA and previous correspondence and continued:
“We hereby ask to transfer the aforesaid amounts to the bank account of [ILLC CHLODWIG ENTERPRISES/ILLC ADORABELLA] immediately. If you fail to transfer the amounts due to us, we will be initiating legal proceedings against you in the appropriate forum. We propose negotiations in order to resolve the dispute.”
RenSec did not respond to these letters. The evidence of one of its directors, Mr Marios Hadjiyiannakis was that RenSec understood the reference to “appropriate forum” to mean that the Defendants would abide by their obligation to refer disputes arising in relation to the ISAs to LCIA arbitration in London. Nonetheless, RenSec was aware from Russian legal advice that it had obtained that the Defendant might be able to commence proceedings in Russia and its legal department started monitoring the Russian court website periodically on a precautionary basis, as a result of which it discovered in the evening of 13 October 2023 that each of the Defendants had commenced proceedings in Russian courts effectively seeking damages in the amount of its blocked assets.
It is unnecessary for the purposes of this judgment to give details of each individual court process. It is sufficient to note that:
i) The claims of Chlodwig and Adorabella are proceeding in the Commercial Court of Kaliningrad (where they are now domiciled), while the claims of the Cypriot Defendants are proceeding in the Commercial Court of Moscow;
ii) Each of the claims has been accepted for consideration by the court concerned;
iii) Preliminary hearings are currently scheduled to take place on:
a) 7 November 2023 in Perpecia's claim;
b) 13 November 2023 in Owl's claim;
c) 6 December 2023 in Gekolina's claim;
d) 11 December 2023 in Dubhe's claim;
e) 14 May 2024 in Chlodwig's claim;
f) 15 May 2024 in Adorabella's claim.
iv) RenSec has not as yet been served with any of the proceedings and is not aware of any steps having been taken to notify it of their commencement;
v) RenSec has not taken any steps in relation to the Russian proceedings which might amount to a submission to the jurisdiction.
It is in these...
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