Tajik Aluminium Plant v Ermatov and Others
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE DAVID STEEL |
| Judgment Date | 27 June 2007 |
| Neutral Citation | [2006] EWHC 2374 (Comm),[2007] EWHC 1554 (Comm) |
| Docket Number | 2006 Folio 271,Case No: 2006 FOLIO 271 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 27 June 2007 |
[2006] EWHC 2374 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
MR JUSTICE CRESSWELL
Case No: 2006 FOLIO 271
Brian Doctor QC, Paul Sinclair and Rosalind Phelps (instructed by Clyde & Co) for the Part 20 Claimant/Second Defendant.
Murray Rosen QC, Neil Kitchener and Henry Forbes Smith (instructed by Herbert Smith) for the First Part 20 Defendant.
Tom Beazley QC, Adrian Briggs, Shaheed Fatima and Nick Cherryman (instructed by Bryan Cave) for the Second to Fifth Part 20 Defendants.
Andrew Popplewell QC and Richard Gillis (instructed by Osborne Clarke) for the Sixth to Eighth Part 20 Defendants.
Judgment Approved by the court
for handing down
(subject to editorial corrections)
If this Judgment has been emailed to you it is to be treated as 'read-only'. You should send any suggested amendments as a separate Word document.
Introduction
There are a number of applications before the court including applications by the Rusal defendants and the Orienbank defendants for a declaration that the court has no jurisdiction/should not exercise jurisdiction to try the Part 20 claims against these defendants, an application by TadAZ for an order that the Part 20 claim against TadAZ be struck out because it is said the Part 20 Particulars of Claim make non-justiciable allegations, an application by the sixth and eighth Part 20 defendants to set aside the default judgment entered against them and an application by Ansol for permission to amend the Part 20 Claim Form and the Particulars of the Part 20 claim (an earlier application for permission to amend having been withdrawn).
The applications before the court followed extensive interlocutory applications between some of the parties in the Chancery Division. The hearing (set for 8 days) was delayed by and extended by the service by Ansol of draft amended pleadings on 19 June, 21 June and 23 June.
Challenges to the jurisdiction and related applications in the Commercial Court (and in the Chancery Division) should be conducted in accordance with the Admiralty & Commercial Courts Guide (and the Chancery Guide) and the overriding objective, with a high level of realism and co-operation. Such applications are not the occasion for a mini trial on the basis of witness statements. At the hearing I received considerable assistance (and co-operation) from all four legal teams in a number of respects. But it should be possible to conduct applications of this nature without the need for the extensive materials placed before the court.
The Main Action in outline
These proceedings concern a State-owned aluminium smelting plant in Tajikistan ("TadAZ") and, in particular, the trading operations conducted by TadAZ over the period 1996 to 200The director of TadAZ with responsibility for the management of the plant over that period was Mr Abdukadir Ermatov, the first defendant.
TadAZ alleges that Mr Ermatov had a corrupt relationship with Mr Avaz Nazarov, the third defendant. It is said that by reason of that corrupt relationship, and in breach of duties of loyalty owed to TadAZ, Mr Ermatov concluded contractual arrangements between TadAZ and companies associated with Mr Nazarov (including the second defendant Ansol Ltd ("Ansol")) on terms which were manifestly disadvantageous to TadAZ. The profits earned by the second defendant by virtue of its dealings with TadAZ between July 1996 and 31 December 2004 are alleged to have been about US$485 million.
The fourth to sixth defendants are said to have participated in the fraud. The seventh defendant (Mr Ermatov's son) is alleged to have been privy to the fraud, and to have received various corrupt benefits from Mr Nazarov, including a flat in London. The eighth and ninth defendants (companies owned and/or controlled by Mr Nazarov) are said to have traded with TadAZ and to have received proceeds of the fraud perpetrated on TadAZ. I will refer to the second to sixth and eighth and ninth defendants as "the Ansol defendants".
Each of the defendants denies having committed or participated in any wrongdoing. In essence it is denied that any corrupt relationship existed between Mr Ermatov and Mr Nazarov and it is said that all trading between TadAZ and companies owned or controlled by Mr Nazarov took place at arm's length and on commercial terms. The defendants say that TadAZ's production increased significantly and it became profitable for the first time over the period in question.
The Part 20 Proceedings in outline
Ansol, the second defendant, issued a Part 20 claim against TadAZ and eight other parties. On 21 June 2005 Master Price granted Ansol permission to make a counterclaim against TadAZ prior to filing its defence, to add the second to ninth Part 20 defendants to the Part 20 claim/counterclaim and permission to serve the Part 20 claim/counterclaim out of the jurisdiction against the second to ninth Part 20 defendants.
The second to fifth Part 20 defendants consist of OJSC Russian Aluminium ("Rusal") and related parties, including senior management (collectively, the "Rusal defendants"). The term "OJSC" refers to "Open Joint Stock Company". According to Rusal: —Rusal is incorporated under the laws of Russia, is privately owned, and owns a number of affiliated companies ("the Rusal Group"). The Rusal Group is the third largest primary aluminium producer worldwide and employs over 50,000 people in seven Russian regions and eleven foreign countries. Its annual sales exceed $5.5 billion, its assets exceed US$4.1 billion, and its equity is over US$2 billion. In 2004, the Rusal Group accounted for a total of 75% of Russia's, and 10% of the global, primary aluminium output.
The eighth Part 20 defendant, OJSC Orienbank is a Tajik bank and the sixth Part 20 defendant, Mr Saduloev, is its Chairman.
CDH Investments Corp, the seventh Part 20 defendant, is a company incorporated in the BVI. Orienbank, Mr Saduloev and CDH are collectively referred to as "the Orienbank defendants". According to the Orienbank defendants, the Rusal defendants and TadAZ, CDH has been ultimately owned by Orienbank through Amatola SA (USA) LLC since December 2004. The Ansol defendants dispute that CDH is owned by Orienbank. Prior to its transfer to Orienbank through Amatola it was an affiliate of Rusal since its incorporation in mid-2003. Ansol contends that CDH was and remains owned or controlled by Rusal (or another Rusal entity).
Ansol alleges that in 2003 it entered into a joint venture with Rusal, following which Hamer Investing Limited ("Hamer"), the ninth Part 20 defendant, a company owned 50% by Ansol and 50% (indirectly) by Rusal, traded with TadAZ. The alleged joint venture is denied by Rusal.
In the Part 20 proceedings, Ansol originally alleged that the Part 20 defendants breached various alleged contractual, tortious and fiduciary duties to Ansol and others, including in particular duties in relation to the alleged joint venture. These alleged breaches were said to have arisen in connection with an unlawful conspiracy between the Part 20 defendants and members of the Government of Tajikistan (including the President) to oust Ansol from the alleged joint venture and its trading position with TadAZ and to enable Rusal to take control of TadAZ.
TadAZ filed a Defence to the Part 20 claim in which it denies Ansol's allegations. The Rusal defendants and the Orienbank defendants have applied under Part 11 to dispute the jurisdiction of the court and have not therefore submitted any form of substantive defence. As part of that application, these Part 20 defendants raise in particular the question whether the Part 20 claim is justiciable. They also assert that there is no claim against them which has a reasonable prospect of success. TadAZ has issued a separate application under CPR 3.4 by which it seeks to have the Part 20 claim struck out, also on the basis that the issues it raises are non-justiciable.
In addition, judgments in default of filing Acknowledgements of Service were (and remain) entered against Mr Saduloev, CDH and Orienbank. Mr Saduloev and Orienbank (but not CDH) have applied to set aside the judgments in default under Part 13.2. CDH has indicated that it will issue an application under Part 13.3 in the event its application under Part 11 fails. Mr Saduloev and Orienbank have indicated that they will also issue applications under Part 13.3 in the event that their applications under Part 11 and 13.2 fail. The Orienbank defendants contend (but Ansol disputes) that an application under Part 11 can be issued and determined at a time when a default judgment remains outstanding against the party issuing the Part 11 application.
Hamer, the ninth Part 20 defendant, is currently subject to the control of a receiver appointed by the High Court of the British Virgin Islands. It has not filed a Defence or applied to dispute the court's jurisdiction, there being an agreed modus operandi in place that preserves its right so to do.
Procedural History in outline
The proceedings were issued by TadAZ in the Chancery Division on 13 May 2005. On the same day, TadAZ obtained a freezing...
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