VTB Commodities Trading Dac v JSC Antipinsky Refinery
| Jurisdiction | England & Wales |
| Judge | Mr Justice Teare,Mr. Justice Teare |
| Judgment Date | 03 December 2019 |
| Neutral Citation | [2019] EWHC 3292 (Comm) |
| Docket Number | Case No: CL 2019 000666 |
| Date | 03 December 2019 |
| Court | Queen's Bench Division (Commercial Court) |
[2019] EWHC 3292 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
IN THE MATTER OF AN ARBITRATION CLAIM
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr. Justice Teare
Case No: CL 2019 000666
Stephen Cogley QC, Alexander Wright and Christopher Jay (instructed by Fieldfisher LLP) for the Claimant
Muhammed Haque QC and Alexander Cook (instructed by Candey Limited) for the Defendant
Hearing dates: 27–28 November 2019
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
THE HONOURABLE Mr Justice Teare
On 25 October 2019 the Claimant, VTB Commodities (VTB), issued an application for an order pursuant to section 32 of the Arbitration Act 1996 determining whether an arbitral tribunal had jurisdiction to determine the disputes which have been referred to it. The application was made with the permission of the arbitral tribunal.
The court was also asked, by an application notice dated 25 October 2019 and the accompanying draft order, to permit service out of the jurisdiction on the Defendant, JSC Antipinsky Refinery (Refinery), to permit alternative service on the Refinery's solicitor in the arbitration, Candey Limited (Candey), and to order an expedited hearing and to give directions. Section 32 expressly requires that notice of an application under section 32 is given to the other parties to the arbitration. CPR 62.6(3) provides that where such notice is required to be given to another party to the arbitration it is given by making the other party a defendant to the arbitration application. That was done and in addition notice of the application was given to the Refinery by providing its solicitors in the arbitration, Candey, with copies of the application by email on 25 October 2019.
By letter dated 31 October 2019 Candey informed the court that it acted for the Refinery in the proceedings commenced by VTB by way of an arbitration claim. At the same time Candey said that it did not accept that there had been valid service. Without prejudice to that position it made a submission that the one day requested by VTB for the hearing of the section 32 application was insufficient and that two days should be allowed for the hearing.
On 1 November 2019 I made an order, without a hearing, permitting service out of the jurisdiction and alternative service on Candey and ordering an expedited hearing (with directions) in the “window” of 25–29 November 2019. CPR 62 PD provides that the court may exercise its powers under rule 6.15 (alternative service) to permit service on a party's solicitor in the arbitration. The application has variously been described as “ex parte”, “without notice”, “ex parte” on notice and on notice. It was certainly without a hearing but notice of it had been given to the solicitor acting for the Refinery in the arbitration.
The Refinery acknowledged service on 12 November 2019 and indicated that it intended to contest the claim and to dispute the court's jurisdiction. On the same day a witness statement of some 24 pages was made in support of an application to set aside the order of 1 November 2019 on several grounds. There was an exchange of correspondence as to how and when the court should deal with the application to set aside and whether the arbitration application should be listed for hearing. By this time the court had identified 27 and 28 November 2019 as being the date when the arbitration application could be heard on an expedited basis. The court called the parties into court on 19 November 2019 to discuss these matters. Since all parties were present (though the Refinery was represented by junior counsel only) the court offered to consider the application to set aside at that time or on the next day, 20 November 2019. That was not acceptable to the Refinery who wished their leading counsel to be present. It was therefore decided, with the reluctant consent of the Refinery, that the application to set aside be heard on the morning of 27 November 2019 with the arbitration application to be heard thereafter if the application to set aside was dismissed.
The application to set aside the order of 1 November 2019 was therefore heard on the morning of 27 November 2019. It was dismissed by me for the reasons given on that day after the short adjournment. The section 32 application was then heard in the afternoon of 27 November 2019 and on the morning of 28 November 2019. There is a need for a prompt determination of the section 32 application and so this judgment will be shorter than it might otherwise have been.
The chronology
Before dealing with the issues which arose for determination on the section 32 application it is necessary to give a short summary of the dispute between the parties, the proceedings in this court, the proceedings in arbitration and further proceedings in Russia.
The Claimant, VTB, agreed to buy quantities of gasoil from the Defendant, Antipinsky, a refinery in Russia. The agreement between the parties is in three pairs of contracts, the Offtake Contract and the Prepayment Agreement, dated 19 October 2018, 15 March 2019 and 8 April 2019. VTB pre-paid for the gas up to 120 days in advance. The Refinery was to deliver the products to VTB FOB Murmansk (ex a floating storage facility, MT POLAR ROCK). In the event that the Refinery made insufficient deliveries to amortise the pre-payments it was to pay the difference in cash. The contracts were all subject to English law and provided for London arbitration.
As at 29 April 2019 VTB claims that it had paid substantial pre-payments but that the Refinery was behind in its deliveries. VTB alleges that the Refinery sold the gasoil to a third party, Petraco. So on 29 April VTB, on the basis of alleged events of default, accelerated repayment of outstanding prepayments and commenced arbitration in London. At the same time a Worldwide Freezing Order (“WFO”) was sought pursuant to section 44 of the Arbitration Act 1996.
The WFO was granted by me on 30 April 2019. In addition, an injunction was issued restraining the Refinery from selling oil to third parties. The order permitted VTB to seek injunctive relief in Russia in respect of the sums or assets covered by the WFO.
VTB has since learnt and now alleges that the Refinery had agreed to sell the gasoil intended for VTB to MachinoImport who had purported to sell the cargo to Petraco.
VTB sought injunctive relief in Murmansk against the Refinery and MachinoImport but on 8 May 2019 that application failed on “territorial” grounds; the court ordered that the claim be brought “before the commercial court for the place where one of the defendants is located”.
So on 13 May 2019 VTB sought injunctive relief in Moscow. The claim for injunctive relief was based upon a claim which sought to impugn or invalidate the agreement between the Refinery and MachinoImport.
On 15 May 2019, the first return date for the WFO, Sir William Blair sitting in this court continued the WFO and ordered the sale of the cargo in the storage facility.
On 17 May 2019 the Moscow court listed a preliminary hearing of VTB's claim to impugn or invalidate the agreement between the Refinery and MachinoImport but refused to grant injunctive relief.
On 28 May 2019 Knowles J. made a further order facilitating the sale of the cargo ordered by Sir William Blair. A further order to that effect was made on 31 May by Moulder J.
On 7 June 2019 most of the cargo in the storage facility was delivered to the order of VTB.
On 11 June 2019 the Refinery responded to the request for arbitration. It was said that by reason of the proceedings in Russia VTB had submitted to the jurisdiction of the Russian courts and that the tribunal therefore had no jurisdiction to determine the issues referred to it.
On 18 June 2019 VTB applied to withdraw the claim before the Moscow court which sought to impugn or invalidate the agreement between the Refinery and MachinoImport. On 20 June 2019 both the Refinery and MachinoImport filed defences to the claim. But on that day the Moscow court permitted VTB to withdraw its claim.
On 1 July 2019 the London arbitral tribunal was constituted.
On 16 July 2019 Sir Jeremy Cooke sitting in this court dismissed a challenge by the Refinery to the jurisdiction of the court and adjourned the application to discharge the WFO.
On 2 August 2019 VTB served its Statement of Case in the arbitration.
On 19 September 2019 the Refinery served its Defence and identified the three grounds on which it challenged the jurisdiction of the arbitral tribunal.
On 23 September 2019 the tribunal held its first procedural meeting. VTB raised the question whether, in the light of the risk that on 10 December 2019 the Refinery might be placed into bankruptcy there should be an urgent Partial Final Award (“PFA”) dealing with certain of VTB's claims.
On 14 October 2019 VTB issued an application for an urgent PFA and for the tribunal to consent to the court determining the jurisdiction of the tribunal pursuant to section 32 of the Arbitration Act.
On 20 October 2019 the tribunal agreed that there should be an urgent PFA and consented to a section 32 application. Hence it was that on 25 October 2019 the application was made to this court for an order determining the questions raised as to the jurisdiction of the arbitral tribunal.
The conditions to be satisfied
The arbitrators having given their consent, section 32 requires the court to be satisfied, first, that determination of the question is likely to produce substantial savings in costs, second, that the...
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