VTB Commodities Trading Dac v JSC Antipinsky Refinery
| Jurisdiction | England & Wales |
| Judge | Lord Justice Phillips |
| Judgment Date | 20 January 2020 |
| Neutral Citation | [2020] EWHC 72 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2019-000281 |
| Date | 20 January 2020 |
[2020] EWHC 72 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice
Rolls Building, Fetter Lane
London, EC4A 1NL
Lord Justice Phillips
Case No: CL-2019-000281
and
Stephen Cogley QC, Alan Gourgey QC, Alexander Wright, Christopher Jay and Michael Ryan (instructed by PCB Litigation LLP) for the Claimants
Kenneth MacLean QC and Alexander Brown (instructed by Candey Limited) for the Defendants
Louis Flannery QC and Andrew Leung (instructed by Stephenson Harwood LLP) for the Intervener
Hearing dates: 16–18 October and 4, 5 and 12 December 2019
Approved Judgment In Public
By application notice dated 13 May 2019 the claimant (“VTB”) applied to continue an injunction granted on 30 April 2019 by Teare J against the defendant (“Antipinsky”) on a without notice basis (“the Continuation Application”). The injunction, made urgently pursuant to section 44 of the Arbitration Act 1996 (“s.44”) in support of six London arbitrations commenced by VTB the day before, comprised two elements:
i) a worldwide freezing order (“the WFO”) in relation to Antipinsky's assets up to the value of €225,000,000;
ii) an order (“the Cargo Injunction”) (i) restraining Antipinsky from selling, transferring or otherwise disposing of High Sulphur Vacuum Gasoil (“VGO”) to third parties save to the extent that such dealings did not inhibit Antipinsky's ability to supply VGO to VTB under contractual arrangements between them or pursuant to bona fide agreement with third parties entered before those contractual arrangements; and (ii) requiring Antipinsky to comply with its delivery obligations under the contractual arrangements in respect of shipments of VGO.
On 8 July 2019 Antipinsky applied to set aside the order of Teare J in its entirety (“the Discharge Application”).
When the Continuation Application and the Discharge Application first came before me on 16 October 2019 (which was also the adjourned Return Date specified in the WFO and the Cargo Injunction) Antipinsky took a preliminary objection to the court's jurisdiction to entertain the Continuation Application under s.44.
On 18 October 2019 I ruled (with reasons to follow) that Antipinsky's objection was well founded on the ground that, the matter no longer being urgent within s.44(3), VTB required but had not obtained either the permission of the Tribunal (which had been appointed in the six arbitrations, by then consolidated) or the agreement of Antipinsky to the making of the Continuation Application in order for the court to have jurisdiction to act on that application by virtue of s.44(4). However, I declined to allow the WFO and Cargo Injunctions simply to lapse or to allow Antipinsky to argue the Discharge Application, instead further adjourning the Return Date and all applications generally, with liberty to restore.
On 20 October 2019 the Tribunal gave VTB permission to make the Continuation Application (and associated applications) to this court, the Tribunal further deciding that it was not in a position to act effectively in that regard.
The adjourned Return Date and associated applications were thereafter restored for hearing before me on 4 December 2019. Antipinsky initially raised a further jurisdictional objection, asserting that the Tribunal had been wrong to consider that it was unable for the time being to act effectively in relation to the applications, so that the requirement imposed by s.44(5) was not satisfied. Antipinsky again contended that the injunctions should be allowed to lapse and/or that only the Discharge Application should be determined. However, following my indication that, if I were to accept the further argument on jurisdiction, I would nonetheless be minded again to adjourn the Return Date and all other applications and continue the injunctions pending a decision of the Tribunal on whether they should be continued, Antipinsky sensibly decided not to pursue the point further.
Once objections to the court's jurisdiction were resolved or withdrawn, Antipinsky's only remaining ground for applying to discharge the WFO (and, correspondingly, for opposing its continuation) was that VTB, in making its without notice application to Teare J, had been guilty of material non-disclosure in two respects, considered below.
The applications to continue or to discharge the Cargo Injunction turned on the question of whether it was appropriate, as a matter of law and as a matter of discretion, to make an order which amounted, in effect, to an order for specific performance of a contract to sell commodities.
Also before me was an application by VTB dated 8 October 2019 for an order that all VGO remaining on a floating storage vessel, MT POLAR ROCK (“the Polar Rock”) be sold and directions given for the preservation of the proceeds (“the Polar Rock Application”). VTB contended, for reasons explained below, that such an order should be made regardless of whether the Cargo Injunction was continued.
On 12 December 2019 I ruled (with reasons to follow) that the WFO be continued until the termination of the arbitral proceedings (save for an agreed amendment to paragraph 7(2) of the order of Teare J), but that the Cargo Injunction be discharged. I also refused to make any order in relation to the sale of the balance of VGO stored on the Polar Rock.
This judgment sets out the reasons for my rulings of 18 October and 12 December 2019.
The background facts and procedural chronology
Antipinsky, a company incorporated in Russia, owns and operates the largest independent oil refinery in that country, producing VGO, among other petroleum products.
By three offtake contracts, dated respectively 19 October 2018, 15 March 2019 and 8 April 2019, VTB, a commodity trader incorporated in Ireland and a subsidiary of VTB Bank, agreed to purchase quantities of VGO from Antipinsky, FOB Murmansk (“the Offtake Contracts”). In practice delivery was to be by way of transhipment from floating storage on the Polar Rock in the port of Murmansk.
Each of the Offtake Contracts was accompanied by a prepayment agreement of the same date (“the Prepayment Agreements”), pursuant to which VTB prepaid Antipinsky a total of €194,759,518.45 in respect of the deliveries of VGO that Antipinsky was obliged to make under the Offtake Contracts between April and July 2019. All of the Offtake Contracts and the Prepayment Agreements were governed by English law and provided for arbitration of any disputes in London pursuant to the rules of the LCIA.
In April 2019 Antipinsky and its forwarding agent, JSC Machinoimport (“Machinoimport”) stopped communicating with VTB and VTB learned that cargoes of VGO were being delivered to the Intervener (“Petraco”). VTB feared that, despite having prepaid for delivery of effectively all of Antipinsky's production of VGO, that oil was being sold to third parties, notwithstanding Antipinsky's assurances to the contrary.
On 29 April 201 Notice of Default under each of the Prepayment Agreements and exercised its right to accelerate Antipinsky's obligation to repay all outstanding pre-payments and interest accrued thereon 9 VTB:
i) served Notice of Default under each of the Prepayment Agreements and exercised its right to accelerate Antipinsky's obligation to repay all outstanding pre-payments and interest accrued thereon;
ii) commenced the six LCIA arbitrations against Antipinsky;
iii) issued the arbitration claim form in these proceedings seeking the WFO and Cargo Injunction;
iv) applied urgently and without notice to Waksman J, who granted cargo injunctions until a further without notice application could be heard the next day, in the event by Teare J.
The following day Teare J made the order referred to above, providing that the WFO and the Cargo Injunction thereby granted were to continue until after the Return Date (originally 15 May 2019), or further order of the court or award or order of the Tribunal. In the interim, pursuant to the Cargo Injunction, Antipinsky was to deliver a consignment of 33,000mts on 27–28 April 2019 by transhipment to the MT Stone and two further consignments, each of 33,000mts, on 4–5 May 2019 by transhipment to the MT Meganisi.
On 8 May 2019 the Intervener (“Petraco”) issued an application to vary the WFO and the Cargo Injunction to allow it to take delivery of 60,608.905mts of the VGO aboard the Polar Rock (“the Disputed Parcel”). Petraco claimed that Machinoimport had title to the Disputed Parcel, having purchased it from Antipinsky, and had on-sold the Disputed Parcel to Petraco.
On 15 May 2019 Sir William Blair:
i) ordered VTB to pay US$30 million into court by way of fortification of its undertaking in damages;
ii) ordered the sale of the 85,675 mts of VGO stored aboard the Polar Rock pursuant to two contracts of sale between VTB and third parties, by loading aboard the MT Stone and the MT Meganisi;
iii) directed an expedited trial of the rights and obligations of VTB, Antipinsky and Petraco in respect of the Polar Rock Cargo and/or the sums paid into court by VTB;
iv) adjourned the Return Date to a date to be fixed.
On 28 May 2019 Knowles J varied the order of Sir William Blair to permit VTB to pay the fortification sum to be held by its solicitors.
On 31 May 2019 Moulder J further varied the order of Sir William Blair so that, provided VTB undertook to pay US$2.5million to Machinoimport, Petraco was required to nominate the MT Stone and MT Meganissi to take delivery of the Disputed Parcel in furtherance of the order for sale and in performance of Petraco's purchase contract with Machinoimport.
The Disputed Parcel was duly loaded onto the MT Stone and the MT...
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VTB Commodities Trading DAC (formerly VTB Capital Trading Ltd) v JSC Antipinsky Refinery
...the background to this case up until 2 July 2021 is set out in the judgment of Mrs Justice Cockerill of that date, VTB Commodities Trading DAC v JSC Antipinsky Refinery, Petraco Oil Company, Sberbank of Russia and JSC Vo MachinoImport [2021] EWHC 2021 (Comm) ( the Jurisdiction Judgment). No......