VTB Commodities Trading DAC v JSC Antipinsky Refinery and Others
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Cockerill DBE |
| Judgment Date | 02 July 2021 |
| Neutral Citation | [2021] EWHC 1758 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
[2021] EWHC 1758 (Comm)
Mrs Justice Cockerill DBE
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
CASE SUMMARY
Cockerill J upheld the challenge to jurisdiction, finding that VTB could not properly be classified as a defendant in the relevant proceedings and that the Court did not have jurisdiction to permit it to bring Part 20 claims against Sberbank and Machinoimport.
Background
The procedural background to this case is of some complexity and is fully summarised at [12] to [81]. However, in brief, VTB Commodities Trading DAC (“VTB”) purchased VGO cargo from JSC Antipinsky Refinery (“Antipinsky”) under a series of Offtake Contracts and Prepayment Agreements between 2018 and 2019. By January 2019, VTB had made advance payment of €194.8 million for 22 shipments, which it suggested reflected Antipinsky's entire VGO output until July 2019. However, in February 2019, VTB became aware that Antipinsky was, ultimately, shipping VGO cargoes to Petraco Oil Company SA (“Petraco”).
VTB commenced six (now largely defunct) LCIA arbitrations against Antipinsky pursuant to the Offtake Contracts and Prepayment Agreements on 29 April 2019. On the same day, VTB applied to this court, under section 44 of the Arbitration Act 1996, for a Worldwide Freezing Order against Antipinsky (the “WFO”) and a mandatory interim injunction requiring Antipinsky to deliver a particular VGO cargo (the “Polar Rock Cargo”) to VTB, pending final determination of VTB's claims in arbitration (the “Cargo Injunction”).
Both the WFO and Cargo Injunction were granted. However, on 8 May 2019, Petraco, intervening on the basis that it was entitled to the Polar Rock Cargo, applied to vary the WFO, to set aside the Cargo Injunction, and for an enquiry as to damages under VTB's cross-undertaking. VTB issued a cross-application seeking an order for sale of the Polar Rock Cargo. Ultimately, the parties reached a compromise under which the WFO was varied (removing a prohibition on Antipinsky delivering VGO cargoes to third parties), the Cargo Injunction was set aside, and an order for sale of the Polar Rock Cargo to VTB's sub-buyers was made in exchange for VTB paying US$ 30 million into court. Further, the court directed an expedited trial to determine the parties' rights and obligations in respect to the Polar Rock Cargo and/or the monies paid into court (the “Cargo Trial”).
In its pleadings in the Cargo Trial, Petraco relied upon contracts between Antipinsky and JSC VO Machinoimport (“Machinoimport”) and onward sale contracts between Machinoimport and itself to demonstrate title to the Polar Rock Cargo. VTB argued that these contracts were void, as they were entered into by Antipinsky and Machinoimport in breach of the duty of good faith under Russian law. In particular, VTB alleged that each of Antipinsky and Machinoimport knew that the relevant cargo was ‘booked’ to VTB at the time the contracts were entered into and were engaging in a fraudulent ‘double selling scheme’. In addition, VTB alleged that Sberbank of Russia (“Sberbank”), Antipinsky's largest creditor and the entity which, VTB suggested, controlled Antipinsky at the relevant time, and Machinoimport had made fraudulent representations to induce VTB to make further prepayments in this period.
VTB counterclaimed against Petraco seeking a declaration that Petraco had no interest in the Polar Rock Cargo and tortious damages, alleging that Petraco had procured Antipinsky to breach its contractual obligation to deliver VGO cargoes to VTB. In addition, on 1 August 2019, VTB applied to join Machinoimport and Sberbank as Part 20 Defendants to the Cargo Trial. This application was granted by Teare J on 5 May 2020 and Sberbank and Machinoimport applied to set aside that order, by way of a challenge to jurisdiction.
Issue 1: Is VTB a defendant in the Cargo Trial for the purposes of Part 20?
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