VTB Commodities Trading DAC (formerly VTB Capital Trading Ltd) v JSC Antipinsky Refinery
| Jurisdiction | England & Wales |
| Judge | Mr Justice Foxton |
| Judgment Date | 04 November 2022 |
| Neutral Citation | [2022] EWHC 2795 (Comm) |
| Docket Number | Case No: CL-2019-000281 |
| Court | Queen's Bench Division (Commercial Court) |
and
[2022] EWHC 2795 (Comm)
Mr Justice Foxton
Case No: CL-2019-000281
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (KBD)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Wolfson KC and Andrew Leung (instructed by Mishcon de Reya LLP) for the Intervener
The Claimant in person, represented with the permission of the court by Nick Hutt
Hearing dates: 28 October 2022 and 2 November 2022
Judgment Approved
by the court for handing down
(subject to editorial corrections)
This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be Friday 04 November 2022 at 14:00.
INTRODUCTION
The background to the applications before the court presents a study in procedural complexity. The applications themselves are:
i) By Mr Hutt, the Chief Executive Officer of the Claimant ( VTB) for permission to represent VTB at these hearings, the solicitors previously representing VTB having come off the record on 7 June 2022. This occurred because VTB is a sanctioned entity and no license has as yet been granted by the Office of Financial Sanctions Implementation ( OFSI) to enable it to pay legal fees.
ii) By the Intervener ( Petraco) for security for the costs of the trial ordered by Sir William Blair ( the Cargo Trial) to determine Petraco's application for an award of damages pursuant to the undertakings offered by VTB when obtaining injunctions from Mr Justice Waksman (on 29 April 2019) and Mr Justice Teare (30 April 2019).
iii) By Petraco for an order that VTB be required to serve a response to a Request for Further Information served on 23 February 2022 ( the RFI), in which Petraco seeks further information as to VTB's case on Russian law.
iv) By VTB, albeit it has been unable to issue an application notice because of the sanctions in place, to adjourn the security for costs application, and for extensions of the directions which would have the effect of vacating the Cargo Trial, currently listed for 23 May 2023.
After the hearing on 28 October 2022, it became apparent that on that day, OFSI had issued a “General Licence under the Russia Regulations and the Belarus Regulations Int/2022/2252300” ( the General Licence) in relation to the provision of legal services. That necessitated a further hearing at which submissions were made addressing the potential impact of the General Licence on the issues before the court.
PRELIMINARY RULINGS
I should deal with the first of those applications at the outset. I am satisfied on the material before me that VTB is not presently in a position to pay for legal representation in this jurisdiction, as a result of sanctions imposed by orders made pursuant to the Russia (Sanctions) (EU Exit) Regulations 2019 ( the 2019 Regulations). As I have stated, the solicitors previously acting for VTB (PCB Byrne ( PCBB)) have come off the record. The effect of the evidence before me is that neither that firm of solicitors nor counsel were willing to undertake this hearing without remuneration (assuming that the provision of legal services without remuneration would not contravene the 2019 Regulations). Nor can they be criticised for adopting that position.
In such circumstances, the court has a discretion to permit an appropriate person such as a director or an officer of the company to appear on its behalf pursuant to its inherent jurisdiction (and cf CPR 39.6 as to the position of an employee of the company at trial). It is often not practicable for litigants in person to conduct complex commercial litigation. As The Commercial Court Guide 11 th edition (2022) notes at [M.3]:
“Although rule 39.6 allows a company or other corporation with the permission of the Court to be represented at trial by an employee, the complexity of most cases in the Commercial Court generally makes that unsuitable. Accordingly, permission is likely to be given only in unusual circumstances, and is likely to require, at a minimum, clear evidence that the company or other corporation reasonably could not have been legally represented and that the employee has both the ability and familiarity with the case to be able to assist the court and also unfettered and unqualified authority to represent and bind the company or other corporation in dealings with the other parties to the litigation or with the Court.”
In this case, the matters which Mr Hutt wishes to raise on behalf of VTB concern issues of case management – which application should be determined at this hearing, what variations should be made to the directions for trial which have been given and the timing of the trial. I was satisfied that it was appropriate to give Mr Hutt permission to speak on VTB's behalf in relation to issues of that kind, and that it furthered the overriding objective of dealing with cases justly and at a proportionate cost to do so. In particular, I was satisfied that, as VTB's Chief Executive Officer, Mr Hutt has authority to act for VTB and is in a position to explain VTB's position on these issues. I was also satisfied that it would assist the court in resolving those issues if it heard submissions from VTB as well as from Petraco.
As I have mentioned, one consequence of the sanctions imposed on VTB is that it was unable to pay the fee necessary to issue an application notice. The exemptions from the requirement to pay fees do not provide for the position of a sanctioned party. This is becoming an increasingly common issue in the Commercial Court, while litigants wait for OFSI to determine their license applications. The matters which VTB wishes to raise through its draft application notice are all matters of case management, which it would be open to the court to raise of its own motion as part of the process of active case management. In these circumstances, I confirmed that VTB would be able to raise these issues at the hearing even though no application notice had been issued.
THE BACKGROUND
I am fortunate that 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). Nonetheless, for this judgment to make sense on a standalone basis, it is necessary to offer a brief summary of the events here.
The Injunctions
On 29 April 2019, VTB, obtained injunctive relief under s.44 Arbitration Act 1996 in respect of six LCIA arbitrations it had commenced against the Defendant, ( Antipinsky) which operated an oil refinery in Russia, arising from contracts for the purchase by VTB of oil from Antipinsky. VTB obtained two orders under s.44:
i) A Worldwide Freezing Order against Antipinsky ( the WFO).
ii) A mandatory injunction requiring Antipinsky to deliver a particular cargo of oil then on board the tanker Polar Rock ( the Polar Rock Cargo), to VTB ( the Cargo Injunction).
In the usual way, as a term of obtaining injunctive relief, VTB offered an undertaking in damages, in this case in the following terms:
“If the Court later finds that this Order has caused loss to the Respondent or any other person(s), and decides that the Respondent or that or those other person(s) should be compensated for that loss, the Applicant and Joint Stock Company VTB Capital Holding will comply with any order the court may make”.
Petraco is an oil trader who claims it was entitled to delivery of the Polar Rock Cargo. On 8 May 2019, it applied to intervene in these proceedings to vary the WFO (so that it did not apply to the Polar Rock Cargo) and discharge the Cargo Injunction, and for an order for the payment of damages pursuant to the undertaking. On 13 May 2019, VTB applied for an order permitting it to sell the Polar Rock Cargo and pay the proceeds into court by way of fortification of the injunctions.
These applications were scheduled to be determined at a hearing before Sir William Blair on 15 May 2019. It became clear that a key issue between VTB and Petraco was whether, at the time the Cargo Injunction was granted:
i) title in the Polar Rock Cargo remained with Antipinsky, such that VTB could injunct Antipinsky from delivering the cargo and Petraco had no legal right to delivery of the Polar Rock Cargo (and could not suffer loss by reason of any interference with such a right); or
ii) title in the Polar Rock Cargo had passed from Antipinsky to JSC Vo MachinoImport ( MachinoImport) from whom Petraco said that it had purchased the cargo, such that VTB had no basis to injunct delivery of the Polar Rock Cargo and Petraco had a legal right to delivery of the cargo.
In the event, the parties were able to agree a way forward which Sir William approved ( the Blair Order):
i) VTB was permitted to sell the Polar Rock Cargo.
ii) VTB was required to pay $30m into court to fortify the injunction ( the Secured Sums).
iii) The issue between VTB and Petraco as to who had what rights in relation to the Polar Rock Cargo was to be tried on an expedited basis, with a three-day estimate ( the Cargo Trial).
The Blair Order provided for:
“The expedited trial of the rights and obligations of the Claimant, the Defendant and the Intervener in respect of the Polar Rock Cargo and/or the Secured Sums including any losses that Petraco may have sustained under the cross-undertaking in damages and (for the avoidance of doubt) the Claimant's right to seek repayment of the monies paid into Court”.
While this order referred to...
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