Alfa Telecom Turkey Ltd v Cukurova Finance International Ltd and Another

JurisdictionBritish Virgin Islands
Judgment Date12 January 2009
Neutral CitationVG 2009 HC 1
CourtHigh Court (British Virgin Islands)
Docket NumberClaim Nos. BVIHCV2007/0072 & 0119
Date12 January 2009



Claim Nos. BVIHCV2007/0072 & 0119

Alfa Telecom Turkey Limited
Claimant (Claim 72)
Defendant (Claim 119)
(1) Cukurova Finance International Limited
(2) Cukurova Holding As
Defendants (Claim 72)
Claimants (Claim 119)

Mr. Stephen Smith QC, Mr. Robert Levy, Mr. Samuel Jackson Husbands and Mr. Oliver Clifton of Walkers for the Claimant in Claim 72 and Defendant in Claim 119

Mr. Kenneth MacLean QC, Ms. Arabella di lorio and Mr. James Nadin of Maples & Calder for the Defendants in Claim 72 and the Claimants in Claim 119

Cases referred to and considered in the Judgment:

Boston Life and Annuity Company Limited v Dijon Holdings Limited , BVIHCV2006/0070—delivered on 14 May 2007.

Brantley Inc. v Antarctica Asset Management Ltd. , BVIHCV2007/0227—delivered on 9 May 2007.

Burger King Corp. v Hungry Jack Pty. , Court of Appeal New South Wales, CA40924/99; CA4325/00—delivered on 21 June 2001.

Campbell v Holyland (1877) 7 Ch D 166 .

Downsview Nominees Ltd. V First City Corporation Ltd. , (1993) AC 295.

Glencore Grain Rotterdam BV v Lebanese Organization for International Commerce , (1997) 4 All ER 514.

Hitchens, Harrison, Woolston & Co. v Jackson & Sons (1943) AC 266 .

Hooper v Herts (1906) 1 Ch. 549 .

Macmillan Inc. v Bishopgate Investment Trust Plc . (No. 3) (1995) 1 WLR 975.

Meretz Investments et al v ACP Ltd. Et al (2006) EWHC 74.

Nash v Eads (1880) 25 Sol J 95 .

Palk v Mortgage Services Funding Ltd. , (1993) Ch 330.

Pentium (BVI) Limited and Landcleve Corporation v The Bank of Bermuda Limited , BVIHCV2002/0122-delivered on 30 April 2003 (unreported).

Quennell v Maltby (1979) 1 WLR 318 .

Raja v Austin Gray (2003) 1 EGLR 91 .

Royal Bank of Canada v Helenair Caribbean Limited , St. Lucia HC No. 654 of 2001-delivered on 23 September 2002.

Swain v Hillman and Another (2001), 1 All ER, 91 .

Shiloh Spinners v Harding , (1973) AC 691.

Taylor v Oakes Roncoroni and Co. , (1922) 127 LT 267.

Three Rivers District Council v Governor and Company of the Bank of England , (2001) UKHL 16.

WB Nominees Limited and Others v Blue Ribbon Assets Limited , BVIHCV 2002/0154 and BVIHCV2004/0030-delivered on 31 August 2004 (unreported)

Westdeutsche Landesbank v Islinton London Borough Council , (1996) AC 669.


Commercial law — application for summary judgment — loan to company secured by equitable mortgage of shares — remedy of appropriation — right granted by equitable mortgage — collateral provider registered as legal owner of shares at time of attempted appropriation — triable issues as to the existence of events of default at time of purported appropriation — mortgagee entitled to registration to perfect its security — breach of contract — failure to provide opportunity to remedy breach — prevention of unlawful enforcement cannot itself constitute an event of default justifying enforcement — triable issues as to mortgagee's good faith — triable issues as to availability of relief in equity.


By an agreement dated 28 September 2005 between Alfa (the claimant in Claim No. BVIHCV2007/0072 (‘Claim 72’) and the defendant in Claim No. BVIHCV2007/0119 (‘Claim 119’)) and CFI and CH (the defendants in Claim 72 and the claimants in Claim 119), Alfa, as the lender, agreed to provide CFI, as the borrower, a secured dollar term loan facility in the sum of US$1.352 billion (‘the Facility Agreement’). On 25 November 2005 that sum was advanced to CFI, and as security for the loan under the Facility Agreement, four charges were created. Pursuant to these charges, CH granted to Alfa security over its shares in CFI, and CFI granted to Alfa security over its shares in CTH. It is agreed that the charged shareholdings confer control over a significant stake in Turkcell, the largest mobile telecommunications company in Turkey.

On the 24 November 2006, the first payment of interest under the Facility Agreement was due and was paid to Alfa. On 16 April 2007 Alfa purported to accelerate the loan alleging that the defendants had committed a number of events of default under the Facility Agreement (it was not disputed that at this time, CFI had paid to Alfa all sums due, and the next payment was not due until 26 November 2007).

On that same day, Alfa issued two claims: (a) Claim 72—by which it sought repayment of all sums due under the Facility Agreement and (b) Claim 73 (BVIHCV2007/0073)—by which it sought declarations that it was entitled to be registered as legal owner of the Charges Shares and rectification of the relevant share registers to reflect its ownership. Alfa argued that by doing so, it was seeking to perfect its security. The defendants applied for and obtained stop notices because of this. However, Alfa purported to appropriate the Charged Shares on 27 April 2007.

On 17 May 2007 CFI gave notice and on 25 May 2007 CFI tendered repayment to Alfa for the outstanding principal amount of the loan under the Facility Agreement with interest. However, Alfa stated that it was too late, as payment was demanded from 16 April 2007 and was not paid, and that the equity redemption in the loan was subsequently extinguished the day they appropriated the shares.

On 25 May 2007, the defendants issued Claim 119 seeking an order that Alfa accept the repayment offered to Alfa. The defendants then issued an application for the trial of preliminary issues in Claim 119 concerning Alfa's purported appropriation and for a stay of actions and the court gave judgment in favour of the defendants. Alfa appealed this decision and the Court of Appeal gave judgment in favour of Alfa.

The defendants made a motion for leave to appeal to the Privy Council, and this was granted to them on 2 June 2008. Before knowing the outcome of the said matter before the Privy Council, Alfa made an application to the Court for summary judgment pursuant to CPR 15 against the defendants, on the issues raised in paragraphs 34A to 34O and 47A to 47P of Alfa's Re-Re-Amended Statement of Claim in Claim 72 on the ground that the defendants have no real prospect of success in respect of any element of Alfa's claim or its own claim.

  • 1. The application for summary judgment, on the issues raised in paragraphs 34A to 34O and paragraphs 47A to 47P of Alfa's Re-Re-Amended Statement of Claim in Claim 72 is dismissed since there are many conflicting facts and in-depth issues to be dealt with in this matter, which are as follows:

    • (a) The events of default that are relied on in this application, which are, the refusal/failure of the defendants to (a) register Alfa as the holder of the Charged Shares and (b) enforce Alfa's security, are triable issues, since if those events of defaults did not occur then Alfa would not have been entitled to be registered as holder of the Charged Shares and would not have been entitled to enforce its security.

    • (b) Alfa cannot now rely on the recent event of default to justify appropriating the Charged Shares before such reason/default had been available at that time.

    • (c) The issue as to whether the reason/breach was factually available at the time Alfa purported to appropriate the share is one fit for trial.

    • (d) The concept of appropriation is an untested and novel remedy which should be tested in a court of law and not summarily granted. The law of appropriation is in a state of development.

    • (e) The issue of whether Alfa acted in bad faith, when it accelerated the payment of the loan and when it purported to appropriate the Charged Shares is a triable one.

    • (f) The availability of the equitable jurisdiction of relief from forfeiture and re-opening of foreclosure cannot be determined on a summary basis.

  • 2. A Type 2 mortgage (where the mortgagee is entitled to be registered as the legal owner of the shares, thereby perfecting his security by making it a legal mortgage) was created and, therefore, Alfa had the right to perfect its security at any time without recourse to the defendants. Also Alfa was entitled to be registered as holder of the Charged Shares and convert its equitable mortgage into a legal mortgage whether or not the defendants were in default.

  • 3. There is no basis, from the evidence, on which Alfa was entitled to appropriate the Charged Shares when the defendants had categorically disputed each and every event of default. The decision of the Court of Appeal that Alfa had such a right was based on the assumption that there was at least one event of default. If there was no event of default, then appropriation would have been unlawful and unreasonable.

  • 4. The Application to dismiss Claim 119 is also dismissed.


On 6 December 2007, Alfa Telecom Turkey Limited (‘Alfa’) being the Claimant in Claim No. BVIHCV2007/0072 (‘Claim 72’) and the Defendant in Claim No. BVIHCV2007/0119 (‘Claim 119’) applied, pursuant to CPR 15, for summary judgment on the issues raised in paragraphs 34A to 34O and 47A to 47P of Alfa's Re Re-Amended Statement of Claim in Claim 72 on the ground that Cukurova Finance International Limited (‘CFI’) and Cukurova Holding SA (‘CH’) (referred to together as ‘the defendants’) in Claim 72 and the Claimants in Claim 119 have no real prospect of success in respect of any element of Alfa's claim or its own claim.

The parties

Alfa is a privately-owned company incorporated in the British Virgin Islands (‘the BVI’). In December 2007, it was a wholly-owned subsidiary of the Alfa group, which is a conglomerate based in Russia. The Alfa group controls a diversified range of businesses, including telecommunications companies. It is ultimately controlled by Russian billionaire, Mikhail Fridman.


CFI is a private company incorporated in the BVI. It is a wholly owned subsidiary of CH, a private...

To continue reading

Request your trial
1 cases

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT