Joint Stock Company Alfa-Bank v Emmerson International Corporation

JurisdictionBritish Virgin Islands
CourtHigh Court (British Virgin Islands)
JudgeJack, J
Judgment Date06 April 2020
Neutral CitationVG 2020 HC 27
Docket NumberCLAIM NO. BVIHC (COM) 2019/0127
Date06 April 2020

EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE

(COMMERCIAL DIVISION)

CLAIM NO. BVIHC (COM) 2019/0127

Between:
Joint Stock Company Alfa-Bank
Claimant
and
(1) Emmerson International Corp
(2) Batios Holdings Ltd
(3) Brasspoint Trading Ltd
(4) Otoba Assets Ltd
(5) AVS Partners Global Consulting Group Ltd
Defendants
Appearances:

Mr. Paul Lowenstein QC, with him Mr. Gerard Clarke of Collis Crill for the claimant (the respondent)

Mr. Andrew Emery of Emery Cooke for the second and third defendants (the applicants)

No appearance for the first, fourth and fifth defendants

Mr. Shane Donovan of Mourant Ozannes for the receivers, Mr. Borrelli and Mr. Wilson

1

Jack, J [Ag.]: On 14 th October 2019, Ann-Marie Smith J granted a world-wide freezing injunction against the second to fifth defendants in the sum of €120 million. By an order of the same day, she appointed Cosimo Borrelli and Colin Wilson as interim receivers of those defendants. The orders were continued by Wallbank J on 17 th and 28 th October 2019. Before me, by an application of 14 th January 2020, the second and third defendants seek to discharge the orders.

2

In this judgment I shall describe the parties as follows:

Mr. Abyzov: Mikhail Anatolyevich Abyzov, a former Russian government minister and at least at one time a wealthy businessman, currently in prison in Russia awaiting trial on unrelated matters

Alfa-Bank: the claimant

The Andex Foundation: a Liechtenstein foundation founded for the benefit of Mr. Severilov's family

Batios: the second defendant, a BVI company, the beneficial owner of which is in dispute

Mr Borrelli: Cosimo Borrelli, one of the interim receivers of Batios and Brasspoint

Brasspoint: the third defendant, a BVI company, the beneficial owner of which is in dispute

Mr. Cabrera: Armando Rogel Vila Cabrera, said to be an associate of Mr. Severilov

Ms. Costi: Miranda Costi, said to be an associate of Mr. Severilov

Dayneswood: Dayneswood Investments Ltd, a Cypriot company beneficially owned by Mr. Abyzov

E4: the JSC E4 Group, a Russian entity, said to be beneficially owned by Mr. Abyzov

Emmerson: the first defendant, a BVI company beneficially owned by Mr. Abyzov

Ms. Eremina: Marina Eremina, said to be an associate of Mr. Abyzov and said to hold 4 per cent of the shares of Brasspoint

Mr. Fridman: Mikhail Fridman, a major owner of Alfa-Bank

Hillestrato: Hillestrato Investments Ltd, a Cypriot company in the beneficial ownership of Mr. Abyzov

Joule: Joule Consultants Pte Ltd, a Singapore company beneficially owned by Mr. Abyzov

Ms. Kalinkina: Natalia Kalinkina, a sometime director of Brasspoint

Mr. Khan: German Khan, a major owner of Alfa-Bank

Komaro: Komaro Pte Ltd, a Singapore company beneficially owned by Mr. Abyzov

Leguma: Leguma Ventures Ltd, a BVI company, said to have held shares in Brasspoint

Mr. Malyshev: the president of E4, said to have been the subject of attempted suborning by Alfa-Bank

Oriden: Oriden Holdings Ltd, a BVI company beneficially owned by the Andex Foundation

Mr. Papademetriou: Demetrakis Papademetriou, a director of Sundance resident in Cyprus

Mr. Parinov: Sergey Parinov, a sometime director of Brasspoint and an associate of Mr. Titarenko

Ru-COM: AO Ru-COM Invest, a Russian company beneficially owned by Mr. Abyzov

Mr. Severilov: Andrey Vladimirovich Severilov, who claims to be, either in his own name or on behalf of his family the beneficial owner of Batios and 96 per cent of Brasspoint

Sundance: Sundance Services Ltd, a corporate services company incorporated in St Vincent and the Grenadines

Mr. Titarenko: Andrey Titarenko, a one-time associate of Mr. Abyzov, but who has since fallen out with him

Ms. Uryupina: Victorya Uryupina, an associate of Mr. Abyzov

Mr. Wilson: Colin McBeath Wilson, one of the interim receivers of Batios and Brasspoint

The background
3

Alfa-Bank says that it is the victim of a US$120 million fraud. It lent money to E4 in reliance on inflated financial statements. Alfa-Bank alleges that E4 is beneficially owned by Mr. Abyzov and that Mr. Abyzov is liable for fraudulently borrowing the money. The claims against Mr. Abyzov are currently being litigated in Cyprus. Mr. Abyzov denies fraud and says that he is the victim of a vendetta by Mr. Fridman and Mr. Khan.

4

Alfa-Bank has obtained world-wide freezing orders in Cyprus and Singapore against various companies beneficially owned by Mr. Abyzov. The freezing orders obtained before Smith J as extended by Wallbank J were all forms of Black Swan relief 1 against the five defendants to the current action. The appointment of interim receivers was in support of the Black Swan relief.

5

For the purposes of the current application Batios and Brasspoint accept that in principle Alfa-Bank is entitled to Black Swan relief against assets beneficially owned by Mr. Abyzov. The point these two companies take is that they are not beneficially owned by Mr. Abyzov. Rather they are beneficially owned by Mr. Severilov, who is unconnected with Mr. Abyzov.

The delay
6

Mr. Lowenstein QC on Alfa-Bank's behalf says that Batios and Brasspoint have delayed too long to bring their application to discharge. I should therefore dismiss the application on that ground alone. The relevant chronology, he says, is this. On 23 rd September 2019 Alfa-Bank obtained a world-wide freezing order against Emmerson as well as an order appointing interim receivers over Emmerson. On 14 th October 2019, it obtained world-wide freezing orders against, and the appointment of receivers, over, inter alia, Batios and Brasspoint. 17 th October 2019 was the return date on the Emmerson orders. On that occasion Emmerson,

Batios and Brasspoint all appeared, represented by counsel. The Emmerson, Batios and Brasspoint return dates were adjourned to 28 th October 2019, when the orders were continued until “trial or further order”. Batios' and Brasspoint's application was only issued on 14 th January 2020, which, Mr. Lowenstein QC submitted, is far too late: they should have disputed the granting of the injunction on the adjourned return date of 28 th October
7

The authorities on which Mr. Lowenstein QC relied do not, in my judgment, show that there is some mechanical rule that a party is automatically debarred from seeking to set aside a freezing order or an order appointing interim receivers, if that party does not argue the matter fully at the first possible opportunity. The first authority cited, Network Multimedia Television Ltd v Jobserve Ltd 2, was a case of an ordinary ex parte injunction, not a case of a freezing order. Neuberger J (as he then was) said, quite uncontroversially in my judgment, that generally cross-applications for continuance and for setting aside should be heard together, but did not set down — or purport to set down — any invariable rule to that effect. The second is MacKay v Ashwood Enterprises Ltd 3 which concerned a costs order and is very far removed from the current case.

8

I agree with Mr. Lowenstein QC to this extent. If there is a return date on an ex parte application and the Court on the return date, after hearing full argument with perfected evidence from all parties, decides to continue the injunction until trial or further order, then the party enjoined may in general only seek to have the injunction set aside or varied if there is a change in circumstances. The Court retains a discretion to hear an application to set aside or vary, but will not usually exercise that discretion when there has been a full hearing on the merits. 4

9

In the current case there was no full merits hearing. The return date of 28 th October was listed for only half an hour. Mr. Carroll of counsel appeared for Emmerson. Mr. Emery appeared for the other four defendants. Various matters were raised by them. All five defendants had potential applications. At page 28 of the transcript, the judge pointed out: “We've got four minutes before 1:00 o'clock.” Mr. Clarke, appearing for Alfa-Bank, said:

“Anyway, My Lord, we can't be expected to deal substantively with any of these matters today. The Court has to hold the ring. The Court should, in my submission, continue the injunction and receivership order until some future date and we should try and agree some timetabling.”

10

Wallbank J then noted that both Mr. Carroll and Mr. Emery had applications and said:

“What I am going to order today is that the injunction, the receivership and injunction shall continue until further order with costs reserved. And if you [clearly indicating Mr. Carroll and Mr. Emery] make your applications, file them and think realistically that the shorter the time I am asking for, for a hearing, the more likely it is to come on earlier and you can get earlier hearings.”

11

In my judgment, this shows that the Court was adjourning consideration of the merits of continuing the orders. Mr. Lowenstein QC points to a further hearing on 16 th December 2019 before Wallbank J. This was an application by Emmerson to replace the receivers and to have the cross-undertaking in damages given by Alfa-Bank fortified. It was attended by Mr. Emery on behalf, inter alia, of Batios and Brasspoint, but neither of these companies had a live application before the Court. It is true that Mr. Severilov had on 11 th December 2019 sworn his first affidavit in these proceedings, however, since neither Batios nor Brasspoint were making any application at the hearing on 16 th December, this point seems to me to be irrelevant.

12

Whilst it is true that there was a delay until 14 th January 2020 in Batios and Brasspoint issuing their application, there is in my judgment no prejudice to Alfa-Bank or to the administration of justice generally such as to debar Batios and Brasspoint under the overriding objective from making their application. Indeed, as I pointed out in Re Wardour Trading Ltd; Cohen v Nekrich 5, “the more marginal the case on the merits, the more work...

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