Oxus Gold Plc; Norox Mining Company Ltd v Maples Finance BVI Ltd; Commonwealth Trust Ltd; Mossack Fonseca & Company BVI Ltd; Trustnet (British Virgin Islands) Ltd; Portcullis Trustnet BVI Ltd; Trident Trust Company BVI Ltd; Morgan & Morgan Trust Corporation Ltd [Eastern Caribbean Supreme Court]
| Jurisdiction | British Virgin Islands |
| Judge | HARIPRASHAD-CHARLES J,Indra Hariprashad-Charles |
| Judgment Date | 09 November 2006 |
| Docket Number | Claim No. BVIHCV2006/0213 |
| Court | High Court (British Virgin Islands) |
| Date | 09 November 2006 |
THE EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE (CIVIL)
Before: Her Ladyship Justice Indra Hariprashad-Charles
Claim No. BVIHCV2006/0213
Mr. Daniel Wise of Martin Kenney & Co. for the Claimants/Applicants
Mr. Michael Pringle and Mrs. Marisol Marsh of Maples & Calder for the Second Defendant, Commonwealth Trust Limited
Cases Considered and referred to in the Judgment:
1. Norwich Pharmacal Co. v Commissioners of Customs & Excise [1974] A.C. 133.
2. Axa Equity and Law Life Assurance Society v National Westminster Bank [1998] P.N.L.R. 433.
3. The President of the State of Equatorial Guinea and another v The Royal Bank of Scotland International (a company incorporated in Jersey) and others [2006] UKPC 7—Judgment delivered on 27 February 2006.
4. Bankers Trust Co. v Shapira and others [1980] 3 All ER 353.
5. Ashworth Security Hospital v MGN Limited [2002] UKHL 29—Judgment delivered on 27/7/2003.
6. Morgan and Morgan Trust Corporation Limited and Fiona Trust & Holding Corporation et al BVI Civil Appeal No. 3 of 2006—Judgment delivered on 25 September 2006.
CATCH WORDS:
Application to discharge or vary Norwich Pharmacal/ Bankers' Trust Order — Identity of certain wrongdoers not known — Whether the entity about which the information is sought is involved in the wrongdoing — Is the Second Defendant mixed-up in the wrongdoing — Relief is discretionary — Relief available only where no other remedy is available
HEADNOTE:
The Court granted a Norwich Pharmacal/Bankers Trust Order (‘the Order’) against the Defendants on the application of the Claimants, to assist them in the identification of certain ultimate tortfeasors and to investigate alleged wrongs committed against them in Kyrgyzstan.
The background to this Order was the ownership of certain valuable gold mining rights in Kyrgyzaltan. In September 1998, the Second Claimant executed a Joint Venture Agreement (‘JV Agreement’) with a Kyrgyz state-owned entity, Kyrgyzaltan. The JV Agreement led to the formation of Talas Gold Mining Company (‘Talas’). Between 2000 and 2004, Talas secured various licences to mine gold from the Kyrgyz Government. In August 2004, the Kyrgyz Government annulled the gold Mining Licence. On 14 November 2005, the Kyrgyz Government informed the Claimants that the licence would not be reinstated. At the same time, the Claimants were approached by a company, Strategic Investment Group (‘SIG’) which is said to be a fund rather than a gold mining company and claimed to have no relation to the Kyrgyz Government. Despite this claim, SIG notified the Claimants that it had been informed by the Kyrgyz Prime Minister and Deputy Prime Minister that if SIG acquired the Claimants' shares in Talas, SIG would not have to submit to any tender process. SIG offered to buy their interest in the Jerooy mine by paying only the value of their $US50m investment less depreciation. Oxus refused to sell its shares at this price as its interest was projected to be worth $US265m. Global G.O.L.D, a company associated with SIG is said to have signed a Joint Venture Contract for the development of the Jerooy Mine with Kyrgyzaltan. Throughout these negotiations SIG refused to reveal the identity of its clients; although subsequently it emerged that these clients were undisclosed Russian and Georgian oligarchs who had financed the recent revolution in Kyrgyzstan. Certain internet research and media reports have indicated that one of the oligarchs may be Mr. Boris Berezovsky, operating through one or more BVI entities. One such entity is ‘Salford’, or ‘Salford Continental’.
The Second Defendant, Commonwealth Trust Limited operates as the Registered Agent for Salford. It applied to discharge or to vary the Order. It submitted that the Claimants knew the identity of the wrongdoers and in those circumstances no Order should have been granted. It alleged that the Claimants (i) had presented insufficient evidence to justify the grant of the Order and (ii) had failed to show how Salford, had been complicit in the alleged wrongs committed against the Claimants. The Second Defendant's Compliance Officer had deposed that, based on the records available, there was no link between two of the key individuals identified by the Claimants as being involved in the wrongs of which they complain, and Salford. It further submitted that the Norwich Application amounted to no more than a ‘fishing expedition’ and that providing services as the Registered Agent did not amount to the facilitation of any wrong committed by one of its clients as it was no more than a repository of corporate information and therefore cannot be mixed up in their wrongdoing.
The Claimants submitted that in addition to seeking the identity of the unknown wrongdoers, the Norwich jurisdiction provides for a Norwich respondent to provide ‘full information’. The Claimants argued that Salford appears to be involved in serious wrongs against the Claimants and that without the Registered Agent, Salford could not act.
HELD:
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1. The object of the Claimants' application to identity of the alleged unknown and unidentified wrongdoers fit squarely within the description of the Norwich Pharmacal/Bankers Trust relief.
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2. Salford is an investment company. There is an interconnection between Salford and SIG with both the known and unknown oligarchs. SIG is connected to Global G.O.L.D. The investors in SIG and the investment groups linked with SIG have not been identified. Therefore, Salford is or might be involved in the wrongdoing alleged by the Claimants.
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3. The Applicant, as the registered agent of Salford and is the recipient of correspondence, money and court process for whoever is the true controlling mind of Salford. Documents and information held by the Applicant are likely to reveal the identity of the beneficial owner of Salford, or further links in the chain of control; which the Claimants intend to pursue. The Applicant therefore, is involved, albeit innocently, in the wrong committed against the Claimants.
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4. The Norwich Pharmacal jurisdiction is discretionary. It is an equitable remedy. A wrong has been committed against the Claimants. Without the Norwich Pharmacal Order, the Claimants will be unable to identify the true beneficial owners of Salford and to pursue their remedies. It is therefore just and convenient in the interest of justice to grant the relief prayed for.
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5. A Norwich Order should only be granted when no other procedure would achieve the ends of justice. From the information before the Court there are no existing proceedings wherein discovery or the information sought is available anywhere in the world. Salford is not a party to the BIT Arbitration in London.
On 11 September 2006,I granted a wide-ranging Norwich Pharmacal/Bankers Trust Order (‘the Order’) compelling the Defendants to disclose, produce and furnish various documentation and information to enable the Claimants to, among other things:
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a) identify, trace and preserve the entire chain of beneficial title to certain assets which were paid for by the Claimants and which include certain valuable rights to develop and exploit at the Jerooy gold mine in the Talas region of the Kyrgyz Republic (the ‘Jerooy Project’), and which would appear to have been unlawfully appropriated and taken from the Claimants;
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b) gather information necessary to investigate and discover all material facts associated with the wrongs that appear to have been visited on the Claimants in connection with the unlawful deprivation of the rights acquired with funds belonging to the Claimants, including all facts and documents pertaining to the ownership, assets, affairs and administration of all the companies listed in Schedule ‘A’ to the proposed Order; and
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c) identify apparent wrongdoers, facilitators and all other persons or entities who have acted knowingly or unknowingly, in concert with any of the persons listed in Schedule A to the Order, or in any fashion whatsoever, to cause harm to the Claimants.
The background facts are well encapsulated in the first affidavit of Mr. William Trew, Chief Executive Officer of Oxus Gold Plc (‘Oxus’), filed on 28 August 2006 and which I appreciatively adopt.
In 1997, Oxus entered into negotiations with the Kyrgyz Republic government to develop a potentially costly gold mine known as the Jerooy Mine in Kyrgyzstan (the ‘Jerooy Mine’) which was described in Oxus' 2005 Annual Report as having a reserve of 9.88 million tonnes of ore equating to 2.38 million ounces of gold with an estimated value in the region of US$488 million.
On 9 September 1998, a Joint Venture Agreement (the ‘JV Agreement’) was signed between a wholly owned Cayman subsidiary of Oxus, Norox Mining Company Limited (‘Norox’) and Kyrgyzaltan (a Kyrgyz state concern owned and controlled by the government) creating Talas Gold Mining Company (‘Talas’), a company registered inKyrgyzstan for the purpose of developing the Jerooy Mine. Norox has 66.7% interest in Talas while Kyrgyzaltan has the remaining 33.3%.
Between 2000 and 2004, Talas secured various approvals necessary for the development of the Jerooy Mine including a right to use the mineral resources at Jerooy Mine (the ‘Mining Licence’) dated 6 March 2000, License Agreement No. 3 dated 6 May, 2003, and a Construction Licence dated 24 May 2004. The Mining Licence was purportedly annulled by the Kyrgyz government (for the second time) on 3 August 2004 prior to completion of the Jerooy...
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