Sibir Energy Plc Applicant/Claimant v (1) Gregory Trading SA (2) Richard Enterprises SA (3) Ferenco Investment & Services Ltd (4) Shaw Invest & Finance Corporation (5) Carroll Trading SA (6) Tranquillo Trading SA (7) Ojsc Siberian Oil Company (8) Roman Abramovich Respondents/Defendants

JurisdictionBritish Virgin Islands
JudgeHARIPRASHAD-CHARLES J
Judgment Date23 December 2005
Neutral CitationVG 2005 HC 17
Judgment citation (vLex)[2005] ECSC J1223-1
Docket NumberClaim No. BVIHCV2005/0174
CourtHigh Court (British Virgin Islands)
Date23 December 2005
[2005] ECSC J1223-1

THE EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE

(CIVIL)

Claim No. BVIHCV2005/0174

Sibir Energy PLC
Applicant/Claimant
and
(1) Gregory Trading SA
(2) Richard Enterprises SA
(3) Ferenco Investment & Services Limited
(4) Shaw Invest & Finance Corp.
(5) Carroll Trading SA
(6) Tranquillo Trading SA
(7) Ojsc Siberian Oil Company
(8) Roman Abramovich
Respondents/Defendants
Appearances:

Mr. Guy Philipps QC, with him Mr. Colin Mc Kie for the Applicant/Claimant

Mr. Mark Howard QC, with him Mr. Daniel Jowell and Mr. Phillip Kite for the Respondents/Defendants

HARIPRASHAD-CHARLES J
1

The Applicant, Sibir Energy PLC ("Sibir") applies to the Court for an Order against the 1 st, 2 nd, 3 rd and 7 th Respondents to extend the interim injunctive order dated 13 July 2005 as varied on 21 July 2005 pending the hearing of an appeal by the Court of Appeal of the Eastern Caribbean Supreme Court.

Procedural history of application for interim relief
2

Sibir commenced these proceedings against the Respondents on a without notice application dated 12 July 2005. The application sought various forms of injunctive relief. On 13 July 2005, the Court granted the interim injunctive relief sought against the Respondents ("the Order").

3

On 18 July 2005, the Respondents applied to the Court to discharge the Order. At the same time, they applied to strike out or dismiss the claims and to dispute and/or contest the jurisdiction of the Court.

4

By Order dated 21 July 2005, the Court ordered by consent that certain paragraphs of the Order would be discharged upon the provision of certain limited and confidential undertakings proffered by some of the Respondents. Directions were given for the hearing of the Respondents' applications as well as Sibir's application for interim relief.

5

Between 19–21 September 2005, the hearing took place in respect of the Respondents' applications to strike out or for reverse summary judgment and to dispute and/or contest the jurisdiction of the Court. At the said hearing, Sibir applied to continue the Order. No substantive hearing of the application took place as the Respondents undertook that the undertakings in the Order of 21 July 2005 shall continue until the earlier of 25 November 2005 or 7 days after the delivery of the Judgment upon the Respondents' application. It was ordered that Sibir's application for interim relief should be heard immediately after delivery of judgment upon the Respondents' applications.

6

On 14 November 2005, Sibir issued an application notice returnable on 24 November 2005 for interim relief. The relief sought goes no further than the scope of the confidential undertakings scheduled to the Order of 21 July 2005 and constitutes relief of a narrower kind than that obtained on the original without notice application on 13 July 2005. It also precedes the outcome of the Respondents' applications which were heard on 19–21 September 2005.

7

On 29 November 2005, the Court delivered a written Judgment ("the Judgment"). The Judgment has (i) granted the applications of the 1 st, 2 nd, 4 th and 5 th Respondents ("the BVI Respondents") for reverse summary judgment and (ii) dismissed the claims against the remaining 3 rd, 6 th, 7 th and 8 th Respondents ("the Foreign Respondents") for want of jurisdiction.

8

Sibir maintains its application for interim relief against some of the Respondents, namely the 1 st, 2 nd, 3 rd and 7 th Respondents. In effect, Sibir seeks an Order to maintain the status quo pending appeal in order to ensure that any decision by the Court of Appeal in its favour is not rendered nugatory.

9

Sibir asserts that the Court should continue the interim relief sought for the following reasons:

  • a) The evidence establishes a strong case of a particularly large and egregious fraud perpetrated on Sibir by the Respondents. There is, at the very least, a serious issue to be tried. Sibir contends that at the 19–21 September hearing, the Respondents did not seek to suggest that there was no serious issue to be tried, save for the jurisdictional and conflicts of laws issues.

  • b) Damages would not be an adequate remedy for Sibir. Sibir says that the Respondents declare that any order in Sibir's favour against them could be satisfied by Sibneft alone; it being one of the largest oil companies in Russia with total assets in excess of US$8.5 billion and net income alone in excess of US$2.2 billion. Sibneft maintains that it has plenty assets to satisfy any judgment against it. But Sibir says that its claim is for participation interests in Sibneft-Yugra. Sibir says that the participation interests held by the 1 st, 2 nd and 3 rd Respondents are the only valuable assets of which Sibir is presently aware within the jurisdiction of this Court. Sibir says that however deep Sibneft's pockets might be, its riches lie not in the BVI but in Russia, so any judgment of this Court against Sibneft cannot effectively be enforced in Russia. 1

  • c) Sibir alleges that, if for any reason, the interim relief against the 1 st, 2 nd or 3 rd Respondents should not have been granted, any loss suffered by the Respondents

    may be compensated in damages. In addition, the Respondents are protected in the usual undertaking as to damages but, in any event, they have not advanced any convincing reason why they may suffer loss if the 1 st, 2 nd and 3 rd Respondents are restrained from dealing with the participation interests in Sibneft-Yugra.
  • d) To the extent that it is necessary to consider the balance of convenience, Sibir asserts that the balance falls firmly in granting the relief sought. It says that the Respondents will suffer no loss, or at least no loss that cannot be compensated in damages. On the other hand, if the relief is not obtained, there is a real risk that the 1 st, 2 nd and 3 rd Respondents will dissipate the participation interests which are held by them. Sibir's allegation is that it is worried that these Respondents would take steps to repeat the fraud that forms the basis of its claim, and either transfer the participation interests away from the 1 st, 2 nd and 3 rd Respondents or engineer a further re-arrangement of the participation interests of Sibneft-Yugra so as to frustrate its claim. 2

10

The terms of the relief are to be found in the draft order as amended. They are as follows:

"It is hereby ordered that for 14 days from today's date and within that time, the Claimant/Applicant lodges a Notice of Appeal with the Court of Appeal then for 14 days after the grant or refusal of leave to appeal by the single Judge:

  • 1. The 1 st, 2 nd and 3 rd Respondents:

    • a) will not dispose of, or transfer, or in any way whatsoever deal with the participation interest in LCC Oil Company ("Sibneft-Yugra") which they respectively own;

    • b) will not take or procure or cause to be taken, whether by exercising or purporting to exercise (whether by itself or any other person or entity pursuant to any authority granted by it at any time) any right to vote as a holder of a participation interest in Sibneft-Yugra or otherwise, any step intended to have the consequence that the net assets of Sibneft-Yugra or the value of any participation interest in Sibneft-Yugra may be diminished;

    • c) will inform the Court and the Claimant's solicitors immediately it is informed of any intention by Sibneft-Yugra to issue a dividend or make a distribution of profits.

  • 2. The 7 th Defendant:

    • a) will not take any step intended to have the consequence that the net assets of Sibneft-Yugra or the value of any participation interests in Sibneft-Yugra may be diminished;

    • b) will not take or procure or cause to be taken any step intended to have the consequence that any of the 1 st, 2 nd or 3 rd Respondents shall act in contravention of or frustrate any of the orders in respect of them, set out in paragraph 1 above.

11

It cannot be disputed that the relief sought is very limited. Mr. Philipps QC emphasizes that if the interim relief is not granted, then the Respondents are at liberty to put the participation interests in Sibneft-Yugra beyond the reach of Sibir and/or this Court and "justice will be frustrated" should Sibir succeed on appeal because the only asset in this jurisdiction would have already been dissipated. This is indeed an attractive argument.

12

The Respondents assailed the application for a freezing order on the ground of lack of jurisdiction to grant it. Furthermore, say the Respondents, even if the Court were to have jurisdiction, it should not exercise that jurisdiction to grant the interim relief sought in light of the Judgment.

No Jurisdiction
13

Two issues arise for consideration under the generic heading of jurisdiction namely:

  • a. In light of the Applicant's intention to seek leave to appeal the Judgment, should the present application for interim relief be made to the single judge of the Court of Appeal?

  • b. Is there a pre-existing cause of action since the Judgment (i) granted the application of the BVI Respondents for reserve summary judgment and (ii) dismissed the claims against the Foreign Respondents for want of jurisdiction?

a. Leave to appeal
14

Much time was spent arguing whether the present application for interim relief should have been made to a single judge of the Court of Appeal. CPR 62.16 (1) makes provision that "a single judge of the court [emphasis added] may make orders for, among other things (a) an injunction restraining any party from disposing of or parting with the possession of the subject matter of an appeal pending the determination of the appeal." The word "court" under CPR 62.1(2) means the Court of Appeal. On a true construction of CPR 62.16(1) and CPR 62.1 (2), it appears proper to make such an application to the Court of Appeal. The section is silent on whether a Judge of the High Court could hear such an application. But, when CPR 62 is read...

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