Sibir Energy Plc v Gregory Trading SA and Others

• Jurisdiction: British Virgin Islands
• Judge: HARIPRASHAD-CHARLES J
• Judgment Date: 29 November 2005
• Docket Number: Claim No. BVIHCV2005/0174
• Court: High Court (British Virgin Islands)
• Date: 29 November 2005

THE EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE (CIVIL)

Her Ladyship the Honourable Justice Indra Hariprashad-Charles

Claim No. BVIHCV2005/0174

Sibir Energy Plc

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

Defendants

Appearances

Mr. Guy Philipps QC, with him Mr. Sa'ad Mohammed Hossain and Mr. Michael Pringle for the Claimant

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

The following cases were referred to in the judgment of Justice Charles:

1. El Ajou v Dollar Land Holdings plc and another [1993] 3 All ER 717.

2. Re Jogia (A Bankrupt) [1988] 1 WLR 484

3. Kuwait Oil Tanker Co. SAK and another v Al Bader and Others [2000] 2 All ER (Comm) 271.

4. Arab Monetary Fund v Hashim [1996] 1 Lloyd's Rep. 589.

5. Macmillan v Bishopsgate Investment Trust Plc (No. 3) [1996] 1 W.L.R. 387.

6. Barnes v Addy (1874) LR 9 Ch. App. 244.

7. Grupo Torras v Al Sabah [2001] CLC 221.

8. Dubai Aluminium Co. Ltd v Salaam [1999] CLC 1469

9. Chaplin v Boys [1971] A.C. 356.

10. Machado v Fontes [1897] 2 Q.B. 231, C.A. overruled.

11. Red Sea Insurance Co Ltd v Bouygues SA [1995] 1 A.C. 190.

12. Spiliada Maritime Corporation v Cansulex Limited [1987] 1 A.C. 460.

13. IPOC International Growth Fund Limited v LV Finance Group Limited et al (BVI Civil Appeal Nos. 20 of 2003 and 1 of 2004) [unreported].

14. Banco Atlantico S.A. v The British Bank of the Middle East [1990] 2 Lloyd's Rep 504.

15. Bitech Downstream Ltd v Rinex Capital Inc. et al (BVIHCV2002/0233) [unreported].

16. Arabian American Insurance Company (Bahrain) E.C. v Al Amana Insurance and Reinsurance Company Ltd. (Civil Case No. 38 of 1993) [Supreme Court of Bermuda].

17. Telesystem International Wireless Inc v CVC Opportunity Equity Partners et al [Civil Appeal Nos. 15, 17 and 18 of 2001—Cayman Islands.

18. Lubbe v Cape plc [2000] 1 W.L.R. 1545.

19. The Abidin Daver [1984] A.C. 398.

20. Connelly v R.T.Z. Corporation plc [1998] A.C. 854.

21. Amchem Products Inc. v (British Columbia) Workers' Compensation Board (1993) 102 D.L.R. (4th) 96.

Summary Judgment/strike out application — CPR 15.2 — forum non conveniens — summary judgment on the basis that claims brought were not sustainable under Russian law — whether principle that claim must be civilly actionable under the governing law applies to claims in knowing receipt and dishonest assistance

Forum non conveniens — principles to be applied — importance of language and location of witnesses — applicable law — location of parties and assets — multiplicity of proceedings — length of proceedings — whether cause of action need be actionable against all defendants in Russia

The Claimant filed a claim alleging that the 1 ^st, 2 ^nd, 3 ^rd, 4 ^th, 5 ^th, 6 ^th and 8 ^th Defendants had participated in a dishonest breach of fiduciary duties owed to the Claimant by the 7 ^th Defendant, whereby the 7 ^th Defendant had increased its stake in a joint venture between it and the Claimant from 50% to 99%. The proceedings were pleaded to recover that benefit, or its value from the alleged wrongdoers.

The 1 ^st, 2 ^nd, 4 ^th and 5 ^th Defendants (‘the BVI Defendants’) sought an order under CPR 15.2 that the proceedings be struck out or summarily dismissed on the ground that the Claimant has no real prospect of succeeding on the claim and/or alternatively, under CPR 9.7(2) that the Court should not exercise its jurisdiction in the proceedings on the ground that Russia is clearly and distinctly the more appropriate forum to resolve this dispute.

The 3 ^rd, 6 ^th, 7 ^th and 8 ^th Defendants (‘the Foreign Defendants’) sought an order under CPR 7.7 and 9.7(2) that service of the claim form and the statement of claim be set aside on the grounds that the Court has no jurisdiction to hear the claim and/or the claim be stayed because the Court should not exercise any jurisdiction it may have to try the claim.

The applications were contested by the Claimant on the basis that the fact that the claims did not give rise to liability under Russian law did not mean that there was no liability under BVI law, and that Russia was not clearly and distinctly the more appropriate forum, and that it would be wrong to stay proceedings to a forum where the Claimant was bound to fail against the BVI Defendants.

HELD

• 1. To resist summary judgment the Claimant would have to show that it had a claim against the BVI Defendants, which would be civilly actionable under Russian law.

• 2. On the evidence, the Claimant was unable to show that the claim would be actionable under Russian law and accordingly the Court would grant summary judgment to the BVI Defendants.

• 3. As all the claims against the BVI Defendants were pleaded in knowing receipt, Russia is the appropriate governing law for those receipt based restitutionary claims.

• 4. Under Russian law, there was no cause of action for knowing receipt.

• 5. In relation to a claim for dishonest assistance, a claim must be civilly actionable under the proper law governing the dishonest assistance, which would ordinarily be the place where the alleged dishonest assistance was rendered.

• 6. Again, on the evidence, the alleged dishonest assistance was rendered entirely in Russia, and under Russian law, the BVI Defendants were under no civil liability.

• 7. Accordingly, reverse summary judgment would be granted against the BVI Defendants with the result that permission to serve out of jurisdiction on the Foreign Defendants was not permitted under CPR 7.3(2) (a) and service against them would be set aside.

• 8. In the event that the above is incorrect, the BVI Defendants had shown on the evidence that Russia was clearly and distinctly the more appropriate forum as the action essentially concerned the alleged breach of a joint venture agreement governed by Russian law the breach of which was, according to the Claimant, actionable in Russia and where the Russian Court was clearly and distinctly the more appropriate forum for the dispute in view of (1) where the parties conduct business (2) the business itself being in Russia (3) the signing of the alleged joint venture agreement was in Russia and in Russian (4) the EGMs, which formed the basis of the claim, the disputed Co-Financing and alleged Security Agreements were all entered into in Russia and signed in Russia (5) the relevant applicable law being Russian and (5) the overwhelming number of witnesses were in Russia, the vast majority of which would either have to or prefer to give evidence in Russian, and whom would only be compellable by the Russian court

Introductory

HARIPRASHAD-CHARLES J

1 There are before the Court two applications by the Defendants namely:

• (i) The 1 ^st, 2 ^nd, 4 ^th and 5 ^th Defendants which are companies incorporated in this Territory (‘the BVI Defendants’) seek an order that the proceedings be struck out or summarily dismissed and/or alternatively, that this Court should not exercise its jurisdiction in these proceedings on the ground that Russia is clearly and distinctly the more appropriate forum to resolve this dispute (forum non conveniens).

• (ii) The 3 ^rd, 6 ^th, 7 ^th and 8 ^th Defendants (‘the Foreign Defendants’) seek an order that service of the claim form and the statement of claim be set aside on the grounds that the Court has no jurisdiction to hear the claim and/or the claim be stayed because the Court should not exercise any jurisdiction it may have to try the claim.

2 In addition, the Defendants maintain their opposition to the Claimant's application for an interim injunction.

The procedural history

3 The Claimant, Sibir Energy PLC (‘Sibir’) commenced these proceedings on a without notice application dated 12 July 2005. The application sought (i) various forms of injunctive relief including a freezing order in respect of $1 billion dollars of the assets of the 7 ^th and 8 ^th Defendants; (ii) the appointment of a receiver over the 1 ^st to 3 ^rd Defendants; (iii) wide ranging disclosure orders (in relation to the whereabouts of the Defendants' assets) and (iv) permission to serve the proceedings against the Foreign Defendants out of the jurisdiction pursuant to CPR 7.3(2)(a).

4 The without notice application was supported by an affidavit dated 8 July 2005 of Mr. Henry Cameron, Sibir's Chief Executive Officer together with a claim form and statement of claim of even date and skeleton argument. The gravamen of Sibir's claim is that the 1 ^st, 2 ^nd, 3 ^rd, 4 ^th, 5 ^th, 6 ^th and 8 ^th Defendants have participated in a dishonest breach of fiduciary duties owed to it by the 7 ^th Defendant, Sibneft whereby the Sibneft group has increased its stake in a joint venture between it and Sibir from 50% to 99%. The value of the benefit that the Sibneft group has thereby obtained is estimated to be between US$1 billion and US$2 billion. The present proceedings are aimed at recovering that benefit, or its value from the wrongdoers.

5 On the basis of submissions and evidence, Sibir was granted the interim injunctive relief sought against the Defendants as contained in paragraphs 4 to 10 of the Order dated 13 July 2005 (‘the Order’). By paragraph 1 of that Order, permission was also granted to serve the Foreign Defendants out of the jurisdiction.

6 The Order set a return date for 27 July 2005. The Order required the Defendants to do certain acts before that date. Specifically, paragraph 10 of the Order required the 7 ^th and 8 ^th Defendants to file with the Registrar of the High Court by Friday, 22 July 2005, an affidavit setting out the ‘value, location and details of its or his assets exceeding US$1 million in value wheresoever situated and whether in its or his own name or not...