Vitaly Arkhangelsky & Others v Bank of ST Petersburg CJSC [Eastern Caribbean Supreme Court]
| Jurisdiction | British Virgin Islands |
| Judge | Bannister J [ag] |
| Judgment Date | 02 February 2012 |
| Docket Number | CLAIM NO: BVIHC (COM) 70 OF 2011 |
| Court | High Court (British Virgin Islands) |
| Date | 02 February 2012 |
EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
COMMERCIAL DIVISION
CLAIM NO: BVIHC (COM) 70 OF 2011
(Freezing order — discharge by consent — parties subsequently agreeing to stay proceedings but without agreeing further terms — whether defendants entitled to their costs of the proceedings — whether entitled to their costs of the proceedings only if showing that freezing order should not have been sought and/or was not properly applied for — whether defendants entitled to variation of costs order made against them on continuation of freezing order — whether certain defendants should be granted inquiries as to loss suffered by reason of the grant of the freezing order)
On 22 July 2011 I refused the Claimants permission to serve these proceedings out of the jurisdiction on the first, second and fourth to seventeenth Defendants. They were intended to be served on the third Defendant (“Havana”), which is a BVI registered company and it was said that the prospective overseas Defendants were necessary or proper parties to a claim in conspiracy made by the Claimants in this jurisdiction against Havana. Given my decision on service, I did not need to consider the question whether I should grant the Claimants' other application, which was for a freezing order against the second to sixteenth Defendants. The factual background to the Claimants' applications is set out in my judgment of 22 July 2011 to which the reader is referred.
On 9 November 2011 the Court of Appeal, on anex parte application by the Claimants, reversed my decision and granted permission to serve out on all the Defendants except (obviously) Havana. The Court of Appeal also made an ex parte freezing order against all the Defendants other than the first Defendant bank (“the Bank”) and the seventeenth Defendant (a company in liquidation in Russia owned by the first and second Claimants (“Mr Arkhangelsky” and “Mrs Arkhangelsky”). The Claimants offered, and gave an undertaking to provide, a bank guarantee in the sum of US$3 million in fortification of their cross undertaking in damages by 8 December 2011. A return date of 5 December 2011 was appointed.
When the matter came back on 5 December 2011 there was, as I understand it, nointer partes argument on the merits of the Claimants' applications. Instead, the injunction was continued until trial but with provision for a “deferred”inter partes hearing to take place in the window between 23 and 30 January 2012. The Judge (James J) refused an application by the Bank and the second Defendant (“Mr Savelyev”) for an increase in the amount of fortification but extended Mr Savelyev time for compliance with the disclosure provisions in the freezing order.
At the hearing the Claimants told James J that they had been having difficulties in providing the bank guarantee which they had undertaken to the Court of Appeal that they would provide by 8 December and said that they were “instead arranging for payment of the same sum into court.”1 They therefore asked for the undertaking to be modified to provide for fortification by way of payment into Court or by way of guarantee and for an extension of time in which to make the payment. In fact, the order was for fortification to be provided by means of payment into Court and time was extended from 8 December 2011 to 21 December 2011.
The Bank and Mr Savelyev were refused permission to appeal James J's order and ordered to pay the Claimants' costs of the hearing. They lodged an application for permission to appeal on 14 December 2011.
On 9 December 2011 Havana issued an application for a declaration that this Court should not exercise its territorial jurisdiction in respect of these proceedings, for discharge of the freezing order; and for strike out of the statement of claim.
On 12 December 2012 Maples and Calder (“Maples”), for the Bank and Mr Savelyev, wrote to Conyers Dill & Pearman (“Conyers”), for the Claimants, saying that the claim by the Claimants that the BVI was an appropriate forum on the grounds that they could not obtain a fair hearing elsewhere in the world was false, because identical causes of action arising out of the same allegations of fact were being litigated by the Claimants against other parties in Cyprus. Maples suggested that the whole dispute be removed to England and Wales and invited Conyers to agree that the English Courts should have exclusive jurisdiction over it. They asked Conyers to agree to discontinue or stay these proceedings “to ensure the agreement was implemented”. In making this proposal, Maples emphasized that their clients continued to contest the jurisdiction of the BVI Court. By another letter delivered on the same day Maples adumbrated a substantial damages claim should their application to discharge (which had yet to be served) succeed on theinter partes hearing and indicated that they intended to seek to have the cross undertaking in damages extended to cover the Bank (against which, it will be recalled, no freezing order had been sought or granted). In a separate letter of 13 December 2011 Forbes Hare, for the Defendants which they
represented, supported Maples' suggestion as to the choice of an English forum, again reserving their clients' right to challenge the jurisdiction of the BVI Court.By letters dated 14 December 2011 Conyers accepted Maples' suggestion and agreed to stay the proceedings in the BVI and Cyprus. They indicated that they would prepare a formal consent order staying the BVI proceedings and that they would ask their Cypriot counterparts to do the same with respect to the proceedings there.
On 15 December 2011 Maples wrote to Conyers making clear that unless the Claimants agreed to lift the freezing order, pay the Bank's and Mr Savelyev's costs (other than the costs which they had been ordered to pay by James J) and submit to an assessment of damages suffered by their clients as a result of the freezing order, they would have to proceed in the BVI to obtain those results through the Court, including by way of an application to have the cross undertaking in damages extended to cover the Bank and to appeal the order made by James J on 5 December 2011. An application seeking the latter relief was issued on the same day.
On 20 December 2011 (nearly six weeks after leading Counsel had offered a bank guarantee in the sum of US$3 million to the Court of Appeal) the Claimants issued an application to be discharged from their (replacement) undertaking to fortify their cross undertaking by payment of US$3 million into Court. The application, which for reasons which will become apparent was never moved, was supported by a third affidavit of Mr Arkhangelsky. In it he explained how the bank which he had expected to advance the funds for the provision of the necessary fortification had been put under pressure not to do so by the second Defendant, Mr Savelyev, and had not yet decided whether to fund the fortification payment, although Mr Arkhangelsky said that the matter remained under internal consideration within the bank in question.
On 30 December 2011 the Bank and Mr Savelyev issued an application, returnable before me on 11 January 2012, for the discharge (if it had not lapsed automatically upon failure to provide fortification) of the freezing injunction and its ancillary disclosure provisions and for an inquiry as to damages. The grounds were the failure to provide fortification after what it was alleged must have been deliberately misleading indications to the Court of Appeal and to James J that the Claimants would be in a position to provide it. That was rapidly followed by a further application to set aside the Court of Appeal's order granting permission for service of the proceedings upon the Bank and Mr Savelyev out of the jurisdiction. The grounds for that application were, first, that there was intruth no real issue to be tried between the Claimants and Havana; and, secondly, that the BVI were not the appropriate forum. This second application was combined with a further application to have the freezing order set aside, this time on the additional grounds that (a) there had not been full and frank disclosure to the Court of Appeal on the question of available forum (b) that there was no serious risk of dissipation (c) that the application had been made too late (d) that there was no good arguable case against the Defendants on the merits and (e) that Mr Arkhangelsky had misrepresented the course of the proceedings in the Russian media. The application was supported by five new affidavits in addition to the two affidavits of Igor Gorchakov already filed.
On 5 January 2012 the Claimants indicated that they would not oppose the discharge of the freezing order at a preliminary hearing fixed for 11 January 2012.
Attempts to agree the terms of a Tomlin order dealing with all outstanding issues came to nothing and on 11 January 2012 I made an order by consent (although that is not reflected in the order as drawn up) discharging the freezing order and its ancillary disclosure provisions. Theinter partes hearing envisaged by James J was fixed for 24 January 2012 and all outstanding matters together with the costs of the hearing of 11 January 2012 were reserved to be dealt with at that...
To continue reading
Request your trial
-
Bank ST Petersburg and Another (Applicants/Claimants) v Vitaly Arkhangelsky and Another (Respondents/Defendants)
... ... [2013] EWHC 3529 (Ch) IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION Royal ... case which succeeded in the Eastern Caribbean Court of Appeal, which was that they ... Street Capital Limited v Tchigirinski & Others [2005] EWHC 2471 (Ch) at paragraphs 34 to 36 ... has recently been re-affirmed by the UK Supreme Court in Ust-Kamenogorsk Hydropower Plant JSC v ... ...