VTB Capital Plc v Nutritek International Corporation & Others [Eastern Caribbean Supreme Court]

• Jurisdiction: British Virgin Islands
• Judge: Bannister J [ag]
• Judgment Date: 23 November 2011
• Docket Number: CLAIM NO: BVIHC (COM) 2011/0103
• Court: High Court (British Virgin Islands)
• Date: 23 November 2011

EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE

COMMERCIAL DIVISION

CLAIM NO: BVIHC (COM) 2011/0103

Between:

VTB Capital Plc

Respondent/Claimant

and

(1) Nutritek International Corp (a Company incorporated in the BVI)

Defendant

(2) Marshall Capital Holdings Limited (a Company incorporated in the BVI)

Applicant/Defendant

(3) Marshall Capital Llc (a Company incorporated in Russia)

Defendant

(4) Konstantin Malofeev

Applicant/Defendant

Appearances:

Mr John Carrington for the Applicants

Mr Richard Evans for the Respondent

(Injunction in aid of foreign worldwide freezing order — foreign injunction subject to worldwide cap — injunction granted here ex parte subject to same cap in the BVI — continued on return date until further order by consent — respondent applying to remove cap — whether application because injunction continued by consent — proper form of injunction in aid of foreign worldwide freezing injunction)

Bannister J [ag]

1 On 5 August 2011, in the Chancery Division of the High Court of England and Wales, Roth J, on the application of the Claimant VTB Capital plc (‘VTB’), made a worldwide freezing orderex parte against the fourth defendant to the present proceedings here in the BVI (‘Mr Malofeev’). The order prevented Mr Malofeev from removing any of his assets from England and Wales up to a limit of US$200 million and from dealing (etc) with any of his assets worldwide up to the same limit (paragraph 4). By paragraph 7(1) of Mr Justice Roth's order it was provided that if Mr Malofeev had unencumbered assets in England and Wales to a value in excess of US$200 million, he could remove, deal, etc with any of those assets provided that there remained unencumbered assets in England and Wales to a value of US$200 million. By paragraph 7(2) it was provided that if the value of Mr Malofeev's unencumbered assets in England and Wales was less than US$200 million, they must remain intact within England and Wales. In that case, but subject to paragraph 7(3), Mr Malofeev was permitted to deal with assets outside England and Wales provided that the total value of unencumbered assets worldwide (when aggregated with the assets in England and Wales) remained more than US$200 million. Paragraph 7(3) provided that if the total unencumbered value of Mr Malofeev's assets in (a) England and Wales (b) the Cayman Islands (c) Cyprus and (d) the British Virgin Islands did not exceed US$200 million, then Mr Malofeev was not to deal with certain named assets (which appear to be Russian shareholdings) without the permission of the Court.

2 The scheme of the order is that any assets situated in England must stay there, up to a limit of US$200 million, but if Mr Malofeev maintains an unencumbered fund, whether of English assets alone or made up of a combination of English and foreign assets with a value of not less than US$200 million, he is free to deal with non-English assets in excess of that amount as he pleases. If, however, assets in the four jurisdictions named in paragraph 7(3) areless than US$200,000,001, then even though he might have a total unencumbered worldwide asset base far in excess of US$200 million, he still needs the permission of the English High Court to deal with the Russian shareholdings. The thinking appears to have been that the primary aim of the order was to establish a fund of US$200 million subject to freezing orders in the four named jurisdictions. Once that had been achieved, Mr Malofeev could deal with any other assets worldwide not caught by such freezing orders. If the assets frozen in the four named jurisdictions did not amount to US$200 million, however, then even though Mr Malofeev's other assets worldwide might be vastly in excess of that sum, he still needed the permission of the English High Court to deal with the Russian shareholdings.1

3 Roth J's order was continued on its return date by Vos J in (for present purposes) the same terms.

4 Meanwhile, on 12 August 2011 VTB issued a claim here against Mr Malofeev and three companies. On 24 August 2011 VTB applied hereex parte for a freezing order in aid of the injunction granted by Roth J in England and Wales. Hariprashad-Charles J granted the order. For present purposes its material provisions were that Mr Malofeev was prohibited from removing from the BVI assets situate here up to a limit of US$200 million, or from dealing with any such assets. Paragraph 7 of the order was in the same wording as paragraph 7(2) of the order made by Roth J.

5 The return date for Hariprashad-Charles J's order was 21 September 2011. Although the order does not recite the fact, the order which she had madeex parte was continued by me by consent. Since the proceedings here were stayed, the consent order was expressed to continue ‘until further order’, the perception being that it would abide the outcome of the English proceedings.

6 Although I did not appreciate it at the time, paragraph 7 of the BVI order is completely otiose. Its first sentence does no more than repeat the terms of paragraph 2. The second sentence is unnecessary, since, unlike the corresponding paragraph 4 of the order of Roth J and paragraph 3 of the order made by Vos J, paragraph 3 of my order2 (correctly3) affected only assets situated within the BVI. In other words, the orders made here in the BVI are domestic, rather than worldwide freezing orders.

7 On 30 September 2011 Mr Malofeev issued an application for the variation of the BVI consent order. He asked that the prohibition upon removing or dealing with assets up to a cap of US$200 million within the jurisdiction be made subject to a redrafted clause 7 which, unlike clause 7(2) in the order made by Roth J, was intended to provide that Mr Malofeev could remove assets from the

Virgin Islands or deal, etc, with them provided that the ‘collective unencumbered value’ of his assets in England and Wales, Cyprus, Cayman Islands and the British Virgin Islands remained above US$200 million.

8 As I have said, my order does not restrict dealings by Mr Malofeev with assets outside the jurisdiction of this Court. It appeared from the submissions of Mr John Carrington, who appeared for Mr Malofeev on this application, that Mr Malofeev's real...