SEBASTIAN PERRY
WEDNESDAY, 30 NOVEMBER 2011
French bank BNP Paribas has accused two subsidiaries of Russian billionaire Oleg Deripaska's Basic Element group of colluding to derail an LCIA case worth US$90 million. BNP Paribas made the allegation before the Commercial Court in London as part of a request for injunctive relief in support of an arbitration it is pursuing against carmaker Russian Machines under a 2008 loan guarantee agreement.
The bank filed for arbitration in August 2010, alleging that Russian Machines failed to honour a guarantee on a US$1.2 billion loan to the carmaker's Dutch subsidiary. A sole arbitrator, Albert Jan van den Berg, was appointed by agreement of the parties to hear the case under LCIA rules. But another Basic Element subsidiary, Ingosstrakh Investments, began Moscow Arbitrazh Court proceedings in December 2010, seeking invalidation of the guarantee on the ground that under Russian law it was a transaction between interested parties that should have been approved at a general meeting of shareholders.
The Moscow court dismissed the case in August this year on the basis that it had been brought outside the applicable one-year limitation period. Ingosstrakh took the case to the Moscow Arbitrazh Appellate Court a month later. Both BNP Paribas and Russian Machines are co-defendants in the Moscow proceedings.BNP Paribas alleges that Russian Machines is cooperating with Ingosstrakh in the Moscow proceedings and that the two companies are colluding to frustrate the arbitration and hinder enforcement of any award in Russia.
Both Russian companies vehemently deny the allegations. Ingosstrakh says it is acting in its capacity as trust manager to private pension fund Socium, which has a 0.14 per cent shareholding in Russian Machines. In a 24 Nobember Judgement, Mr Justice Blair upheld the English court's jurisdiction to consider BNP Paribas's request for injunctive relief, even though Ingosstrakh is not a party to the arbitration agreement. Where "companies are in the same ownership and control, it is arguably unconscionable for them to work together to the extent of one bringing court proceedings with a view to impeding the outcome of an arbitration to which the other is a party," said Blair J. For the purposes of determining jurisdiction, the judge accepted "the claimant's contention that there is sufficient material to justify drawing the inference that the Russian proceedings are brought with a view to impeding the outcome of the arbitration."GAR understands that the Commercial Court subsequently granted BNP Paribas's request for interim relief in a decision last week, ordering Ingosstrakh and Russian Machines to refrain from pursuing the claim in Russia while the London court considers the bank's application for final injunctive relief.
Source: GAR, Steptoe at http://www.steptoe.com/assets/attachments/4350.pdf
BNP Paribas SA v OJSC Russian Machines (2011)
This case involved complex issues of law, but on the facts Blair J found that Russian proceedings brought by a non-party to an arbitration should be restrained in order to prevent an ongoing arbitration in London from being undermined.
Background
By a guarantee dated 1 October 2008, OJSC Russian Machines ("Russian Machines") guaranteed certain liabilities of one of its subsidiaries, which arose under a collateralised margin loan made by BNP Paribas SA ("BNPP") to the subsidiary. The guarantee is governed by English law, and provides for disputes to be referred to arbitration under the LCIA rules, with BNPP having the option to bring proceedings in the English courts. A dispute arose under the agreement and BNPP sought to enforce the guarantee. On 6 August 2010, it commenced arbitration against Russian Machines in London. Russian Machines responded that the guarantee was not valid on the basis that it did not receive the fundamental approvals required for it to be effective.
The Second Defendant, Joint Stock Asset Management Company Ingosstrakh-Investments ("Ingosstrakh"), an affiliate company of Russian Machines, then commenced proceedings against BNPP and Russian Machines before the Russian Arbitrazh Court seeking invalidation of the guarantee on the basis that it was an "interested party transaction" and a "major transaction" under the Russian Joint Stock Company Law. These proceedings were served on 13 January 2011. There were therefore two sets of proceedings on foot regarding the validity of the guarantee. On 27 May 2011, BNPP applied to the English Court for permission to serve an anti-suit injunction against Ingosstrakh and Russian Machines to restrain the continuation of the Russian proceedings.
Anti-suit injunction against Russian Machines
As a party to the arbitration agreement, the position as regards Russian Machines was seen by Blair J to be clear. The English courts would have jurisdiction under CPR 62.5(1)(b) (application for an interim order under section 44 of the Arbitration Act 1996) over the claim and to grant the injunction sought by BNPP.
Anti-suit injunction against Ingosstrakh
The position in regards to Ingosstrakh was more complicated. BNPP advanced the case that Russian Machines acted vexatiously, oppressively or unconscionably by supporting, procuring or encouraging Ingosstrakh in its commencement and pursuit of the Russian proceedings with a view to frustrating the arbitration and hindering enforcement of any award in Russia. Blair J looked at the timing of Ingosstrakh's decision to bring the Russian proceedings, which was 7 days after the commencement of the arbitral proceedings in London and noted that although it may be coincidental, it also raised questions.
Blair J was satisfied that there was at least a good arguable case for drawing the inference that the Russian proceedings were brought with a view to impeding the outcome of the arbitration.
Source: Anti-suit injunctions - "egotistic paternalism" or a valid means of protecting English proceedings?
at http://www.lexology.com/library/detail.aspx?g=3f838bd4-45ae-4891-931d-ae9e47bd0c89
This case involved complex issues of law, but on the facts Blair J found that Russian proceedings brought by a non-party to an arbitration should be restrained in order to prevent an ongoing arbitration in London from being undermined.
Background
By a guarantee dated 1 October 2008, OJSC Russian Machines ("Russian Machines") guaranteed certain liabilities of one of its subsidiaries, which arose under a collateralised margin loan made by BNP Paribas SA ("BNPP") to the subsidiary. The guarantee is governed by English law, and provides for disputes to be referred to arbitration under the LCIA rules, with BNPP having the option to bring proceedings in the English courts. A dispute arose under the agreement and BNPP sought to enforce the guarantee. On 6 August 2010, it commenced arbitration against Russian Machines in London. Russian Machines responded that the guarantee was not valid on the basis that it did not receive the fundamental approvals required for it to be effective.
The Second Defendant, Joint Stock Asset Management Company Ingosstrakh-Investments ("Ingosstrakh"), an affiliate company of Russian Machines, then commenced proceedings against BNPP and Russian Machines before the Russian Arbitrazh Court seeking invalidation of the guarantee on the basis that it was an "interested party transaction" and a "major transaction" under the Russian Joint Stock Company Law. These proceedings were served on 13 January 2011. There were therefore two sets of proceedings on foot regarding the validity of the guarantee. On 27 May 2011, BNPP applied to the English Court for permission to serve an anti-suit injunction against Ingosstrakh and Russian Machines to restrain the continuation of the Russian proceedings.
Anti-suit injunction against Russian Machines
As a party to the arbitration agreement, the position as regards Russian Machines was seen by Blair J to be clear. The English courts would have jurisdiction under CPR 62.5(1)(b) (application for an interim order under section 44 of the Arbitration Act 1996) over the claim and to grant the injunction sought by BNPP.
Anti-suit injunction against Ingosstrakh
The position in regards to Ingosstrakh was more complicated. BNPP advanced the case that Russian Machines acted vexatiously, oppressively or unconscionably by supporting, procuring or encouraging Ingosstrakh in its commencement and pursuit of the Russian proceedings with a view to frustrating the arbitration and hindering enforcement of any award in Russia. Blair J looked at the timing of Ingosstrakh's decision to bring the Russian proceedings, which was 7 days after the commencement of the arbitral proceedings in London and noted that although it may be coincidental, it also raised questions.
Blair J was satisfied that there was at least a good arguable case for drawing the inference that the Russian proceedings were brought with a view to impeding the outcome of the arbitration.
Source: Anti-suit injunctions - "egotistic paternalism" or a valid means of protecting English proceedings?
at http://www.lexology.com/library/detail.aspx?g=3f838bd4-45ae-4891-931d-ae9e47bd0c89
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