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England and Wales High Court (Chancery Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Bank St Petersburg & Anor v Arkhangelsky & Anor [2013] EWHC 3674 (Ch) (06 December 2013) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2013/3674.html Cite as: [2013] EWHC 3674 (Ch) |
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CHANCERY DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
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(1) BANK ST PETERSBURG (2) ALEXANDER SAVELYEV |
Applicants/ Claimants |
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- and - |
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(1) VITALY ARKHANGELSKY (2) JULIA ARKHANGELSKAYA |
Respondents/ Defendants |
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The DEFENDANTS appeared by their McKenzie friend, MR PAVEL STROILOV
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Crown Copyright ©
The Hon. Mr Justice Hildyard :
Supplemental issue (1): Claimants' application for permission to appeal
(a) any unusual difficulties of effecting the steps necessary to bring the claim;
(b) the reasonableness of any expectation of the claimant (though subsequently falsified) that a particular means of bringing the claim within the period will be effective;
(c) any efforts in fact made, albeit without success, to bring the claim, and the reasons for their failure; and
(d) any special factors which have made it unusually difficult for the claimant to bring the proceedings within the time prescribed by the foreign limitation law.
(a) hardship caused, not by lack of time, but by a factor unconnected with the specific period prescribed, such as wrong advice as to the application of the period (see Harley v Smith at paragraph 53), although I note that in Hellenic Steel Co v Svolamar Shipping Co [1990] 1 Lloyd's Rep 541, a Greek limitation law was disapplied on the ground that "it would…constitute a real and undue hardship if the plaintiffs were to be denied the opportunity of pursuing their claim by an incident of foreign law by which the parties did not realise that their contract was governed";
(b) the mere fact that the period specified by the foreign limitation law is less generous than the period allowed under English law (ibid at paragraph 55); or
(c) hardship that, however regrettable, is no greater in the particular circumstances than would normally be the case (ibid).
a) the inherent likelihood of difficulties, delays and expense of effecting service in Russia of proceedings calling into question the integrity of the processes of the Russian legal authorities;
b) the impecuniosity of the Defendants, in consequence of those Russian proceedings brought and their exile;
c) the reasonableness of their expectation, in my judgment, that there would be no objection in point of service to them being able to bring claims now comprised in their counterclaim, since although (as HHJ Mackie QC held) no agreement was eventually made as to service, the purpose of the Exclusive Jurisdiction Agreement was to enable all matters substantively in issue to be tried out in the English Courts;
d) the limited time available in which to effect service (if that was required to interrupt the Russian limitation period) after the Exclusive Jurisdiction Agreement;
e) the efforts made, albeit late and after an extension granted by Christopher Clarke J, to serve the Claim Form within the period of its validity;
f) what I still regard overall as a "hardball" approach of the Claimants in refusing to accept service without any sufficient explanation as to the reasons for that refusal, nor any indication that if brought by way of counterclaim in the existing Chancery proceedings they would not oppose that;
g) the time lapsed between February 2013 and the Defendants' application to pursue a counterclaim is largely referable to my own reluctance to deal with the question of a counterclaim until after the Commercial Court had determined whether to permit the proceedings to continue in that court without requiring service of the Claim Form; and
h) overall, the disproportionality and unfairness and undue hardship in denying the Defendants the opportunity to bring claims of which the Claimants have long been aware, accept are the obverse of the declaratory relief that the Claimants seek, and which it was agreed should be litigated substantively in this jurisdiction.
a) the fact that the Defendants did serve proceedings in BVI and Cyprus (which I regard as two-edged given that BVI declined jurisdiction and the proceedings in Cyprus were against different parties, and were withdrawn before the availability of that jurisdiction was determined);
b) the fact that the Defendants were aware, at all material times and in particular in and after making the Exclusive Jurisdiction Agreement, of the time bar applicable under Russian law of limitations (and they issued a Claim Form in the Commercial Court with expedition accordingly);
c) the fact that in the BVI proceedings the Defendants had legal representation (Withers and Conyers Dill), as they did in this jurisdiction between May 2012 and January 2013 (Mr Paul Diamond of Counsel, acting on direct access instructions);
d) the Defendants' delay in taking steps to serve the Claim Form they had issued, the paucity of any justification for it, and their stubbornness in adhering to the course of separate proceedings in the Commercial Court, rather than seeking to bring a counterclaim in the existing proceedings in the Chancery division;
e) the Claimants' contention that they were fully entitled to refuse service of proceedings in light of the delays and the fact that (a) the Russian time period had expired by the time service was sought to be effected and (b) a counterclaim in the existing proceedings rather than a claim in another Division was apposite;
f) the fact that the Commercial Court declined to waive service of the Claim Form despite arguments not dissimilar to those I have adumbrated above;
g) all the circumstances described or referred to in the evidence and witness statements provided to me; and
h) the exceptional nature of the jurisdiction to disapply a foreign time bar, and the concomitant requirement to exercise it sparingly.
Supplemental issue (2): Defendants' application for permission to appeal
a) the only jurisdictions in which (so far as I am aware) the Claimants are pursuing enforcement proceedings are Bulgaria, France and Russia;
b) as stated in paragraph 81 of my main Judgment, Bulgaria and France were expressly and deliberately excepted from the usual cross-undertakings given as the price of the grant of the freezing orders since they were already on foot and being contested by the Defendants (including in the court of appeal in Bulgaria);
c) it would be a big step to seek to impede by requiring a cross-undertaking to prevent the enforcement of Russian Judgments in the Russian Federation itself;
d) my conclusions as regards the Exclusive Jurisdiction Agreement as set out in my main Judgment seem to me to tell quite strongly against my stepping in to (in effect) extend protection which was available to be agreed but was not; and
e) the reality and substance of requiring cross-undertakings now would be to achieve by the back door that which I declined, in my discretion, to order by the front door of an injunction.
Supplemental issue (3): Costs
(1) FortificationThe Defendants' application for fortification of the cross-undertaking in damages in the freezing order was dismissed. The Claimants applied for their costs of the application to be reserved to the Trial Judge with no payment on account on the basis that costs should follow the event. The Defendants conceded that they should bear the costs. The Defendants must pay the costs in any event, such costs to be subject of detailed assessment if not agreed.
(2) Anti-suit Injunction
The Defendants' application for a worldwide anti-suit injunction was dismissed. The Claimants applied for their costs of the application to be reserved to the Trial Judge with no payment on account, on the basis that costs should follow the event. The Defendants conceded that they had failed but Mr Stroilov submitted that the Court should reflect its concerns about the Claimant's conduct in harrying the Defendants in other jurisdictions by not awarding them costs or directing costs to be in the case. Mr Stroilov submitted additionally that what he called a "neutral" order was appropriate in relation to the Defendants' alternative application for a cross-undertaking to be given to prevent enforcement proceedings elsewhere as the price of continuing the freezing order.I have concluded that costs should follow the event: the Defendants must pay the costs in any event, such costs to be subject of detailed assessment, if not agreed. I would not have made any order for a payment on account in this regard either: but the Claimants conceded that anyway.(3) Adjournment of trial dateThe Defendants' application for an adjournment of the trial date succeeded, although the Court adjourned the trial until May 2014 rather than October 2014. The Defendants do not seek their costs on the basis that the application did not fully succeed and the fact that the Defendants cannot be said not to have been responsible for some of the delays. The Claimants submit that the application was appropriately resisted and that the adjournment represented a significant indulgence to the Defendants: they seek an order that the Defendants pay their costs.
In my view, it had become obvious that a fair trial could not take place in January 2014. I had intimated as much previously. I do not criticise the Claimants for placing the decision in the hands of the Court, since the adjournment of a trial affects other litigants and is not a matter purely for the parties to agree themselves. However, I consider that the Claimants' opposition was disproportionate and overdone.
I need to balance against that, however, the latitude granted to the Defendants by the Court, and the fact that the Defendants were seeking to be relieved from directions and a trial date which with more focus earlier on might have been achieved. It would not be appropriate to make any form of order in favour of the Defendants.
I think the fairest balance is to make no order as to costs.
(4) Permission to introduce a counterclaim
The Defendants' application for permission to introduce a counterclaim succeeded in substantial part, including on the issue of most difficulty and importance as to whether the claim was time-barred. However, the Court struck out part of the counterclaim and required the Claimants to re- particularise their counterclaim.
The Defendants applied for their costs of the application on the basis that their application had succeeded. The Claimants resisted this application on the basis that the standard order in applications for permission to amend was for the applicant to pay the costs of and caused by the amendment (i.e. the costs both of the application and any consequential amendments to the pleadings).I consider that all the parties envisaged that all substantive issues should be tried out between them; and it was conceded by the Claimants (not surprisingly in view of the form of their own proceedings for declaratory relief) that the Defendants' counterclaim was "the other side of the coin".
I consider that the fairest order is to reserve these costs to the Trial Judge, who will be in a better position to assess whether the effort has been worth the resources expended.