Mrs Justice Cockerill handed down judgment on 2 July 2021 in VTB Commodities Trading DAC v JSC Antipinsky Refinery & ors.  EWHC 1758 (Comm), concluding that the English courts did not have jurisdiction to hear the claims brought by VTB Commodities Trading DAC (“VTB”) against Sberbank.
VTB had asserted claims in excess of US$300 million against Sberbank, which is Russia’s largest bank, arising out of the insolvency of JSC Antipinsky Refinery (“Antipinsky”), which was one of Russia’s largest oil refineries.
The dispute arose out of proceedings which VTB had originally commenced against Antipinsky under section 44 of the Arbitration Act 1996, in which VTB sought an injunction in support of arbitral proceedings to prevent the alleged “double selling” of cargoes of vacuum gas oil by Antipinsky. The competing purchaser, a Swiss oil trader (“Petraco”), intervened in those proceedings by applying to vary the injunctive relief and claiming damages under VTB’s cross-undertaking. Mr Justice Blair gave directions for the trial of an issue as to the rights and obligations of VTB, Petraco and Antipinsky in respect of the disputed cargoes. In the context of that trial, VTB purported to commence Part 20 proceedings against Sberbank and another party, by which it sought to introduce allegations that the “double selling” was part of a wider conspiracy involving Sberbank which had caused VTB very significant losses. Sberbank challenged the jurisdiction of the English court to hear those claims, which it argued ought to be heard in the Russian courts.
Mrs Justice Cockerill upheld Sberbank’s jurisdictional challenge, concluding that:
- Although Petraco was seeking damages under VTB’s cross-undertaking, VTB was not to be regarded as a “defendant” to proceedings and, as such, VTB was not entitled to commence proceedings pursuant to CPR Part 20.
- In any event, it would not have been appropriate to permit VTB to bring proceedings under CPR Part 20 given the proper (and limited) function of the court when hearing claims under the Arbitration Act 1996, even if (which the Judge doubted) it was possible to commence Part 20 proceedings at all within the context of an Arbitration Claim.
- England would not have been the proper forum for VTB’s claims against Sberbank. The Judge concluded that, although the claims against Sberbank did overlap to some degree with the existing proceedings between VTB and Petraco, the factors in favour of Russia were so strong that Russia was the proper forum to hear the claims against Sberbank. The Judge’s analysis in this regard will be of significant interest, addressing the issue of whether and when the risk of parallel proceedings and irreconcilable decisions will operate as a “trump card” in light of the decision of the Supreme Court in Lungowe v Vedanta Resources Plc  2 AC 1045. In particular, the Judge considered and rejected the argument that Lungowe created only a ‘narrow exception’ where the risk of overlapping proceedings was a result of the voluntary decision of the claimant.
The judgment can be found here.
James Willan QC represented Sberbank of Russia, with Lord Goldsmith QC and Georgina Petrova, instructed by Christopher Boyne of Debevoise & Plimpton LLP.