Bank St Petersburg Ojsc & Anor v Arkhangelsky & Ors (Rev 1)

A foreign limitation period causes undue hardship where it deprives a claimant of a reasonable opportunity to pursue the claim and the consequence is disproportionate to any fault. The court must consider all the circumstances, including impecuniosity and difficulties effecting service.

An exclusive jurisdiction agreement may justify restraining a party from enforcing earlier foreign judgments concerning the agreed substantive dispute. An anti-enforcement injunction operates personally against that party. It does not assert jurisdiction over, or interfere with, the foreign court. Interim relief may preserve the position where a permanent injunction is strongly arguable.

Three interlocking interlocutory appeals arose from competing English proceedings concerning the alleged wrongful acquisition of companies in the Oslo Marine Group. The parties had agreed that the English court would have exclusive jurisdiction over their substantive dispute.

The first appeal challenged HHJ Mackie QC’s refusal to dispense with service of Commercial Court proceedings. The second challenged Hildyard J’s decision under the Foreign Limitation Periods Act 1984 to disapply the applicable Russian limitation period because it would cause undue hardship. The third challenged his refusal to restrain the Bank and its chairman from enforcing Russian judgments in France, Bulgaria or elsewhere.

The central issues were the meaning and application of undue hardship, and whether the exclusive jurisdiction agreement justified an interim anti-enforcement injunction.

1. Disposition. The court made no order on the first appeal, dismissed the Bank’s appeal concerning limitation and allowed the appeal against the refusal of an anti-enforcement injunction. Kitchin and McCombe LJJ agreed with Longmore LJ.

2. The determination of undue hardship under section 2(2) of the Foreign Limitation Periods Act 1984 required evaluation of a complex factual background rather than the exercise of a discretion. An appellate court should not interfere lightly with that evaluation, particularly where the judge had managed the litigation throughout.

3. The relevant question was whether the foreign time limit would deprive the claimant of a reasonable opportunity to pursue the claim, assuming reasonable diligence and knowledge of the provision. Hardship is undue when it is excessive or out of proportion to the claimant’s fault. The court must adopt a multi-factorial approach and consider all the circumstances. Impecuniosity may be highly relevant even if the opposing party did not cause it.

4. The Russian limitation period would cause undue hardship. The claimants had been impecunious, lacked effective legal assistance and reasonably expected the Bank’s solicitors to accept service. Service in Russia presented difficulty, delay and expense, and little time remained after the agreement conferring English jurisdiction. Although the claimants bore some responsibility for delay, losing claims already known to the Bank was disproportionate to that fault. Timely issue of proceedings did not prevent the limitation provision from having causative effect where impecuniosity obstructed service and the period expired during the time allowed for service.

5. The first appeal did not require determination. It was nevertheless highly arguable, in light of Abela v Baadarani [2013] UKSC 44, that service on the solicitors could be validated retrospectively under rule 6.15, notwithstanding the possible application of the Hague Convention.

6. The exclusive jurisdiction agreement required the substantive dispute to be determined afresh in England. Continuing to enforce earlier Russian judgments concerning that dispute was inconsistent with the agreement. The injunction operated personally against the Bank and its chairman and did not interfere with the foreign courts.

7. A permanent anti-enforcement injunction was strongly arguable if the English claim succeeded. Fairness therefore required interim protection. The exceptional character of the remedy and the weakness of the cross-undertaking did not outweigh that conclusion, particularly because existing freezing orders provided security.

1. Court of Appeal (Civil Division): In [2014] EWCA Civ 593, made no order on the appeal concerning service, affirmed the disapplication of the Russian limitation period and reversed the refusal of an interim anti-enforcement injunction.

2. High Court, Chancery Division: Hildyard J permitted the counterclaim, disapplied the Russian limitation period under section 2(2) of the Foreign Limitation Periods Act 1984, but refused an anti-enforcement injunction.

3. High Court, Commercial Court: HHJ Mackie QC refused to dispense with service of the Commercial Court claim form under rule 6.16 of the Civil Procedure Rules 1998.