Sberbank of Russia v Ramljak

Where parties give a consent undertaking expressed to continue “pending final determination” of an application, “final” ordinarily adds more than the completion of the first-instance decision. In a contractual undertaking, the court must construe the words used in their commercial and factual context, excluding evidence of subjective intention. The phrase generally refers to the point at which the determination can no longer be changed, either because all appeal possibilities have ended or because the unsuccessful party has acknowledged that no further appeal will be pursued. The conclusion depends on the language and context of the particular agreement. A contractual undertaking may extend beyond an automatic statutory stay.

Sberbank of Russia and Ante Ramljak agreed a consent order while an application was pending for recognition of Croatian extraordinary administration proceedings under the Cross-Border Insolvency Regulations 2006. Sberbank undertook not to pursue specified arbitrations or commence related proceedings pending the “final determination of the Recognition Application”.

The court subsequently recognised the Croatian proceedings. Sberbank argued that the undertaking ended with that first-instance decision. Mr Ramljak argued that it continued while permission to appeal, and any ensuing appeals, remained possible. The issue was the construction of “final determination” in the consent order.

1. Construction of the undertaking. The consent order was both an order of the court and a contract between the parties. The court therefore construed the words used in their commercial and factual context, without considering evidence of subjective intention.
2. The undertaking was wider than the automatic stay arising from recognition because it also covered Agrokor’s affiliates and subsidiaries. That wider protection formed part of the commercial context and explained why the undertaking might be intended to continue after recognition at first instance.
3. The word “final” would be superfluous if “final determination” meant only that the first-instance application had been determined. The court distinguished an interim grant of relief under article 19 of the Schedule to the Cross-Border Insolvency Regulations 2006 from determination of the recognition application.
4. “Final determination” meant a point in time when the determination could no longer be changed. It therefore referred to the end of the possibility of appeal, or, if earlier, the point at which the unsuccessful party acknowledged that there would be no appeal or further appeal.
5. Recognition had been determined at first instance, but it had not yet been finally determined because an application for permission to appeal remained outstanding. The undertaking had therefore not come to an end.