Navigator Equities Ltd & Anor v Deripaska

Contempt proceedings are civil but quasi-criminal. An applicant invoking the jurisdiction as a quasi-prosecutor must act dispassionately, fairly and in the public interest, especially after any private enforcement interest has ended. Proceedings brought to advance personal animosity or to vex the respondent, supported by partisan or misleading presentation, may be struck out as an abuse of process. A solemn undertaking to the court is construed strictly, but no breach arises beyond its terms. An undertaking securing shares did not require continued Jersey registration, and voting for a corporate redomiciliation did not dispose of or deal with shares that remained owned and enforceable. Whether an undertaking also creates a contract depends on the objective facts; agreement of terms for a court order does not ordinarily create private contractual relations.

The claimants sought to commit the defendant for alleged breaches of undertakings given in place of a worldwide freezing order, and also claimed damages on the basis that the undertakings had contractual effect. The defendant applied to strike out the contempt application as an abuse of process.

The applications arose from an underlying arbitration and related Arbitration Act 1996 section 67 proceedings. Teare J had ordered payment into court in the related enforcement proceedings: [2019] EWHC 1846 (Comm). The central issues were whether the contempt application was abusive, whether the redomiciliation of En+ breached the undertakings, and whether the defendant had entered into an enforceable contract with the claimants.

1. Outcome. The defendant’s cross-application succeeded. The contempt application was dismissed as an abuse of the process of the court, and the damages claim was dismissed.
2. Contempt and abuse. Contempt proceedings have a quasi-criminal character. A claimant pursuing them acts as a quasi-prosecutor serving the public interest. Where the claimant’s private litigation interest has ended, the application must be pursued dispassionately and even-handedly, with fair and candid presentation of the facts. Here, the claimants’ incomplete and misleading presentation, aggressive conduct and personal animosity towards the defendant rendered the proceedings abusive.
3. Earlier interlocutory hearing. The Henderson v Henderson principle applies to interlocutory proceedings, but the contempt application was not barred by the earlier hearing before Teare J. The issue of breach had not been argued as a basis for relief, and Teare J’s observations were unguarded comments on a matter that did not arise for decision.
4. Breach of undertaking. The undertaking was a solemn commitment to the court and was construed strictly, following the approach to injunctions in JSC BTA Bank v Ablyazov [2015] 1 WLR 4754. En+ remained the same legal person after redomiciliation, and the shares remained owned by B-Finance. Voting for the redomiciliation was not a disposal or dealing with the shares. The phrase available for direct enforcement did not require the shares to remain registered in Jersey. The defendant therefore neither breached the undertakings nor failed to take a required step.
5. Contract. Whether an undertaking given pursuant to an inter-party agreement creates contractual obligations depends on the objective facts and ordinary principles of contract. There is no rule that such contractual rights automatically disappear when the undertaking is accepted by the court. However, in the context of contested interlocutory litigation, agreement on wording for a proposed court order ordinarily does not evidence an intention to create private contractual relations. No relevant contract was formed here.

This was a first-instance decision on the contempt and damages applications. The judgment records that:

• High Court (Commercial Court) — Teare J dismissed the defendant’s challenges in the section 67 proceedings: [2019] EWHC 173 (Comm) . The Court of Appeal later dismissed the appeal: [2020] EWCA Civ 109 .
• High Court (Commercial Court) — Teare J ordered payment into court and provided for discharge of the undertakings on payment: [2019] EWHC 1846 (Comm). The present court held that the related contempt application was not barred by that hearing but was abusive on other grounds.