Navigator Equities Limited & Anor. v Oleg Vladimirovich Deripaska

A properly constituted and arguable civil committal application which objectively seeks to bring an alleged serious contempt to the court’s attention is not an abuse merely because the applicant is motivated by revenge or personal animosity. Civil contempt proceedings are not private prosecutions. A private applicant retains a legitimate interest in enforcement and deterrence, even after immediate enforcement has been achieved.

The applicant and its solicitors must act fairly and comply with their duties to the court. They are not, however, required to act as disinterested quasi-prosecutors or guardians solely of the public interest. On an abuse application, the arguable merits and gravity of the alleged contempt are relevant, although the court should not conduct a mini-trial.

The appellants obtained an arbitral award against the respondent and accepted a suite of court undertakings in place of a worldwide freezing order. The respondent undertook, among other matters, to ensure that specified certificated shares in a Jersey company remained available for direct enforcement.

Following the company’s redomiciliation to Russia, the appellants issued a committal application alleging breaches of those undertakings. The Commercial Court struck out the application as abusive and dismissed a separate contractual claim: [2020] EWHC 1798 (Comm).

The appeal concerned whether the committal application was abusive because of the appellants’ alleged motive, knowledge and partisan conduct, and whether its properly arguable merits had to be considered.

1. Appeal allowed. The committal application was restored and remitted to the Commercial Court for a hearing before another first-instance judge.

2. Civil contempt proceedings are quasi-criminal and require a high standard of procedural fairness, but they are not private criminal prosecutions. A committal application may properly seek enforcement or bring a serious, including past and irremediable, contempt to the court’s attention. It must be proportionate and must not be used for an improper collateral purpose.

3. Where a civil committal application complies with procedure, is properly arguable, and objectively serves the legitimate purpose of bringing an alleged serious contempt before the court, the applicant’s personal desire for revenge or its animosity towards the respondent does not itself make the application abusive. An external or collateral purpose, such as using committal as settlement pressure, is different.

4. A private applicant retains a legitimate private interest in vindicating an order or undertaking made for its protection, including deterrence in continuing litigation. Its solicitors must act fairly and consistently with their professional duties, but neither they nor the applicant must act as wholly impartial prosecutors acting solely in the public interest.

5. The judge erred by failing to weigh the arguable merits of the alleged contempt. The court did not determine breach, but held that it was properly arguable that the redomiciliation cancelled the Jersey shares, impaired their direct enforceability, and involved breaches of both the positive and negative undertakings. The application was therefore capable of alleging serious, rather than technical, contempt.

6. The abuse finding was also undermined by the judge’s erroneous assumption that it was common ground that the Jersey shares continued after redomiciliation and that the change was beneficial to the appellants. The relevant concern was ready enforcement against assets outside Russia, not merely the commercial value of the replacement shares.

7. The earlier finding of no breach, made only when dismissing the contractual claim, was obiter and rested on that mistaken understanding. It was neither binding nor persuasive for the remitted committal application.

• Court of Appeal (Civil Division): Allowed the appellants’ appeal, set aside the strike-out of the committal application, and remitted it to the Commercial Court.
• Commercial Court: Andrew Baker J struck out the committal application as an abuse of process and dismissed the contractual claim: [2020] EWHC 1798 (Comm).