Navigator Equities Limited & Anor. v Oleg Vladimirovich Deripaska

A procedurally compliant and properly arguable civil contempt application which brings an allegedly serious contempt to the court’s attention is not abusive merely because its applicant acts from personal revenge. An improper collateral purpose, such as using committal proceedings to secure a settlement, remains capable of rendering an application abusive. Applicants retain legitimate private interests even after enforcement has been achieved. They and their lawyers must observe a high standard of fairness, but need not act as wholly impartial prosecutors or solely as guardians of the public interest.

When considering strike-out for abuse, the court must assess and weigh the application’s arguable merits without conducting a trial of the alleged contempt. Satisfaction of the underlying obligation does not prevent proceedings concerning a serious past breach.

Navigator Equities Limited and Vladimir Chernukhin obtained an arbitral award requiring Oleg Deripaska and his company to purchase Chernukhin’s interest in a joint venture. During Deripaska’s challenge to the award, the claimants obtained a worldwide freezing order. That order was discharged in return for undertakings concerning certificated shares in EN+ Group plc, a Jersey company. B-Finance Ltd held the shares, Deripaska was their ultimate beneficial owner, and Reynolds Porter Chamberlain LLP held the certificates in London.

EN+ subsequently redomiciled to Russia following a shareholder vote supported by B-Finance. The claimants alleged that Deripaska had procured or failed to prevent the loss of the Jersey shares and the security afforded by the undertakings. After the award was paid and the undertakings discharged, they applied to commit him for contempt.

Andrew Baker J struck out the application as abusive in [2020] EWHC 1798 (Comm). He relied on personal revenge and failures to prosecute dispassionately in the public interest. He also dismissed a contractual damages claim, which was not appealed. The appeal concerned the significance of subjective motive, applicants’ duties, and the arguable merits of the alleged breaches.

1. The appeal was allowed unanimously. Carr LJ’s reasoning was expressly adopted by Snowden and Asplin LJJ. The contempt application was restored and remitted to the Commercial Court. The judge had misunderstood the parties’ positions and the security’s purpose, failed to weigh the arguable merits, and applied incorrect principles concerning motive and applicants’ duties (paras 89, 140–143).

2. Civil contempt proceedings attract criminal safeguards, including clear charges, proof beyond reasonable doubt, the right to silence and a high standard of fairness. They nevertheless remain civil proceedings. They may legitimately secure compliance or bring serious past and irremediable breaches to the court’s attention. Their purposes and the applicant’s protective interest distinguish them from private criminal prosecutions: Guildford BC v Smith applied (paras 78–81).

3. Where an application satisfies procedural requirements, is properly arguable and objectively brings an allegedly serious contempt to the court’s attention, predominant or exclusive personal revenge does not justify strike-out. Sectorguard plc v Dienne Plc concerned legitimate ends and a hopeless application, rather than establishing a subjective motive requirement. KJM Superbikes Ltd v Hinton and Tinkler v Elliott concerned permission for public law contempt proceedings and were distinguishable. Using proceedings for an improper collateral advantage remains abusive (paras 109–126).

4. The merits were material to the particular allegations of abuse. Neither the judge nor the appellate court should determine breach outright on this application. However, crossing the arguability threshold did not make the merits irrelevant. There was a properly arguable case, to the criminal standard, of serious breaches of both undertakings. That assessment had to inform the abuse decision (paras 101–107).

5. The security package was intended to preserve assets outside Russia for ready enforcement. It was not common ground that the Jersey shares continued after redomiciliation. Their cancellation and replacement by materially different Russian shares were properly arguable, subject to the absence of expert foreign-law evidence. Commercial disadvantage did not establish impossibility of compliance. The alleged contempt was not disproportionate merely because the award had subsequently been satisfied (paras 89, 96–104).

6. A private applicant retains an interest in upholding protective undertakings and deterring future breaches. Its lawyers owe their ordinary professional duties to the court and their clients. Fairness does not require wholly impartial prosecution solely in the public interest. The judge’s contrary benchmark undermined his criticisms of the claimants’ conduct. JSC BTA Bank v Ablyazov was explained; TBD (Owen Holland) Ltd v Simons and Cole v Carpenter were distinguished (paras 131–139).

7. The later application did not infringe the Henderson principle: breach had expressly been left for another application at the earlier interim hearing. The judge’s finding of no breach on the contractual claim was obiter and founded on his misunderstanding. It was neither binding nor persuasive for the restored contempt application, whose merits required independent determination (paras 87, 141).

1. Court of Appeal (Civil Division): In [2021] EWCA Civ 1799 , the court unanimously allowed the appeal against strike-out, restored the contempt application and remitted it to the Commercial Court. The contractual claim’s dismissal was not challenged.
2. High Court, Commercial Court: Andrew Baker J dismissed the contempt application as an abuse of process and granted the respondent’s strike-out application. His reasons were given in [2020] EWHC 1798 (Comm) . He separately dismissed the contractual damages claim.
3. Earlier enforcement proceedings: Teare J ordered payment into court in [2019] EWHC 1846 (Comm), treating likely breach of the undertakings as relevant to interim relief. Further enforcement orders followed. The award was subsequently paid and the undertakings discharged by consent.