VTB Commodities Trading DAC v JSC Antipinsky Refinery & Ors

A party’s procedural label does not determine whether it is a claimant or defendant for a particular claim. The court must examine the substance of the proceedings and the party’s position in the relevant claim. A party affected by an injunction who seeks relief under a cross-undertaking in damages remains in a defensive position. A substantive claim for damages cannot generally be introduced into an arbitration claim through CPR Part 20 merely because it has some factual overlap with the existing proceedings. Even if jurisdiction exists, the discretion to permit such claims should be exercised sparingly, particularly where the proposed claims substantially expand the proceedings. Forum conveniens is determined by an overall, fact-sensitive balancing exercise. The risk of inconsistent judgments is important but is not a trump card where the substantive dispute is overwhelmingly connected with another forum.

The proceedings began as an Arbitration Claim under CPR Part 62 concerning six LCIA arbitrations between VTB and Antipinsky. Interim relief under Arbitration Act 1996, section 44, included a worldwide freezing order and a mandatory cargo injunction.

Petraco intervened, claiming an interest in the cargo and relief under VTB’s cross-undertaking in damages. Following an order for an expedited cargo trial, VTB brought proposed CPR Part 20 claims against Sberbank and MachinoImport alleging deceit, breach of warranty and unlawful means conspiracy arising from an alleged double-selling scheme. Teare J granted permission for the additional claims. Sberbank and MachinoImport challenged that order.

The issues were whether VTB was a defendant entitled to use Part 20, whether the court should exercise its discretion to permit the claims, and whether England was the forum conveniens.

1. VTB was not a defendant. Whether a party is a claimant or defendant depends on the substance of the particular claim, not its formal designation. Petraco’s claim arose from VTB’s injunction and cross-undertaking. Petraco had been brought into the proceedings involuntarily, sought only to be restored to its pre-injunction position, and had no freestanding cause of action against VTB. It therefore remained in a defensive position, while VTB remained the claimant for the purposes of that claim. The Blair Order did not alter that analysis. The court therefore had no jurisdiction to permit VTB to bring Part 20 claims against Sberbank and MachinoImport.
2. Discretionary observations. Even if jurisdiction existed, permission would have been refused. The Cargo Trial concerned ownership of the Polar Rock Cargo and potential liability under the cross-undertaking. The proposed Part 20 claims were substantially freestanding claims alleging conspiracy and deceit, involved different factual and legal inquiries, concerned many more cargoes and a much larger claim, and sought materially different relief. CPR r. 20.9 therefore pointed strongly against permission. The supervisory role of the court in relation to arbitration is limited and intervention should be sparing.
3. Forum conveniens. Russia was clearly the more appropriate forum. The parties, events, witnesses, documents, insolvency proceedings and principal Russian-law claims were overwhelmingly connected with Russia. The Russian-law issues were novel and complex, and evidence through translation would materially impede assessment of documents and witness credibility. The partial overlap and risk of inconsistent findings did not outweigh those factors. The risk of irreconcilable judgments was a factor, not a trump card.
4. The challenge therefore succeeded. The court also indicated that, had the issue been live, it would have refused permission to serve out because England was not clearly and distinctly the most appropriate forum.