VTB Commodities Trading DAC v JSC Antipinsky Refinery

Security for costs is directed to costs incurred in proceedings which the applicant seeks to pursue. An intervener enforcing an undertaking in damages is not thereby a claimant for security for costs purposes, and the party resisting enforcement is not necessarily a claimant. The court must consider the practical sanction for non-provision of security and whether it would produce one-sided litigation or impair a fair trial. Security may be appropriate for a counterclaim where staying or striking out the counterclaim is an available and proportionate sanction. Case management powers may also justify an adjournment, subject to conditions addressing foreseeable costs and licensing difficulties.

The applications arose in litigation concerning injunctions obtained by VTB in support of arbitral proceedings concerning oil cargoes. Petraco intervened and sought damages under VTB’s cross-undertaking in damages. VTB also pursued a counterclaim against Petraco. Following sanctions affecting VTB’s ability to pay legal fees, Petraco applied for security for the costs of the Cargo Trial and for further information concerning VTB’s Russian law case. VTB sought an adjournment of the trial and extensions of directions after the issue of an OFSI general licence. The central issues were VTB’s procedural status, the appropriateness and practical effect of security for costs, and whether the trial should proceed on the existing timetable.

1. Representation and case management. The court permitted VTB’s chief executive officer to represent it on case-management issues under the court’s inherent jurisdiction. VTB could also raise those matters without an application notice because they were matters the court could address of its own motion.
2. Security for costs. Petraco was not a claimant when enforcing the undertaking in damages. It had intervened to protect its interests and to seek restoration of the position existing before the injunctions. VTB was a claimant in relation to its counterclaim, so security might in principle be ordered for that counterclaim. It did not follow that VTB was a claimant for the purpose of security for Petraco’s costs of enforcing the undertaking. The requested sanction—striking out VTB’s defence and counterclaim—would not halt Petraco’s proceedings and would create acute one-sided litigation. The application for security for the Cargo Trial was therefore refused.
3. The court did not exclude a properly framed application for security for costs of the counterclaim. Such an application would need to address the counterclaim’s specific issues, the amount of security, and the available sanction of staying or striking out the counterclaim.
4. Adjournment and licensing. The existing three-week trial timetable was unrealistic given VTB’s reduced resources, the absence of effective preparation, the scale of the evidence, and the uncertainty surrounding OFSI and other licences. The trial was adjourned and directed to be re-fixed in November 2023. As a condition of the adjournment, VTB was ordered to make a contingent application to OFSI for a licence covering a possible adverse costs liability, with £2,500,000 identified as a realistic interim-payment figure.
5. Further information and disclosure. VTB was ordered to obtain the Russian law advice used in pleading its causes of action and to use its best endeavours to answer Petraco’s request for further information within six weeks. VTB was also directed to identify relevant personnel and locations of electronic documents and report that information to Petraco’s solicitors.