Navigator Equities Limited & Anor v Oleg Vladimirovich Deripaska

A person may be committed for breach of an undertaking only on the allegations particularised in the application notice and proved beyond reasonable doubt. Heightened procedural fairness prevents an applicant from advancing a materially different case on appeal.

Where an alleged contempt depended on the cancellation of foreign-company shares, the applicant had to prove that consequence under the relevant foreign laws. A shareholder’s vote was not proved to determine a change of domicile where further discretionary regulatory approval was required.

Indemnity costs require conduct or circumstances taking the case outside the norm. Such an order should not be imposed merely to punish inappropriate language which caused no additional costs, particularly where it would disapply proportionality.

The claimants sought to commit Mr Oleg Deripaska for contempt of court. They alleged that he had procured or permitted a company he controlled to vote for the transfer of EN+ Group Plc’s domicile from Jersey to Russia, contrary to undertakings intended to preserve 45.5 million EN+ shares for enforcement of arbitral awards.

His Honour Judge Pelling KC, sitting in the Commercial Court, dismissed the application in [2023] EWHC 788 (Comm). He held that the claimants had not proved beyond reasonable doubt their pleaded case that the continuance automatically cancelled the Jersey shares and replaced them with new Russian shares. He ordered part of Mr Deripaska’s costs to be assessed on the indemnity basis because of inappropriate language in a supporting affidavit.

The claimants appealed against both the dismissal of the committal application and the partial indemnity-costs order.

1. The committal appeal was dismissed. A contempt application must satisfy a heightened standard of procedural fairness. The applicant must prove beyond reasonable doubt the contempt particularised in the application notice. The court cannot determine guilt on a materially different factual basis which was not pleaded, even if that basis might establish a breach of the undertaking: [2020] EWHC 2599 and [2016] EWCA Civ 173 applied.

2. The pleaded allegations depended throughout on the proposition that the continuance of EN+ from Jersey to Russia automatically cancelled the 45.5 million shares and replaced them with new shares in a new company. The language, supporting affidavit and procedural history showed that “cancellation” meant the extinction of the shares, not merely that continuing shares had become uncertificated Russian-law shares. The claimants could not substitute the latter case on appeal.

3. The legal effect of the continuance depended on Jersey and Russian law. No expert evidence of either system had been adduced, and English company law contained no equivalent regime. The claimants therefore failed to prove beyond reasonable doubt that the shares had been cancelled. The statutory language instead appeared consistent with the company and its shares continuing in existence.

4. The claimants also failed to prove that B-Finance’s vote was determinative of the continuance. Although its shareholding enabled it to defeat the special resolution, further steps outside its control remained necessary. In particular, article 127U of the Companies (Jersey) Law 1991 gave the Jersey Financial Services Commission a discretion whether to approve the application even if the statutory criteria were satisfied.

5. The costs appeal was allowed. An indemnity-costs order requires conduct or circumstances taking the case outside the norm. Although parts of the supporting affidavit used unnecessary and inappropriate language, the criticisms made of Mr Deripaska were relevant and factually justified. The language caused no additional response costs. The order was therefore punitive rather than compensatory and disproportionately removed the protection of proportionality under rule 44.3 of the Civil Procedure Rules 1998. The indemnity-costs provision was set aside and assessment ordered on the standard basis.

1. Court of Appeal (Civil Division): In [2024] EWCA Civ 268, the court dismissed the committal appeal but allowed the costs appeal, setting aside the order for partial assessment on the indemnity basis.
2. Commercial Court: His Honour Judge Pelling KC dismissed the contempt application in [2023] EWHC 788 (Comm) because the pleaded allegations had not been proved to the criminal standard. He ordered the claimants to pay part of the respondent’s costs on the indemnity basis.