England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		7 Rolls Building Fetter Lane London EC4A 1NL
		16 August 2013

MR JUSTICE BLAIR:

1. This is an application by Carlsbad Enterprises Limited (the 27^th defendant) to discharge a worldwide freezing injunction made against it on 2 May 2013 by Field J. Carlsbad is a Cyprus company. The injunction was made ex parte in support of London arbitration proceedings against Mr Sergey Maksimov and ancillary to a freezing order against him and the second to fourth defendants made by Cooke J on 17 January 2013.
2. The claimant, PSJC Vseukrainskyi Aktsionernyi Bank does not assert a cause of action against Carlsbad, but claims relief against it on the grounds that its assets are, in truth, the assets of Mr Maksimov and are amenable to enforcement in the event that it obtains an award in its favour.
3. Carlsbad's discharge application is made on four broad grounds: (1) The court has no jurisdiction to make or serve the injunction out of the jurisdiction; (2) Carlsbad's assets are not owned by Mr Maksimov and/or are not amenable to enforcement; (3) it is not just and convenient to maintain the injunction; and (4) there has been material non-disclosure by the Bank.
4. The facts are set out in judgments of Popplewell J of 7 March 2013 and Field J in granting the injunction. I need only summarise them.
5. The Bank is a joint stock company incorporated under Ukrainian law. Mr Maksimov was President of the Bank and Chairman of its Supervisory Board from 12 April 1996 until 2 November 2010. In December 2011 criminal proceedings in Ukraine were commenced against him, relating to his management of the Bank. Mr Maksimov's position is that he has been the victim of a campaign to discredit and weaken him, conducted through the media and the Ukrainian courts after a majority share in the Bank was acquired by Mr Oleg Bahmatiuk who is a Ukrainian businessman.
6. The position as regards the arbitration is as follows. On 4 July 2012, the Bank commenced arbitration proceedings against Mr Maksimov for recovery of amounts under a Framework Agreement dated 19 November 2009. This agreement is governed by English law and provides for arbitration in London under the LCIA rules. The parties to the framework agreement were Mr Maksimov, a company called TBIF Financial Services BV and the Bank. Under the Framework Agreement, TBIF agreed to purchase Mr Maksimov's shares in the Bank if certain conditions precedent were fulfilled. I am told that the Framework Agreement was never implemented.
7. In the arbitration, the Bank is seeking damages of approximately US$80 million, alleged caused by the failure of Mr Maksimov to use his best efforts to fulfil the conditions precedent. These involved the repayment of loans allegedly made to companies owned or controlled by him while he ran the Bank. On 1 October 2012, Professor Kaj Hobér was appointed as sole arbitrator and there is a hearing taking place in November.
8. The injunction came about as follows. On 17 January 2013, Cooke J granted the Bank an injunction against Mr Maksimov and the second to fourth defendants pursuant to section 44(3) Arbitration Act 1996. The second to fourth defendants are English registered companies. The injunctions against those three companies was granted on the basis of the jurisdiction confirmed in the case of TSB v Chabra [1992] 1 WLR 245. The principles have not been in dispute before me.
9. The Bank claimed that these companies, which hold shares in a Ukrainian company, PJSC Odeskyi Portovyi Holodylnyk ("OPH"), were, in reality, owned by Mr Maksimov via Carlsbad. OPH provides transport, stevedore and cold storage services in Odessa.
10. The second to fourth defendants each own a substantial block of shares, as does Carlsbad. As I shall state shortly, it was not seriously disputed as Popplewell J noted in his judgment that there is a good arguable case that the OPH shares are held by these defendants as nominees for Carlsbad. He explains the reasons for this in paragraphs 8 and 9 of his judgment. On this basis, the 94 per cent holding in OPH held by the four companies is in the same beneficial ownership and subject to the same control. This has not been in dispute in front of me either.
11. On 8 February 2013, the second to fourth defendants applied to discharge the injunction on the basis that the companies were beneficially owned by Mr Oleg Nemyrovskyy, an independent third party, and not Mr Maksimov.
12. On 26 February 2013, Popplewell J heard these defendants' discharge application. On 7 March 2013, he handed down his judgment rejecting the discharge application on the basis that there was a good arguable case that the companies are beneficially owned by Carlsbad, which is itself beneficially owned by Mr Maksimov. The Chabra principles are summarised in paragraph 7 with both parties accepted before me was accurate.
13. On 13 April 2013 the Bank applied, in effect, for an extension of the injunction to cover the 5^th to 29^th defendants (including Carlsbad). The injunction was granted by Field J ex parte on 2 May 2013. He also gave permission to serve Carlsbad out of the jurisdiction. Carlsbad was not served with the injunction until 17 May 2013.
14. On 13 June 2013, it made the present application to discharge the injunction. It applied for the matter to be heard as soon as possible, which is why it is being heard this week. I should say that, although Carlsbad has complied with the disclosure provisions in the order, albeit inadequately according to the Bank, the other non-UK defendants, including Mr Maksimov, have not.

The Bank's preliminary objection

15. The Bank has a preliminary objection as follows. It applies to Carlsbad's second contention, namely that its assets are not owned by Mr Maksimov and are not amenable to enforcement. The Bank says that this is not a point which it is open to Carlsbad to take on this application. The issue of whether there is good reason to suppose that Carlsbad is owned and controlled by Mr Maksimov was decided by Popplewell J on 7 March 2013 and Carlsbad, the Bank submits, is estopped under the doctrine of privity of interest from contending otherwise on this application. Alternatively, it would be an abuse of process to allow it to raise this issue.
16. Carlsbad submits that Popplewell J's judgment is not binding on this court now. Carlsbad was not a respondent to the initial injunction proceedings or a party to the proceedings before Popplewell J. It says that different considerations were also at stake. It points out that Popplewell J commented adversely on the absence of corroborative evidence. There is no significantly more material supporting Carlsbad's case than was available at the earlier hearing. The court must, Carlsbad submits, consider matters afresh in view of all the evidence now before it.
17. As it says, there is considerably more evidence now before the court. It includes witness statements from persons who worked at the bank at the relevant time and associates, family and trading partners of Mr Nemyrovskyy and Carlsbad. Mr Nemyrovskyy, Carlsbad says, has also produced extensive contractual and corporate documentation showing his ownership of and control over the company.
18. There is no doubt about the extent of the material before the court. The court has 16 files of evidence on this application and further evidence came in just before and during the hearing. However, the preliminary question is whether it can be deployed in the manner in which Carlsbad seeks to use it.
19. The matter arises in this way. The issue before Popplewell J can be explained by reference to three paragraphs of his judgment. The term "corporate defendants" is a reference to the second to fourth defendants. In paragraph 6 the judge said as follows:

"For reasons I shall explain, the critical issue for the purposes of this application is as to who is the ultimate beneficial owner of Carlsbad. The Bank contends that Carlsbad is, like the Corporate Defendants, a nominee company for Mr Maksimov and under his substantial control. The Corporate Defendants contend that Carlsbad is a company beneficially owned and controlled by Oleg Nemyrovskyy."

20. In paragraph 8 the judge said:

"It was not seriously disputed before me that there is a good arguable case that the OPH shares are being held by the Corporate Defendants as nominees for Carlsbad; and that those shares are therefore in the beneficial ownership and subject to the substantial control of whoever is Carlsbad’s ultimate beneficial owner exercising substantial control over Carlsbad."

21. In paragraph 10 the judge said:

"The critical question on this application is therefore whether there is good reason to suppose that Mr Maksimov is the ultimate beneficial owner of Carlsbad, using Mr Nemyrovskyy as his nominee and acting through him in exercising control."

22. The conclusion which he reached is at paragraph 37. He said:

"It is important to keep in mind that the exercise upon which the Court is engaged is not the trial of an issue as to whether Mr Maksimov substantially controls Carlsbad, but a determination whether the evidence establishes that it is more than barely arguable that such is the case. For the reasons I have given I am persuaded that the Bank has reached the threshold of a good arguable case. On the totality of the evidence currently before me, there is good reason to suppose that Carlsbad was and remains a company owned and substantially controlled by Mr Maksimov. Whether that will prove to be so upon a full trial of the issue remains to be seen."

23. Having given this judgment on 10 April 2013, Popplewell J ordered that:

"There shall be a trial of the issue between the Claimant and the Corporate Defendants as to the ownership of the shares in the Ukrainian company [OPH] currently held by the Corporate Defendants ..."

24. He gave directions as to disclosure and so on. He directed that the provisional length of the trial was to be six days. I am told that the trial has been fixed for March 2014. It is worth repeating that the second to fourth defendants are English companies and that the question is as to the ownership and control of shares held by these companies. The issues, as I understand it, it will be whether or not that is Mr Maksimov through Carlsbad, or Mr Nemyrovskyy through Carlsbad as he claims. Essentially, what I am being asked to do is to reverse Popplewell J's conclusion ahead of the trial.
25. There are some other matters to mention in this regard and I do not think that they are in dispute. The evidence on the challenge decided by Popplewell J was essentially that of Mr Nemyrovskyy (see paragraph 6 of the judgment). This records that Carlsbad was paying the applicant's costs. As the judge recorded in paragraph 9.4:

"Mr Nemyrovskyy is providing all of the instructions and evidence on behalf of the Corporate Defendants in these proceedings, even though he has no official position with them, and Carlsbad is paying for them. In his witness statement he suggests that this is because Carlsbad is the biggest beneficial shareholder in OPH; but this does not explain why he is better qualified to protect the interests of the Corporate Defendants than their purported beneficial owners. Their willingness to allow Mr Nemyrovskyy to represent them is suggestive that they are mere nominees of Carlsbad or whoever exercises substantial control over Carlsbad."

26. The Bank says that to all intents and purposes, Carlsbad fully participated in the hearing before Popplewell J and, although Carlsbad disputes this now, this is clearly correct in my view. The question is as to the consequences.
27. Carlsbad makes the following submissions.

(1) It is a distinct legal entity from the second to fourth defendants and was not a party to the earlier proceedings. It cannot be automatically shut out from these proceedings.

(2) The present injunction is wider in scope than the initial injunction.

(3) The hearing before Popplewell J did not deal with Carlsbad's Ukrainian assets or issues of jurisdiction.

(4) There is new evidence before the court that was not before Popplewell J that it is right for the court to consider.

(5) The injunction expressly provides that anyone served with or notified of it may apply to the court "at any time to vary or discharge the order".

(6) The Bank was informed of Carlsbad's intention to seek a discharge of the injunction on jurisdictional and substantive grounds at the return date hearing before His Honour Judge Mackie QC on 23 May 2013. The Bank raised no issue of abuse then. It is too late for it to do so now.

(7) Further, to the extent that there is overlap between issues before Popplewell J and issues presently before the court, the Bank is entirely at fault for choosing to proceed initially against the second to fourth defendants without also proceedings against Carlsbad. The Bank (submits Carlsbad) is the party which has abused the process.

28. I reject the last two grounds as having no substance. The did not have to be raised on 23 May 2013. As regards why proceedings against Carlsbad were proceeded with subsequently, rather than with the earlier application, this is a matter which I deal with later. The Bank, in any case, takes issue with all these points.
29. My conclusion on the other points made by Carlsbad is as follows. A freezing order of this kind is a draconian remedy and, having been brought within it for the first time, Carlsbad has every right to come to court to seek to discharge it. I shall have to consider the various grounds it raises in due course. However, as regards the question of the ownership and control of the company, none of the points that Carlsbad raises appears to me to have any force. Although Carlsbad was not a defendant at that time, the issue as to its ownership was the one which the court had to determine to the good arguable case standard. The second to fourth defendants were funded by Carlsbad. They were represented by well-known solicitors and counsel. It was up to them as applicants to put their evidence before the court on that occasion. What has happened is that, picking up on the judge's comments as to the inadequacy of the evidence, they have sought to add to their evidence now.
30. However, not only is the ultimate issue the same, but similar factual issues are raised. If some significant new matter had come to light which made it unfair to uphold the existing finding, which I emphasise is only a finding that Mr Maksimov's ownership and control of Carlsbad is arguable to the requisite standard, that might be different, but even on a freezing injunction, a person cannot come back and argue the same point again on evidence which could have been deployed at an earlier hearing. The fact that Carlsbad was not a party at the time does not make any difference to the substance of the matter.
31. This conclusion is supported, in my view, by the decision of Megarry V-C, in Gleeson v Wippell [1977] 1 WLR 510. Speaking of privity of interest, that is the kind of interest which may prevent a person from arguing a point already decided in previous proceedings to which he was not a party, the Vice-Chancellor said this at page 515E:

"... it seems to me that the substratum of the doctrine is that a man ought not to be allowed to litigate a second time what has already been decided between himself and the other party to the litigation. This is in the interest both of the successful party and of the public. But I cannot see that this provides any basis for a successful defendant to say that the successful defence is a bar to the plaintiff suing some third party, or for that third party to say that the successful defence prevents the plaintiff from suing him, unless there is a sufficient degree of identity between the successful defendant and the third party. I do not say that one must be the alter-ego of the other: but it does seem to me that, having due regard to the subject matter of the dispute, there must be a sufficient degree of identification between the two to make it just to hold that the decision to which one was party should be binding in proceedings to which the other is party. It is in that sense that I would regard the phrase 'privity of interest'."

32. This was cited with approval by the Court of Appeal in House of Spring Gardens v Waite [1991] 1 QB 241 at 252. It is argued that a difference is that Mr Nemyrovskyy is paying the costs this time rather than Carlsbad. The Bank's response is that this is to avoid Carlsbad having to disclose the source of the money. Whatever the position, it does not seem to me to change the analysis. I consider that this is clearly a case where there is sufficient identification between the second to fourth defendants in the previous discharge hearing and to Carlsbad in this one. In agreement with the Bank therefore, I think that Carlsbad is barred under the privity of interest and/or the abuse of process principles from running the same point again at this stage.

The evidence

33. I have, however, read the evidence in this case that the parties asked me to read and have heard oral submissions on it. The issue is, therefore, one which I have considered on the merits. Bearing in mind that the trial is fixed for March 2014, it is undesirable that I should say too much about my views of the evidence. The following points should, however, in my view be stated.
34. As a matter of background, Mr Nemyrovskyy is, as Carlsbad's submissions say, a businessman with extensive business interests. According to him, one of these is Carlsbad. He has primarily been associated with Brooklyn Kiev LLC, a leading commercial and industrial company in Ukraine and with companies which have developed other projects. The evidence is that he is a respected businessman and a former member of the Ukrainian Parliament. He is not the kind of person, Carlsbad says, to allow himself to be used as a mere nominee. He says that, like many Eastern European businessmen, he sometimes owns and managers his interests through family members and associates. I accept that, whilst noting that the concomitant is that it may be harder to establish who actually is the beneficial owner of particular businesses.
35. Popplewell J dealt with the setting up and administration of Carlsbad in paragraph 30 of his judgment.
36. There is now considerably more evidence in that respect, including from Ms Marina Verlinsky, Mr Nemyrovskyy's daughter, who, with him, was one of the people for whom shares in the company were held. A number of links are relied on this application, including the fact that Carlsbad's address in Cyprus is or was her father-in-law's medical institute. There is no mention of Mr Maksimov in any of the documents that have been produced. It can, in my view, fairly be said that the documentation produced points to the establishment of Carlsbad as Mr Nemyrovskyy's company.
37. There are, however, detailed discrepancies which the bank points to in the evidence. One is that, although Mr Nemyrovskyy says that the transfer and re-transfer of his interest in the company at the beginning and end of the five year term he served in the Ukrainian Parliament was to comply with rules against foreign holdings, the shares appear to have continued to be owned and held by the same nominee companies. There were, it is right to say, trust agreements relied on in that regard. More significantly, although Mr Nemyrovskyy states that during his term in Parliament he continued to make all managerial and business decisions in relation to Carlsbad, the Bank comments, "... in the hundreds of pages of documents he has exhibited, he has not produced a single memorandum, letter, email or other written communication which evidences this".
38. Matters may look different on analysis at trial. However, at present I do not think that I should read too much into the evidence regarding the incorporation and management of Carlsbad. The fact that Mr Nemyrovskyy set the company up and decided what happened to it, does not necessarily determine the beneficial ownership of the company or control of its assets.
39. Carlsbad has put in considerable further evidence of the business and projects in which the company participated. These matters are dealt with in paragraphs 28 and 29 of Popplewell J's judgment but, as I say, more documents have been produced now than were before the judge and there are considerably more deponents as well. These are summarised in paragraph 75 of Carlsbad's skeleton argument. I have read these witness statements and taken them into account, even if I do not expressly refer to them.
40. Carlsbad relies on the link which the evidence shows between these various projects of Carlsbad and Mr Nemyrovskyy and the absence of any reference to Mr Maksimov. The particular business projects referred to by Carlsbad are as follows.
41. The first concerns a company called Naftoservis LLC. This is a subsidiary of Carlsbad which engages in projects relating to the oil industry. Carlsbad's case is that it lent millions of dollars to Naftoservis, which had been a client of the bank since September 1998. Significant projects near the border with Slovakia were entered into in 1997 and 1999.
42. Evidence as regards ownership of the company is given by Ms Oksana Tsybka on behalf of Carlsbad. She was employed by Mr Nemyrovskyy or, to be more accurate, his companies, for ten years from October 1998. She says that she is certain that Carlsbad is not owned or controlled by Mr Maksimov.
43. As regards Naftoservis, she says that, upon completion of the construction works in 2004, Mr Nemyrovskyy decided to transfer his Naftoservis shares to Carlsbad. She says:

"I suspect that this was done in part as a tidying up exercise and to bring the shares more close back under his control. Subsequently, for tax purposes the corporate ownership was transferred on many occasions to various persons, including Mr Nemyrovskyy himself ... But at all times LLC Naftoservis remained in beneficial ownership of Mr Nemyrovskyy."

44. I tend to agree with the Bank that at this stage this statement does not provide clarity and, if anything, places the matter in some doubt.
45. The second project relates to the Kempinski Hotel which opened in Odessa in 2001. It was plainly a substantial project, but I do not at present see how the assertion that Carlsbad paid for the equipment and material for the construction and fitting out of the hotel advances the case much. Mr Nemyrovskyy says that he sold his stake in the hotel in April 2002. This project was not pressed in argument.
46. Third, Carlsbad made two loans in respect of a project called Respect Hall Resort and Spa near Yalta. Mr Nemyrovskyy says that he carried it out through a company called Respectservis LLC and another company.
47. The Bank says, however, that this project directly raises questions as to Mr Maksimov's participation. As I understood its case, it emphasised the following in particular. In addition to the first loan from Carlsbad, Mr Nemyrovskyy asserts that "at my request, Mr Maksimov also provided to me US$2 million in cash as at that time I needed it to finance the construction works at Respect Hall". There was, therefore, the Bank says, a clear link with Mr Maksimov.
48. Further, although Carlsbad is said to have "received property in Respect Hall", I agree with the Bank that the way this happened is not presently clear. The acquisition of a Falcon aircraft in connection with the project which Carlsbad also mentioned does not seem material at this stage and has not been pursued in argument.
49. There was some last minute evidence as regards Respectservis LLC. The Bank produced a witness statement from Mr Sotir, one of its lawyers in Ukraine. This was served on Carlsbad's lawyers shortly before the hearing. What it says is that Mr Sotir has ascertained that Respectservis LLC is subject to insolvency proceedings. Carlsbad is one of the creditors. The person acting as insolvency administrator is a Mr Irkliyenko. The Bank believes that Mr Irkliyenko is a close associate of Mr Maksimov.
50. It was submitted by Carlsbad that this witness statement was inadmissible on grounds of lateness. However, on the second morning of the hearing, Carlsbad put in a witness statement from Mr Irkliyenko answering it and that objection falls away.
51. He said that, although he still has directorships in two of Mr Maksimov's companies, he holds these positions nominally and intends to resign. He says that at the beginning of 2013, "Mr Nemyrovskyy, who knew my intention to terminate the relationship with Mr Maksimov, informed me of a possibility of insolvency proceedings against Respectservis LLC". Accordingly, he (that is Mr Irkliyenko) applied to the Commercial Court of Crimea and was appointed insolvency administrator. He does not agree that he was a close associate of Mr Maksimov. Another witness statement was put in by a Mr Pasko, contradicting an assertion by Mr Sotir that his participation in Respectservis also indicated Mr Maksimov's involvement in the Respect Hall project.
52. There is obviously a major dispute on the facts in this regard. On the present evidence, the Bank is able to point to the fact that a director of companies owned by Mr Maksimov has been appointed insolvency administrator in connection with Respect Hall. That much is not in dispute and, so far as it goes, it supports the Bank's case.
53. The fourth project was to construct a port silo and grain transhipment facility by a company called UKPROM. The evidence is that Carlsbad was the principal investor in the project and provided a loan drawn down in instalments until 2005. In that year Mr Nemyrovskyy sold the shares. Reliance is placed on the fact that a draft report by KPMG and the sale agreement show Mr Nemyrovskyy to be the owner and/or controller of Carlsbad and UKPROM. The Bank challenges this by saying that the actual report as opposed to the draft is not in evidence.
54. There is also in evidence material relating to an approach for funding made to Alpha Bank, which is Russian Bank, for a loan, although this did not happen. Again, the evidence shows Mr Nemyrovskyy rather than Mr Maksimov as directing this process.
55. Subsequently in late 2005, Carlsbad's evidence is that Mr Nemyrovskyy initiated the fifth project to construct a container terminal next to UKPROM’s grain facility. Carlsbad's evidence is that it was one of the shareholders providing the equipment for the construction of the project and also funding in the sum of US$17,720,000. The terminal was completed in October 2008. Mr Nemyrovskyy says that Carlsbad withdrew from the project by selling its shares to another company, although he does not give the date.
56. The Bank makes numerous detailed criticisms of the evidence as to these projects. I accept Carlsbad's submission that some of them are, as it was put, "nit-picking". Its Ukrainian lawyers produced a table of comments on the Bank's submissions dealing with some of them.
57. I think it was accepted and, in any case it seems clear from Mr Nemyrovskyy's evidence, that at all relevant times he and Mr Maksimov had been close business associates. However, this can be no more than background evidence. It does not begin to establish ownership and control of Carlsbad. Despite the Bank's criticisms, I accept Carlsbad's submission that the evidence it has adduced provides strong support for its case that it is and was a company owned and controlled by Mr Nemyrovskyy not Mr Maksimov. That is my starting point on this issue. The point in essence is that Mr Maksimov's name does not appear in contemporary documents. The witnesses depose to the fact that they considered Mr Nemyrovskyy to be the true owner.
58. However, it seems to me that some of the Bank's criticisms of Carlsbad’s case are more weighty. I mentioned above the reliance placed by Carlsbad on the approach made to Alpha Bank. As part of the application for financial facilities, Carlsbad gave a description of its main activity and construction cycle. The Bank says that it is not consistent with the descriptions given in evidence on this application. In full, it reads as follows:

"Carlsbad Enterprises Limited is a company incorporated and operating under the laws of Cyprus since May 1998. Main directions of activity are the following: investments, construction, grain and metal trade. The company has been operating on Ukrainian markets since 1999. It has successfully carried out such widely known projects as construction of grain, storage complex in Odessa, commercial seaport, construction of a hotel on the passenger pier in Odessa, construction of an oil handling terminal ... (amount of investments €5 million). The company also invests in construction projects in Kiev ... and Crimea (Yalta) a project of recreational complex Respect Hall. Amount of investments US $5 million.

During the period the company has invested more than US $100 million in Ukraine, by crediting Ukrainian enterprises, purchase of shares or corporate rights of enterprises. Average term of realisation of investment projects is three years. Average term of providing loan or credits to Ukrainian enterprises 5 years ... The enterprise employs personnel qualified in the area of financial management as well as commercial activity. In the area of grain trade, Carlsbad Enterprises Limited cooperates with transnational grain company Alfred Topfer... and other major market actors. In metal trading the company has been working with Leman-Ukraine for several years. Rostovskaya Galina has been the director of the company since its foundation. Nemyrovskaya Oksana is the representative of the company in Ukraine acting on behalf of the company under the general power of attorney."

Oksana Nemyrovskaya is Mr Nemyrovskyy's wife.

59. As the Bank says, this describes a trading vehicle on a large scale. However, there are no bank statements which deal with the movement of funds. The Bank maintains that the inference to be drawn is that Carlsbad does not wish to supply those because they will show connections to Mr Maksimov.
60. In this respect, it relies on the disclosure which Carlsbad gave pursuant to Field J's order. This was done by witness statement of 28 May 2013. The order required Carlsbad to set out information on its assets, exceeding US $50,000. There is no reference to bank accounts in the witness statement. Carlsbad's case is that it has no accounts holding funds in excess of that amount. In fact, no bank statements of any kind have been produced. Given the scale of Carlsbad's activities, the bank is, in my view, entitled at this stage to invite the court to draw adverse inferences from this omission.
61. Carlsbad seeks to answer the lack of the kind of evidence that one would expect to see of activities on the scale described to Alpha Bank by maintaining that it was a funding vehicle for the projects. In fact, this is the thrust of its evidence and certainly of its written submissions in support of the application. But as the Bank points out, if that is so, and it was a funding rather than a trading vehicle, there is no explanation in Carlsbad's evidence as to where the source of its own funding came from. On the evidence, this was funding on a large scale. So again the Bank is entitled to ask for adverse inferences to be drawn at this stage from the omission.
62. Further, at this stage in the proceedings, the Bank comments, with some force in my view, that even if much of the recent evidence can be substantiated, it is not necessarily inconsistent with Mr Nemyrovskyy acting as nominee for Mr Maksimov. It submits that the fact that Mr Maksimov does not feature in the evidence which has been placed before the court is not conclusive of the ownership and control issue. The weight and credibility of the evidence, says the Bank, will depend on its analysis in the light of disclosure and cross-examination which will follow from the order which Popplewell J has made.
63. As against Carlsbad's evidence, the Bank relies upon the same evidence that it relied on at the hearing in February. This was dealt with in detail in Popplewell J's judgment and I need not repeat what is said there.
64. The first thing is a shareholders' agreement dated 25 October 2005 between TBIF, a Netherlands' company, and Mr Maksimov. In it, Mr Maksimov sets out the various companies through which he holds his shares in the Bank. One of these is stated to be Carlsbad. Ms Tsybka says in her evidence that the agreement was not acted on and was intended to reflect an arrangement by which Carlsbad and other shareholders aggregated their shareholding and gave Mr Maksimov authority to negotiate with TBIF.
65. However, the terms of the agreement are inconsistent with any interpretation other than that Carlsbad was a Maksimov company: see paragraphs 20 to 22 of Popplewell J's judgment. In addition to the provisions referred to there, clause 9.2 provides that:

"The Shareholders of Mr Maksimov herewith declare to TBIF that Mr Maksimov controls all the Shareholders of Mr Maksimov and is a person that can manage or control any decision of each of the Shareholders of Mr Maksimov with regard to this Agreement or the Bank."

66. One of the "shareholders of Mr Maksimov" is Carlsbad which is effectively, therefore, making this statement itself. Crucially that evidence is not alone because the Bank's 2006 and 2007 annual reports state that Mr Maksimov's holding and that of his family is held through various companies, one of which is Carlsbad. He was President of the Bank making this statement at the time. The Bank's accounts are to similar effect.
67. In the witness statement provided by Mr Irkliyenko that I referred to earlier, he deals with this point. He says that he was chief accountant at VAB Bank in 2005 and 2006. He says that the shareholders' agreement was to create a group of shareholders who supported the policies of Mr Maksimov. The statements regarding Mr Maksimov's beneficial ownership of the Bank's shares through Carlsbad were the auditors' interpretation of the obtained data. In any case, Carlsbad submits that the information concerning the ownership of the shares cannot be trusted because it must have come from Mr Maksimov who is an alleged wrongdoer. It says that, given the timing, this evidence says nothing about the current ownership and control of Carlsbad. Further, it submits that these statements only concerned the ownership of its shares and not its assets or business and applied to members of Maksimov's family and not just himself.
68. I do not accept these submissions at this stage. It may be that further supporting explanations can be given and I do not wish to prejudge that. However, the ownership and control of a banking institution is an important matter. A bank has access to international payment systems and is central to combating money laundering. Ownership and control cannot be exercised indirectly without disclosure and the statements made by responsible persons in that regard are very important. Mr Maksimov was President of the Bank at the time and he stated in the Bank's reports that Carlsbad was his company. At this stage (and I repeat only at this stage) I think I must proceed on the basis that Mr Nemyrovskyy was aware of what was being said or would have been if in fact it was his company not Mr Maksimov's.
69. It is correct that these statements go back to the 2006/2007 period and that Mr Nemyrovskyy says that in 2008 Carlsbad sold the shares in the Bank to a Maksimov entity called Webbing Limited. This was dealt with in paragraphs 31 to 33 of Popplewell J's judgment. I agree with the judge that the evidence on this is presently doubtful.
70. I emphasise that the issue I have to decide is whether the Bank has made out a good arguable case that Carlsbad is owned and controlled by Mr Maksimov within the meaning of the test in the Chabra case. I am not making any findings and it is not appropriate that I should do so on this application. Notwithstanding the extensive further evidence before the court on this occasion, I agree with the conclusion expressed by Popplewell J in paragraph 37 of his judgment.
71. Accordingly, even if I had thought that ownership and control of the company was a point which it is open to Carlsbad to argue on this discharge application, which I do not, I would not have set aside the order. The factual disputes can be explored so far as they arise at the trial which has been ordered for next March.

Jurisdiction

72. I come therefore to Carlsbad's first submission, which is that the court has no jurisdiction to make or serve the injunction out of the jurisdiction. This divides into two points.
73. First, it is said that this was not a case of urgency so that the court had no jurisdiction to grant interim measures under section 44(3) Arbitration Act 1996. The principal point made is that, had the matter truly been urgent, Carlsbad could have applied either at the hearing on 8 February 2013 or soon after the judgment which was handed down on 7 March 2013.
74. On balance, I prefer the Bank's submission on this point. Carlsbad was one of a further 24 defendants against whom it sought the injunction which was in due course granted by Field J on 2 May 2013. I accept the Bank's case that there was a considerable amount of preparatory work involving enquiries in seven or eight countries required before it was in a position to make the application. It could not be expected to make the application piecemeal. Of course, only one of the further defendants is applying to discharge the injunction.
75. The next aspect of Carlsbad's challenge is on the basis that there were no grounds to serve it out of the jurisdiction. As I have said, it is a Cyprus company. The Bank seeks to justify service out on the basis that the claim is for an order under section 44 Arbitration Act 1996. Such a claim falls within CPR 62.5(1)(b). This was the ground on which Field J gave permission to serve Carlsbad out of the jurisdiction. It is to be noted, so far as relevant, that there was no alternative application under section 37 Senior Courts Act 1981.
76. Carlsbad objects on the basis that it was not a party to the arbitration agreement and rule 62.5 does not allow service out of the jurisdiction on a non-party. It relies on the decision of Thomas J in Vale Do Rio Doce v Shanghai Bao Steel Ocean Shipping Co [2000] 2 Lloyds Rep 1, which is cited as authority for this proposition in the note in the White Book. It is similarly cited in the 15^th edition of Dicey Morris & Collins at paragraph 16-045.
77. However, neither commentary refers to the subsequent decision of the Court of Appeal in Tedcom Finance v Vetabet Holdings [2011] EWCA Civ 191, which expressed the view that the point was arguable. I discussed this decision and the question generally in BNP Paribas v OJSC Russian Machines [2011] 2 CLC 942 at paragraphs 41 to 45, to which for convenience I refer without setting it all out here. I concluded on the facts of that case that CPR 62.5(1)(b) applied, albeit the defendant in question was not a party to the arbitration agreement—see paragraph 49. However, in the Court of Appeal, the court expressly reserved its decision on this point.
78. The issue has been touched on in further case law. In Western Bulk Shipowning v Carbofer [2012] 1 CLC 954 at paragraph 114, Christopher Clarke J "inclined to the view" expressed in Tedcom. In this regard he cited Gee on Commercial Injunctions (5^th edition) at paragraph 6.039. He did resolve the matter, since he would not have been minded to grant permission in any event.
79. Further, this view has some support in Merkin’s Arbitration Law at paragraph 19.94. Finally, Field J in granting the injunction "inclined to the view" that CPR 62.5(1)(b) does indeed allow for the grant of permission for the service of an arbitration claim form against Chabra defendants, though it was not necessary to reach a final determination since the Tedcom decision plainly established that the proposition was sufficiently arguable for the grant of permission. This was the ground on which he gave permission.
80. The result is that there is no binding authority on this point. I consider, however, that Tedcom is supportive of the view that, in a proper case, there is power to order service out of the jurisdiction under CPR 62.5(1)(b) on a defendant, albeit the defendant is not a party to the arbitration agreement. Clearly this is not a power to exercised lightly, but there are reasons for thinking that this may be the right analysis. Where it can be demonstrated to the requisite standard that a company is owned and controlled by a party to the arbitration agreement in the sense used in the Chabra case, there may be good reason for the court of the seat of the arbitration to stop that company from dissipating its assets if that would render enforcement of an eventual award nugatory.
81. In the present case England is the seat of the arbitration so the matter falls to this court to decide. I agree with Field J that this gives the necessary connection to England and I repeat that the 2009 agreement was subject to English law. The Bank says, credibly, that the only one of the companies which were injuncted by Field J which has valuable assets is likely to be Carlsbad because it is the only one which has applied to discharge it. Although Carlsbad has submitted that the assets already frozen are sufficient to cover any award, I agree with the bank that no reliance can be placed on such values since proper disclosure has not been given.
82. The risk of dissipation was not addressed at length in Carlsbad's written submissions, and I think for good cause. Broadly, it seems to me that, in the case of Carlsbad, this must depend on the conclusion as to Mr Maksimov's ownership which I have set out above. This is because it has already been decided that there is such a risk in his case and, of course, that is not challenged on this application. But there is, I think, an additional factor. The Bank, as I have said, points to the absence of any disclosure of Carlsbad's bank accounts in the context of dissipation.
83. For these reasons I reject Carlsbad's case on jurisdiction and need not consider the alternative submissions that were made as regards the provisions in the CPR dealing with necessary or proper parties.

Enforcement

84. Carlsbad's next submission is that there is no good reason to suppose that its assets are amenable to enforcement. Both parties have adduced evidence as to the position as regards enforcement against Carlsbad in the Ukraine and Cyprus should an award against Mr Maksimov in the arbitration not be satisfied.
85. It is plain that there is a dispute in this respect which cannot be resolved at this stage. Whatever the position may be in the Ukraine, I am satisfied that the Bank has made out a good arguable case that, if it can prove that Carlsbad is owned and controlled by Mr Maksimov, enforcement may be available in Cyprus, which is where the company is incorporated.
86. It is correct that Carlsbad has produced evidence from a Cyprus lawyer, Mr Lemonaris, to the effect that, in the absence of a floating charge, a receiver could not be appointed over the shares. However, he does not deal with the possibility of the appointment of a trustee in bankruptcy, which is also relied on in the Bank's witness evidence.
87. It is not appropriate at this stage to express a view on whether the latter would apply to a corporation rather than an individual, or whether, despite the opinion of Mr Lemonaris, the Cyprus court would have the power to appoint a receiver outside the context of a floating charge. As Popplewell J said at paragraph 7 of his judgment, the question is whether there is good reason to suppose that the assets would be amenable to some process, by which they would be available to satisfy the award. The Bank has satisfied that test, in my view, and nothing in the further evidence adduced rebuts it.

Just and convenient

88. The next point taken by Carlsbad is that, even if the court has a basis to grant an injunction against it, it would not be just and convenient to do so. I have dealt with a number of its reasons already. As regards the others, my views are as follows.
89. I do not think it makes any difference that the application was made ex parte rather than on notice. Although I accept that the injunction is causing a degree of prejudice, it does not prevent Carlsbad from dealing with or disposing of any of its assets in the ordinary and proper course of business, subject to informing the Bank's legal representatives beforehand.
90. I agree with Carlsbad that there was an inexplicable breach of the injunction by way of a failure to provide it with the skeleton argument and table of connecting factors. That omission has, however, now been corrected.
91. The main point that has caused me concern is Carlsbad's contention that the injunction seeks to bind a foreign company and involves matters that can only be properly determined by foreign courts. The same point was made as regards monitoring the injunction. There is, I note, a difference between the injunction granted by Field J and that granted by Popplewell J. The latter was restricted to English companies, together with Mr Maksimov, who is a party to the arbitration agreement. The further order against non-UK companies is a considerable extension. I accept the force of Carlsbad's point that issues relating to the corporate structure of the company should, on the face of it, be decided in Cyprus as the place of incorporation, and it is not in dispute that all the assets are in the Ukraine.
92. Ultimately, I have to approach this on the assumption that the Bank has made good to the requisite standard its case as to ownership and control of Carlsbad. On that basis, the question is whether it is just and convenient for the English court to grant an injunction against Carlsbad.
93. As against the points which Carlsbad legitimately raises, there are the following going the other way. Carlsbad has been represented as a Maksimov shareholding in the Bank's documents which I referred to earlier. The framework agreement was to do with Maksimov's shares in the Bank, albeit the evidence is that the Carlsbad shares had been disposed of by that time. The framework agreement is subject to English law and, most important, there is a London arbitration clause. That means that this court is the court of the seat of the arbitration and prima facie the court to grant interim measures in connection with the arbitration. This is not a straightforward equation but, on balance, I consider that these factors may fairly be described as exceptional when taken as a whole and make it just and convenient to continue the injunction.

Non-disclosure

94. That brings me to the last but important point which Carlsbad has raised. In reliance on well-settled principles which have not been in dispute before me, it submits that this is a case of material non-disclosure. The injunction should, it submits, be discharged on that ground. There are two bases for this submission.
95. The first has to do with the change of ownership in OPH. As it was put in oral submissions, the people who were associated with Mr Maksimov, that is the people who he put in place, were not in OPH at the relevant time. This is dealt with in paragraph 41 of Popplewell J's judgment. However, in the oral submissions to Field J in support of the application for the ex parte injunction, he was told that there were common personnel without this qualification being made. Like Popplewell J, I consider that this is a relatively minor matter, and do not consider that it amounts to material non-disclosure, and say no more about it.
96. However, the next matter is not, in my view, minor; it relates to documents about Carlsbad held by the Bank. As the evidence filed at an earlier stage in the proceedings mentioned, though it has to be said at no great length, Carlsbad had a relationship with the Bank at the time of the original injunction granted by Cooke J. Mr Nemyrovskyy himself said in his first affidavit in connection with the discharge application that Carlsbad opened investment accounts with the Bank in 1998 which were still active.
97. However, though this was noted by Mr Maltsev, who has provided most of the Bank's factual evidence in his third affidavit of 15 February 2013, it does not appear that this issue was explored in any way.
98. On 20 June 2013 Carlsbad's solicitors requested provisions of the Bank's "Know your Customer", that is KYC, documentation. On 16 July 2013, the KYC documents were served on them by the Bank's solicitors with translations. Carlsbad's case is that these KYC documents should have been disclosed to Field J, and that they strongly support the case that, not only was Mr Nemyrovskyy the true beneficial owner of Carlsbad, but that the Bank was fully aware that Mr Maksimov did not control or own it. The documents, therefore, it submits, go to fundamental issues before the court.
99. Before evaluating that submission, I should say that the Bank's position at the outset of the hearing was that the documents were not material and that in any case it was not open to Carlsbad to argue the point on this application not having raised it in its application notice. Neither of these points were tenable and were abandoned during the course of the hearing. Finally, but only (as Carlsbad's counsel put it) when seeing how the wind was blowing, the Bank apologised for the omission.
100. It was clearly important, in my view, for the Bank to search thoroughly for any documents it held which shed any light on the ownership of Carlsbad before making the application for the injunction. Anything material required to be brought expressly to the judge's attention. All this in accordance with basic principle and a bank in particular can be expected to comply with all due diligence. Carlsbad should not have had to ask for this information.
101. However, in fact the KYC documents, which appear to go back to 2004 or thereabouts, shed only limited light on the issues in the case. Although Mr Nemyrovskyy is identified in them, he is identified as the person authorised to operate the accounts. This is not inconsistent with the Bank's case. Insofar as anyone is identified as beneficial owner in the sense of "having a direct or indirect influence as to the client's activity", it is a Ms Zorpa.
102. In addition to the KYC documents, the Bank belatedly disclosed a bank account opening document between Carlsbad and the Bank dated 4 January 2013. In my view, this should have been shown to the judge.
103. Carlsbad submits that on this basis the injunction should be discharged with no re-grant.
104. The Bank makes the following points in answer. First, it is said that the infraction was not deliberate. Evidence was put in just prior to the hearing by one of the Bank's Ukrainian lawyers, Mr Korchev. He gives a relatively detailed explanation of the instructions given to the Bank by the English lawyers as to full and frank disclosure and the steps the Bank took to comply. It appears that there were two searches made and the branch manager identified some relevant documents but did not provide all the KYC documentation because he did not consider it to be relevant to the search he had been asked to undertake. I accept that there was no deliberate nondisclosure in this case, but that is not in itself conclusive.
105. Second, the KYC documents not disclosed are the Bank's internal documents. The Bank says, and this appears to be correct, that these were created from information supplied by Carlsbad, which Carlsbad, by definition, already had, and some of which were deployed in the first hearing in February 2013.
106. Third, the Bank submits that the further information it has disclosed would not have affected the result in any way. Again, however, that does not excuse non-disclosure.
107. In approaching this question, I have considered the factors in the case law summarised in Arena [2003] EWHC 1089 Ch at [213]. My conclusion on the issue is as follows. I consider that the Bank was at fault in the thoroughness of the search it conducted of its internal documents relating to the Carlsbad connection. Had it done a proper search, the KYC documents would have been disclosed, certainly to Field J and probably to Cooke J on the initial application.
108. However, the information included in the KYC documents must have come from Carlsbad. Furthermore and importantly, despite Carlsbad's submissions to the contrary, it does not appear to me that there is anything in the KYC documentation that is inconsistent with the other evidence in the case. In particular, it appears to be consistent with Carlsbad's own case as to the setting up and operation of the Cyprus company, which it seeks to establish through the documents.
109. In other words, it confirms the contents of Carlsbad's own documents, which is what one would expect. For reasons I have explained, the fact that Mr Nemyrovskyy set the company up and decided what happened to it, does not necessarily determine the beneficial ownership of the company or its assets. The KYC documents shed little, if any, light on the beneficial ownership question.
110. As regards the loan agreement document of 4 January 2013, the point that has weighed with me most is that this was signed by Mr Nemyrovskyy. While Carlsbad can fairly say that it supports its case as to ownership of the company, on the other side, it is to be noted that Carlsbad had been invested with a Power of Attorney issued on 9 March 2012 and signed by Ms Zorpa. Again, this does not appear to me to take matters much further.
111. But for present purposes, the point is that Mr Nemyrovskyy signed it. This was something which he knew about. Had it been of real significance, it can reasonably be inferred that the point would have been raised in his own evidence.
112. On balance, and applying the test shown in the case law, regrettable though this non-disclosure was, I do not consider that it justifies setting aside the injunction.

Conclusion

113. For all the above reasons, Carlsbad's application to set aside Field J's order does not succeed. That is my ruling.