Maplesfs Ltd v B&B Protector Services Ltd
| Jurisdiction | Cayman Islands |
| Judge | Justice David Doyle |
| Judgment Date | 14 July 2022 |
| Court | Grand Court (Cayman Islands) |
| Docket Number | CAUSE NO: FSD 213 of 2021 (DDJ) |
The Hon. Justice David Doyle
CAUSE NO: FSD 213 of 2021 (DDJ)
IN THE GRAND COURT OF THE CAYMAN ISLANDS
FINANCIAL SERVICES DIVISION
Substituted service and appropriate forum issues — Cayman Trustee of Cayman Trust — governing law and jurisdiction provision and firewall provisions — Russian Banks and English Proceedings — desirability of all issues in dispute between the parties being dealt with in one forum — identification of the forum in which the case can be suitably tried for the interests of all the parties and for the ends of justice
John Machell QC and Adam Huckle of Maples and Calder (Cayman) LLP for the Plaintiff
Alex Potts QC, Alecia Johns and Tonicia Williams of Conyers Dill & Pearman LLP for the Second Defendant
By Originating Summons dated 21 July 2021 the Plaintiff, a company incorporated under the laws of the Cayman Islands, as trustee of the MF Trust (the “Trustee”) sought, then stated to be pursuant to the Trusts Act (2021 Revision) and/or the Grand Court Rules (“GCR”) Order 85 rule 2, the following “directions, orders and relief” namely, a declaration that the Trustee is the trustee of the MF Trust, which is a trust governed by a deed dated 27 December 2017 (as amended and restated by a Deed of Amendment and Restatement dated 13 December 2018) (the “Trust Deed”) and Cayman Islands law, and that it holds various assets (specified in the Schedule to the Originating Summons and referred to as the “Trust Companies”) as assets of the MF Trust for the beneficiaries and on the terms set out in the Trust Deed, and not on bare trust for Boris Mints.
On 22 November 2021 this court on an ex parte application made, on consideration of the papers without an oral hearing, an order (the “Service Order”) permitting the Trustee to serve any documents in the Cayman proceedings on the Second and Third Defendants (the “Russian Banks”) by sending such documents by courier and email to the English solicitors acting for the Russian Banks in London and by courier and post to the Russian Banks' respective addresses in Moscow.
The Russian Banks have applied, on various grounds, for the Service Order to be set aside or for the Cayman proceedings to be stayed.
In this judgment I have declined to set aside the Service Order and 1 have concluded that there was no lack of disclosure or lack of fair presentation. I have, however, granted a forum non conveniens stay and leave the parties, including the Trustee, to argue all the points in dispute between them in the proper context of the proceedings in England and Wales which were commenced as long ago as June 2019.
The application of the Russian Banks is in two main parts. The issues raised relate firstly to service and secondly to jurisdiction.
By summons dated 25 January 2022 (the “Service/Jurisdiction Summons”) the Russian Banks made an application that the Service Order be set aside on various grounds, namely:
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(1) permission was not applied for service out of the jurisdiction;
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(2) it was not “impracticable” for the Originating Summons to be served “personally” on the Russian Banks in Russia;
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(3) the Trustee's assertions in the skeleton argument dated 17 November 2021 that an order for substituted service was not necessary to achieve expedition or to avoid delay and that the Trustee would be materially “prejudiced” by effecting service on the Russian Banks through the Hague Service Convention were incorrect and/or not the subject of fair presentation;
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(4) the Trustee's following assertions were misleading and/or not fairly presented:
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(a) service may take anywhere between one and three years;
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(b) there appears to be no proper reason why the Banks would refuse to accept service via their English solicitors;
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(c) “the Banks have given no reason for their position”.
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(5) the Trustee's assertion that “substituted service” on the Russian Banks in Russia or via their English solicitors in England is not contrary to the law of Russia (within the meaning of such phrase in GCR Order 11 rule 5(2)) was incorrect and/or not the subject of fair presentation;
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(6) the Service Order was irregular in that it failed to specify the date on which the Originating Summons would be deemed to be served on the Russian Banks and/or the period by which the Russian Banks should file any acknowledgement of service and/or defence and/or affidavit evidence;
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(7) the Originating Summons was irregular in requiring the Russian Banks to file an acknowledgement of service within 21 days contrary to the 28 day period specified in GCR Order 11 rule 1(4);
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(8) the Trustee failed to discharge its duty of full and frank disclosure and its duty of fair presentation including:
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(a) by failing to draw the Court's attention to the various matters set out above;
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(b) by failing to draw the Court's attention to the fact that the Beddoe order and reasons provided by Kawaley J were made on an ex parte and unopposed basis and were not binding on the Court nor the Russian Banks;
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(c) by failing to draw the Court's attention to various findings made in the LCIA Tribunal's Final Partial Arbitration Award dated 23 June 2021 including the findings that certain individuals had participated in a dishonest conspiracy to defraud the Third Defendant of around US$600 million in a transaction that look place in August 2017. In fairness I should record that the Trustee says at paragraph 4 of its skeleton argument that the English Court (Foxton J [2022] EWHC 871 (Comm) 11 April 2022) has recently decided that the findings in the LCIA arbitration are not binding on the Mints;
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(d) by failing to draw the Court's attention to the timing and circumstances by which the MF Trust was purportedly established on 27 December 2017;
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(e) by wrongly describing the Russian Banks' position at paragraphs 12 and 23 of the Trustee's skeleton argument dated 17 November 2021 as “relying on a technical position simply to delay the progress of these proceedings”.
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The Russian Banks also apply for an Order staying the proceedings on the grounds of forum non conveniens and/or Us alibi pendens on the basis that the High Court of England and Wales is both an available forum with competent jurisdiction, and the appropriate forum for the trial and determination of the Trustee's claims against the Russian Banks and the Russian Banks' claims against the Trustee (and various other parties) which are already the subject of proceedings commenced by the Russian Banks against the Plaintiff (and various other parties) in the High Court of England and Wales in Claim No CL-2019-000412 and CL-2020-000432 (the “English Proceedings”) in which the case may be tried more suitably for the interests of all the parties and the ends of justice.
Further or alternatively the Russian Banks seek an order staying the proceedings before this court on “case management grounds” pending final determination of the substantive English Proceedings and/or the Trustee's application to set aside the Order of Knowles J dated 28 July 2021 (which the Russian Banks state “is currently scheduled for hearing in or about September 2022”).
By summons dated 17 November 2021 (the “Substituted Service Application”) the Plaintiff applied, pursuant to GCR Order 65 rule 4(1), for the Trustee to be permitted to serve documents in these proceedings on the Russian Banks by way of substituted service upon their English solicitors in London and on the Russian Banks' addresses in Moscow.
The Substituted Service Application was supported by the second affidavit of Peter Goddard sworn on 17 November 2021. Mr Goddard referred to the Originating Summons and the English Proceedings. Mr Goddard at paragraph 13 said that any delay in the determination of the proceedings extends the time during which there is an outstanding challenge to how the Trustee continues to hold the trust assets of the MF Trust. He added:
“It is of critical importance to the Trustee to have certainty as to how it holds the trust assets.”
Mr Goddard indicated that the Russian Banks' English solicitors were provided with copies of the Originating Summons and evidence in support by letter dated 27 July 2021. Mr Goddard referred to “the importance to all parties of determining the question of the validity of the MF Trust as quickly as possible … without the delay that would result from the Trustee needing to serve the Banks via the Hague Main Channel.” Mr Goddard referred to the litigation prejudice.
Mr Goddard referred to an opinion from the Trustee's Russian counsel KIAP that (1) service of the proceedings on the Russian Banks in Russia under the Hague Main Channel may take between one and three years (paragraphs 21, 51–52 of the Opinion) and (2) the proposed methods of substituted service would not be contrary to Russian law.
Mr Goddard said that the Trustee was concerned that if the sole option to serve the Russian Banks was via the Hague Service Convention, the proceedings in the Cayman Islands may only be able to proceed after a delay of up to three years and (1) the bare trust claim in the English Proceedings is likely already to have been determined, or at least be sufficiently advanced so as to prejudice the Cayman Proceedings and (2) the Trustee would have continued to act in circumstances where there is an outstanding and continuing challenge to how it holds the trust assets — a point that goes to the core principles of its role as trustee.
The legal opinion of Anna Grishchenkova (“Ms Grishchenkova”) of KIAP was dated 2 November 2021 and I have revisited it...
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