An Application for a Disclosure Order v Arcelormittal USA LLC
| Jurisdiction | Cayman Islands |
| Judge | Kawaley |
| Judgment Date | 02 July 2019 |
| Year | 2019 |
| Court | Grand Court (Cayman Islands) |
| Docket Number | CAUSE NO. FSD 2 OF 2019 (IKJ) |
In the Matter of the Foreign Arbitral Awards Enforcement Law (1997 Revision)
And in the Matter of the Enforcement of the Arbitral Award of the ICC International Court of Arbitration Cause No. 22187/RD/MK
(A company incorporated under the laws of Mauritius)(in Administration)
(A company incorporated under the laws of the Cayman Islands)
(A company incorporated under the laws of Russia)
The Hon. Justice Kawaley
CAUSE NO. FSD 2 OF 2019 (IKJ)
CAUSE NO FSD 74 OF 2019 (IKJ)
IN THE GRAND COURT OF THE CAYMAN ISLANDS
FINANCIAL SERVICES DIVISION
Enforcement of foreign arbitration award—Foreign Arbitral A wards Enforcement Law—application for garnishee order — joinder application by secured lender — requirements for garnishee order — GCR Order 49 — whether qualifying debt exists — effect of subordination agreement — whether directions should be given for trial of issue concerning capacity of judgment debtor to validly enter into subordination agreement — whether garnishee summons should be summarily dismissed — application for freezing injunction against garnishee — modified application for ‘notification order’—whether good arguable case for injunction made out — whether injunction just and convenient — whether scope of proposed order proportionate — Norwich Pharmacal Order — whether final or interlocutory decision — Court of Appeal Law section 6(f) (ii) — Court of Appeal Rules rule 12(3), 12(5) (a)
Mr Tom Weisselberg QC of counsel, Mr Paul Smith, Ms Jessica Williams, Mr Conal Keane and Ms Anya Park, of Harneys, on behalf of the Applicant/Judgment Creditor (“AMUSA”)
Mr Paul Stanley QC of counsel, Mr Ulrich Payne, Mr William Jones, and Ms Kayla Lewis of Ogier, on behalf of the 2 nd Respondent/Garnishee (“EGFL”)
Mr Adrian Beltrami QC of counsel, Mr Brett Basdeo of Walkers, on behalf of VTB Bank (PJSC) (“VTB”)
The 1 st Respondent (“ESL”) did not appear
On December 19, 2017, AMUSA obtained a final arbitration award from an ICC Arbitration Tribunal sitting in Minnesota against ESL, a subsidiary of EGFL, requiring ESL to pay AMUSA US$1,380,991,356.04 plus interest at the rate of 8.60% until payment or entry of judgment on the award (the “Award”). AMUSA has taken various steps towards enforcing the Award, initially in Minnesota and thereafter in England and Wales, the Cayman Islands and Mauritius. It complains that no offers to settle its debt of approximately $1.5 billion have been made and not one cent has been paid since the Award was obtained nearly 1 years ago.
On January 15, 2019 in FSD No. 2 of 2019 (IKJ), I granted AMUSA a Norwich Pharmacol Order, which was modified in certain minor respects both on January 16, 2019 and (following an inter partes application to set it aside) through the Order drawn up to give effect to my judgment of March 29, 2019 (the “NPO'Vthe “NPO Proceedings”). AMUSA was the Plaintiff in those proceedings and EGFL was the 1 st Defendant. EGFL is the parent company of the Essar Group. The formal Order to be drawn up pursuant to my judgment delivered on March 29, 2019 in the NPO Proceedings was not agreed. Accordingly, by Summons dated May 28, 2019, AMUSA requested the Court to settle the terms of the Order. The dispute was whether the information required to be produced should be produced by June 10, 2019 as AMUSA sought or July 31, 2019, as the Defendants sought.
For reasons which are, for convenience, set out briefly below, I resolved that dispute (and the ancillary question as to whether the Order was final or interlocutory for appeal purposes) in favour of the Defendants in the NPO Proceedings. My decision, which ought to have been rendered at the end of the hearing, was communicated to the parties by email on May 31, 2019, the day after the hearing.
By an Ex Parte Originating Summons dated April 26, 2019, commencing the present proceedings, AMUSA sought an Order that:
“1. AMUSA has leave pursuant to section 5 of the Foreign Arbitral Award Enforcement Law (1997 Revision), to enforce against the Respondent in this Court the final arbitral award rendered in the ICC International Court of Arbitration Cause No. 22187/RD/MK on 19 December 2017.
2. Pursuant to Order 73, rule 31 (2) of the Grand Court Rules, this application may be served on the Respondent at Essar House, 10 Frere Felix de Valois, Port Louis, Mauritius.
3. Within 14 days, or such other period as the Court may fix pursuant to Order 73, rule 31(8), the Respondent may apply to set aside this Order, and the Award shall not be enforced until after the expiration of that period, or, if the Respondent applies within the 14 days…”
ESL did not appear in opposition of this application which I granted at the beginning of the hearing on May 29, 2019 for reasons which are set out briefly below.
By an interlocutory Summons also dated April 26, 2019, AMUSA sought:
“ 1. A Garnishee Order, in the form annexed to this summons pursuant to Order 49, rule 1 of the Grand Court Rules…”
The form of order sought was a Garnishee Order Absolute. By an interlocutory Summons of the same date, AMUSA sought a Freezing Injunction and Asset Disclosure Order against both ESL and EGFL in terms of an attached draft Order in what might be described as “full-blown” form. On or about May 23, 2019, AMUSA advised that it proposed to seek a far less intrusive form of injunction essentially requiring EGFL, as the proposed Garnishee, to provide information about significant transactions relating to the Essar Group. This was because rather than seeking a substantive Garnishee Order, it now merely sought directions for a contested hearing of the question of whether or not it was entitled to relief under GCR Order 49, and a less intrusive injunction was considered appropriate as an interim measure.
VTB applied to be joined as an Interested Party to the present proceedings by Summons dated May 24, 2019. AMUSA did not object, subject to discovery. Mr Beltrami QC complained that it was unsatisfactory for his client's position to be left unresolved, and I signified that for the purposes of the present hearing VTB was joined. Its commercial interests lay in ensuring that AMUSA did not take steps by way of execution which it contended were debarred by a Subordination Deed entered into on October 21, 2016 between, inter alia, EGFL, ESL and VTB (the “Subordination Deed”).
The delay in finalising the NP Order after the delivery of the March 29, 2019 Judgment in the NP Proceedings cannot be laid at the door of the Defendants. On April 24, 2019, Ogier requested a draft Order which was not supplied by Harneys until April 25, 2019. A response was requested by April 29, 2019. The proposed deadline for information production was May 10, 2019. Ogier responded on May 3, 2019 (just over a week after receiving the draft Order) indicating that their client needed until July 31, 2019 in light of the scope of the task. This position was maintained, despite AMUSA's counsel agreeing to push back the deadline to June 10, 2019. Assuming the NPO was not being challenged, there was no excuse for a failure to begin the production process after March 29, 2019.
However, on April 24, 2019, Ogier had written to Harneys stating, inter alia:
“We confirm that we have instructions to appeal the Order once it has been made. It is our view that our clients are entitled to appeal as of right…
We would therefore be grateful if you could please confirm that you agree… that our clients do not require leave to appeal the Order once made and filed in accordance with the Rules.”
On April 29, 2019, Harneys declined to agree that the Order would be final once drawn up and indicated it was a matter for the Court to decide. This meant that the Defendants would not be able to appeal until after the hearing fixed for May 29, 2019. Against this background, it seemed to me to be both unrealistic and unfair to the Defendants to ignore the intended appeal and fix a deadline which would require the Defendants to seek an urgent stay pending appeal. In litigation as substantial and contentious as this, the Plaintiff's strict rights to production within a timetable that the Defendants, using their best endeavours, can comply with must be tempered with regard being had to the practical ramifications of an intended appeal and a stay application. For these reasons, which I foreshadowed in the course of the hearing, I decided to fix the production deadline at July 31, 2019.
Section 6 of the Court of Appeal Law (2011 Revision) provides that no appeal shall lie “from an interlocutory judgment without leave of the Grand Court, or of the Court”, subject to five exceptions, none of which at first blush applied to the NPO. Mr Stanley QC submitted that although the analysis was not entirely straightforward, it was ultimately clear that a Norwich Pharmacol order was a final order. It was, viewed simply, the substantive relief granted upon the final determination of a freestanding action commenced by originating summons. It mattered not that ancillary applications might subsequently arise by way of implementation of the order. Rule 12 of the Court of Appeal Rules (2014 Revision) provided firstly and most broadly:
“(3) A judgment or order shall be treated as final if the entire cause or matter would (subject only to any possible appeal) have been finally determined whichever way the court below had decided the issues before it.”
The NPO also qualified as a final order because it...
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