Navigator Equities Limited and Vladimir Chernukhin v Oleg Deripaska

The Court of Appeal has today handed down an important judgment on committal applications in Navigator Equities Limited and Vladimir Chernukhin v Oleg Deripaska [2021] EWCA Civ 1799. The court set aside the order of Andrew Baker J (striking out the committal application against Mr Deripaska as an abuse of process) and has remitted the matter back to the Commercial Court for trial.

The judgment is available below.

James Weale (led by Jonathan Crow KC) represented the successful appellants, instructed by Ted Greeno and Greg Pantlin of Quinn Emanuel Urquhart & Sullivan UK LLP.

Key Points

The claimants brought committal proceedings against Mr Deripaska in respect of alleged breaches of his undertakings to the court in June 2018 relating to a portion of shares in EN+ Plc (Jersey), of which Mr Deripaska was the ultimate beneficial owner. The alleged breaches consisted of Mr Deripaska procuring (or, alternatively, failing to block) a vote of EN+ Plc in December 2018 in favour of “redomiciliation” from Jersey to a special administrative region of Russia. The Claimants alleged that the effect of such redomiciliation was to destroy the true value of the undertakings by cancelling the shares which formed their subject matter and replacing them with shares in a company located in Russia (where enforcement was extremely difficult if not impossible).

At first instance, Andrew Baker J struck out the committal application as an abuse of process on the basis the Claimants had brought committal proceedings in order to vex and harass Mr Deripaska and that the Claimants were motivated by personal animus.

However, the Court of Appeal held that Andrew Baker J’s judgment depended upon “fundamental misapprehensions” as to the factual basis of the alleged breaches as well as errors of law relating to the duties owed by an applicant bringing contempt proceedings and the relevance of an applicant’s subjective motives. The key points arising out of the court’s judgment are as follows.

The court (Carr LJ giving the lead judgment) held that there was an important distinction between “civil contempt” (i.e. committal proceedings arising out of breaches of orders/undertakings) and “criminal” / “public law” contempt (i.e. committal proceedings arising out of matters other than such breaches) (see paras 81 and 120). In the context of civil contempt:

1. Provided that the objective purpose of the application is to bring to the court’s attention serious breaches, an applicant’s subjective motive (e.g. personal animosity) is irrelevant and cannot form the basis for a strike out application (paras 82(vii), 110, 114, 122 and 127).
    
2. Applicants are not required to act as disinterested quasi-prosecutors acting solely in the public interest. Rather, they are entitled to pursue applications in a partisan fashion in pursuit of their legitimate private interests (paras 134 and 138).