(1) Nori Holdings Ltd (2) Centimila Services Ltd (3) Coniston Management Ltd V Public Joint-Stock Co Bank Otkritie Financial Corp (2018)

The facts

The case concerned an application for an anti-suit injunction by three companies, two of which were incorporated in Cyprus and one in the BVI (together the "Claimants"), against the Public Joint-Stock Co Bank, Otkritie Financial Corp, a Russian Bank in temporary administration (the "Bank") following the restructuring of an existing loan arrangement between the parties.

The Claimants were linked to one-another by way of their involvement in a group of companies known as the O1 Group. Two of the Claimants were subsidiaries of an investment holding company which was part of the O1 Group - O1 Group Limited ("O1 GL") - and the remaining Claimant had shares in a company whose shareholders were also members of  the O1 Group.

Pursuant to three short-term loan agreements, the Bank had lent O1 GL $500 million. The Loan Agreements were governed by Russian law and gave exclusive jurisdiction to the Moscow Arbitrazh Court. The loans were secured by pledge agreements with the Claimants and three further companies. Unlike the underlying Loan Agreements, the Pledge Agreements were governed by the law of Cyprus and contained arbitration clauses providing for arbitration in London under the rules of the LCIA.

In August 2017 the existing loan arrangement was restructured:

  • the Bank bought bonds at a value of $600 million issued by O1 Group Finance (which raised money for companies within the O1 Group);
  • O1 Group Finance then used the proceeds of the transaction to lend money to the Claimants who then used the money to repay their existing loans with the Bank under the Loan Agreements;
  • the Loan Agreements were then terminated; and
  • on 9 and 10 August 2017, the Claimants and the Bank entered into agreements to terminate the Pledge Agreements which were governed by the law of Cyprus and each contained an arbitration clause mirroring the Pledge Agreements.

Three weeks after the restructuring on 29 August 2017 the Bank entered into temporary administration. The Bank (acting by its temporary administrators) argued that it was the victim of fraud, as the restructuring had replaced its $500 million secured loans with bonds that provided no regular income as interest payments were deferred until maturity in 2032. The Claimants argued the restructuring was requested by the Bank and was a product of the fact that the Bank was in urgent need of liquidity.

The dispute

Various proceedings were subsequently commenced by the Bank against the Claimants. The proceedings of relevance to this article were those commenced in the Moscow Arbitrazh Court to set aside the restructuring. There were two grounds relied on:

  • a claim comparable to a transaction at an undervalue claim; and
  • a civil claim based on abuse of rights of various articles of the Russian Federation Civil Code,

In an attempt to restrain the proceedings commenced by the Bank, including the Russian Proceedings, the Claimants sought an anti-suit injunction in the English Commercial Courts on the grounds that the proceedings constituted a breach of the arbitration clauses in the Pledge and Pledge Termination Agreements.

In response, the Bank argued that the Russian Proceedings were not in breach of the arbitration provisions because:

  • such clauses should not be construed as extending to an insolvency claim to set aside a transaction at an undervalue within the exclusive jurisdiction of the Moscow Arbitrazh Court; and/or
  • such claims are not arbitrable.

The decision

The Court found that the Russian Proceedings were in breach of the arbitration clauses. The Court dismissed the Bank's contention that the clauses should not be construed as extending to an insolvency claim and decided that such claims were arbitrable.

Patten LJ and Longmore LJ were in agreement that the arbitration clauses contained no express exclusion of disputes of any kind and therefore, there was no substantive reason to imply such a limitation.

The Court agreed claims' arbitrability should be determined by reference to the relief sought - "the substance", rather than the fact that the claim arises from an insolvency - "the form" (following Fulham Football Club (1987) Ltd v Richards and another [2011] EWCA Civ 855).

The Court considered the matter to be a straight forward factual dispute as to whether the restructuring was carried out at the Bank's request as alleged. This claim could have a number of legal labels, including an insolvency claim, but the dispute was the same regardless of the legal label.


The judgement provides a useful test for the arbitrability of claims governed by arbitration clauses that arise in an insolvency situation - if the remedy sought does not take the matter beyond the jurisdiction of the arbitrators, it should and can be dealt with by the arbitrators. Where the remedy sought does take the matter beyond the jurisdiction of the arbitrators, the case will likely need to be decided in two stages, with the arbitrators deciding the factual issue first leaving the relevant court to decide the remedy.

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