Ovsyankin v Angophora ( [2021] EWHC 3376 (Comm))

• Published date: 02 March 2022
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Corporate and Company Law, Arbitration & Dispute Resolution, Shareholders
• Law Firm: Ivanyan and Partners
• Author: Mr James Dingley

England & Wales

Ovsyankin v Angophora: Arbitrators' discretion to explore, invite evidence on, and decide on the basis of, issues that are merely 'in play' confirmed; high threshold for successful challenge to arbitral Awards re-affirmed; RAV Bahamas v Therapy Beach Club cited with approval.

1. INTRODUCTION

In April 2021, the Judicial Committee of the Privy Council in RAV Bahamas v Therapy Beach Club¹ addressed an application to set aside an award in the Bahamas on grounds of "serious irregularity".² In that case, the Privy Council found that there had been a serious irregularity based on a number of grounds³ and, in doing so, set out guidelines on the manner in which arbitral tribunals should address arguments and evidence presented to them by parties.

A number of the Privy Council's guidelines were cited with approval in the recent case of Andrei Mikhailovich Ovsyankin v (1) Angophora Holdings Limited; (2) Valeriy Anatolievich Kirilov; (3) Dr Georg von Segesser; (4) Sir Jeremy Cooke; (5) Mr Khawar Qureshi QC ("Ovsyankin v Angophora"),⁴ in which the English High Court dismissed a challenge to an arbitral award rendered in favour of a joint venture between Intesa Sanpaolo S.p.a., an Italian bank, and Gazprombank JSC by the applicant Mr Ovsyankin on the grounds of serious irregularity pursuant to section 68 of the Arbitration Act 1996 (the "Arbitration Act").

The High Court also heard and dismissed the attempts by Mr Ovsyankin (as sole applicant in one arbitration) and Mr Ovsyankin and Retemmy Finance Limited (as joint applicants in two other arbitrations) to remove all three arbitrators from each of the identically-constituted tribunals in the three underlying arbitrations, pursuant to section 24 of the Arbitration Act, on the grounds that they were biased. In doing so, the High Court made some useful comments regarding the ability of arbitrators to sit and decide similar issues in related arbitration proceedings.

2. BACKGROUND

The underlying agreements

In 2012, Angophora and Retemmy (the latter being owned by Messrs. Ovsyankin and Kirilov) entered into a Shareholders Agreement in relation to a joint venture. Under the Shareholders Agreement, Angophora and Retemmy each acquired shares in Grooks Global Limited ("Grooks"), a Cypriot company that belonged to a group providing services in the oil and gas industry.

Under the Shareholders Agreement, the parties undertook to cooperate in good faith with one another with the aim of selling their respective shareholdings several years later. Angophora had 'drag-along' rights entitling it both to sell its own shareholding and, in the event that Retemmy refused to buy Angophora's shares in the first instance, require the sale by Retemmy of its shareholding to the same third party that had offered to buy Angophora's.

Angophora also entered into a Deed of Guarantee in relation to the performance of Retemmy's obligations under the Shareholders Agreement, with Messrs. Ovsyankin and Kirilov acting as guarantors.

Finally, Angophora, Retemmy, Mr Ovsyankin and Mr Kirilov entered into a Non-Compete Agreement, whereby they undertook not to compete with the activities of Grooks and its group of companies.

Each of the above three agreements contained an arbitration clause providing for LCIA arbitration in London in the event of a dispute.

The arbitration proceedings

Angophora commenced separate arbitrations under each of the above agreements:

• the 'SHA Arbitration', in which Angophora alleged that Retemmy had breached the Shareholders Agreement by, inter alia, entering into transactions at inflated prices and without proper disclosure or approval

• the 'Guarantee Arbitration', in which Angophora alleged that Messrs. Ovsyankin and Kirilov were correspondingly in breach of the Deed of Guarantee having failed to procure that Retemmy would act in accordance with the terms of the Shareholders Agreement; and

• the 'Non-Compete Arbitration', in which Angophora alleged that Messrs. Ovsyankin and Kirilov had breached the Non-Compete Agreement through various fraudulent activities and the diversion of assets of the Grooks group of companies.

The SHA Arbitration was commenced first. The parties to the Guarantee Arbitration and to the Non-Compete Arbitration, which were commenced later in time, agreed to nominate the same three-member arbitral tribunal in those proceedings as had been appointed in the SHA Arbitration. It was then decided (and not contested by the parties) that the Guarantee Arbitration would be the first to proceed. An award was issued in the Guarantee Arbitration in December 2020.

The tribunal's award in the Guarantee Arbitration upheld the majority of the claims made by Angophora and...