On 29 February 2024, the BVI Commercial Court handed down its much-anticipated decision in Joint Stock Company “Alfa-Bank” v Kipford Ventures Limited discharging the sanctioned Bank's second application for an interim injunction against Kipford (the Second Injunction Application) and stayed its claim pending further order.
This decision follows Justice Jack's discharge of the Bank's first application for injunctive relief which was subsequently upheld by the Court of Appeal. In summary, Justice Jack's found that Alfa Bank (the Bank) had no good arguable case and was in breach of its duty of full and frank disclosure.
Following the discharge of the first injunction, the Bank issued a fresh claim and the Second Injunction Application against Kipford arguing that it was deceived, inter alia, by the provision of allegedly false financial statements into financing the acquisition of a coal mine in Siberia. Kipford was alleged to be the recipient of some of the allegedly fraudulently obtained loan monies. Kipford denies all of the allegations and offered to provide undertakings until the return date of the Second Injunction Application could be listed.
Following Russia's invasion of Ukraine, the Bank became subject to various international sanctions. As a result of the sanctions legislation Kipford was and is concerned that if it succeeds at trial then it is unlikely to be able to recover any of its costs from Alfa. Indeed, as a result of the discharge of the first injunction Kipford already has several outstanding costs' orders in its favour which the Bank contends that it is unable to pay. As a result of this Kipford applied for a stay of the claim until such a time as the Bank ceases to be designated under the relevant sanctions legislation and/or for security for costs.
Following numerous adjournments which were necessitated as a result of the Bank being designated as a sanctioned entity, the hearing of the Second Injunction Application along with Kipford's application for a stay or security for costs was heard in mid-2023. Justice Mangatal has now handed down judgment in which she has dismissed the Bank's Second Injunction Application and has held that the claim should be stayed until such a time as the sanctions legislation is revoked or the Bank ceases to be designated.
The judgment is important as it is one of the few BVI judgments to really consider the impact of the sanctions legislation in the BVI. Central to Justice Mangatal's decision was the fact that as a result of the sanctions regime any judgment that the Bank may obtain would be unenforceable. She also considered that there is ongoing uncertainty as to whether any costs awards in Kipford's favour will ever be able to be paid either as a result of the licensing regime or for the practical reason that it is difficult to find a bank willing to process funds from a sanctioned entity.
Justice Mangatal could have ordered the Bank to have paid security for Kipford's costs as opposed to staying the claim but she decided against this course as in reality it was clear that the Bank would not be able to pay and therefore risked having its claim struck out. She therefore did not consider that this would be a just order.
Separately, like Justice Jack, Justice Mangatal did not consider that the Bank had a good arguable case against Kipford.
Claire Goldstein, Victoria Lissack, Robert Maxwell Marsh and Jhneil Stewart of Harneys acted for Kipford.
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