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England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Nomihold Securites Inc v Mobile Telesystems Finance SA  EWHC 2143 (Comm) (01 August 2011)
Cite as:  EWHC 2143 (Comm)
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QUEEN'S BENCH DIVISION
B e f o r e :
|NOMIHOLD SECURITES INC|
|MOBILE TELESYSTEMS FINANCE SA|
WordWave International Limited
A Merrill Communications Company
190 Fleet Street, London EC4A 2AG
Tel No: 020 7404 1400, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Simon Salzedo QC and Tony Singla (instructed by Simmons & Simmons Solicitors) for the Claimant / Applicant
Crown Copyright ©
MR JUSTICE BURTON:
"The Tribunal hereby:
(1) Orders [MTF] to pay to Nomihold the sum of US$170 million in exchange for the remaining 49 per cent of Tarino shares in respect of [MTF's] failure to comply with the Put Notice.
(2) Orders [MTF] to pay to Nomihold the sum of US$5.88 million in damages in respect of [MTF's] breach of clause 3.5 of the [POA]."
(i) Was the Claimant unable to convey clear title (indirectly through Tarino) to Bitel, because the Claimant had previously sold its interest in Bitel to a Kazakh group (dealt with in paragraphs 63 to 67 of the Award "the Kazakh Issue")?
(ii) Was there misrepresentation and mistake on the basis that Kyrghyz law required registration of shares as a prerequisite of ownership, to the intent that at the time of the SPA the Isle of Man companies, through which Tarino owned its interest in Bitel, were not so registered (paragraphs 68 to 196 of the Award "the Registration Issue")?
(iii) Did the Claimant breach the seller's warranties in the SPA, that Tarino (indirectly) owned Bitel when the Isle of Man companies were (allegedly) not registered at the time of the SPA (paragraphs 197 to 221 of the Award) ("the Warranties issue")?
(iv) Could the Claimant exercise the put option after Tarino lost its indirect ownership of Bitel because the shares in Tarino no longer satisfied the definition of "Option Shares" in the POA (paragraphs 228 to 260 of the Award) ("the Construction Issue").
(v) Did the Claimant breach the warranty in the POA (clause 5.2) that the Option Shares were free from encumbrances by reference to the alleged sale to the Kazakh group ("the Kazakh Misrepresentation Issue")?
(vi) Did the Claimant make a material misrepresentation that Tarino (indirectly) owned Bitel at the date of the POA ("the Bitel Misrepresentation Issue")?
(v) and (vi) were in paragraphs 261 to 277 of the Award.
(vii) Was the POA void for mistake either because of the alleged agreement with the Kazakh group or the non-ownership of the Bitel shares (paragraphs 278 to 284 of the Award: "the Mistake Issue")?
(i) When Gloster J made her ex parte order, giving leave to enforce the Award as a judgment, she also granted a worldwide freezing order in support. There was an unsuccessful challenge to that freezing order before me by the Defendant on 18 February 2011, but more significant was the Defendant's case, which was at that same hearing successful, to clarify the position relating to what is apparently the only asset of the Defendant, a debt of $400 million owed to it by its parent, MTS OJSC ("MTS"). MTS was instrumental in the issue of Loan Notes to third parties, which were structured through its subsidiary, the Defendant, so that the Defendant loaned $400 million to MTS, and MTS loaned that money to the third parties. MTS sought to do two things: (a) to eliminate a clause in the Notes which made it an event of default if the Defendant were to default, inter alia, in respect of payment of the Award, and (b) to restructure the Notes so as to eliminate the Defendant from the loop. This was because (i) MTS openly asserted that the Defendant was not going to pay the Award, (ii) it was clear that upon the restructuring the Defendant would hold "minimal assets with which it could satisfy the Award". For reasons I then gave, I permitted steps to be taken to eliminate the default provision, but I did not sanction the proposed form of the restructuring as it then stood. I was also concerned at the apparent effluxion of a guarantee ("the Sistema guarantee") of the Defendant's liability for the Award by MTS's shareholders, which had been reported in MTS's accounts. The Notes remain in place.
(ii) Gloster J had removed from the worldwide freezing order on 4 February 2011 the proviso permitting transactions in the ordinary course of business, because she was persuaded that a freezing order in support of enforcement after an award should be treated in the same way as a freezing order in support of enforcement after a judgment (see Soinco SACI v Novokuznetsk Aluminium Plant  QB 406 per Colman J and Masri v Consolidated Contractors  EWHC 2492 (Comm) at 35, per Tomlinson J. David Steel J, on 18 July, refused to permit a variation of the freezing order to allow payment of $16 million interest due to the noteholders. The Court of Appeal, for reasons to be given later, allowed the Defendant's appeal against that order on 26 July. This hearing commenced immediately thereafter.
(iii) Meanwhile, the Claimant sought, by proceedings commenced on 1 February 2011 in Luxembourg, to enforce the Award there against the Defendant, which is, as I have said, incorporated in Luxembourg. An ex parte order for enforcement was granted, and the Defendant filed an appeal against that order on 3 March, the Claimant filing its response on 25 May. The Luxembourg proceedings continue. Insolvency proceedings commenced on the back of the ex parte enforcement order have been adjourned.
(iv) Finally there are proceedings in the Seychelles. These were brought by Tarino (whom the Defendant 51 per cent or 100 per cent controls). Tarino has brought before the Seychelles court the issue that it wishes directions as to whether it may register the transfer of its shares into the name of the Defendant, because of its alleged concern that there has been, or that such a transfer would constitute, breach of the Seychelles money laundering statute (s 3 of the Anti-Money Laundering Act 2006).
"(1) an Award made by the Tribunal pursuant to an Arbitration agreement may, by leave of the court, be enforced in the same manner as a judgment or order of the court to the same effect.
(2) where leave is so given, judgment may be entered in terms of the Award."
"We accept that the court should not automatically exercise its discretion in favour of permitting service out of the jurisdiction unless it is just to do so and that it will ordinarily not be just to do so unless there is a real prospect of a legitimate benefit to the Claimant from the English proceedings. We see no reason why that benefit should not be indirect or prospective."
(i) Although the power under s 66 is discretionary and not automatically exercised, there should be a presumption of enforcement.
(ii) Certainly so where this court is the supervising court.
"Once an Award has been made -- and not challenged in the court -- it should be entered as a judgment and given effect accordingly. It should not be held up because the losing party says he wants to argue some point or other or wants to set up a counterclaim or anything on that sort. He would not be allowed to do so in the case of a judgment not appealed from, nor should he do so in the case of an Award that he has not challenged. I am in agreement with what Diplock J said in [Margulies]: I think that it would be contrary to the purpose of section 26 of the Arbitration Act 1950 if in a case where the validity of the Award and the right to proceed upon it is beyond doubt, it should be given less effect than a judgment. In this case the judge was impressed by In Re Boks & Co and Peters, Rushton & Co Ltd  1 KB 491. But in that case the validity of the award was doubtful -- very doubtful I would say -- because of the illegality of the whole transaction. Naturally enough, no leave was given. But I think that Scrutton LJ went a good deal too far. He said at p497 that "this summary method of enforcing awards is only to be used in reasonably clear cases." I would put it just the opposite. I would say that it is to be used in nearly all cases. Leave should be given to enforce the award as a judgment unless there is real ground for doubting the validity of the award."
"Subsections 66(1) and (2) reenact with minor drafting amendments the Arbitration Act 1950, section 26(1) ... The law is unchanged. In particular enforcement under this section should only be granted in 'reasonably clear cases'. In other cases enforcement should be by an action on the award. The effect of subsection 66(4) is than an action on the award is still permitted and that such an action is still governed by the common law."
(i) so far as the old law is concerned, which Mustill & Boyd there refer to as being "unchanged", the correct statement of law was that in the Court of Appeal, with the imprimatur of Lords Denning and Diplock, cited earlier.
(ii) Mustill & Boyd do not say, as is apparent from the last quotation which I have cited, that enforcement under s66 should only be granted in "reasonably clear cases" and if not so clear, then enforcement should not be granted at all. The passage is addressing when enforcement should be left to an action on the award.
"11. Enforcement is a plain word and means something quite different from a restatement of the effect of the award in the form of a judgment. The summary procedure provided by s 33 of the Act is a procedure with a purpose, the purpose of enabling the victorious party in an arbitration to obtain the material benefit of the award in its favour in an easier manner than having to sue on the award. There has been nothing put forward in this case to suggest any occasion for enforcement of the declarations made in the interim award. They are binding on the parties and bind them for the balance of the Arbitration and beyond that.
12. I agree with Smart AJ's view that there is no utility in making the order sought, but for the perhaps more fundamental reason that there is just no question of enforcement yet arising. In the absence of any question of enforcement arising, it would not be appropriate to grant leave to enforce the award."
"28. In my opinion, s66(1) stands to be construed in the same manner as that adopted by the NSW Court of Appeal in Tridon in respect to s33 of the Commercial Arbitration Act 1984. The purpose of s66(1) and (2) is to provide a means by which the victorious party in an arbitration obtain the material benefit of the award in his favour other than by suing on it. Where the award is in the nature of a declaration and there is no appreciable risk of a losing party obtaining an inconsistent judgment in a member state which he might try to enforce within the jurisdiction, leave will not generally stand to be granted because the victorious party will not thereby obtain any benefit which he does not already have by virtue of the award per se. In short, in such a case the grant of leave will not facilitate the realisation of the benefit of the award. Where, however, as here, the victorious party's objective in obtaining an order under s66(1) and (2) is to establish the primacy of a declaratory award over an inconsistent judgment the court will have jurisdiction to make a s66 order because to do so will be to make a positive contribution to the securing of the material benefit of the award."
"32. The argument is very finely balanced and is in my judgment unusual. Mr Salzedo submits that this is the only way in which he can get his judgment paid. If the event of default clause is left in the Notes, then on 5 March the whole arrangement will come crashing down and there will all kinds of cross-default provisions involving potential loss to the parent company, it seems of a substantial kind. So that is the only way in which he can be sure of his clients getting paid, because otherwise it is apparent that the Defendant and its parent, who are the source of every payment, will take every possible steps to avoid making payment. That has become now apparent by virtue not least of the application under s66 to challenge registration in this country ...
"38. [Mr Salzedo] is entitled to his award, he submits, and the only way he can get it [paid] will be by making life so difficult for the Defendant that its parent company will be caused to pay up. That, of course, would extend to any kind of action or injunction or order by a judgment creditor in relation to any kind of transactions which its recalcitrant judgment debtor was proposing to enter into whereby some order could be obtained which would be intended to mean that the Defendant will be forced by commercial embarrassment or commercial difficulties so caused into paying up or, as Mr Salzedo says, at least providing security ...
40. I conclude that that is not where post-judgment freezing orders have got to. They do not legitimise interference in ordinary commercial transactions simply because a judgment debtor is not paying up quickly enough. There has in my judgment to be some element of impropriety. In this case I do not see any impropriety. It was a public declaration that there will be a default and that steps had to be taken, not least in the interests of a number of third parties if that was going to have a catastrophic consequences. I do not conclude, even if one were to extend the ambit of Stuart-Smith LJ's enunciation of the jurisdiction, that it would go so far as to say that a judgment creditor can interfere in any transaction which would render it more likely that he would paid on a judgment which otherwise the judgment debtor is determined not to pay, particularly where the pressure is thus put on a third party, in this case the parent.
41. Accordingly I conclude that it is not appropriate to cover the consent solicitation by the freezing order, but to proceed with that transaction ought not to be a breach of the continuing freezing order."
"On an application under s66 or to set aside a s66 order, it is enough, in my view, in a case such as this for the party seeking to enforce the award to show that he has a real prospect of establishing the primacy of the award over an inconsistent judgment. It is not necessary, nor is it appropriate, for the court finally to decide this hypothetical question -- hypothetical because the unsuccessful party to the Arbitration will not have obtained an inconsistent judgment in a member state at the time the court is dealing with the s 66 application."
That arises in this case, by reference to parallel proceedings in Luxembourg, in which there is a parallel challenge to enforcement, and it seems to me appropriate for the Claimant to say that there is a legitimate interest in obtaining a decision first from the supervising court.
(i) the Award or its enforcement involved money laundering, so that its enforcement would be contrary to English public policy.
(ii) the Award has been obtained by fraud, namely by perjury by Mr Yerembetov.
(iii) the Award should not be enforced because of its impact on third parties, particularly the parent company, MTS, but to an extent the noteholders.
(iv) the Arbitrators' order was in effect for specific performance of the Award, and by entering a judgment in the form ordered by Gloster J (which was exactly in the form of the order made by the Arbitrators which I have recorded earlier) the court was effectively turning a specific performance order into a money judgment.
(i) He agreed that the effect relied on by him on third parties related to the aspects of what he asserted to be an illegitimate interest, in the intent of the Claimant to put pressure on the Defendant's parent, and that that was part and parcel of his case that there was no legitimate interest. That, in my judgment, falls away, once I make my conclusion, which I have reached, that there is a legitimate interest. Consequently, there is no separate argument. If the Claimant is entitled to enforce the award as a judgment, and the judgment has to be paid, then, as Mr Flynn accepted, any effect on third parties would be a proper consequence.
(ii) Again he accepted, in the course of argument, that the "specific performance" argument was only part of his money laundering case. He pointed out that the Request for Arbitration sought specific performance, and that s48(5)(b) of the 1996 Act permits the Arbitrators to grant specific performance (as the Arbitrators themselves recognised in paragraph 284 of the Award). However, they effectively made an order for the award of money, and Mr Salzedo refers to the judgment of Briggs J in Fraser Islington Ltd v Hanover Trustee Co Ltd and Others  EWHC 1514 (Ch) whereby the court is entitled to make an order in a contested case which ignores any issues that are not raised, such as, for example, in that case whether vacant possession can be given. In this case, there was no issue in the Arbitration about the performance of clause 4, to which I have referred, particularly where the obligation to ensure performance was, by clause 4.4, on Tarino, and hence on the Defendant. Mr Flynn submits that if there were proceedings in court, and an order made for specific performance, and it became clear subsequently that there were problems as to whether the court order could be performed, then there could be subsequent application to the court. But here the Arbitrators are functi. I concluded, and I believe Mr Flynn accepted, that the real argument is in the event not a procedural one as to the form of the order, but as to whether the Defendant can object to performance, can raise the allegation that the award has become unenforceable because of the Seychelles money laundering objections; and in those circumstances his fourth point in effect elides into his first, to which I shall now turn.
How to deal with the two grounds of objection?
(i) This is the supervisory court, the court of the seat of the Arbitration, and is ready to deal with the issues. Under the New York Convention (ss103(3)(f) and 103(5) of the 1996 Act so illustrate) it is to the local court that the enforcing court would look, and this is that court.
(ii) There is little evidence as to the state of play in Luxembourg. I have referred earlier to the last step being taken in May. There are no assets in Luxembourg, and no freezing order in place, if one were available. In any event, this court is, in Judgments Regulation terms, if that arose, the court first seised, on 25 January as opposed to 1 February.
(iii) There has been alleged (and denied) delay in the Seychelles, to which I have referred, but in any event the issue is whether the Award can and should be enforced in this jurisdiction.
(iv) It is overwhelmingly sensible to gather up the issues in one place and resolve them, if there are any, in this jurisdiction.
(i) He referred to the decision of Hamblen J in Sovarex SA v Romero Alvarez  EWHC 1661 (Comm), and in slightly different circumstances, since the English proceedings were for a declaration that the foreign award was not enforceable, of mine in HJ Heinz Co Ltd v EFL Inc  2 Lloyd's Rep 727, in support of his case that issues as to whether an award was obtained by fraud can, in appropriate cases, be decided, with oral evidence and disclosure as applicable, as a discrete point by this court, and in this case for the purpose of resolution of the s66 application.
(ii) He recognised that such a hearing must be held and the issues resolved, including any appeals, before January, when the $400 million loan becomes payable by MTS to the Defendant.
(iii) As to a discretion to order security during such adjournment, raised by Mr Salzedo as appropriate in such eventuality by analogy with s103(5) and s70(7) of the 1996 Act, there would not -- see again my judgment in Dowans (paragraphs 45 to 53, referring to the leading cases) -- be a "need" for any security, as nothing would occur, provided that the issue was resolved before January, to cause the Defendant any loss of enforcement opportunity during the period of delay. I accept that proposition.
(i) It is the public policy of the country in which the award is to be enforced which is in question, not the public policy of some other country.
(ii) The raising of a question of public policy must not lead to, or be based upon, a reargument of the issues already raised in the Arbitration, see again my judgment in Dowans at paragraph 11(iii)(e).
"Thirdly, considerations of public policy, if relied upon to resist enforcement of an award, should be approached with extreme caution: Deutsch Shachtbau-und Tiefbohrgesellschaft mbh v Ras Al Khaimah National Oil Co  2 Lloyd's Rep 246, at 254. The reference to public policy in s 103(3) was not intended to furnish an open-ended escape route for refusing enforcement of New York Convention awards. Instead the public policy exception in s 103(3) is confined to the public policy of England (as the country in which enforcement is sought) in maintaining the fair and orderly administration of justice."
"Where the successful party is said to have procured the award in a way which is contrary to public policy, it will normally be necessary to satisfy the court that some form of reprehensible or unconscionable on his part has contributed in a substantial way to obtaining a judgment in his favour. Moreover, I do not think that the court should be quick to interfere under this section. In those cases in which s68 has so far been considered, the court has emphasised that it is intended to operate only in extreme cases."
See also his remarks in Tongyuan, a case to which I referred earlier.
(i) that the Claimant, through the three Isle of Man companies, acquired shares in Tarino in 2004.
(ii) Tarino in April and June 2005 acquired the shares in Bitel from (among others) a Mr Akaev, the son of the former president of the Kyrghyz republic, who had to flee the country when his father's government fell.
(iii) Mr Yerembetov gave evidence, cited by Dr Gross, that Mr Akaev "had to leave the country in haste, on an airplane, when the revolution started and all [their assets] were taken away from them. My objective was to make sure that ...Akaev no longer held any stake in Bitel, because I had to be in a position to say to people in Kyrgyzstan that: yes, this is the company that used to be owned by that person, but I bought it, I am now the owner ... I had to be in a position to show them contracts that would prove that I had bought 100 per cent of the shares in the company."
(iv) he also gave evidence that the price for the shares in Bitel which Tarino had bought was expressed as an undervalue, but was topped up by paying other sums to Mr Akaev for plots of land.
"(i) The transaction under which Nomihold acquired shares in Tarino was part of a conspiracy to defraud the Kyrghyz authorities to which Nomihold was a party (ii) performance of the sale of the Shares under the Option would realise for Nomihold part of the proceeds of the conspiracy to defraud while the transfer of the Shares in return for US$170 million would confer on Nomihold proceeds resulting from the criminal conspiracy; and (iii) any facilitation or assistance in the transfer of the Shares would contravene s 3 of the Anti-Money Laundering Act 2006."
(i) There is no suggestion as to any money laundering or other problem relating to the shares of Tarino. It is Tarino's (indirectly through the Isle of Man companies) purchase of Bitel which is said to be affected.
(ii) No issue has been raised by Mr Flynn by which the Arbitration itself is said to have been affected, and in any event, if relevant, it could have been and was not raised in the Arbitration. It is said that subsequently there is an alleged problem arising out of the registration of the transfer of the Tarino shares, as between the Claimant and the Defendant.
(iii) On the evidence relied upon by Dr Gross, Mr Akaev had been taken out of Bitel by Tarino. There is no case made out, nor evidence alleged, which supports the proposition that Nomihold's shares in Tarino "represent the proceeds of criminal conduct". That would require evidence that Tarino is a mere shell (with no other material assets or role) and that, in reality, what was being transferred were the shares in Bitel. Not only is there no such evidence, but by the time of the POA, the Defendant was already the owner of 51 per cent of Tarino.
"To justify the reception of fresh evidence or a new trial, three conditions must be fulfilled. First, it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial. Secondly, the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive. Thirdly, the evidence must be such that it is presumably to be believed, or, in other words, it must be apparently credible, though it need not be incontrovertible."
"No good reason has been shown as to why the Defendant should not have applied to the Swiss court within the period of 90 days, raising the allegation that the award had been obtained by perjured evidence and that is an added factor against granting them leave to amend to raise the issue in this jurisdiction."
"Whereas in the present case the allegation is fraud and the production of evidence, the onus is on the applicant to make good the allegation by cogent evidence."
He then referred to Ladd v Marshall and in that context to Westacre Investments Inc, among other cases.
"Normally the conditions to be fulfilled will be (a) that the evidence to establish the fraud was not available to the party alleging the fraud at the time of the hearing before the Arbitrators, and (b) where perjury is the fraud alleged, i.e. where the very issue before the arbitrators was whether the witness or witnesses were lying, the evidence must be so strong that it would reasonably be expected to be decisive at a hearing, and if unanswered must have that result."
"If it is open to a party to seek to get an enforcing court to retry issues of fact which the Arbitrators had before them and which they had to and did determine, it would appear to present an open invitation to disappointed litigants to relitigate their disputes by alleging perjury and a major inroad would be made into the finality of Convention awards."
"Mr Asylov's lawyers were always expressing their confidence that they would succeed in courts in quashing Order 1570. That is why the 21 November 2005 court ruling was an unexpected blow to them. This is evidenced by the fact that Ms Makhadiyeva, who took part in the court hearing, was very nervous when she got back to the office later the same day, after the hearing, and told me that Mr Yerembetov was angry with Mr Asylov because of the court ruling, as such ruling could derail the transaction with [MTF]."
(i) how Mr Fortuna came to give the evidence. At the very least there could be an explanation as to why the evidence was not available prior to the Award on 11 November 2010.
(ii) whether he was in touch with the Defendant, and available to give evidence in the Arbitration at the hearings which took place as late as 2 October 2009. He was certainly in contact with the Defendant, and gave evidence for its subsidiaries in a court in the Isle of Man, relating to his "recollection of events of December 2005" in proceedings which came before HH Deemster Doyle on 30 November 2007.
(iii) No explanation is given as to why the Defendant did not attempt (if it needed to) to get in contact with Mr Fortuna at any time prior to delivery of the Award in November 2010 or, in particular, after the evidence said to have been false was given by Mr Yerembetov in December 2007.
"Nomihold falsely represented that Tarino indirectly owned Bitel, whereas the effect of the 21 November 2005 ruling was that it no longer did. This allegation depends on (a) the effect of the 21 November 2005 ruling being that Tarino no longer indirectly owned or controlled Bitel, (b) Nomihold's having the relevant knowledge, (c) the non-reliance clause in the [POA]'s being ineffective for this purpose and (d) [MTF]'s not having affirmed the [POA]. As dealt with below, the Tribunal rejects each one of these contentions."
"264. The effect of the 21 November 2005 ruling is dealt with earlier in this award, but in brief it was appealable and of no effect until the appeal was heard and disposed of. Thus it could not render any representation to the effect that Tarino indirectly controlled Bitel false. Furthermore, at all times until 14 December 2005 the IOM companies controlled Bitel. Therefore the misrepresentation argument falls on this ground.
265. As to knowledge it is alleged by [MTF] that Mr Yerembetov was in fact aware of the 21 November 2005 Ruling and concealed it from [MTF]. The Tribunal has already noted that it considered Mr Yerembetov to be an honest witness and believes his testimony that he did not. This is moreover wholly credible on grounds other than [my underlining] Mr Yerembetov's credibility.
266. First, the decision was not of the significant effect contended for by Nomihold. There was no particular reason for Bitel's Kyrghyz lawyers ... to have informed Mr Yerembetov of it in the time between its having been handed down and the signature of the [POA] (little more than one working day). It is more likely in the Tribunal's view that they would have waited until the next scheduled regular update to Nomihold ...
267. Secondly, it is unlikely that they would have informed Mr Yerembetov of the impending decision before it happened, leaving him possibly asking them what happened on 21 November 2005. The evidence seems to show that Bitel only intervened in the proceedings on 18 November 2005, the Friday before the Monday, leaving little time for Bitel's lawyers to have informed Mr Yerembetov.
268. For these reasons the Tribunal concludes that Mr Yerembetov was not aware of the 21 November 2005 ruling when the [POA] was signed."
"If Mr Yerembetov did know, then it is alleged that this knowledge rendered false a representation that he had told Ms Evtoushenkova all of the risks about the transaction. On the evidence before the Tribunal (Ms Evtoushenkova's absence once again being a handicap), this is rejected. It is to be assumed that all discussions about risk were made in the context of the overall deal and not separately for the SPA and the [POA]. The only sensible understanding of the evidence is that Mr Yerembetov warned Ms Evtoushenkova and Ms Zhirikova that there were substantial risks and that Nomihold was making no representations. Mr Yerembetov's knowledge of the 21 November 2005 ruling, if he had such knowledge, could not have rendered any representation false."
"271. Moreover, Clause 12.1 of the [POA] is an entire agreement and non-reliance clause that would estop [MTF] from bringing any claim for innocent or negligent misrepresentation ...
273. As to fraud, the Tribunal accepts the high standard of proof set out by the House of Lords in Re H (Minors). [MTF] has not reached this standard. The Tribunal further notes that, as the misrepresentation argument only arose after the hearing in December 2007, Mr Yerembetov was not cross-examined on it and thus did not have the opportunity to defend himself against accusations of fraud. On this ground alone, the Tribunal would have been hesitant to conclude that there was a fraudulent misrepresentation ...
275. Further, the Tribunal finds that [MTF] affirmed the [POA]. At least ten days but perhaps a month after the signature of the [POA], Mr Zubov told Mr Yerembetov that '[MTF]'s lawyers regarded the [POA] as a valid agreement'. This amounts to an affirmation which would defeat even a fraudulent misrepresentation. Even on [MTF]'s own case, namely that Steiner und Zingerman LLP or Bitel told Mr Yerembetov of the 21 November 2005 ruling before the date of the [POA], and even if the effect of that knowledge were to falsify a representation given to [MTF] (neither of which propositions is accepted by the Tribunal), immediately thereafter [MTF] had the same knowledge, as it was managing Bitel and instructing Bitel's lawyers (including no doubt about an appeal from the 21 November 2005 ruling). It would be odd, to put it no higher, were Bitel and/or its lawyers not to have told its new managers that they had made Mr Yerembetov aware of the 21 November 2005 ruling. In the absence of evidence from Bitel's former managers and/or lawyers, the Tribunal must assume that [MTF's] managers asked Bitel's lawyers whether they had told Yerembetov. Given the absence of any allegation that they were asked and answered negatively, the Tribunal infers that their evidence would be unhelpful to [MTF]. [MTF] nonetheless, in the person of Mr Zubov, affirmed the agreement by confirming that it would be honoured.
276. Finally, [MTF]'s delay in seeking rescission means that that remedy is no longer available to it, even if (which it has not) it had made out a case of actionable misrepresentation.
277. For the avoidance of doubt, having found no deceit or misrepresentation the Tribunal also dismisses [MTF]'s non-contractual claims concerning or arising from the same matters, including the tort of deceit."
(i) The Kazakh Issue and (v) The Kazakh Misrepresentation Issue
The evidence of Mr Yerembetov was addressed by the Arbitrators, and they make the finding of his credibility to which I have referred in paragraph 63. However, they plainly resolved the two issues (which inter-react) independently of that conclusion:
"63.Despite the creativeness and vigour with which [MTF] pursued this argument, the Tribunal considers it hopeless. [MTF] has the burden of establishing the alleged agreement, yet it has failed to demonstrate who the proper parties to it were or that such parties were even capable of performing it. The only written evidence of the alleged agreement is hopelessly vague: the Memorandum of Understanding, which was not a binding agreement and did not even specify a precise buyer or seller of Tarino. Moreover, Mr Yerembetov gave evidence in relation to the Kazakh Group negotiations, including the late payment and subsequent refund in relation to that proposed, but not concluded, transaction. The Tribunal found Mr Yerembetov to be a straight-talking credible witness. The Tribunal accepts his evidence that no agreement was concluded orally or in writing with the Kazakh group.
64. Even were this not the finding [my underlining] of the Tribunal, [MTF]'s claims would still fail.
65. The Tribunal is entirely satisfied that there was no binding agreement with the Kazakh group that would possibly have amounted to an encumbrance upon the Tarino shares. Consistent with this finding no claim was in fact ever made by the Kazakh group. Moreover, the Tribunal is satisfied that even had there been a binding agreement with the Kazakh group, MTS would have defeated any such claim by the Kazakh group as a bona fide purchaser, which took the Tarino shares free of any encumbrance.
66. Accordingly, [MTF]'s claims based on the existence of an encumbrance on the shares by virtue of an agreement with the Kazakh group (including mistake, misrepresentation and breach of warranty) fail."
They refer to Mr Yerembetov's evidence as additional support ("Moreover"), but decide independently of it ("even were this not the finding ...").
(ii) The Registration Issue
The finding does not depend upon any evidence from Mr Yerembetov. It was plainly (see paragraph 107) an issue of Kyrghyz law.
(iii) The Warranties Issue
This too did not depend upon Mr Yerembetov's evidence. It was a matter of Kyrghyz law and construction (paragraph 219).
(iv) The Construction Issue
This was overwhelmingly how it is described -- namely, a construction issue (paragraphs 228-260). One of the five subissues, as Mr Flynn says, was a check against 'commercial purpose', as to which Mr Yerembetov's evidence was considered, for the purpose of seeing whether an unreasonable result would be achieved (paragraph 254), and it is in that context that the credibility of the Mr Yerembetov is again referred to (paragraph 248). It is, however, clear that the decision of the Tribunal was a straightforward one, by reference to the simple construction of the claim (e.g. paragraphs 231-3), and Mr Yerembetov's evidence is of little significance.
(vii) The Mistake Issue
This is not suggested to have any relevance to Mr Yerembetov's evidence. Mr Flynn refers to the equitable doctrine whereby the absence of clean hands can be a reason why the equitable remedy of specific performance should not be granted, and suggests that the Arbitrators, if they had concluded that Mr Yerembetov had lied, might not have granted that remedy. As Mr Salzedo points out, that would only arise if the Claimant had won on all issues, so that the lie was established, but not determinative. In such a scenario it is difficult to see how that would have affected the result and, given that the Defendant would have been, in those circumstances, plainly liable to pay the sums due under the POA by way of purchase price for the shares (or damages in lieu), the Arbitrators would no doubt have been able to conclude that they could award a remedy which reflected that position, if necessary at common law, even if they had been in some way inhibited, which I conclude they would not have been, from ordering specific performance.