In a definitive judgment handed down on 20 June 2016 in
JSC VTB Bank v Alexander Katunin [BVIHCMAP2015/004 &
007], the Eastern Caribbean Supreme Court of Appeal
confirmed that the correct test in determining conduct amounting to
submission to the jurisdiction of the court is that it must be
considered by a disinterested bystander to be wholly unequivocal,
following English High Court precedent in SMAY Investments
Ltd & another v Sachdev & ors 2003 [EWHC 474]. The
judgment was the outcome of a successful interlocutory appeal by
Withers BVI client Alexander Katunin in BVI proceedings brought by
VTB Bank to enforce an award of US$ 30 million obtained by default
in the Meschansky District Court in Russia. Stephen Rubin QC was
instructed to appear for Mr. Katunin.
In so doing, the Court of Appeal set aside the judgment of
Bannister J. sitting in the BVI Commercial Court who had held -
despite numerous reservations of his right to challenge
jurisdiction, including in an application to extend time and adduce
foreign law evidence, and notwithstanding making a formal
application to challenge jurisdiction within the time stipulated by
EC CPR 9.7 - that Mr. Katunin had submitted to the Court's
jurisdiction. The Court of Appeal found that the application to
extend time and adduce foreign law evidence was made for the
additional purpose of allowing Mr. Katunin to file his jurisdiction
challenge and thus, when all the circumstances were taken into
account, the steps taken by him did not amount to a wholly
unequivocal submission to the Court's jurisdiction.
Accordingly, the question of the jurisdiction of the BVI Court to
hear and determine the disputed enforcement proceedings remains at
In a further reversal, the Court of Appeal found that VTB Bank
had not satisfied the test of 'impracticability' when
obtaining an ex parte order for alternative service pursuant to EC
CPR 7.8A. At the time of filing BVI proceedings, the bank obtained
an order permitting service of the Claim Form in Russia under Hague
Convention rules but in fact subsequently made no effort to serve
the Claim Form in Russia. Instead, some six weeks later the bank
sought and obtained an order for alternative service upon BVI
companies that were thought to be beneficially owned by Mr.
Katunin. The bank's legal practitioners submitted that it would
be 'impracticable' to serve Mr. Katunin in Russia as, they
said, it could take an inordinate amount of time to do so (6 months
or more) and he had attempted to evade service of the Russian
proceedings upon which the current BVI proceedings were based.
Apart from whether it could be properly argued that service
pursuant to the mandatory provisions of the Hague Convention was
'impracticable' in circumstances where no efforts at such
service had been made, Mr. Katunin's evidence that he had been
unaware of the Russian proceedings was not contradicted. The Court
of Appeal found that there was no evidence to show that Mr. Katunin
had been evading service, merely a failure to attend the Court in
Russia at which the default judgment was obtained. This conflict of
evidence was one which Bannister J. had acknowledged could not be
resolved on the application. As a result, the Court of Appeal
decided that the judge had erred in adopting the bank's version
and that there was no evidential basis for the exercise of judicial
discretion to make an alternative service order. Accordingly, the
Court of Appeal set aside that order also.
A consequence of Mr. Katunin's successful appeal, apart from
VTB Bank being liable for his costs of the appeal and in the court
below, is that the Claim Form, filed two years ago but not
extended, has now expired without having been served.
Alexander Katunin was represented by Niki Olympitis, Sara-Jane Knock & Lauren Peaty of Withers BVI, acting together
with Justin Michaelson and Christiane Deniger of Fried, Frank,
Harris, Shriver & Jacobson (London) LLP and instructing Stephen
Rubin QC of Fountain Court Chambers.
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Last year we reported that the DIFC had successfully established itself as a so called ‘conduit' jurisdiction for the enforcement of foreign and domestic arbitral awards as well as foreign money judgements.
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