Agrofirma Oniks LLC & Anor v ABH Ukraine Limited & Ors

This is the hearing of separate applications brought by the first and second defendants to set aside the claim form insofar as it asserts claims against them and/or to set aside service and/or to set aside one or more of three separate extensions of time granted for service of the claim form and for the court to declare that it has no jurisdiction over them. I do not rehearse the procedural history of the matter which is set out in the skeleton arguments and as to which there is no material dispute.

On 29 August, the claimants issued their own application to amend the claim form to “clarify the basis of their claim,” but in reality to assert a claim on an entirely different basis and to abandon the existing basis of claim at least as against the first defendant. That application has not been listed to be heard today and the claimants do not seek further adjournment of the defendant’s application so that they can be heard together. Indeed, it is difficult to see how they could properly do so in the light of Bright J’s comments at the end of July that the jurisdiction challenges should be heard today “come hell or high water.”

Nonetheless, the claimants invite me to determine their application, or at the very least to examine the merits and find that it is sufficiently meritorious to justify refusing the jurisdiction challenges. For their part, the defendants say that there is no merit even in the amended claim and that it is so weak that it can safely be dismissed here and now. On any view, they say it would be wholly unfair and unjust for me to determine the application against them given its late service and the lack of opportunity to put in evidence in response. They say that this is but the latest chapter in a history of attempts by the claimants to delay and derail the jurisdiction challenges. They invite me, therefore, simply to proceed with their applications and to ignore the amendment application altogether in so doing.

In these circumstances, it seems to me that the following principle matters fall to be addressed. First, whether service can stand on the basis of the claims as originally pleaded against each of the first and second defendants. Secondly, if I take the view that it cannot, whether the amendment application should nonetheless deter me from actually setting service aside.

I start with the original basis of claim, for which purpose I ignore the putative amendment altogether. As to the relevant principles, there is no dispute that the claimants bear the burden of showing in respect of each defendant a good arguable case that the claim asserted against that defendant falls within CPR Part 6.33(2B). It is also common ground that the test is that recently set out in Pantheon International Advisors Ltd v Co-Diagnostics Inc [2023] EWHC 1984 (KB), namely whether there is a plausible evidential basis for the application of the relevant gateway, and that where there is a dispute as to this, the claimant must have the better of the argument.

Whilst deceptively simple on first reading, I have to confess that I do not find Part 6.33(2B) altogether easy to construe. I am comforted by the fact that other judges have not found it entirely straightforward either. It raises three particularly thorny issues: first, whether the defendant has to be a party to the contract referred to in subparagraphs (b) and (c); secondly, whether the claimant has to be a party to that contract; and thirdly, the precise degree of connection denoted by the words “in respect of” between the claim asserted by the claimant against the intended defendant and the contract containing the jurisdiction clause.

In common with most other judges who have had to consider this matter, I take the view that for the purposes of both subparagraphs (b) and (c), the intended defendant must be a party to the contract containing the jurisdiction clause. Like Bright J in Magomedov v TPG Group Holdings [2025] EWHC 59 (Comm), I find the views of Tomlinson LJ in Alliance Bank JSC v Aquanta Corp [2012] EWCA Civ 1588 compelling. I accept the submission of Mr Head KC for the second defendant that it is dangerous to draw too close an analogy between authorities on Practice Direction 6, para.3.1 and Part 6.33(2B); the former governing cases where permission to serve out in the jurisdiction is required, and the latter of course governing cases where no such permission is necessary.

But in this respect, it seems to me that part 6.33(2B) is an a fortiori case. Tomlinson LJ in Aquanta considered it implicit in para.3.1(6) of the practice direction that the intended defendant should be bound by the jurisdiction agreement. It seems to me that his reasoning applies with all the more force where Part 6.33(2B) as a whole is concerned with cases where permission is not required and where it can only be assumed that this is because the defendant has voluntarily bound itself to English jurisdiction by agreement. It therefore seems to me that the better view is that the defendant must be a party to the contract containing the jurisdiction clause or, at the very least, bound by it. I note that this was also the view of Waksman LJ in IBM v LzLabs [2022] EWHC 2094 (TCC).

A more vexed question is whether the claimant has to be party to the same agreement, bearing always in mind that the contract must – on the express provisions of Part 6.33(2B) – be one which contains a term that the English court has jurisdiction to determine “the claim” asserted by the claimant against the defendant.

The short answer to this question is no, since there are plainly circumstances in which a claimant can properly bring a claim falling within subparagraph (b) without itself being party to the contract containing the jurisdiction clause. Thus, while the subparagraph primarily covers claims asserted by the claimant as the defendant’s contractual counterparty, it is not a huge step to say that it also covers claims brought by a claimant who assert the rights of that counterparty, for example, as assignee or successor in title, and possibly even pursuant to a derivative claim, although that is open to debate and contentious in this case. Whether it goes further than that is unclear, although in the event, I have found it unnecessary to reach a decision on the point.

Finally, there is the question of the meaning to be attached to the words “in respect of.” This has been canvassed extensively in a number of recent judgments and I do not propose to rehearse them. There was a characteristically thorough and rigorous analysis of these authorities by Bright J in Magomedov. I agree with him that the conclusion to be drawn is that there is no bright line to guide our faltering footsteps and that it is an open question whether, given the positioning of subparagraph (c) in Part 6.33(2B), the paragraph was intended to go beyond claims which are themselves covered by the jurisdiction provision. See the comments of Foxton J in JP Morgan International Finance Limited v Werealize.com Limited [2025] EWHC 1842 (Comm) to the effect that the transposition of the provision from the practice direction could support the argument that it does go further, even if that was not necessarily the intention of the rules committee.

Speaking for myself, I would have thought that in order for a claim to be “in respect of” a relevant contract, the contract must, as a bare minimum, be foundational in the sense that the claimant has to plead and prove it in order to establish its claim. Be that as it may, it is still incontrovertible that the contract itself must be one containing a provision that the English court shall have jurisdiction to hear the claim asserted by the claimant against the intended defendant. Furthermore, as I have held, it must be a contract to which the intended defendant is a party.

There was also debate before me as to whether there is a separate merits threshold under Part 6.33 as there is under the practice direction where permission is required. In the latter situation, the claimant has to show a serious issue on the merits, in other words a real and not a merely fanciful prospect of success. As will become apparent, I have not found it necessary to reach a concluded view on whether such a threshold applies, as I have concluded that the claimants do not succeed in showing a good arguable case for the application of Part 6.33 (2B) to the unamended claims in any event. The court may well, however, have to grapple with the existence or otherwise of such a merits test if and when the amendment application comes to be considered.

For what it is worth, my own view is that there is no separate merits threshold under Part 6.33(2B). The logic of allowing claims to be served out of the jurisdiction without permission is that they do not need permission. Necessarily, therefore, the court is not concerned with the merits, which are left for the substantive hearing.

By the same logic, there should equally be no merits threshold when seeking an extension of time to serve such a claim, although I can see the possibility of a contrary argument in that situation since the claimant is there seeking the court’s indulgence. That said, when it comes to the question of a challenge under Part 11, it must clearly be open to a defendant to argue that the merits of the claim are so weak that the court should exercise its discretion not to assert jurisdiction over it. I do not believe that I was saying anything different in my comments in Naftiran Intertrade v GL Greenland Ltd [2022] EWHC 896 (Comm).

Turning, then, to the original claims pleaded against the defendants. I can take the claim against the first defendant shortly, because Mr Béar KC for the claimants candidly accepts that the original claim cannot be maintained absent his amendment. Put shortly, the existing claim against the first defendant is for damages for breach of contract in respect of the Loan Participation Notes under the Master Terms and associated documentation for the Unpaid Coupons and Unpaid Redemptions. This is undeniably the assertion of a claim for breach of an obligation to pay sums due under a contract to which both the claimant and the first defendant are party.

The problem for Mr Béar is that the first defendant was not party to any contract with the claimant. It owed no payment obligations to the claimant; its only obligations were owed to the second defendant under the loan contracts. It was, therefore, not party to any contract at all which obliged it to pay the claimant, let alone one which conferred jurisdiction on the English courts to determine such a claim. As I say, none of this is in dispute, and it is therefore conceded that, subject to the impact of the putative amendment, service cannot stand against the first defendant and must be set aside.

Turning then to the second defendant, the existing claim is pleaded in identical fashion as a claim for damages for the non-payment of money due in respect of the Loan Participation Notes under the Master Terms and associated documents. However, the position here is distinct, as the second defendant was the Issuer of the notes and thus occupied a different position in the contractual structure. I was taken through the contractual framework in some detail by both Mr Quest KC for the first defendant, Mr Head for the second defendant, and Mr Béar, and I will not take up time retracing that journey.

Suffice it to say that, on the basis of what I was shown, I am satisfied that Mr Head has the better argument that:

The structure of the transactions here seems to have been typical of that described in Secure Capital v Credit Suisse [2017] EWCA Civ 1486. I see force in Mr Head’s submission that a claim such as that asserted by the claimant would, therefore, subvert what he described as “the democracy of the structure.”

For all these reasons, I hold that the second defendant has the better of the argument and that the claimants cannot show any good arguable case that the claim as originally asserted against the second defendant falls within the gateway. My putative conclusion is, therefore, that service must be set aside as against both defendants.

The question then arises as to what, if any, regard I should have to the amendment application. As I have said, this was made on 29 August in circumstances where the claimants had clearly had the point in mind from at least 27 June, since it was relied upon as a basis for seeking adjournment on 4 July of the defendants’ applications and a retrospective extension of time for putting in responsive evidence.

It is fair to say that Bright J, who heard that application, was wholly unimpressed with the last-minute application made days before the hearing. He granted the adjournment and extension of time with evident reluctance, and only on condition that the defendants’ costs were secured by 14 August, failing which the claimants would be debarred from serving evidence in response to the applications. He adjourned the hearing to today’s date.

Bright J was even less impressed when a further application was made by the claimants at the end of July for an extension of time for putting up the security. He commented that the claimants should have had in mind from the outset any potential difficulty in getting money out of Ukraine in the current circumstances, and commented that today’s hearing should take place “come hell or high water”. He also increased the amount of security to be provided.

In the event, security was not provided, which means that the claimants have been debarred from relying on any evidence in response to the applications and are confined to making legal submissions. In these circumstances, they are obliged to rely on the charm and persuasiveness of Mr Béar. However, that cannot disguise the fact that they have offered no explanation or justification as to why their application was not made much earlier. The obvious time to bring the application would have been at the date of the first application before Bright J on 4 July, or at least at the date of the second application to Bright J made on 25 July.

Being charitable, I infer that they were not in a position to do so because they had only recently instructed new solicitors at the end of June, that this was a point which had been raised for the first time by those solicitors, and that they had had insufficient time to get to grips with the case and explore it properly. However, I also note that those were the claimants’ third solicitors since February. Moreover, they came off the record themselves two weeks ago to be replaced by yet another, fourth, set of solicitors. Whilst the court might normally be prepared to allow a degree of latitude to a client who has been forced to change horses at a critical juncture, one is entitled to wonder whether getting through four sets of solicitors in less than eight months betokens something more than mere misfortune.

I accept Mr Béar’s submission that the evidence does not permit the courts to determine whether this was due to bad luck, bad management or bad faith, but it hardly inspires confidence that the claimants even now have a proper grip of this case. At all events, there has been plenty of time to make the application since the point was first aired. There is no good reason why it could not have been made at least by the end of July, and leaving it to the eleventh hour is simply unacceptable.

Moreover, the issues raised by the amendment application are not straightforward. Both Mr Quest and Mr Head have raised formidable arguments as to why even the reformulated claim cannot succeed. Many of the points taken in relation to the original claims apply equally to the derivative claim, but there are also further points, which I outline in summary only.

First, there is the question of the restructuring. It is not controversial that five out of six series of Notes have been restructured and that, as part of that restructuring, BNYM was replaced as Trustee and existing Events of Default were waived. The sixth series is apparently also due to be restructured, subject only to resolution of a dispute as to how that is to be achieved, that dispute being listed for hearing in the English courts in October.

If that is right, then the special circumstances on which the claimants rely in order to bring the derivative claim – namely the inability or unwillingness of the tTrustee to act – evaporate. Mr Béar sought in argument to cast some aspersions on the restructuring. He pointed to what the claimants say is suspicious timing. There may or may not be anything in this point. I cannot possibly decide that at this juncture, although I cannot say that the balance of evidence, as opposed to assertion or speculation, clearly tilts in the claimants’ favour.

Secondly, and in any event, since the claimants are not Noteholders, they cannot say that the Trustee is holding the note security on trust for them directly. At best, they are beneficiaries under a sub-trust, and so any claim would have to be a double derivative claim, for which it is said they would have to show special circumstances in respect of each link in the chain.

Thirdly, it is said that there is a substantive requirement for the Trustee to be joined to the claim, but that this is no part of the proposed amendment. Mr Béar argued to the contrary that joinder was a purely procedural matter. The weight of authority seems to be that it is a substantive requirement, although I accept that the absence of the Trustee does not necessarily invalidate proceedings and that the Trustee could in principle be joined later.

Be that as it may, however, there will on any view be substantial issues for determination in relation to the proposed amendment, which will require factual evidence as well as legal submission. Plainly, there has been insufficient time since service of the application for the defendants to address those matters properly. In these circumstances, it would be wholly improper to determine the application now, as I have been invited to do by Mr Béar. Indeed, it seems to me that it would be grossly unfair to do so in circumstances where the logic of Bright J’s order was that the defendants’ costs should be secured before they were put to the expense of dealing with any responsive evidence served by the claimants.

Since it was clearly contemplated at the time of Mr Justice Bright’s order that any evidence in response would encompass the matters now put forward by amendment – if the point were to be run – it seems to me that to allow the amendment application to be deployed in opposition to the jurisdictional challenges would permit the claimants effectively to circumvent the requirement for security by the back door.

I accept in principle the proposition derived by Mr Béar from NML Capital Ltd v Republic of Argentina [2012] 1 All ER (Comm) 1081 that, other things being equal, if there is an arguable basis for the claim, the court should not make the claimant go back to the beginning when it would serve no useful purpose to do so.

However, all things are not equal in this case. For the reason I have just given, there is a concern that allowing reliance on the amendment would circumvent at least the spirit, if not the letter, of the order for security made by Bright J. It seems to me, therefore, in order to be able to rely on the proposed amendment in response to these applications, I would have to be satisfied that it was so compelling as to override that concern.

To that extent, I cannot avoid a consideration of the merits of the application. I have some sympathy for the claimants’ predicament in finding themselves holding interests in Loan Participation Notes which have been unpaid for several years, but that does not begin to excuse the less than satisfactory, not to say chaotic, conduct of their claim against the first and second defendants to date.

While I am not prepared to say that the putative amendment is so weak that I should accede to the defendant’s invitation simply to dismiss it peremptorily here and now, by the same token I am unable to say that it is so obviously meritorious as to justify refusing to set aside service in respect of the existing claims. The balance might have been altered if limitation had been in play, but that is not a factor in this case. More than that I will not say about the merits: that will be a matter for the judge hearing the amendment application in due course.

In these circumstances, I do not consider it unfair to limit the claimants to their pleaded case for the purpose of determining the jurisdictional challenges. They are not shut out altogether, although the condition of further pursuit will involve fairly stringent conditions as to the payment of costs.

Subject to hearing counsel, I would therefore propose to proceed in the following way: first, to set aside service of the claim form on the first and second defendants, but otherwise leaving the claim form in existence; secondly, to direct that the amendment application be listed for a determination on a date after the hearing of the dispute relating to the appointment of the new Trustee for Series 6; direct that the claimants should serve any evidence in support of the application within 14 days of today’s date; to order that all costs thrown away should be paid on the indemnity basis within 21 or 28 days and security for the costs of the amendment application provided; that the defendants should be entitled to serve responsive evidence no later than 14 days in advance of the hearing, but that they should not be obliged to do so unless the costs have been paid and the security provided; and make provision for the claimants to reply no later than 7 days prior to the hearing of the amendment application; and that there should be liberty to apply for a peremptory order or other relief in the event that the costs are not paid and the security not provided.

It is unnecessary, given my conclusions, to deal with the extensions of time. I merely emphasise that whether or not there was strictly a duty of full and frank disclosure on the claimants in respect of any one of those applications, it was nonetheless incumbent on them to give a proper explanation of why an extension was needed in relation to each of the first and second defendants, including an explanation of the delays to date and why, if their case was that no permission was in fact required, the defendants had not already been served.

I confirm that I will be making an order to set aside service. On reflection and on careful consideration of the submissions made by all counsel, I am, contrary to my initial inclinations, persuaded that the best and most efficient course in accordance with the overriding objective and in the interests of clarity and simplicity is that the claim form also should be set aside as against the first and second defendants, notwithstanding that it remains live as regards defendants three and four. I will therefore also make a declaration that the court has no jurisdiction over the first and second defendants in relation to that claim.

Part of the reason for changing my initial views is this: if only service is set aside, the inevitable consequence is, as Mr Head pointed out, that the claim form has lapsed and can no longer be validly served. That must mean that the defendants are no longer party to the proceedings and therefore, there is no obvious procedural mechanism for allowing them to contest the amendment application, should it be pursued and that would be unsatisfactory. The proceedings will therefore be set aside altogether against the first and second defendants and if the claimants wish to pursue a claim against them on whatever basis, they will have to commence fresh proceedings. That, to a certain extent, simplifies matters greatly because it removes the need to make any consequential directions about the amendment application.

It follows that the defendants must be entitled to the entirety of their costs of the proceedings to date and, as I have indicated, I propose to assess these summarily. As to the basis of assessment, it seems to me appropriate that in relation to the costs of defending the jurisdiction and adjournment applications, costs should be awarded on an indemnity basis; otherwise, any remaining costs should be awarded on the standard basis.

Simply commencing a claim which is subsequently found to be unmeritorious is not itself a ground for indemnity costs. Nonetheless, it seems to me that the adjournment and jurisdiction applications are in a different league because of the manner in which they were pursued, including, in particular, reliance by way of defence on a very late application which not only could but should have been made earlier, when an adjournment was sought specifically on the basis that this was a point which was likely to be advanced. The adjournment was granted conditional on the provision of security, and the claimants neither provided security nor made the application and now are effectively trying to get it in by the back door.

I do not accept Mr Béar’s argument that the amendment application did not add nothing materially to the length of the hearing because most of the points were in play in any event. The derivative claim itself took a discrete chunk of time to address, but more importantly, the impact of the amendment application on what would otherwise have been a very straightforward application by the defendants was quite considerable.

As to the mechanism of payment, I do not accede to Mr Béar’s submission that I should refrain from making any order for direct payment. He referred in somewhat elliptical terms to “geopolitical considerations” but these were not supported by any evidence. In any event, it is impossible to ignore the fact that it is the claimants who chose to sue these defendants in 2024, well after the war in Ukraine had started and well after the imposition of sanctions, and when it should have been obvious to them that there might be difficulties for them were they required to make any payments to the defendants during the course of the proceedings. It seems to me that if foreign litigants elect to come to England to litigate their disputes, particularly against a known background of sanctions, they must be prepared to abide by the rules. The fact that they may now find it difficult to get money out of Ukraine with which to meet their payment obligations does not absolve them from that obligation. The order will therefore be for payment in the ordinary way.

As to quantum on assessment, I have to say that the figures in play are simply eye-watering. I have the Court of Appeal’s comments in Saipem & Ors v Petrofac Limited [2025] EWCA Civ 821 well in mind. I am particularly troubled by some of the hourly rates applied and the sheer amount of time which is being claimed for proceedings that have not even progressed as far as service of points of claim. So far as these defendants are concerned, they should only have had to serve an acknowledgement of service and deal with the jurisdiction application and associated matters. I fail to understand how there can be any significant residual costs of the action.

In relation to the hourly rates, I accept that some uplift from the guideline rates is appropriate, but nowhere near as much as claimed. Obviously, the defendants can pay their solicitors whatever they choose – that is their prerogative – but even on an indemnity basis, they cannot recover more than is reasonable from the other side.

In this case, the litigation was moderately large, but not massive by Commercial Court standards and not, it seems to me, unduly complex. The transactions in question were standard for the international bond market and I fail to see anything that justifies anything other than a fairly moderate uplift. I would have considered something in the region of a 15 per cent uplift on the guideline rates to be appropriate, which in rough terms would be £650 for Grade A, £450 for Grade B, £345 for C, and £230 for D. But that is only a rough indication of the figures I have in mind.

In the case of the first defendant, it is true that they had a very slim team of instructing solicitors. On the other hand, these were both top-rate fee earners and, to a certain extent, those two factors balance out. But it still seems to me that there was an unreasonable amount of time spent, particularly in relation to the residual costs. I am also going to take an axe to counsel’s fees. There appears to have been an element of over-lawyering in this respect. Inevitably, any assessment can only be broad brush. On the headline figures provided by Mr Quest, the first defendant’s total costs were some £424,000, of which approximately £347,000 related to the jurisdiction and adjournment applications. Taking account of all the points I have mentioned, I reduce the indemnity costs element to £250,000 and the residual costs to £35,000, making a total of £285,000.

As regards the second defendant, the same considerations apply. In their case, the total costs incurred were £459,000, of which £334,000 related to the jurisdiction and adjournment applications. The hourly rates applied by these solicitors are not as objectionable, but counsel’s fees are extremely high. Given the rough comparability of both solicitor and counsel teams in terms of size and standing, I consider that the same figures are appropriate for the second defendant, so as to give likewise a total figure of £285,000.

Adding that up, the total for both defendants will come to some £570,000. It is purely coincidental that this is almost the same as the current figure for security ordered by Bright J. In those circumstances, it seems to me that the neatest course is to round the figure up to £580,000 across both parties, which is the same as the amount ordered by Bright J for security. In consequence the order for security will now be discharged.