Cetelem SA v Roust Holdings Ltd

MR JUSTICE BEATSON: Mr Black, before I give judgment, let me just ask you one question. You did not deal, in your reply, with Mr MacLean's point based on Redland Bricks v Morris and the argument that a requirement that RHL procure documents did not clearly specify what was needed to be done.

You did perhaps allude to it by reference to paragraph 27.1 of the bylaws but do you have anything you want to say about that point?

MR BLACK: My Lord, ultimately I would be happy with a wording that was clear and direct. I did, as your Lordship says, refer to the bylaws and the question of instructing. Certainly, I have to say, my original drafting was, I suppose, an attempt to be as wide as possible and cover a number of possibilities.

The use of the word "procure" was to take such steps as were lawful and proper to reflect the wording of the actual contract itself, the obligation in clause 6.8 on RHL to take the steps necessary that the documents be produced and it may be that that is a better wording on the general covenant signed, delivered (inaudible) to take all reasonable lawful measures that may be necessary or appropriate. My Lord, that is certainly the (inaudible) cover the single word "procure".

MR JUSTICE BEATSON: Good, thank you.

On 23rd December the claimant, Cetelem SA, applied for and was granted an injunction without notice. The injunction prohibited the respondent, Roust Holdings Ltd, from dealing with any of the assets specified in the order, in particular its direct shareholding in Roust Trading Ltd, a Bermudan company; and Roust Cetelem Ltd, a Cypriot company; and its indirect shareholdings in ZAO Roust Inc, a closed joint stock company incorporated under the laws of the Russian Federation; the Russian Standard Company, a similarly incorporated joint stock company; and the Russian Standard Bank, also a joint stock commercial bank organised and existing under the laws of the Russian Federation.

The dispute that gave rise to these proceedings concerns a contract for the purchase of shares in Roust Cetelem Ltd, the Cypriot company ("RCL"), by the claimant, a French company, from Roust Holdings Ltd, a company incorporated under the laws of the British Virgin Islands, in order to create a 50/50 shareholding between the claimant and Roust Holdings Ltd. The consideration for the transaction is in the region of US$320 million.

The claimant, Cetelem, is a subsidiary of BNP Paribas, and the respondent is one of a group of companies controlled by Mr Roustan Tariko. Roust Holdings Ltd, the defendant ("RHL"), is a British Virgin Islands company and, as stated in an affidavit on behalf of the claimant by Katherine Olivier, it is believed that its ultimate beneficial owner is (through a trust) Mr Roustan Tariko. Roust Trading Ltd ("RTL"), is a wholly owned Bermudan subsidiary of RHL and RTL in turn wholly owns the Russian company Roust Incorporated, and 99.97 per cent of the shares in the Russian Standard Company ("RSC"), which in turn owns over 90 per cent of the shares in the Russian Standard Bank ("RSB").

The method by which the shares in RCL were to be transferred to the claimant was a complex series of transactions involving a number of companies in the Roust Group. It is not necessary for the purpose of this judgment to set those out in detail.

The share transfer agreement between RHL and Cetelem provides, by clauses 6.2 and 6.3, that it shall be governed and construed in accordance with the laws of England and Wales and that any dispute arising in connection with it shall be subject to ICC arbitration, with the place of arbitration in London and the language of proceedings English.

When obtaining the freezing order, Mr Black QC, on behalf of the claimant, sought an early return date where the claimant's application for a mandatory injunction could be considered on notice to the defendant. The reason for this was the need under the share purchase agreement for the Central Bank of Russia ("CBR"), to authorise the transfer of the shares of RSC and to authorise the transaction: see clause 3.1.1.3 of the agreement which is described as a principal condition precedent. Clause 3.5 of the agreement states:

Mr Black submitted, on the basis of the evidence contained in Miss Olivier's first affidavit, that the Central Bank of Russia had stated that any application would take a month to be processed, hence it was necessary for the paperwork to be submitted by 31st December at the latest. He submitted that in fact the Central Bank was unlikely to receive documentation after a fairly early hour on 31st December.

So the matter has come back at short notice. In order for the Central Bank of Russia to consider the authorisation of this transfer, a number of documents need to be furnished to it by or on behalf of the defendant or the companies which it controls. These include lists of shareholders of RSC; information and facts concerning the financial activity of RSC for the period from the last day of the month preceding the month in which the application is made to the date of the application, although Mr Black has informed me that a failure to furnish up-to-date facts concerning this financial activity is not fatal to an application. They also include a calculation of net assets; a list of debtors whose debt exceeds 5 per cent of RSC's balance value information; on claims against or shares in companies subject to liquidation or bankruptcy; information on bank accounts certified by the tax authority; certificates confirming that RSC does not have a file of unpaid payment orders; a certificate confirming that RSC has no indebtedness on the payment of taxes and levies issued by tax authorities; powers of attorney for RSC; a list of shareholders for RTL; a power of attorney for RTL or an application signed by RTL itself; a list of shareholders of RHL; a power of attorney for RHL unless the application is signed by RHL itself; and similar documents for Roust Inc.

Mr Black now seeks a mandatory injunction that:

Mr Black submits that the court has jurisdiction over the present application because by Article 6.2 and 6.3 of the share purchase agreement the applicable law is London and the seat of arbitration is London, so that the provisions of the Arbitration Act 1996 apply. He argues that the application satisfies the criteria under Sections 44(3) and (5) of the 1996 Act because the application for the mandatory order falls within Section 44, in particular Section 44(3) which provides that:

He submits that the decision of Cooke J in Hiscox Underwriting Ltd v Dickson [2004] EWHC 479 shows that Section 44(3) is permissive and not exhaustive of the court's powers, and that an interim injunction prior to the appointment of an arbitrator is permissible in an urgent situation where the injunction would be supportive of the arbitral process. In that case a mandatory injunction was given. Alternatively, in any event, the court has a residual jurisdiction under Section 37 of the Supreme Court Act to act in the interests of fairness and justice.

In seeking the freezing order, Mr Black argued that if these documents are not signed and delivered to the Central Bank of Russia by the end of this month, the condition precedent in clause 3.1.1.3 will not be satisfied, and by Section 3(5) the agreement will become null and void. He submits that the respondent is under an obligation to use its best efforts and provide mutual assistance so that the principal and other conditions precedent are satisfied as rapidly as practicable (see clause 3.3), and that there is an obligation in clause 6.8 that the parties shall sign and deliver all documents, provide all information and take all reasonable and lawful measures that may be necessary or appropriate to achieve the purposes of the agreement.

The circumstances in which the claimant fears that the agreement will not be fulfilled by the defendant are that after a period of exchanges between the parties following from mid-October, the claimant became apprehensive that the defendant was not complying with its obligations under clause 6.8. Matters came to a head in a letter dated 22nd December 2004 from the respondent's solicitors, Simmons & Simmons, which stated, inter alia, that the necessary trust between the parties had been destroyed by steps the claimant took to influence the approach of auditors in relation to retailers' fees. The letter states that the claimant's interference in the accounting treatment of retailers' fees was clearly detrimental to RHL's interests and contrary to the claimant's obligations to RHL pursuant to the shareholders' agreement. The letter states that RHL wishes to inform the Central Bank of Russia of the dispute and the documentary background and to seek its advice, and to instruct professional advisers to review the share purchase agreement. It was that letter that precipitated the application to the court last week.

Mr Black submits that this is a case in which it is appropriate to give the relief sought. His skeleton argument notes that the letter of 22nd December was the first occasion that the respondent alleged that the claimant had taken steps to influence the auditors; this matter had not been mentioned beforehand; and the respondent's complaint had been met by the respondent securing an additional payment from the claimant in October in relation to retailer fees. Mr Black states that it is significant that the letter of 22nd December does not state that there is any outstanding dispute with regards to the fees. He submits that there is no dispute identified but that if RHL wishes to inform the Central Bank and try to persuade them to withhold approval, there is no reason that it cannot do so. It can inform the Central Bank of the dispute after the application has been submitted and it will then be up to the Central Bank whether to issue its approval on the merits of the position of the parties. He submits that there are no grounds for failing to comply with the share purchase agreement by refusing to submit the application to the Central Bank. He submits that underlying the dispute is the claimant's view that Mr Tariko's commercial aim is that he does not now wish to sell only a 50 per cent shareholding of RSB, he wishes to sell 100 per cent. He had stated this in a meeting in December. Mr Black submits that the only way in which the claimant's position can be protected until an arbitral tribunal is convened is if the court compels RHL to take all steps necessary to allow for the possibility of the satisfaction of the principal condition precedent set out in clause 3.1.1.3, the authorisation by the Central Bank.

Mr Black recognised that it is only exceptionally that a mandatory injunction is given on an interim basis but, as already noted, such an order was made by Cooke J in the Hiscox case. That order required the defendant to hand over the names of brokers from whom business had been obtained. Cooke J noted that in making an order of this type it was essential not to prejudge the issue which had to be determined by the arbitrator in that case the scope of the disclosure obligation. His Lordship stated that the principles exercising the exercise of the jurisdiction were as follows:

"Section 1(c) of the 1996 Act provides that the court should not intervene except as provided by part 1 of the Act. The words 'should not' are not the same as 'shall not', as both parties accepted and indeed as is pointed out in a passage in Mustle and Boyd's companion volume at page 28 and in the comments of Thomas J in Val Do Rio Doce Navegacao S.A v Shanghai Bao Steel Ocean SS Co Ltd [2000] 2 Lloyd's Reports 1 at paragraph 52.

It is also agreed, however, that the court's general approach should be a minimalist one of intervening only within the framework of the Act or in order to support the basic principles of arbitration. As I have already found that an interim injunction prior to the appointment of an arbitrator or in circumstances when an arbitrator cannot effectively act is permissible in an urgent situation, Section 1(c) provides no bar here if the matter otherwise requires an order to be made as a matter of urgency, and such an injunction would be supportive of the arbitration process.

Additionally, it is accepted by both parties that the courts have a residual jurisdiction outside the framework of the Arbitration Act under Section 37 of the Supreme Court Act. Examples of this appear in the Epsilon Rosa [2003] 2 Lloyd's Reports 509 at 517, and in Excel Insurance v Owens Corning [2000] 2 Lloyd's Reports 500. In addition, the court has inherent jurisdiction, particularly in the light of the requirements for fairness and justice set out in the principles of Section 1 of the Arbitration Act itself. It is nonetheless plainly only in exceptional cases that the court would be justified in acting under such a jurisdiction if the matter does not readily fall within the terms of Section 44 of the Arbitration Act.

Furthermore, the following point needs to be emphasised. An interim injunction will not readily be granted if the effect of granting that injunction is effectively to decide the matter at issue which is to be determined by the arbitrator, and if the effect of doing so would be to usurp the function of the arbitrator to which the parties have agreed. This is a point of the utmost importance but it will, nonetheless, yield to the requirements of justice if urgency and fairness require it in order that justice can be administered."

Mr Black also points me to the general principles governing the grant of mandatory injunctions reviewed by Phillips LJ (as he then was) in Zockpoll v Mercury [1998] FSR 354, in which the authorities, including the decision in Films Rover v Canon Film Sales [1987] 1 WLR 670, were reviewed. In Films Rover v Canon which Hoffman J (as he then was) stated that a fundamental principle is that the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been wrong in the sense that his Lordship described, i.e. in the sense of granting an injunction to a party who fails to establish his right at trial, or failing to grant an injunction to a party who succeeds or would have succeeded at trial.

Mr Black submits that this is a paradigm case for a mandatory order. There is no risk of injustice if the order should not have been made because the order is not dispositive of the parties' rights, it merely facilitates the administrative processes necessary to give the contract effect. The order will not prevent Mr Tariko or his companies from raising any bona fide objection to completion of the contract. However, not to make the order will allow Mr Tariko to evade his contractual obligations by default.

The third limb of this part of Mr Black's submission is that the facts demonstrate that the court can feel a high degree of assurance that the claimant is entitled to insist that the respondent fulfil its obligations to assist in the submission of the application to the Central Bank of Russia. Making an order does not prevent RHL in any way from raising such arguments as it wishes to justify a refusal to complete the transaction. It would merely prevent RHL from being released from its contractual obligations administratively so that, in all the circumstances, not to grant the injunction carries by far the greater risk of injustice.

Mr MacLean, on behalf of the respondent, submitted, first, that there is no jurisdiction to make either the freezing order or the mandatory injunction. In relation to this, he submits that the share purchase agreement involves the transfer of shares by a Cypriot company in a Cypriot company to a French entity by a British Virgin Islands entity with no assets in this jurisdiction. The respondent is not generally amenable to the jurisdiction of this court and it would be extraordinary to give injunctive relief in such a situation. He submitted that the powers exercisable under Section 44 are powers in support of arbitral proceedings, and in the present case there is no arbitration on foot. The order, he submits, would not be in support of arbitral proceedings but an usurpation of the powers of the arbitrators. He submits that there is no detailed information given in Miss Olivier's affidavits as to the claims that might be advanced by Cetelem in arbitration. Paragraph 7 of her first affidavit states that it is the intention of Cetelem to institute proceedings in accordance with the arbitration agreement to secure its right under the Share Purchase Agreement. He submits that where there is no arbitration on foot the powers in Section 44(3) are confined to the matters specified in Section 44(3). What is specified is power to make such orders as the court thinks necessary for the purpose of preserving evidence or assets. He submits that the Hiscox case is distinguishable because in that case the arbitration was on foot. It was just that the arbitrator had not been appointed when the proceedings had been instituted.

Mr MacLean also submits that if I am not with him on his primary submission that the court has no jurisdiction, this is a case in which I should not grant the relief sought in the exercise of my discretion. He submits that there is no practical way the order can be enforced by tomorrow morning, especially given the time difference between Moscow and London. A number of the documents sought and authorisation sought are sought from entities other than RHL, and that it would not be possible to enforce any such order either against RHL or against the Bermudan and Russian companies involved. He relies on a witness statement by Simon Morgan, a solicitor at Simmons & Simmons, which states, inter alia, that Mr Morrison, a partner in the Bermudan law firm of Cox Hallett Wilkinson, had informed him that the directors of RTL, the Bermudan company, were bound to reach decisions consistent with their fiduciary duties to the company and could not be forced by their shareholder, RHL, to pursue any particular course of conduct. He also submitted that proceedings had been started in Bermuda alleging a conspiracy by RTL with a return date on 5th January so that it would not be possible for the directors of RTL to do anything before that. It was, he argued, quite appropriate for them to take time to consider their position in view of the serious allegations against them.

Mr MacLean relied on the decision in Motorola Credit Corporation v Uzan (No 2) [2003] EWCA (Civ) 752, in which it was held that parties without assets in the UK should not have had a worldwide freezing order made against them by the courts of this country: (See paragraphs 18, 89 and 125 of the judgment of the Court of Appeal.)

Mr MacLean also submitted that the relief sought was not clear enough for the court to make a mandatory order. The court should not, he submitted, fashion relief. In the present case the shareholder purchase agreement did not specify a timetable, and clauses 3.3 and 6.8 imposed at best a "best efforts" obligation on RHL. Because some of the documentation required was from entities other than RHL, it was not in RHL's sole control. He also submitted that the draft injunction requiring the respondent to procure that the documents be produced was, on the face of it, inadequately specific as to the factual content of what the respondent was obliged to do. He relied on the well known decision in Redland Bricks v Morris [1970] AC 652, and in particular the speech of Lord Upjohn at pages 665 and 666. His Lordship stated, as the fourth general principle relating to the grant of a mandatory injunction that:

"The court must be careful to see that the defendant knows exactly in fact what he has to do and this means not as a matter of law but as a matter of fact so that in carrying out an order he can give his contractors the proper instructions."

He submits that, on the face of it, requiring RHL to procure documents that it is for other companies to provide, without saying what it is that RHL is to do, violates this principle.

Finally in relation to the mandatory injunction that is sought, he submits that while the underlying merits of the dispute are not for this court, it is clear that there has been a festering disagreement between the parties on the accounting principles applied to the banks, and that disharmony between the prospective parties to a joint venture is a serious matter, particularly in a banking context, which makes it inappropriate to make this order.

In relation to the freezing order, Mr MacLean submits that the evidence as to the risk of dissipation of assets is exiguous. It is contained only in paragraph 61 of Miss Olivier's affidavit. Mr MacLean submits that this is not evidence of substance over which a freezing order should be made because it effectively (see paragraph 50(d) of the affidavit) refers to rumours in the Russian market. It does not bring any evidence to support the suggestion that steps are being taken or contemplated by the defendant to divest itself of its holdings.

As far as the jurisdiction of the court is concerned, I have concluded that the decision in Hiscox's case shows that the court does have jurisdiction. Although I was troubled at one time by the fact that the arbitration proceedings had not been launched, Section 44(3) refers to a proposed party to arbitration proceedings, and, as Mr Black submitted, it would make a nonsense of the framework of the 1996 Act if it did not include a situation in which arbitral proceedings are imminent but not yet launched. Cooke J in that case stated, at paragraph 37, that the words of Section 44(3) are permissive and not prohibitive. In that case a mandatory injunction requiring the disclosure of information was ordered.

For these reasons, I reject Mr MacLean's submission. It would mean that the power of the court under Section 44(3) would vary depending upon whether the application was by a party to arbitral proceedings or a proposed party. The nature of the orders that the court may make are not said to differ according to this distinction, and I see no reason for limiting the power of the court in the way that is suggested. I also consider that Cooke J's statement in Hiscox that the section is permissive and not exhaustive of the court's powers supports this conclusion.

As far as the exercise of my discretion is concerned, Mr Black in reply pointed to the commercial context of the share purchase agreement, and in particular to the cooperation principles that had been signed by M.Clamon, the chief operating officer of BNP Paribas, and Mr Tariko, earlier in the year. Mr Tariko signed them on 27th February, and M.Clamon on 3rd March. These cooperation principles show that Mr Tariko's companies (as I can loosely refer to them) were regarded as such. Paragraph 3 of main heading 1 states:

"For so long as Roustan Tariko's equity stake in the bank will directly and indirectly amount to 50 per cent of the shares in or the voting rights, certain management principles organising a joint control over RSB will apply".

In the third recital to the shareholder agreement between Cetelem, BNP Paribas, RHL, Mr Tariko and Listone Interproject Ltd, which became RCL, it is stated that:

"Mr Tariko ultimately has management control through particularly Russian Standard Company, RSC, of Russian Standard Bank, RSB, a closed joint stock commercial bank duly organised and existing under the laws of the Russian Federation which is a leading retail bank for consumer finance in Russia. Mr Tariko and companies connected thereto hold a 93.5 per cent participation in the assets."

Mr Black submitted that in these circumstances, the argument that any relief that the court gave against RHL would be futile or could not be enforced is not a real one. He submits, and Mr MacLean did not suggest otherwise, that the court should not assume that the defendant would disobey its order, and he also submits, relying on RTL's Bylaws, that RTL can be instructed to deal with matters on the receipt of a signed resolution by all its members. Paragraph 27.1 of the Bylaws states:

"Except where the Act or these Bylaws expressly requires that a general meeting of members be held for a particular purpose or in particular circumstances or that a particular matter be dealt with by the members at a general meeting, a resolution in writing, which may be in counterparts, which does not relate to such particular purpose, circumstances or matters signed by all the members who at the date of the resolution would be entitled to attend a general meeting invoking the resolution, shall be as valid and effectual as if it had been passed by a general meeting duly called and constituted."

He submitted, on the basis of this, that it is open to the owner of RHL to direct that the relevant signatures and powers of attorney be signed without the need for a general meeting.

He also submitted that the decision in Motorola v Uzan, which Mr MacLean used as the basis of his submission that the court should not seek to act as a global or juridical policeman, is distinguishable because in the present case the terms of the agreement make this country the primary locus of jurisdiction for resolving disputes. That was not the case in Motorola v Uzan where the only link with this country was that some of the defendants in an United States action had assets in this country.

Of the five principles set out by the Court of Appeal at paragraph 115 of that judgment Mr Black argued that two do not apply because the issue here does not concern a worldwide freezing order. Moreover, because of clause 6.3, the first and third criteria do not preclude an order in the present case. This is the primary court for disputes about this contract, subject to the arbitration, and secondly, there is no risk of conflicting orders because the parties have expressly chosen that disputes should be adjudicated in this jurisdiction.

With regard to the fifth of the criteria set out in Motorola v Uzan, the difficulties in enforcement, he submitted that, first of all, RHL can directly or indirectly, exercise the powers specified in clause 27.1 of RTL's Bylaws. Secondly, most of the documents specified in the schedule to the injunction are in existence in Russia and can be gathered. Some are out of date, but he accepted that this is the position and said it is not fatal to an application to the Central Bank. With regard to the Roust Inc shareholders' list, he informs me that this, which is not dealt with in Miss Olivier's affidavit, is in existence with RSB but it needs to be signed by Mr Levin.

Finally, Mr Black submitted that, as far as the merits of the case are concerned, there has been no explanation as to why RHL is threatening not to comply with its obligations. He submitted that RHL's position is unsustainable because effectively (see paragraph 16 of Mr Morgan's witness statement) the respondent relies on an unspecified communication by a manager at Pricewaterhouse Coopers Moscow that BNP Paribas had exercised influence on Pricewaterhouse Coopers' London headquarters to require Pricewaterhouse Coopers Moscow to adopt a change of approach in relation to the accounting treatment of cash advances and retailers' fees. He submits that this is vague. One is not told when this communication was made or when the trust broke down.

Mr MacLean also submitted that, quite apart from anything else, the claimant had delayed. It has now come to the court on an urgent basis stating that it is necessary for relief to be given before tomorrow in order that the position under the share purchase agreement can be maintained, but that in M.Clamon's letter of 3rd December to Mr Tariko he had stated that December 10th was the very latest possible date to remain in compliance with the contractual deadline, and that his team looked forward to receiving all the missing documents as soon as possible.

As far as the exercise of my discretion is concerned, I consider that, while the court should not make an order for which it knows there is no practical way it can be enforced, Mr MacLean's submissions based on the corporate structure of the companies in the Roust Group do not reflect the commercial reality of the way the parties dealt with matters, as reflected in the principles of cooperation (see paragraph 3 of heading 1 set out earlier in this judgment) and the share purchase agreement. In particular, given the principles of cooperation, the fact that many of the documents are in Russia and can be gathered, and the power of the owners of RTL to require action under clause 27.1 mean that a suitably worded order can not be said to be impractical and incapable of enforcement.

The argument based on Motorola v Uzan is one that the court is alive to, but in this case concerns a contract governed by English law with London as a seat of arbitration. Accordingly, for the reasons submitted by Mr Black, that decision is distinguishable.

With regard to Mr MacLean's arguments based on the fiduciary duties of the directors of RTL under Bermudan law, it will of course be a matter for them to consider and to consider whether (should the company receive a direction pursuant to paragraph 27.1 of the Bylaws) anything that is asked for would put them in breach of their fiduciary duties either in general or because of the proceedings pending in Bermuda. If they do so consider, that will no doubt be a difficulty but it is one that will not necessarily put RHL in breach of the order.

Mr Black pointed me to paragraph 37 of Mr Morgan's witness statement which states only that powers of attorney conferring power to dispose of assets of RTL had been agreed to be revoked, and that the directors had resolved that no director should be able to agree the sale of any company asset until the directors have received further information and reviewed and considered the order made in the Bermuda court. Neither of these facts would prevent them signing a power of attorney necessary to support the submission of the documents to the Central Bank.

As far as the argument that the claimant has delayed, it cannot be right, says Mr MacLean, that on 3rd December M.Clamon said 10th December was the last date but now they are saying that it is 31st December. It was only on 22nd December that Simmons & Simmons' letter arrived with the claimant, and I consider that in those circumstances they acted speedily once that letter was received.

I am, however, concerned about the terms of the draft order. I am prepared to make a mandatory injunction but I shall want to hear submissions about the terms. As far as the freezing order is concerned, it follows from what I have said that I consider that it should remain in place but I shall require the claimant to institute arbitral proceedings forthwith. So, for these reasons and subject to submissions as to the precise form of the order, I reject the argument ably put forward by Mr MacLean and I will now hear any submissions as to the form of the order.

MR BLACK: My Lord, may I just make one slip rule point? At the very beginning of my Lord's judgment you referred to Mr Tariko being paid further sums at a meeting in October. It was in fact December.

MR JUSTICE BEATSON: I shall certainly correct that if the transcript shows that. I shall remember that.

MR BLACK: Thank you, my Lord.

My Lord, so far as the terms of the draft order are concerned, your Lordship has expressed concern about it.

MR JUSTICE BEATSON: Well, I have basically said I am not prepared to make an order in the terms that you have proposed but I am prepared to make a more restrictive order.

MR BLACK: Yes, my Lord. It is perhaps difficult to draft it standing on one's feet.

MR JUSTICE BEATSON: Well, we are going to have to do it because I am disappearing as soon as this case is finished.

MR BLACK: Yes, my Lord.

MR JUSTICE BEATSON: The alternative is that we follow the wording, as you suggested in argument, of clause 6.8.

MR BLACK: My Lord, we would certainly --

MR JUSTICE BEATSON: I shall have to hear what Mr MacLean says about this or we have a specific reference in relation to RHL, RTL to bylaw 27.1 or both.

MR BLACK: My Lord, may I suggest we follow the wording of 6.8? It is the contractual obligation, it may not be necessary for RTL to do it by resolution. Sorry, (inaudible) RHL to instruct by resolution if the parties are minded to comply with the court's order.

MR JUSTICE BEATSON: The trouble is that this requires the parties to sign and deliver all documents, but you are requiring procuring, is to get -- the fact that it is other parties. Well, it is "take all reasonable and lawful measures".

MR BLACK: Yes, my Lord and the standard clause in the injunction is a respondent which is a corporation and which is ordered not to do something, one can change that to do something. It says "Must not do it by its direct officers, employees, or agents".

MR JUSTICE BEATSON: Let me just hear Mr MacLean on the basic point.

MR MacLEAN: I find this quite difficult, my Lord, for this reason: your Lordship has relied strongly, in your Lordship's judgment, on Article 27 which I will be submitting to you, in connection with our application, does not actually achieve what it is intended to achieve by your Lordship's order. There is still the point that whatever the shareholders decide, it is a matter at the end of the day for the directors, under the articles, to decide what to do. So fashioning an order which reflects Article 27 does not, in my submission, actually advance matters any further.

MR JUSTICE BEATSON: And fashioning an order that reflects paragraph 6.8?

MR MacLEAN: That is an obligation which is imposed on RHL, that is true. But if the position is that RHL makes a request of RTL and RTL says: you are not going to comply, there is a problem.

MR JUSTICE BEATSON: Yes but your submission is -- you have said to me that I should not assume that there will be a problem.

MR MacLEAN: Should not assume, no. There may be a problem. All I am seeking to make clear here is that if there is an order in those terms and it is specifically restrictive as it ought to be in relation to specific documents, we ought not to be talking about the documents in general so there is a debate about what is or is not necessary.

MR JUSTICE BEATSON: No. The documents are listed in schedule C and --

MR MacLEAN: Yes, they are. I am not clear as to whether all those documents are appropriately described or not, I simply have not had enough time to investigate that. The only evidence we have from our side in relation to those is that a number of them are out of date. But leave that aside, we will have to be restricted to the documents in schedule 3 to the draft order. But if, for example, RHL does not, by 9 o'clock tomorrow morning, deliver --

MR JUSTICE BEATSON: The other point is that given the time of day that we are at, 9 o'clock is a no-no for the order. I was thinking of noon.

MR MacLEAN: Right, so your Lordship advances it by three hours, I can see that. I am not going to argue about that, plainly (inaudible) me to do so. Whether that satisfies things is a different matter. I am not sure there is much more I can submit.

MR JUSTICE BEATSON: No. Well, I am not pressing you to speak if you ... What about:

MR MacLEAN: I am not sure there is much more I can usefully say to your Lordship with regard to this. I am in a slightly invidious position having said to your Lordship not to make any order at all. I know your Lordship has given me the opportunity to make --

MR JUSTICE BEATSON: Obviously, you say I~should not have done it at all and I am inviting you to make the thing more acceptable so I can see that that does put you in an invidious position. I am giving you the opportunity but on the other hand, I am not forcing you.

MR MacLEAN: No, I understand. One is talking about practicality here. Your Lordship has seen the evidence that there are people, I do not know where they are frankly -- 12 o'clock tomorrow is 7 o'clock in the morning in Bermuda, it is 3 o'clock in the afternoon --

MR JUSTICE BEATSON: You see that you should speak because that is right, I was thinking of Moscow rather than Bermuda.

MR MacLEAN: I am sure your Lordship was but midday in Moscow is 9 o'clock here, it is 4 o'clock in the morning in Bermuda.

MR JUSTICE BEATSON: Yes. But then I was thinking of midday here, thinking of Moscow time.

MR MacLEAN: I see, forgive me. Midday here is 7 o'clock in the morning in Bermuda and I was thinking -- 8 o'clock in the morning, four hours' difference. I simply cannot help your Lordship as to whether any of these individuals are available but that is --

MR JUSTICE BEATSON: Well, what you have said before is that there may be difficulties in complying with this order.

MR MacLEAN: Yes, that should be reflected in the order.

MR JUSTICE BEATSON: Yes.

MR MacLEAN: So it ought to reflect those difficulties and therefore it ought to reflect best efforts or reasonable steps or whatever.

MR JUSTICE BEATSON: Well, what do you say, Mr Black?

MR BLACK: My Lord, I think I can help. If we go to the wording of the order in tab 2, may I suggest that it reads:

And then the text may say:

And then adding in "by 1200 hours" --

MR JUSTICE BEATSON: Let us just leave that a moment because the difference -- what time is it, did you say, in Bermuda at 1200 hours, 8.00?

MR BLACK: 8 o'clock in the morning, that is 3 o'clock in the afternoon --

MR JUSTICE BEATSON: 1200 hours.

MR BLACK: -- in Moscow. 1200 hours on 30th December. My Lord, I would suggest no change to (b).

MR JUSTICE BEATSON: I did not deal with (b) in my judgment because what I would say to you is that I do not accept that it be included.

MR MacLEAN: So be it, so (b) would go entirely.

MR JUSTICE BEATSON: (b) can stay until the words "And in default".

MR BLACK: Yes, forgive me, my Lord, yes of course.

MR JUSTICE BEATSON: Yes?

MR BLACK: Yes, I understand. Yes.

MR JUSTICE BEATSON: Right. Now, would it be sensible that I stay until I can initial the draft here and keep it and you can furnish it a typed version tomorrow to the court, I will not be here but I will have left my marked draft here. Yes?

MR BLACK: My Lord, to make life more complicated, the actual order has to go to the Foreign Office first thing tomorrow morning. What is the most practical way?

MR JUSTICE BEATSON: Well, that is a matter for you to sort out.

MR BLACK: Yes, but my Lord, would you like us to mark up a copy or has your Lordship --

MR JUSTICE BEATSON: I have marked up a copy and I will leave that for the court and then you will furnish a clean copy which, as I will be away, I will not be able to initial but the court can check it against this copy. I will initial this one. Yes. There you are.

Now, Mr MacLean, I venture that you may have other applications. I am sorry, Mr Black?

MR BLACK: My Lord, the freezing order is just continued and my Lord with regard to the privacy application, my learned friend has made submissions about that.

MR JUSTICE BEATSON: Well, I heard no argument about it either way.

MR BLACK: The judgment would often be public but in the present -- obviously this is an interlocutory application and a very commercially sensitive ongoing transaction, we would suggest that it should be private but only with the exception that the parties can use it in proceedings in Bermuda and BDI and if necessary show it to the Central Bank in Russia.

MR JUSTICE BEATSON: I do not know whether Mr MacLean has anything to say on that.

MR MacLEAN: In principle I do not object to that; I would simply point out, my Lord, that the evidence that you sought from Mr Morgan suggested that Reuters have been informed by BNP on Wednesday last week, the 21st, that it was taking this action so ...

MR JUSTICE BEATSON: Yes, what do you say about that Mr Black?

MR BLACK: My Lord, it was partially --

MR JUSTICE BEATSON: If your people are telling Reuters.

MR BLACK: My Lord, certainly I understand Cetelem's position to be that they will respect any privacy order surrounding the proceedings and I was specifically instructed to ask for such an order.

MR JUSTICE BEATSON: Well, how do you explain what is said in the witness statement?

MR BLACK: My Lord, I have not taken instructions on that, I --

MR JUSTICE BEATSON: It would be very odd, would it not, if somebody within the claimant's group has spoken to Reuters, for the claimant's group then to seek privacy?

MR BLACK: It would. As a matter of logic, that is absolutely correct.

MR JUSTICE BEATSON: As the only evidence before me is that that is what has happened, I am not going to make an order.

MR BLACK: My Lord, I cannot gainsay --

MR JUSTICE BEATSON: You can always go before another judge if the position becomes clear. Yes, Mr MacLean?

MR MacLEAN: My Lord, I am instructed to ask your Lordship for permission to appeal in relation to your Lordship's order and I make a number of very brief points. Your Lordship has heard all the points.

First of all, I submit that there is an important point of principle as far as the true interpretation of Section 44 is concerned. Your Lordship has indicated that initially your Lordship was troubled and if your Lordship was troubled by the interpretation of Section 44, I submit that that indicates that plainly it is an appropriate matter to take to the Court of Appeal.

Secondly, I submit, and it is always an invidious submission to make, that your Lordship was entirely wrong to rely so heavily on Article 27 of the bylaws. All that does is to say that the parties can, without having a meeting, make a decision as(?) shareholders. That does not answer the question as to what the respective roles of the shareholders and directors are in relation to this company and it is quite clear from the bylaws that it is the directors who have the power of management of the company and that is reflected in the evidence of Ms Olivier, who was saying that the directors have to sign a power of attorney.

So I say that that is a fundamental flaw in your Lordship's reasoning which fatally undermines the order which your Lordship has made. For those reasons, I ask your Lordship for permission to appeal to the Court of Appeal?

MR JUSTICE BEATSON: As far as the first ground is concerned, the fact that one is troubled by a point does not mean that once one has resolved it that it remains arguable and so for the reasons that I gave in the judgment, I do not give you leave on that ground.

Article 27 is only one of the factors that I relied on in the exercise of my discretion to give the remedy. In those circumstances, I think it is for the Court of Appeal to decide whether it wants to hear the case because it is a challenge to the exercise of discretion, so I am afraid I have to ask you to ask the Court of Appeal.

Can I thank you both again for your help in this. Thank you.