CL-2025-000162 - [2025] EWHC 1945 (Comm)

Mr Justice Butcher :

The Respondent (‘OWH’) has applied, pursuant to Commercial Court Guide O.8.6 for the summary dismissal of the application which the Claimants have made under s. 68 Arbitration Act 1996. The court gave directions for a two-hour hearing to consider (a) summary disposal and (b) directions.

The First Claimant (‘RTI’) is a Jersey subsidiary of the Second Claimant (‘Rusal’) which is incorporated in the Russian Federation. OWH is a German financial institution and a subsidiary of VTB Russia PJSC, a Russian financial institution designated as a sanctioned entity in a number of jurisdictions.

RTI and OWH were parties to an agreement dated 11 September 2019 consisting of a 2002 edition ISDA Master Agreement (‘the Master Agreement’) and 11 US dollar – Russian rouble transactions. RTI’s obligations to OWH were guaranteed by Rusal under a guarantee and indemnity.

On 24 February 2022 Russia invaded Ukraine. The sanctions imposed on Russia following the invasion caused a steep depreciation in the value of the Russian rouble. OWH issued a margin call on 25 February 2022, which RTI did not pay. OWH sent Default Notices by email on 1 March, 4 March, and 9 March 2022. On 23 March 2022 OWH sent RTI a Notice of an Early Termination Event (‘the Termination Notice’). This was followed, on 28 March 2022, by a statement of calculation demanding payment by RTI of what was said to be the relevant Termination Amount.

This was not paid, and the resulting dispute was referred to arbitration, subject to LCIA rules, the panel consisting of Jonathan Nash KC, Dame Elizabeth Gloster DBE and Andrew Lenon KC (‘the Tribunal’). The Tribunal issued an award dated 25 September 2024 on ‘Liability and Principles of Quantum’ (the ‘Award’).

In the Award the Tribunal considered and rejected a number of arguments raised by RTI as to why the Termination Notice was invalid. One part of that decision was that, although the Default Notices on which OWH relied to serve the Termination Notice were served by email, and were therefore not in compliance with the Master Agreement, OWH had established ‘that the parties were proceeding on the basis of a common assumption that no objection was being taken to the Default Notices on service grounds (i.e. that the Default Notices had been validly served)’. The Tribunal found that OWH had relied on that common assumption and that it would be unconscionable for RTI to resile from that common assumption and to take the point that the Default Notices had not been validly served.

In the Award the Tribunal awarded OWH the principal sum of € 213,770,150.26. RTI and Rusal have not paid any part of that sum.

By order dated 24 October 2024, Bryan J extended the time for the making of any application or appeal challenging the Award until 1 November 2024, this extension matching the duration of the delay in the transmission of the Award to the parties.

On 19 February 2025 RTI applied to the Tribunal for an admission of an irregularity in the conduct of the proceedings or in the award within the meaning of s. 68(2)(i) of the Arbitration Act 1996 (‘the 1996 Act’). Section 68(2)(i) of the 1996 Act provides: