• Mr Stevie Loughrey, Onside Law, 23 Elysium Gate, 126-128 New Kings Road, London, SW6 4LZ. Mr. Loughrey's email address is: email@example.com. His telephone number is +44 20 7384 6920 and his fax number is + 44 20 7384 1575.
• Ms Anna Lintner, Enterprise Chambers, 9 Old Square, Lincoln's Inn, London WC2A 3SR.
• WJ Holding Lid ("WJ Holding") of Pamboridis Building, 45-47 Digenii Akrita Avenue, 1070 Nicosia, Cyprus, with registration number HE104090.
• Stubrick Limited ("Stubrick"), also of Pamboridis Building, 45-47 Digenii Akrita Avenue, 1070 Nicosia, Cyprus, with registration number HE268820.
• Ms Delphine Nougayrdde, Solicitor of the Senior Courts of England & Wales, c/6 Schneider Law Group, 150 Broadway, Suite 900, New York NY 10038, USA. Her telephone number is +1 212 804 8400 nnd her email address is firstname.lastname@example.org.
• Norair Babadjanian, Advocate (Russia) and Solicitor (England & Wales), Redstone Chambers, Smolenskaya Embankment 2-33, Moscow 121099, Russian Federation. His telephone number is +7 499 248 7278. His email address is email@example.com.
"Any dispute arising out of or in connection with the definitive agreements shall be referred to and finally resolved by arbitration under the LCIA Rules. The number of arbitrators shall be three. The seat, or legal place, of arbitration shall be London, the United Kingdom. The language to be used in the arbitral proceedings shall be English."
(1) took issue with the ability of Mazlin and Shireen under the Rules of the London Court of International Arbitration 2014 as amended ("the LCIA Rules") to bring a single claim for arbitration in relation to the two separate Loan Agreements (§8 & §11);
(2) asserted that "the Loan Agreements are not genuine commercial transactions but constitute sham agreements that were part of an elaborate scheme to document an equity investment that was made by... Mr Alexander Spiegel" (§9);
(3) alleged that the "original agreement" that governs "the real subject matter of this dispute" was an Agreement of Sale dated 15 March 20125 ("the Agreement of Sale") made between WJ Holding and AMM Consulting and Management Group LLC ("AMM Consulting") "together with other ancillary agreements" which are subject to New York law (§10);
(4) contended that the dispute that has arisen between WJ Holding and Stubrick (of the one part) and Mr Spiegel and his alter ego companies (of the other) is accordingly subject to the exclusive jurisdiction of the courts of New York (§10);
(5) stated that proceedings had been commenced by WJ Holding against Mr Spiegel in New York County on 8 December 2016 (§ 10); and
(6) proposed that since the beneficial owner of the Claimants, Alexander Spiegel ("MrSpiegel") and the beneficial owner of the Respondents, Yuri Drukker ("Mr Drukker") are both based in New York "the proper venue for any arbitral hearings should be New York" (§14).
(1) Is the Tribunal precluded, by the LCLA Rules, from proceeding with this arbitration by reason of the fact that the claim seeks a determination in relation to two separate arbitration agreements between non-identical parties in circumstances where those parties do not consent to a consolidation?
(2) If the answer to Question 1 is "yes", can the current claim be amended pursuant to Article 22.1(i) of the LCLA Rules by the deletion of one Claimant (and its claim), such that the amended claim would then proceed only in the name of the other Claimant and only in respect of that Claimant 's claim?
(3) If the answer to Question 2 is "yes", and if a separate arbitration claim were then also to be commenced by whichever Claimant had been amended out of the existing claim, would it be appropriate for the Tribunal to give matching procedural directions in both arbitrations, so that the common issues in each could be determined simultaneously?
(4) In any event,
(i) should the Tribunal give directions for the determination, as a preliminary issue, of the question whether the arbitration should be stayed pending the final determination of any legal proceedings in New York and
(ii) if so, what directions should be given?
(5) What, if any, further directions should be given for the efficient and final disposal of the issues between the parties?
(1) Mazlin and Shireen
(i) conceded that a joint claim by both companies could not proceed under the LCIA Rules without the Respondents' consent (§3-8),
(ii) submitted that the Tribunal had jurisdiction to allow one Claimant to amend the Request for Arbitration by removing the other Claimant and proceeding with the amended claim alone (§9-10),
(iii) confirmed that whichever Claimant was amended out of the joint claim would issue a separate Request for Arbitration, and invited the Tribunal to make matching procedural directions in each arbitration (§11-13), and
(iv) submitted that the Tribunal should proceed to determine the arbitration claims, and not to stay them pending any determination of the proceedings apparently issued in New York (§14-19).
(2) The Respondents not only served written submissions on the conjoinder issue16 but also provided to the Tribunal an exhibit comprising a copy of certain legal proceedings between WJ Holding and Stubrick (plaintiffs) and Mazlin, Shireen, AMM Consulting and Mr Spiegel (defendants) apparently filed in the New York court, County of Kings, Index № 506949/2017 ("the New York proceedings"). The New York proceedings did not appear to have been issued on 8 December 2016 in New York County (as stated in §10 of the Response to Request for Arbitration17) but on 7 April 2017 in Kings County. The Respondents' written submissions -
(i) offered a 'Summary Presentation of the Facts' (§1-15) in which they alleged that: (a) Mr Spiegel and Mr Drukker "agreed that Mr Spiegel would lake an equity stake of 30 in Bender Oil "and that the value of this stake would be US$7 million, corresponding to an enterprise valuation for [Bender Oil] of approximately US$20 million" (§3); (b) "the equity investment would be documented in a manner that would achieve certain specific structuring objectives for Mr Spiegel" which Mr Drukker believed "reflected certain tax and family estate planning considerations" (§4); (c) the agreed structure implemented by Mr Spiegel for the purpose of his equity investment in Bender Oil consisted of (1) the March 2012 Agreement of Sale,18 which would be the "core agreement" under which AMM Consulting "would obtain 30% of the shares of [Bender Oil], in return for payment of a nominal price of US$210,000" (§5(a)), (2) the transfer of the remaining equity investment by Mazlin and Shireen , which was documented by the two Loan Agreements which "would be mere instruments to accomplish transfers of Mr Spiegel's funds to the companies owned by Mr Drukker as consideration for the 30% equity in [Bender Oil]" (§5(b)), and (3) "certain additional agreements" (§7); (d) the "transfers of funds under the Loan Agreements were made by the Claimants between November 2012 and January 201 3, i.e. after Mr Spiegel had satisfactorily completed his due diligence investigations into [Bender Oil]" (§8); (e) Mr Drukker also invested over US$16 million into Bender Oil (§8); (f) neither Mr Drukker nor his wife ever agreed to provide, or ever signed, personal guarantees of the Respondents' liabilities under the Loan Agreements (§9); (g) as a result of the non-performance by certain Transdniestrian governmental authorities of various undertakings and guarantees they had given in a supplementary privatisation agreement signed with WJ Holding on 28 March 2012 ("the 2012 Privatisation Agreement"),19 the Bender Oil project was not as successful as had been hoped (§10); (h) as he was aware of these developments, Mr Spiegel "changed his l ack" and "chose to disregard the real nature of the transaction and instead uphold the sham Loan Agreements of August 2012, as if these were genuine commercial transactions" (§12); and (i) "the Loan Agreements are null and void, that the arbitration agreements that are ostensibly included in these agreements are also null and void, and that instead, Mr Spiegel, through his affiliated companies, holds an equitable interest in 30% in the shares in [Bender Oil]" (§15);
(ii) offered a 'Presentation of Certain Legal Principles Affecting the Validity of the Loan Agreements and Arbitration Agreements' (§16-30), in which they submitted that (a) the Loan Agreements were 'shams' within the meaning of Snook v. London & W est Riding Investments Ltd  2 QB 786, at 802 (§16); (b) the arbitration clauses could not be separated from the Loan Agreements in which they appeared and were accordingly also null and void (§17-18); (c) the principle of party autonomy in general, and Article V(1)(d) of the 1958 New York Convention in particular provide that on arbitral award cannot be enforceable unless the composition of the tribunal and the arbitral procedure are in accordance with the agreement of the parties, whereas in this case the Tribunal had been "imposed an the parties at the sale demand of the Claimants" (§19-20); (d) the Respondents did not consent to arbitration (§21); (e) the Loan Agreements "did not reflect genuine loans, but were part of a larger equity investment made by Mr Spiegel" which were "governed by other contracts (and other dispute resolution clauses)" (§22); (f) New York was "the only proper forum" for the resolution of the dispute (§23); (g) the arbitration agreement was null and void within Article II(3) of the New York Convention having been induced by Mr Spiegel's fraud and/or was unconscionable (§24-25); (h) the dispute did not fall within the arbitration clause (§27) and could not be resolved by arbitration (§28); (i) the Loan Agreements (and the arbitration clauses in them) are unenforceable "due to lack of consideration" (§29-30);
(iii) in answer to the 5 questions posed by the Tribunal, the Respondents submitted that (a) there was no jurisdiction under the LCIA Rules to hear a combined claim by Mazlin and Shireen without the Respondents' consent, which was not forthcoming (§31-49); (b) the existing Request for Arbitration could not be amended by removing one Claimant (§50-53); (c) the third question accordingly did not arise (§54); (d) the arbitration ought to be stayed in favour of the New York proceedings because (1) the arbitration did not properly reflect the wider dispute between the parties (§55); (2) the principle of l is pendens (§56) required the issues to be determined in the New York proceedings (§57-58), not least because the Agreement of Sale was subject to New York law and the "equity related contracts were executed in New York' and the "dispute resolution clause in the last negotiated draft share sale agreement designates AAA arbitration with a seat in New York" (§59); (3) both Mr Spiegel and Mr Drukker are citizens and residents of the USA (§60); (4) the factual circumstances central to the dispute are located in the USA (§60); (5) the power to compel disclosure in the arbitration would be inadequate when compared with the powers available in the New York proceedings (§60-62 & §64-65); and (6) the arbitration proceedings focused on the Loan Agreements, which were shams (§63); and
(iv) in conclusion, the Respondents invited the Tribunal to give directions either (a) to discontinue the arbitration with immediate effect "and the Claimants may be granted a leave [sic] to submit new requests for arbitration " (§67), alternatively (b) the arbitration proceedings should be stayed until such time as discovery in the New York proceedings had taken place "upon the reasonable expectation " that the evidence obtained on discovery there "will be relevant to the subsequent entertainment (by the Tribunal) of the Respondents' principal claim " that the Loan Agreements are shams, and the true dispute cannot be fully determined in the context of the arbitration (§68), (c) that the exchange of written submissions "do not constitute determination of the jurisdictional issue at hand" (§69-70), and (d) either the determination of costs should be deferred (§70) or the Claimants should be liable in costs for having improperly commenced proceedings in the joint names of Mazlin and Shireen under separate agreements (§71).
(1) the parties' respective legal representatives each made oral submissions in support of their arguments, as outlined above;
(2) the Respondents' legal representative also provided hard copies of a 25-page slide presentation headed 'The Respondents' Comments to Claimants' Submissions on 11 April 2017', which had not been supplied in advance;
(3) the Respondents' legal representative stated that the Respondents had no objection in principle (i) to two new and separate arbitration claims being made, one under each of the Loan Agreements, or (ii) to the appointment of identical arbitral tribunals in relation to each such claim, or (iii) to identical directions being given in each such arbitration, so that they could each be run and decided in parallel;
(4) however, (i) the Respondents refused to consent to the arbitration proceeding in its original form: no reasoned explanation was offered for this approach (apart from the Respondents' reliance on the point of form under the LCIA Rules); and (ii) the Respondents also refused to accept that one of the Claimants could be amended out of the arbitration.
(1) Mazlin duly delivered an Amended Request for Arbitration in the Mazlin claim,23 deleting reference to Shireen and its claim, and seeking US$4,987,061 only under the Mazlin Loan Agreement, together with "interest (including default interest) and its costs and expenses (including legal fees) of enforcing the Loan Agreements (plus interest on those costs and expenses)" (§8);
(2) Shireen delivered a separate Request for Arbitration24 in substantially identical terms to the Mazlin claim, save that the amount of the claim was US$3,786,500 under the Shireen Loan Agreement, together with an equivalent claim for interest, costs and expenses to that in the Mazlin claim; and
(3) the Claimants' legal representatives submitted a suggested draft Procedural Order № 2 in the Mazlin claim, seeking directions leading to a determination of the merits of the claim together with the Shireen claim, and including (at §1) the following statement:
"The Parties confirm their acceptance that the Arbitral Tribunal comprising Mr Jonathan Crow OC, Mr Guy Pendell and Ms Kate Davies appointed by the London Court of International Arbitration ("LCIA") by notification to the Parties dated 23 February 2017 has been validly established in accordance with Clause 9 of the "Revolving Loan Agreement (Secured)" between Mazlin Trading Corp ("Mazlin") and (1) WJ Holding Ltd ("WJH") and (2) Stubrick Ltd ("Stubrick") made on 10 August 2012 (the "Agreement") and Article 5 of the LCIA Rules (as hereinafter defined)".
(1) confirmed to the parties its approval of the Amended Request for Arbitration in the Mazlin claim pursuant to §13 of Mazlin PO1;
(2) directed the Respondents to indicate in writing by 5.00 pm on 5 May the extent to which they agreed or disagreed with the directions proposed by the Claimants in their draft P02 in relation to the Mazlin claim and, to the extent that they disagreed, the reasons for such disagreement;
(3) if and to the extent that the Respondents expressed any disagreement, the Tribunal directed that the Claimant in the Mazlin claim indicate in writing any response it might have by 5.00 pm on 10 May;
(4) indicated that the Tribunal would then determine whether to give any further directions in the Mazlin claim; and
(5) stated that the Tribunal was not in a position to give any directions in relation to the Shireen claim unless and until the same panel had been appointed in relation to that arbitration.
(1) stated that they had no objection to the proposals set out in §1-16 of the Claimant's draft P02 in relation to the Mazlin claim (i.e. including the paragraph quoted in §24(3) above);
(2) stated that they objected to any directions being given in relation to the Shireen claim;
(3) proposed that the Respondents should deliver their Statement of Defence within four weeks after the close of discovery in the New York proceedings; and
(4) proposed that all other procedural directions in the Mazlin claim should be dependent on the completion of discovery in the New York proceedings,
(1) accepted that no directions could be given in relation to the Shireen claim until such time as the LCIA appointed an arbitral tribunal, and
(2) submitted that the procedural directions in the Mazlin claim should not be deferred pending discovery in the New York proceedings.
(1) The Respondents maintained their position that (i) neither Loan Agreement is "a genuine commercial transaction but constitutes a sham agreement that was part of an elaborate scheme to document an equity investment [in Bender Oil] made by... Mr Alexander Spiegel" and that "the arbitration agreement in [each] Loan Agreement is also a sham" (§9), (ii) the "original agreement" that governs "the relationship between the parties" was the March 2012 Agreement of Sale "together with other ancillary agreements" (§10), (iii) those agreements are subject to New York law (§11), (iv) accordingly, the dispute that has arisen between Mr Spiegel and his alter ego companies (on the one hand) and WJ Holding and Stubrick (on the other) is subject to the exclusive jurisdiction of the courts of New York (§12), (v) proceedings had been commenced by WJ Holding against Mr Spiegel in New York County on 8 December 2016 (§13) and (vi) since the beneficial owners of the Claimants and the Respondents respectively are based in New York "the proper venue for any hearings should be New York" (§14).
(2) On that basis, the Respondents invited the Tribunal to find that (i) the Mazlin Loan Agreement "is null and void" being a "sham" (§40), (ii) the arbitration agreements in the Loan Agreements "are also null and void " (§4 1), (iii) the "genuine dispute at hand... involves an equity investment that was entered into by other parties and is governed by other contracts governed by New York law (and other dispute resolution arrangements)" (§42), (iv) the 'genuine dispute' "also involves a number of important oral arrangements between WJH and Mr Spiegel that are fun damental to the entire construction of the dispute between the parties" (§43) and (v) "since the issues, which the Claimant has referred to arbitration do not fall within the scope of the arbitration clause in the Loan Agreement, the Respondents are not bound by that arbitration clause" (§46).
(3) Finally, the Respondents indicated that they did not object to the identity of the arbitrators (§52) but that they "object to the jurisdiction of the arbitral tribunal" and on that basis they would "seek the relevant ruling from the tribunal by way of an award on the question of jurisdiction" (§53).
(1) giving those directions to which the parties had agreed (§5 & §15(1)-(16)), and in particular recording the fact (as confirmed in the Claimant's draft P02 and in the Respondents' response dated 5 May 201734) that the parties had confirmed their acceptance that the arbitral Tribunal appointed by the LCIA by notification to the parties dated 23 February 2017 had been validly established in accordance with Clause 9 of the Mazlin Loan Agreement and Article 5 of the LCIA Rules (§15(1));
(2) declining to give any directions in the Shireen claim (§7);
(3) giving detailed reasons for declining to stay the Mazlin claim pending completion of disclosure in the New York proceedings (§8-9); and
(4) giving directions for the further conduct of the arbitration, including an exchange of disclosure by lists (§15(22)) and witness statements of fact (§15(23)), and culminating in a substantive jurisdiction and merits hearing (§15(27)— (29)).
"In emails from their counsel dated 9 and 18 June, the respondents invited the Tribunal to revisit P02, in particular with regard to the question whether further progress in this claim should be deferred pending disclosure in the NY proceedings, but also with regard to specific elements in the timetable.
Before responding to the detail of the respondents' request, we would first make two important preliminary observations, after setting out the relevant procedural chronology:
1. Under cover of an email dated 2 7 April, the claimant's solicitors provided a draft P02.
2. In an email dated 28 April, the Tribunal said this: "we direct the respondents to indicate in writing by 5.00 pm on 5 May the extent to which they agree or disagree with the directions proposed in [the claimant's draft PO2] and, to the extent that they disagree, the reasons for such disagreement. If and to the extent that they express any disagreement, we direct that the claimant... indicate in writing any response it might have by 5.00 pm on 10 May."
3. In accordance with the Tribunal's direction, the respondents duly provided their Response to the Claimant 's Proposed Procedural Order No. 2 in a letter from their counsel dated 5 May.
4. The claimant then provided its response in an email from its solicitors dated 9 May.
5. Having carefully considered the parties' submissions, the Tribunal issued P02 on 7 June.
Our first preliminary observation is this. From the foregoing chronology it will be apparent that both parties had a full opportunity to comment on the proposed content of P02 before it was issued. As a general rule, the Tribunal considers that, in the interests of (i) fairness between the parties (ii) the expeditious progress of the arbitration and (iii) minimising costs, it is undesirable for either party to try reopening an issue that has already been fully debated and ruled on by the Tribunal. Absent any express agreement by the parties to the contrary on any particular issue, the Tribunal has broad powers to order whatever procedure is appropriate to the circumstances of the case. Against that background, we do not consider that the respondents are justified in inviting the Tribunal to reopen P02 on this occasion.
Our second preliminary observatian is this. The heart of the respondents' complaint is that the procedure for discovery available to it in the New York proceedings is more wide ranging and imposes greater obligations on the claimant than any disclosure procedure which might be available to it in these proceedings. In view of this, it seems to be the respondents' contention (previously raised and ruled on in P02) that these proceedings should only progress once the discovery phase of the New York proceedings is complete because material disclosed in the course of discovery in New York will or may be used in this arbitration. Having carefully considered the points raised by the respondents in this regard, the Tribunal does not accept either the contention made or its premise. The respondents contractually agreed to arbitrate all disputes arising out of the agreements at Issue in these proceedings in London. They therefore agreed to the various rules and procedures which govern and apply to such arbitrations - with all the benefits and, in some cases, limitations which such proceedings entail. There is not - nor could there be -any suggestion that disclosure is not available in this arbitration. It is and it will be. To the extent such disclosure is different from (and less than) the disclosure that may be available to the respondents in New York, that is a limitation the respondents accepted when they agreed to arbitrate disputes arising out of the agreements at Issue in these proceedings.
For these reasons, the Tribunal does not accept that it is appropriate to revisit its decision in P02. Nevertheless, having received the respondents' detailed comments in their counsels' email of 9 June, and their further request of 18 June, the Tribunal has on this occasion taken the exceptional course of clarifying the reasons for its decision in P02 by addressing the points raised:-
1. In relation to paragraph 9(1) of P02, the respondents object to any "implied criticism" regarding delay. The respondents need not be concerned: as the context of that paragraph makes clear, theTribunal's remark about delay was neutral as to either party's responsibility.
2. In relation to paragraph 9(2) of P02, the respondents say that it "seems to effectively prejudge the outcome of the proceedings without affording the Respondents the benefit of due process". The Tribunal assures the respondents that it has not prejudged the outcome of any aspect of the proceedings. To clarify, paragraph 9(2) of P02 merely summarised the nature of the pleaded claim, just as paragraph 2 summarised the nature of the pleaded defence. In considering a request regarding the necessity for disclosure (in these proceedings or any other), the Tribunal is fully within its powers (and required) to summarise on a prima facie basis the nature of the claims and defences in order to decide on the appropriate procedure as regards disclosure (and the timetable) going forwards.
3. The respondents say in relation to paragraph 9(3) that "on the one hand the Tribunal implies that the Respondents do not hold sufficient information to convince it that the New York proceedings are necessary, and on the other hand it effectively precludes the Respondents from obtaining the relevant information via the only sufficient means available to it, i.e., through the New York discovery process". The Tribunal refers to its preliminary observations above. The Tribunal is concerned with the progress of and procedure for this arbitration. Under Its broad procedural powers, the Tribunal has dismissed the respondents' contention that disclosure in the New York proceedings is necessary before this arbitration can progress at all, That decision does not preclude the respondents from obtaining discovery either in the New York proceedings or in this arbitration in due course, nor from using disclosure obtained f rom either process in these proceedings (to the extent that is permitted by law). It also does not preclude the respondents from making any application in the future as regards the timing of any final determination of the issues in this arbitration. In the meantime, the Tribunal has merely concluded in P02 that service of the Defence and any Cross-claim should not be deferred until after completion of discovery in the New York proceedings.
4. The respondents say that paragraph 9(4) of P02 "does not correspond to the facts" and they refer in particular to their submissions of 11 April 201 7, sections 1-15, 18, 22, 55-65. The respondents make a similar point in relation to paragraphs 9(7) of P02. The Tribunal was and is fully alive to the nature of the respondents' argument in this regard, and in particular paragraphs 55-65 of its 11 April submissions. However, it remains unpersuaded that this arbitration should effectively be stalled pending the completion of disclosure in the New York proceedings. The fact that Mr Spiegel and/or any corporate entities operated by him (rather than the claimants) may hold some documents which are relevant to the issues in dispute does not justify a complete standstill of these proceedings. The Tribunal refers to its second preliminary observation above about any limitations which may apply to disclosure in these proceedings. It also remains open to the respondents to utilise the procedures available to it in these proceedings.
5. In relation to paragraphs 9(5) and (6) of P02, the respondents have now provided a fuller set of documents relating to the proceedings in New York. Nevertheless, we have still seen nothing issued there on 8 December 2016, nor any filed application for discovery. In any event, consistent with paragraphs 15(13), (14) and (1 6) of P02, the Tribunal does not expect in future to receive information from the parties piecemeal in this fashion. The respondents were directed, on 28 April, to indicate in writing by 5.00 pm on 5 May the extent to which they agreed or disagreed with the directions proposed in the claimant's draft P02 and, to the extent that they disagreed, they were required to set out their reasons for such disagreement. If and to the extent that they wished to bring the Tribunal's attention to the current state of the New York proceedings, they should have done so by 5 May by disclosing any relevant documents. Having said that, and having now reviewed the latest materials submitted by the respondents, we have seen nothing to alter the directions given in P02.
6. In relation to paragraph 9(8) of P02, the respondents point out that various sanctions would be available in the New York proceedings against Mr Spiegel and his corporate vehicles for breach of their discovery obligations which are not available in these proceedings. The Tribunal refers to its second preliminary observation above.
7. Finally, in relation to paragraphs 15(18), (22) and (23) of P02, the respondents object that they are allowed only 14 days for the preparation of their Statement of Defence which, they say (in their email of 9 June) "seems very harsh on any standards (and is even harsher than the delay proposed by the Claimants in their draft of Procedural Order No 2 of 31 May 2015)". They also say (in their email of 18 June) that it is inconsistent with Article 15.3 of the LCIA Rules, and on that basis they again invite the Tribunal to revisit P02. The Tribunal observes that the default timetable laid down in Article 15.3 is subject always to the Tribunal's discretion, as provided in Article 15. 1 of the LCIA Rules. Absent agreement of the parties or any alternative timetable proposed by the respondents, it is entirely within the Tribunal 's powers to direct the filing of the Statement of Defence within 14 days (in particular since the respondents have been in possession of the original Request for Arbitration since November 2016). In the meantime, it has always remained open to the respondents (i) to propose an alternative timetable (which, to date, they have not done), (ii) to seek to agree an extension pursuant to paragraph 15(13) of P02, and/or (iii) to make a reasoned request for any extension pursuant to paragraph 15(1).
For all these reasons, having carefully considered the respondents' latest submissions, we do not alter the directions set out in P02 and in future we will require due compliance with its terms. We will also not entertain any similar attempts to re-open procedural decisions, absent a showing of exceptional circumstances. If the respondents propose that we should treat their counsel's email of 18 June as a request for an extension of time, we direct them to provide by 5.00 pm on Friday 23 June a reasoned request in writing within §15(14) of P02 specifying the proposed revised date for deliveiy of the Defence and any consequential alterations to the timetable laid down in P02."
(1) the purpose of the directions was to ensure that the Mazlin claim and the Shireen claim proceeded in parallel, with as little delay and added cost as reasonably practicable, with a view to any evidential hearing and any oral arguments being heard in each concurrently;
(2) to that end, the procedural timetable in each would thereafter be identical; and
(3) the Statements of Case, witness evidence and documents in one case should stand as part of the record in the other.
(1) making essentially the same cose as they had made in their original Response dated 13 January 201748 (outlined in §8 above), in their written submissions dated 11 April 201749 (outlined in §19(2) above), and in their Responses dated 24 May 201750 (outlined in §28 above), and in addition -
(2) attaching numerous documents on which they relied in support of their case;
(3) specifically identifying an Operating Agreement51 ("the Operating Agreement") and a Member Interest Purchase Agreement52 ("the MIPA") as having been "actively negotiated by the parties" during 2013 and 2014 (§24 of the Defence to the Mazlin claim and §25 of the Defence to the Shireen claim);
(4) relying on certain health insurance agreements (§27), a Power of Attorney53 (§28) executed by Mr Spiegel in favour of Sergey Rashkov ("Mr Rashkov"), and certain email exchanges on 23 September 201354 (§29) as evidence of the concluded nature of Mr Spiegel's agreement to acquire a 30% equity interest in Bender Oil;
(5) alleging that each Claimant was estopped from "acting as if the Loan Agreement was a genuine document" (§51 of the Defence to the Mazlin claim and §52 of the Defence to the Shireen claim);
(6) denying that the Respondents are jointly and severally liable under the Loan Agreements (§52 of the Defence to the Mazlin claim and §53 of the Defence to the Shireen claim);
(7) admitting that (i) "On 30 November 2012, [WJ Holding] received from [Mazlin] an amount of CHF 1,900,000 " (§54 of the Defence to the Mazlin claim), (ii) "On 3 January 2013, Stubrick received from [Mazlin] an amount of USD 2,850,000" (§55 of the Defence to the Mazlin claim), and (iii) "On 3 December 2012, [WJ Holding] received from [Shireen] an amount of CHF 3,490,500" (§53 of the Defence to the Shireen claim);
(8) alleging that the sums transferred in Swiss Francs should be converted to US Dollars on the date of repayment, not on the date of transfer to the Respondents (§54 of the Defence to the Mazlin claim and §53 of the Defence to the Shireen claim);
(9) disputing the Claimants' interest calculations (§56 of the Defence to the Mazlin claim and §54 of the Defence to the Shireen claim);
(10) denying that certain relief allegedly obtained in Cyprus against the Respondents was binding (§81-84 of the Defence to the Mazlin claim, §79-82 of the Defence to the Shireen claim);
(11) on that cumulative basis, alleging (in §38 of the Defence to the Mazlin claim and §37 of the Defence to the Shireen claim) that (i) the Loan Agreements were shams, (ii) the nullity of the Loan Agreements also affected the arbitration clauses, (iii) the actions of Mr Spiegel convinced the Respondents that the Bender Oil investment was an agreed joint equity investment, on which basis the Respondents entered into the Loan Agreements, and (iv) the New York proceedings were the only proper forum, because the arbitrations could not resolve the wider dispute involving other parties; and
(12) in conclusion, seeking (i) a stay of the arbitrations in favour of the New York proceedings (§85 of the Defence to the Mazlin claim and §83 of the Defence to the Shireen claim); alternatively (ii) rejection by the Tribunal of each and every claim advanced by the Claimants and a declaration that the Loan Agreements (and the arbitration clauses contained therein) are null and void ab initio (§86 of the Defence to the Mazlin claim and §84 of the Defence to the Shireen claim), and in any event (iii) an order for the Respondents' costs and expenses, including legal fees (§87 of tiie Defence to the Mazlin claim, §85 of the Defence to the Shireen claim).
(1) denied (i) that the Loan Agreements were shams (§8(a)), and (ii) that Mr Spiegel improperly induced the Respondents to enter into the Loan Agreements (§8(b));
(2) relied on the entire agreement clause in the Loan Agreements as raising an estoppel against the Respondents (§8(b));
(3) denied that the Loan Agreements were void for want of consideration (§8(c));
(4) agreed that, during 2012/13, Mr Spiegel had been contemplating the acquisition of a 30% interest in Bender Oil, but denied that there had been any concluded and unconditional agreement to that effect (§9-19); and
(5) asserted that it was the Respondents' case in related proceedings in Cyprus that the Transdniestrian government which was party to 2012 Privatisation Agreement58 was "in repeated breach of its obligations, and has refused to close the privatisations program and release the shares [in Bender Oil] from the lien. As long as the lien still exists, no transfer of the shares in [Bender Oil] to third parties can occur" (§21).
"We have been instructed to inform the Tribunal and the Claimant that the Respondents shall not be submitting any disclosure list, and that they will decline to produce any documents that might be requested by the Claimant in the context of these arbitration proceedings. The reason, as the Tribunal would hopefully appreciate, is that the disclosure of documents in these proceedings may cause irreparable harm to the position of the Respondents in the New York proceedings, which the Respondents believe are the only proper venue for this dispute.
As regards the Claimant's application of 2d August 2017, the Respondents thank the Tribunal for its invitation to submit a response by 14 September. For the same reason as that stated above, i.e. the Respondents' view of New York as prevailing venue for the resolution of this dispute, they decline to submit any such response" (emphasis added).
(1) the Claimants served substantially identical witness statements from Mr Spiegel in respect of each arbitration;63
(2) the Respondents' legal representatives informed the Tribunal by email64 "that the Respondents w ill not be submitting any witness statement of fact. The reason is the same as that expressed in our email of 6 September 2017, i.e. the Respondents wish to preserve their position in view of the New York proceedings and
(3) those emails also stated that the Respondents declined to file any response to the 2nd Article 24.5 Applications.
"On behalf of the Respondents, we inform the Tribunal and the legal representatives of the Claimant that the Respondents will not attend the hearing of 28/29 November, nor will they be represented.
The position of the Respondents in relation to these proceedings and the underlying dispute remains that set forth in the Statement of Defence of 29 June 2017 (save in regard to casts, as set out below). We are informed that the status of the proceedings in the New York slate court is as follows. Submissions were filed by both sides, the Respondents' submission of 22 June 2017 being attached as Exhibit 13 to the Statement of Defence. An oral hearing took place on 17 August, at which both sides were represented, The New York court has yet to render its decision regarding its jurisdiction and the Respondents' right to proceed with discovery. Until this decision is rendered the Respondents wish to preserve their position in the New York proceedings as a matter of priority over these proceedings.
The Respondents will not be submitting their costs incurred in these proceedings and therefore withdraw their corresponding claim at Paragraph 87 of the Statement of Defence. As regards the costs that will be submitted by the Claimant, the Respondents wish to draw the Tribunal's attention to the circumstances that led to the hearing of 24 April 2017. That hearing took place to address the format of the Claimant's initial Request for Arbitration of 21 November 2016. In Procedural Order No 1, the Tribunal determined that it was precluded from proceeding on this arbitration in its then existing form, and the Claimant filed an Amended Request for Arbitration dated 27 April 2017. The issue of the format of the Request for Arbitration of 21 November 2017 [sic] was immediately raised by the Respondents in their Response of 13 January 2017 and this important procedural objection cannot be viewed as an unjustified attempt to delay or otherwise obstruct these proceedings. The Respondents believe that these circumstances should have bearing on the Tribunal 's final decision in relation to costs" (emphasis added).
"The Tribunal is in receipt of the email from the Respondents' representatives dated 14 November (i) indicating the Respondents' proposed non-attendance at the forthcoming oral hearing and (ii) containing the Respondents' submissions in relation to costs.
Separately, the Tribunal is also in receipt of the Respondents' email dated 16 November 2017, requesting authorisation for a court reporter to be present at the oral hearing.
It is convenient to deal with both at the same time.
Email of 14 November 2017
In light of (a) the agreed position of the parties, which is reflected in paragraph 15(1) of P02, and (b) Articles 15.8, 15.10 and 19.1 of the LCIA Rules, the parties will be aware that the Tribunal is able to proceed with the arbitration and to make an award even if the Respondents choose not to participate in any stage of the proceedings and/or choose not to attend the oral hearing. In particular, and as noted in paragraphs 15 and 16 of PO4, the Tribunal has the jurisdiction conferred by Articles 23.1 and 23.4 of the LCIA Rules to rule on its own jurisdiction and, if it finds that it has jurisdiction, to make a pecuniary award under Article 26 notwithstanding the Respondents' non-attendance.
Email of 16 November 2017
The Tribunal has no objection to the presence of a court reporter at the forthcoming hearing. The Tribunal notes the agreement of the parties on the allocation between them of the attendant costs. The Tribunal would be grateful to receive copies of the transcript for their own use. "
"We write in connection with the above-referenced proceedings (the "Shireen Arbitration"). The elements set out below relate to procedural matters only and are without prejudice to the Respondents' position that the New York proceedings must prevail as regards the questions of jurisdiction and merits in this dispute.
We note that despite the Tribunal's directions, the Claimant has not f iled any preparatory submissions for a hearing scheduled for 28/29 November. In its skeleton argument of 23 November 2017 in relation to concurrent proceedings No. 163503 (Mazlin Trading Corp v WJ Holding Limited and Slubrick Limited), the Claimcmt 's counsel informed the Tribunal that the Claimant (Shireen) no longer existed as a legal person at that time. According to Par. 7 of the argument: "On 22 November 2017 it came to the attention of Shireen's legal representatives in London that Shireen had been erroneously dissolved on 31 October 2017. An application has or is imminently to be made to the Liberian registry of companies, based in Virginia, for Shireen to be immediately restored to the register in order that it can pursue the Shireen Arbitration. "
It was then added that "Until such restoration no further steps can be taken in the Shireen Arbitration [...]. "
A request for joinder in the Shireen Arbitration was then submitted by the Claimant's solicitors, on this day of 24 November 2017, concurrently with the apparent restoration of the Claimant, in favour of Mazlin Trading Corporation as third party (following an assignment of debt that took place on 30 October 201 7). It was suggested in this communication that "Given that the "third person" in question here is the Claimant in the linked arbitration (163503) and as the Tribunal is of course aware both claims share the same factual matrix, the same defences and are to be heard together on 28 November, we do not anticipate this presenting an issue and so should be most grateful if the Tribunal would confirm its agreement to the same."
This would appear to be a last minute attempt to preserve an oral hearing for the Shireen Arbitration on 28/ 29 November, despite the disappearance of the Claimant's corporate existence during certain phases of this arbitration and absence of any pre-hearing submissions in accordance with the Tribunal's directions. These complex procedural manoeuvres cannot be properly understood or assessed in such a short time frame, and a hearing cannot validly take place an 28/29 November 2017 in the Shireen Arbitration. The Respondents reserve the right to challenge any award that might be issued pursuant to such a hearing."
"We write in connection with the above-referenced proceedings (the "Mazlin Arbitration"). The elements set out below relate to recent procedural developments only and are without prejudice to the Respondents 'position that the New York proceedings must prevail as regards the questions of jurisdiction and merits in this dispute.
Hearing of 28/29 November 201 7
In its skeleton argument submitted on 23 November 2017, the Claimant 's counsel informed the Tribunal that claimant company Shireen Maritime Limited in concurrent proceedings No 1 7 3638 (Shireen Maritime Limited v WJ Holding Ltd and Slubrick Limited, the "Shireen Arbitration") no longer existed as a legal person at that time. According to Par. 7 of the argument: "On 22 November 2017 it came to the attention of Shireen's legal representatives in London that Shireen had been erroneously dissolved on 31 October 2017."
It was then added that "Until [Shireen 's] restoration no further steps can be taken in the Shireen Arbitration [...]."
A request for joinder in the Shireen Arbitration was then submitted by the Claimant's solicitors, on this day of 24 November 2017, concurrently with the apparent restoration of Shireen, in favour of Mazlin Trading Corp as third party (following an assignment of debt that took place on 30 October 201 7). It was also suggested in this communication that the claims in the Shireen Arbitration and Mazlin Arbitration should be heard together on 28/29 November.
The Respondents' interpretation of these developments in the Shireen Arbitration is that they appear to be a last minute attempt to preserve an oral hearing for the Shireen Arbitration on 28/29 November, despite the disappearance of Shireen 's corporate existence during certain phases of the Shireen Arbitration and absence of any pre-hearing submissions. It iras submitted by the Respondents that these complex procedural manoeuvres could not be properly understood or assessed in such a short t ime frame, and that a hearing could not validly take place an 28/29 November 2017 in the Shireen Arbitration.
Pursuant to Procedural Order No 3 in this Mazlin Arbitration, the Tribunal directed that proceedings in the Mazlin Arbitration and in the Shireen Arbitration should "proceed in parallel, with as little delay and added cost as practicable, with a view to any evidential hearing and oral arguments being heard in each concurrently "(par. 1) and that "the procedural timetable in each shall hereafter be identical" (par.2). It would therefore appear that the defect having affected the conduct of the Shireen Arbitration (i.e. the dissolution of the claimant even if subsequently restored) must also affect the conduct of the Mazlin Arbitration.
On behalf of the Respondents, it is accordingly submitted that the hearing cannot take place on 28/29 November 2011 in the Mazlin Arbitration either. The Respondents reserve the right to challenge any award that might be issued pursuant to such a hearing.
Claimant 's Costs Submission
On 23 November 2017 the Claimant filed a short schedule of costs amounting to $ 635,845. The Respondents note the following:
1. The costs submitted (under the sole auspices of this Mazlin Arbitration) are very significant and represent not 3% of the claims as averred, but 12% of the Mazlin claim (of principal amount in the vicinity of $4 million). This cannot be considered a proportionate amount.
2. The Claimant did not distinguish between the costs related to the Mazlin Arbitration and those related to the Shireen Arbitration, which cannot be correct.
3. The hours submitted are provided in large blocks, in some instance of up to 102 hours, instead of granular increments of not more than several hours at a time (as would be customary), together with corresponding detailed chronology.
4. The Claimant seeks recovery of costs incurred in foreign proceedings, to which the jurisdiction of the Tribunal does not extend. The recovery of such costs must be governed by cost recovery laws in those foreign jurisdictions and by the proper fora.
The Respondents are accordingly of the view that the Claimant 's costs submission is inadequate.
As a final comment, the Respondents' decision not to participate in disclosure and in the hearings scheduled for 28/ 29 November was based not only their in- principle view that the New York proceedings should prevail, but also in order to mitigate costs related to these London proceedings, including costs incurred by the Claimant. It was not intended to encourage an uncontested accumulation of costs. "
(1) informed the Tribunal that Shireen had been restored to the register earlier that day, and provided a copy of the Proclamation of Rescission of Dissolution;
(2) provided a copy of a Deed of Assignment dated 30 October 2017 by which Shireen assigned absolutely to Mazlin all sums due and owing to Shireen under the Shireen Loan Agreement, including for the avoidance of doubt Shireen's claim in this arbitration and the benefit and proceeds of any award or order herein, including costs;
(3) provided a copy of a Confirmation of Consent to Joinder under Article 22.1(viii) of the LCIA Rules, dated 24 November 2017, signed by each of Shireen and Mazlin; and
(4) invited the Tribunal to make an order under Article 22.1(viii) joining or substituting Mazlin as Claimant in the Shireen claim.
(1) joining Mazlin Trading Corp as a claimant in the Shireen claim, and
(2) providing that the Claimants are not required to serve an amended Request for Arbitration or any amended Statements of Case reflecting the addition of Mazlin as claimant.
(1) the beneficial owner of Shireen and of Mazlin is, and always has been, Mr Spiegel;
(2) the beneficial owner of WJ Holding and of Stubrick is, and always has been, Mr Drukker; and
(3) Mr Spiegel and Mr Drukker were friends since childhood, having been brought up and gone to school in the same part of what is now west Ukraine.
(1) he emigrated to the USA in 1972, after which he established a number of business ventures, specialising since the early 1990s in former Eastern bloc countries; and
(2) Mr Drukker emigrated to the USA in about 1989, and he too has established a number of business ventures,
(1) The agreement recited that WJ Holding was the registered owner of 3,583 shares in Bender Oil, and that it wished to sell and AMM Consulting wished to buy 1,074 of those shares.
(2) Clause 1 provided that WJ Holding agreed to sell, and AMM Consulting agreed to purchase, the 1,074 shares in Bender Oil "upon the terms and conditions hereinafter set forth".
(3) Clause 2 referred to Exhibit A (comprising an 'Appraisal' of certain 'assets' owned by Bender Oil) and Exhibit B (containing a description of various 'Contracts' setting out Bender Oil's and WJ Holdings' privatisation obligations) which were ostensibly attached to the agreement, but neither document has been produced to the Tribunal.
(4) Clause 3 provided that the purchase price was to be $210,000, with $100,000 payable on or before 31 December 2012, and 110,000 payable on or before 1 June 2013.
(5) Clause 5 provided that, at closing, WJ Holding would execute and deliver to AMM Consulting transfer documents and deeds of title in respect of the shares in Bender Oil.
(6) Under clause 6, headed 'Representations and Warranties of Seller', WJ Holding was recorded as having represented and warranted that it had full power and authority to carry out and perform its undertakings and obligation provided in the agreement -
"except the condition precedent to the sale is [ WJ Holding's] fulfilment of the privatisation requirements and p rior authorisation of the Pridnestrovian Moldavian Republic ("PMR") government authorizing the said sale and registration of the Shares. [ AMM Consulting] acknowledges that [ WJ Holding] is not giving any warranty or representation on [ WJ Holding's] ability to fulfil the privatization requirements and to receive necessary government approvals. In the event, [WJ Holding] will not be able to obtain said governmental approval by the end of 2013, this Agreement shall be rescinded and all funds refunded to [AMM Consulting]" (emphasis in the original).
The Claimants submit, and the Tribunal accepts, that this means that the Agreement of Sale was not unconditional. Rather, it was conditional on the fulfilment of certain privatisation conditions, and on the grant of certain governmental consents.
(7) Clause 8 laid down certain 'Conditions to Closing'. In particular, clause 8.2 provided that the obligations of WJ Holding to close were subject, "at the option of [WJ Holding], to the... (b) Ability of [WJ Holding] to complete all privatisation requirements with the PMR Republic". It is difficult to understand the intended effect of the words "at the option of [WJ Holding]" in this context, but the Tribunal considers it unnecessary to resolve that uncertainty.
(8) Pursuant to clause 10, the parties agreed that "the purchase price is based on the value of the Shares before [WJ Holding] will have invested additional finds to make the factory operational and to fulfil privatization requirements". The Tribunal considers that this provision lends at least some further weight to the Claimants' case that the parties were proceeding on the basis that the value of Bender Oil was in the region of $630,000, not $20 million.
(9) Clause 15 provided that the agreement was to be governed by, and construed in accordance with, the laws of the State of New York.
(1) The first was a loan agreement between Stubrick and Bender Oil in the sum of $1.5 million. The term of the loan expired on 10 December 2012.
(2) The second was an Additional Agreement, made between Stubrick and WJ Holding, the effect of which appears to have been to treat the loan made by Stubrick to Bender Oil as if it had been a loan made by WJ Holding in discharge of part of its investment obligations under the 2012 Privatisation Agreement.
As per our consulting agreement I have found 2 potential companies willing to extend the credit line in operation [sic] in Moldova-Transylvania.
Here are the company details
1. Shireen Maritime Limited (Republic of Liberia) 80 Broad Street, Monrovia, Republic of Liberia...
2. Terms: credit line up to 4 mill. Interest rate 6%, 3 years, with a option [sic] for extension for 2 more..
The Loan agreement has to be standard for 3-4 pages covering all concerns (pledges, guaranties etc.)
The second company details you will receive directly from Arla Weber... but the terms the same [sic] except the credit line is 9 mill and the first trans by mutual agreement both sides.
Please put together ASAP."
(1) Clause 1.1 provides that the loan was made "for the purpose of inventory financing for the edible oil crushing facility".
(2) Clause 1.2 provides that the borrowing "shall be secured pursuant to the Security Agreement attached hereto as Exhibit A". There is no Exhibit A attached to either Loan Agreement. Mr Spiegel's evidence is that the parties agreed that the loans would be secured by personal guarantees provided by Mr and Mrs Drukker. The Respondents deny that there was any agreement for personal guarantees to be provided by Mr and Mrs Drukker, but they provide no alternative explanation nor any evidence of what the 'Security Agreement' referred to in the Loan Agreements might be.
(3) Clause 1.3 provides that interest shall accrue at 6% on the outstanding principal balance of each advance.
(4) Clause 1.4 provides that each advance shall be made in certain fixed minimum amounts or multiples thereof, being $250,000 under the Shireen Loan Agreement and $1 million under the Mazlin Loan Agreement.
(5) Clause 1.7 provides that requests for advances would be made by written or telephone requests.
(6) Clause 1.9(a) provides that all payments by the borrower shall be made in US Dollars.
(7) Clause 1.9(c) provides that: "All calculations of interest hereunder shall be made on the basis of a 360 day year for elapsed [sic]".
(8) Clause 1.10 provides as follows: "If any Advances is [sic] not paid when due, Borrower shall, on demand by Lender, pay interest thereon from its due date until paid in full at a rate of ten percent (10%) per annum".
(9) Clause 2 provides that all advances "shall be repaid in full together with all interest, fees, and other sums due Lender [sic] on September 30, 2015" with the lender having an option to extend the loan period for a further year.
(10) Clause 3 contains certain representations and warranties on the part of the borrower.
(11) Clause 4 contains certain positive covenants on the part of the borrower.
(12) Clause 5 defines certain events of default.
(13) Under clause 6, each party agreed "to pay prevailing party's [sic] all reasonable cost [sic] and expenses (including reasonable counsel fees) in connection with the enforcement of this Agreement and Notes [sic]." No actual 'Notes' appear to form any part of the contract.
(14) The relevant part of clause 7 provides as follows:
"This Agreement and agreement [sic], document or instrument attached hereto or referred to herein integrate all the terms and conditions mentioned herein or incidental hereto, and supersede all oral negotiations and prior writings in respect of the subject matter hereof."
(15) Clause 8 provides that the governing law shall be English law.
(16) Clause 9 is the arbitration agreement, quoted in §6 above.
(1) Mr Spiegel is not himself a lawyer, and the Tribunal has seen no evidence to suggest that he instructed any lawyers to draft the Loan Agreements on his behalf.
(2) By contrast, Mr Schneider is a lawyer and he is also Mr Drukker's son-in-law. He would have been well placed to draft the agreements.
(3) The email from Mr Spiegel to Mr Schneider dated 11 July 2012 (referred to in §91-94 above) discussed the proposed contents of a loan agreement, and ended with the words "Please put together ASAF". There is no documentary record of Mr Schneider having declined to do so. This suggests he accepted the invitation from Mr Spiegel to draft the Loan Agreements.
(4) For the reasons discussed in §107 below, the Tribunal finds that Mr Schneider drafted the guarantees. That makes it more likely that he also drafted the Loan Agreements.
(5) The formatting of the Loan Agreements lends some inferential support to Mr Spiegel's evidence because it suggests that the content of the agreements was cut and pasted from other precedents. For example, the headings to clauses 1 to 7 inclusive are in capitals, whereas the headings to clauses 8 and 9 are in lower case. Furthermore, as mentioned above, clause 6 refers to ' the Notes', when no notes formed any part of the transaction.
(6) There is a slight but noticeable difference between the Respondents' case in these proceedings and the evidence they have adduced in support of the New York proceedings. As noted above, the Respondents' Defences say no more than that they have no recollection of Mr Schneider drafting the Loan Agreements.83 By contrast, in the New York proceedings Mr Drukker has sworn an affidavit dated 22 June 201784, in which he says this: "The two loan agreements were produced by Mr Spiegel".85 It does not encourage the Tribunal's confidence in the integrity of the Respondents' case to see slightly varying accounts of the same factual issue.
(7) In any event, the Respondents have offered no witness evidence in these proceedings. By contrast, Mr Spiegel has made a witness statement setting out his evidence in this regard, and he has also tendered himself for cross-examination.
(8) In particular, Mr Spiegel's evidence was that he met Mr Schneider in a coffee bar in mid-August 2012 when Mr Schneider handed over copies of the draft Loan Agreements which he (Mr Schneider) had prepared. This evidence is to some extent corroborated by an exchange of emails between them on 10 August 201286 (which is the date of the Loan Agreements). Although the subject line of the emails is "Re: Bendery Valuation -Part 2" it is common experience that the subject matter of an email chain may evolve without the parties necessarily up-dating the subject line of their communications. In this instance, at 2:41 pm on 10 August 2012 Mr Spiegel was writing to Mr Schneider, asking: "Then do we meet?" Mr Schneider replied: "I have been working on our stuff all morning... I will try to finish in the AM and lets [sic] meet around 2 tomorrow. Will it work for you?" Mr Spiegel replies at 3.22 pm "Yes, Boss!!! anything good for you is good for me See you tomorrow at 2 (In Aroma?)".
"Parties now agree that in the event [Mr Spiegel] stops providing consulting [WJ Holding], or any successor thereof, for any reason, including [WJ Holding] terminating [Mr Spiegel] for any reason at his sole and absolute discretion, [WJ Holding] shall be entitled to terminate the [Agreement of Sale] and rescind the transaction by giving notice to [AMM Consulting] and paying a sum of two hundred and fifty thousand dollars (S250,000) within thirty days of the Notice. In the event of rescission hereunder the payment of S250,000 by [WJ Holding] to [AMM Consulting], [AMM Consulting] agrees to transfer any and all rights it may have had (including any rights to accrued dividends) back to [WJ Holding]".
(1) For their port, the Respondents say that it supports their argument that Mr Spiegel agreed to acquire an equity interest in Bender Oil, otherwise there would have been no need to make provision for its re-transfer.
(2) In answer, the Claimants say that the consideration payable on re-transfer under the Letter of Agreement is consistent with the figure of $210,000 in the Agreement of Sale, and is inconsistent with the Respondents' case that Mr Spiegel agreed to acquire a 30% equity stake for $7 million.
(1) The Letter of Agreement talks only of the parties "entering into" the Agreement of Sale. It does not say either (i) that that agreement had been completed, or (ii) that AMM Consulting had in fact acquired any shares in Bender Oil, or (iii) that Mr Spiegel, through any corporate vehicle, had made an unconditional agreement to acquire an equity interest in Bender Oil. As such, it provides no support for the Respondents’ case that there was an unconditional agreement for Mr Spiegel to enter into an equity purchase at all, let alone for $7 million.
(2) On rescission of the Agreement of Sale, the obligation on AMM Consulting under the Letter of Agreement is "to transfer any and all rights it may have had". The most natural interpretation of the Letter or Agreement is accordingly that it was intended to work prospectively, imposing an obligation on AMM Consulting (on the occurrence of some future contingency) to transfer back to WJ Holding rights in relation to Bender Oil which, as nt the date of the Letter of Agreement, AMM Consulting had not yet acquired.
(3) The consideration payable under the Letter of Agreement on re-transfer makes sense in the context of a potential 30% equity investment for $210,000. It makes no sense in the context of an equity investment for $7 million.
"I was very surprised that you still haven't talked to Marina. As I understood, the matter is urgent. We talked about it August 27. As you understand, until the documents are signed correctly, we won't be able to do anything. "
"Attached please find the form of the guaranty. 1 have drafted this as a mere accommodation for WJ Holding, and do not represent any parties to the loan and guaranty agreements (neither Lenders nor Borrowers nor Marina Drukker nor Yuri Drukker). I strongly recommend that you all review these documents with the counsel of your choice. "
(1) Mr Spiegel has given witness evidence which provides a coherent explanation of the documents, and the documents are consistent with his account.
(2) It is particularly striking that Mr Schneider, who is Mr Drukker's son-in-law, drafted the relevant guarantees, and expressed no surprise at having been asked to do so.
(3) The fact that Mr Schneider says he was not acting for any of the parties does not detract from this inference in any way. Rather the reverse: having referred to "the loan and guaranty agreements", Mr Schneider specifically advises the parties to obtain independent legal advice, which strongly suggests that he regarded the Loan Agreements as being genuine, and that the guarantees would be legally binding on Mr and Mrs Drukker when executed.
(4) The Respondents have offered no witness evidence to contradict Mr Spiegel's account.
(1) The Loan Agreements refer to a 'Security Agreement'. As noted above, no explanation has been offered for that term other than as a reference to the intended guarantees.
(2) The fact is that no funds were advanced under the Loan Agreements for several months after their execution. The timing of the emails in September, followed by Mr Spiegel's account of his meeting with Mr Drukker in November, followed by the first transfer of funds in late November 2012, lend support to the Claimants' case that they would not advance any money until Mr Drukker had agreed to give the personal guarantees.
(3) The Respondents' case is that there never was any agreement to provide personal guarantees. For the reasons outlined above, the Tribunal has rejected that case. The Tribunal infers that the reason why the Respondents were keen to deny the existence of any agreement to provide personal guarantees is that (i) the moving spirit behind the Respondents is plainly Mr Drukker, and Mr Drukker was keen to deny having incurred any potential personal liability under a guarantee and (ii) the existence of a personal guarantee would have been more consistent with a true loan, rather than an equity investment.
(4) Mr Spiegel has given witness evidence and submitted himself to cross-examination on this issue. The Tribunal found his testimony to be consistent with the documentary record and convincing on this point.
(5) By contrast, the Respondents have offered no witness testimony, despite having filed a lengthy Response and Statement of Defence.
" We hereby confirm that during the period since 2012, from the commencement of actions to relaunch the factory after seven years of standstill, namely rebuilding, renovation and modernisation of Bender Oil Extraction Plant, Mr Alex Spiegel repeatedly visited, together with Mr Y.P. Drukker...
 Mr Alex Spiegel was introduced to us as the partner of Mr Drukker - shareholder of [Bender Oil]. On numerous occasions, they noted that any actions regarding repair, installation and acquisition of equipment, and for the future and as far as was known, all matters concerning the procurement of raw materials, processing of such materials and sale of finished products, would have to be reported to both of them for their joint approval.
 On numerous occasions since 2012, Mr Drukker gave formal instructions for all reports relating to the economic activity of [Bender Oil] to be presented to Mr Spiegel in his capacity as shareholder.
 In addition, during his visits to the factory, Mr Alex Spiegel took part in management meetings of [Bender Oil], and held separate meetings with the deputy director of [Bender Oil] in charge of economic and financial affairs. "
(1) To the extent that the document's content is admitted by Mr Spiegel, the Tribunal accepts it as accurate.
(2) To the extent that its content is not accepted by Mr Spiegel, it contains contested evidence from Mr Gurduzn which has not been verified by a witness statement or tested by cross-examination. To that extent, the Tribunal cannot place any reliance on it.
(3) The fact that Mr Spiegel visited the plant and supervised some of its activities is consistent with each party's case: it is not consistent only with the Respondents' case that Mr Spiegel had entered into an unconditional agreement to take a 30% equity interest, whether for $7 million or at any other price; nor is it consistent only with the Claimants' case that the Loan Agreements genuinely reflected the bargain between the parties and that Mr Spiegel was merely exploring the possibility of making an equity investment.
(4) For these reasons, the Tribunal considers that the document, and the evidence regarding Mr Spiegel's visits to the plant, assists neither party.
(1) "On 30 November 2012, [WJ Holding] received from [Mazl in] an amount of CHF 1,900,000";92
(2) "On 3 December 2012, [WJ Holding] received from [Shureen] an amount of CHF 3,490,500";93
(3) "On 3 January 2013, Stubrick received from [Mazlin] an amount of USD 2,850, 000".94
(1) an account statement from Eurobank Cyprus Ltd dated 7 December 2012 relating to WJ Holding's account N o 001-2011-00140829, which shows an amount of CHF 1,900,000 being credited to the account from Mazlin on 30 November 2012;95
(2) a Debit Advice from Bank Frey & Co AG dated 3 December 2012 reflecting a transfer of CHF 3,490,500 from Sliireen to WJ Holding;96
(3) an Inward Swift statement from Eurobank, Nicosia Main Branch, dated 3 December 2012 reflecting the receipt by WJ Holding of the CHF 3,490,500: against the line 'Details of Payment' it says"Loan Agreement as per 10th of August 2012";97
(4) a bank statement from Compagnie Bancaire Helvetique dated 12 May 2013 in relation to Mazlin reflecting a payment order dated 3 January 2013 to Stubrick in the sum of US$2,850,088.60.98
(1) on 30 November 2012 WJ Holding received CHF 1,900,000 from Mazlin;99
(2) on 3 December 2012 WJ Holding received CHF 3,490,500 from Shireen;100 and
(3) on 3 January 2013 Stubrick received US$2,850,088.60 from Mazlin.101
(1) The seller is stated to be Mr Drukker personally, rather than WJ Holding.
(2) Clauses 2 and 6(a) recognise that WJ Holding may not be able to fulfil the privatisation requirements.
(3) Clause 3 provides that the purchase consideration shall be $5500,000 (rather than the $210,000 stated in the March Agreement of Sale).
(4) Under clause 7(e), AMM Consulting acknowledges that Mr Drukker and WJ Holding "are not making and have not made any statement, representation or warranty to hint or his advisors concerning (i) the fairness or adequacy of the Purchase Price".
(1) It is a fact that, by December 2012, no shares in Bender Oil had been transferred to AMM Consulting.
(2) It is the Respondents' pleaded case that the Moldovan government was in breach of its obligations under the 2012 Privatisation Agreement.105
(3) If Mr Spiegel had already committed unconditionally to acquire a 30% equity stake in Bender Oil, and if the March 2012 Agreement of Sale and the Loan Agreements had been created as the instruments ostensibly evidencing that agreement, there would have been no practical purpose in entering into another misleading Agreement of Sale.
(4) If the agreed purchase price for the 30% equity stake had in truth been $7 million, there would have been no practical purpose in agreeing a variation of the purchase price from the $210,000 stated in the March Agreement of Sale to the $500,000 stated in the December draft.
(5) The fact that a draft Agreement of Sale was being prepared in December 2012 supports the inference that the parties recognised that the March Agreement of Sale might expire pursuant to clause 6(a) without having been completed because the necessary governmental approvals were not forthcoming, and that as a result a replacement Agreement of Sale would need to be agreed if Mr Spiegel was to make an equity investment. That is inconsistent with the Respondents' case - namely, that Mr Spiegel had already concluded a binding and unconditional agreement to make an equity investment earlier in 2012.
(6) Accordingly, both the existence and the contents of the December draft support Mr Spiegel's case that (i) he was considering and negotiating a possible equity investment, without having concluded any unconditional deal in that regard, and (ii) the plant was beginning to commence production and was, as a result, increasing in value as time passed, hence the proposed increase in price.
(1) In paragraph number 1, Mr Virga says this: "We suggest that Delta Agro be a holding company owning 100 % directly or indirectly, of each of the companies constituting the operating group " (emphasis added). Paragraph 5(A) says this: "AMM may form a wholly owned entity to own its membership interest in the holding company prior to contract execution" (emphasis added). It is therefore apparent that no agreement had even been reached as to the identity of the respective parties to any equity investment, or to the structure of the deal. That is inconsistent with the Respondents' case that a binding equity investment deal had already been concluded in 2012.
(2) The second paragraph under numbered paragraph I says this: "Apparently, WJ Holding owns a fifty a (50%) percent interest in [Bender Oil]. The other fifty (50%) percent interest is held by Kelley Oil Refinery Ltd." It is therefore clear that the prospective purchaser was not even sure that the prospective seller was in full ownership of the target.
(3) The following paragraph says this: "Our understanding is that WJ Holding has an extensive history. We should attempt to isolate that history from thi s transaction. Please advise us of your thoughts on this area." This may have been a reference to the circumstances in which Mr Drukker parted company from his former business partners. At all events, it further evidences the fact that the negotiations for any acquisition by Mr Spiegel of an equity interest in Bender Oil were still at an embryonic stage.
(4) Paragraph number 2 contains a string of questions and requests for assurances regarding Bender Oil's financial position. Paragraph number 3 says this: "AMM expects representations and warranties that confirm the concepts set forth above" (emphasis added). Paragraph number 4 says this: "The PMR consent needs to be a closing condition" (emphasis added). Together, these paragraphs all demonstrate clearly that the parties were still exploring the possibility and the terms of an equity investment. As such, they are entirely inconsistent with any unconditional deal having already been concluded for an equity investment by Mr Spiegel.
(5) Paragraphs 5(B) to (1) contain a number of detailed proposed terms which had clearly not yet been agreed. Again, this is all entirely inconsistent with an unconditional deal having already been agreed.
"Volodya, we also need:
1. Certificate of registration of AMM
2. Extract from the commercial register regarding AMM
3. Document confirming the founders of the company all the way to physical p ersons (Beneficial owner)
4. Decision of the competent body of AMM on the purchase of shares in Moldova
5. Power of attorney or personal presence director [sic] of AMM".
(1) First, neither the Power of Attorney nor the emails make any specific reference to the Bender Oil project.
(2) Second, the Power of Attorney confers powers on Mr Rashkov well in excess of what would have been necessary simply in order to enable him to enter into a share acquisition agreement on behalf of Mr Spiegel.
(3) Third, as the Respondents have been at pains to point out, both Mr Drukker and Mr Spiegel are resident in the USA, and the terms of Mr Spiegel's prospective equity investment in Bender Oil were negotiated between them and their respective US lawyers. In the circumstances, there is no obvious reason (and certainly none was suggested by the Respondents) why any share purchase agreement reflecting that equity investment would have had to be executed in Moldova.
(4) Fourth, it is apparent from Mr Schneider's email message that he was sending Mr Rashkov a "package of documents". If those documents had supported the Respondents' case, the Tribunal would have assumed that they would have been produced as on exhibit to the Defences, along with the covering email. They were not.
(5) Fifth, Mr Schneider's email says that Mr Spiegel "will purchase shares of the companies" (plural). None of the documents that have been produced relating to the Bender Oil project involved Mr Spiegel (or any company owned and controlled by him) acquiring shares in more than one company.
(6) Finally, even if the Tribunal had rejected Mr Spiegel's evidence in this regard, it would not have considered that either the Power of Attorney or the emails support the Respondents' case. In particular, they do not demonstrate that a concluded, unconditional deal for an equity investment was ever made. At most they might show that Mr Spiegel was putting in place a mechanism for executing the necessary documents if an investment deal were to be concluded. But the fact that he was putting such a mechanism in place is not evidence that an unconditional deal was in the event concluded.
(1) Neither party contends that the Operating Agreement or the MIPA was ever executed as a binding agreement. They both remained in draft. If there had been a concluded, unconditional deal in 2012 for Mr Spiegel to acquire a 30% equity interest in Bender Oil (whether for $7 million or at any other price), there would have been no need for the parties still to be negotiating detailed contractual documents nearly 2 years later.
(2) The parties to the draft Operating Agreement and MIPA were different from those in the 2012 agreements. The parties to the draft Operating Agreement and MIPA included Mr Drukker personally, and also a company called AMM Bender Holdings LLC ("AMM Bender Holdings"), a Florida entity which is different from AMM Consulting (the party to the March 2012 Agreement of Sale). Furthermore, the subject matter of the agreements was another Florida entity, Delta Agro Holdings LLC, not Bender Oil or WJ Holding (as in the March 2012 Agreement of Sale). In other words, even the underlying structure of the deal had still not been concluded.
(3) Clause 8 of the Operating Agreement refers to the 'Initial Capital Contributions' of the parties by reference to the figures set out in Schedule A. The column headed 'Capital Contributions' in Schedule A is in fact blank. This clearly shows that some of the most fundamental provisions of the deal were still under negotiation.
(4) More generally, the detailed terms of the draft Operating Agreement broadly reflect the terms under negotiation between Mr Virga and Mr Schneider in early 2013. This reinforces the inference that the parties conducted lengthy negotiations, and had not concluded any deal.
(5) The Purchase Price stipulated in the MIPA for a 30% equity stake was $500,000 (the same figure as in the draft December 2012 Agreement of Sale122). This is again inconsistent with any pre-existing deal having been concluded at $7 million. Conversely, it also lends inferential support to the Claimants' case that any potential equity investment by Mr Spiegel was to be measured in hundreds of thousands of dollars, not in millions. The increase in price from the $210,000 stipulated in the March 2012 Agreement of Sale to the $500,000 proposed in the MIPA some two years later was presumably attributable to the fact that the Bender Oil plant, albeit not as profitable as hoped, had at least entered into production.123 At all events, if the Loan Agreements had been shams, and the true price for the equity investment had been $7 million, there would have been no need for the parties to have negotiated an upward lift in the purchase price in 2014 from $210,000 to $500,000.
"After attempting to negotiate the purchase of a thirty (30%) percent membership interest in Delta since December 2012, AMM has concluded that further efforts are futile. AMM terminates negotiations.
After approximately twenty (20) months of negotiations, basic issues are still not resolved. The "Group" entities are not formed, or at least not disclosed to us. A draft of the Disclosure Schedule has not been provided. The Seller still insists on qualifying each and every representation by Seller's knowledge and information contained in documents outside of the Disclosure Schedule that may have been provided or seen by AMM. The obligation to enforce the Privatisation Agreements is so vague and discretionary that it is essentially meaningless. The above items are not meant to be exhaustive."
"On the basis of the submitted affidavit, and specifically, exhibit 9 (a letter sent by Mr Drukker 's son in law which pertains to the form of the guaranty), the Court noted that the Respondents seem to admit the due amount and promise a repayment using damages from another action. "
"In or about Early 2012... I agreed to sell [to Mr Spiegel] and his entities a 30 percent stake in [Bender Oil] in exchange for $ 7 million. [Mr Spiegel] also agreed to provide another $2 million in working capital."
"Mr Spiegel told me, however, that he initially needed to structure hi s equity investment as a loan in order to achieve certain tax and estate planning objectives. This would be achieved by [Mr Spiegel] routing ostensible loans for [Bender Oil] through offshore companies and then restructuring or offsetting the debt. The parties were always clear that regardless of formal structure, the investment made by Mr Spiegel (through his companies) was an equity investment and the equity purchase price... was $ 7 million" (emphasis added).
(1) First, the Loan Agreements are clearly expressed as loan agreements, not os an equity investment. The starting point of any analysis is the assumption that the parties to any written contract intend to record in writing the bargain they have in fact made.
(2) Second, the Respondents have offered no witness or documentary evidence in support of their main contention, namely that the Loan Agreements were shams, having been agreed as 'loans' for tax and inheritance planning reasons.
(3) Even if the Loan Agreements had been structured as loans for tax and inheritance planning reasons, that in itself would not necessarily have rendered them shams, unless there had been some evidence that the purpose of the structure was to defraud relevant tax (or other) authorities. Structuring an investment to maximise its tax efficiency is entirely legitimate, assuming the structure is lawful. The Respondents hove adduced no evidence of any unlawfulness.
(4) Mr Spiegel has given witness evidence and submitted himself to cross-examination (by the Tribunal) on these issues, whereas the Respondents, having made serious allegations of fraud against Mr Spiegel, have chosen to deploy no witness evidence at all, and to absent themselves from the hearing.
(5) Having subjected Mr Spiegel to robust questioning, the Tribunal finds him to have been an essentially honest witness in relation to the issues in dispute (although not all of his conduct was necessarily creditable in a wider moral sense).
(6) For the reasons outlined above, the Tribunal considers that Mr Spiegel's evidence is consistent with the contemporaneous documentation.
(7) By contrast, there is not a single contemporaneous document which supports the Respondents' case either (i) that Bender Oil was valued at about $20 million in 2012, or (ii) that Mr Spiegel agreed to make an equity investment for $7 million, or (as noted above) (iii) that the investment was structured in the way it was to avoid (illegally) any tax obligations. Whilst the Respondents have made great play of the fact that they wish to pursue disclosure in the New York proceedings against Mr Spiegel personally and against AMM Consulting in order to verify their case, it is worth noting that neither of the Respondent companies, nor Mr Drukker nor Mr Schneider personally (both of whom could have been expected to assist the Respondents in any way available to them) has been able to produce a single document to support their primary case.
(8) Furthermore, there is a significant discrepancy between the alleged agreement on which the Respondents seek to rely (i.e. an equity investment at $7 million) and (i) the aggregate amount of the loan facility under the two Loan Agreements (i.e. $17 million) and (ii) the amount of money actually transferred by the Claimant companies (i.e. over $8 million). Whilst there has been some suggestion from WJ Holding and Stubrick in the New York proceedings that they may seek to attribute this difference to a separate agreement by Mr Spiegel to make a further investment of $2 million by way of capital, (a) it is striking that that allegation has formed no part of the extensive pleadings and submissions made by the Respondents in these proceedings, (b) in any event it would not explain the difference between the combined value of the alleged equity and capital investments (i.e. $9 million) and the aggregate amount of the loan facilities (i.e. $17 million) and (c) it is again the case that there is no contemporaneous documentary support for the existence of any ancillary agreement by Mr Spiegel to advance a further $2 million. Furthermore, the Tribunal finds it undermines the Respondents' case that they have advanced varying arguments in these arbitration claims and in the New York proceedings.
(9) Moreover, the Respondents' case is on analysis positively inconsistent with the documentary record in a number of respects. In particular, the March 2012 Agreement of Sale142 was plainly conditional, and it is common ground that the conditions to completion were never satisfied. Furthermore, the fact that lengthy draft contracts were subsequently being negotiated throughout 2013 and until July 2014, and that those drafts involved different parties from those in the 2012 agreements, strongly suggests that no concluded, unconditional deal for an equity investment was ever agreed.
(10) The Respondents have also made a number of other allegations which they have been unable to substantiate. For example, they have relied in their pleadings and submissions on "other ancillary agreements"143 which they said were governed byNew York law and by "other dispute resolution clauses".144 They have also referred to "a number of important oral arrangements between [WJ Holding] and Mr Spiegel that are fundamental to the entire construction of the dispute between the parties".145 However, on analysis it emerges that no written agreements (apart from the Loan Agreements and the March 2012 Agreement of Sale) were ever concluded; and the Tribunal has also seen no evidence to substantiate the allegation that there were any oral agreements that are inconsistent with the terms of the Loan Agreements and the March 2012 Agreement of Sale.
(11) There is no suggestion that AMM Consulting ever paid, or that WJ Holding ever demanded, the $100,000 due on 31 December 2012 under clause 3 of the March 2012 Agreement of Sale,146 or the further instalment of $110,000 due on 1 June 2013. If that agreement had (as the Respondents contend) formed part of the concluded bargain for an equity investment, it is difficult to see why neither side sought either to comply with or to enforce its terms.
(12) As noted above, the sequence of events between the making of the March 2012 Agreement of Sale and the first documented mention of a loan in the 11 July 2012 email147 is striking, as is the fact that that email was discussing the possibility of loans being made by companies unconnected with Mr Spiegel.
(13) For the reasons outlined in §101-111 above, the Tribunal finds that (i) there was an agreement that Mr and Mrs Drukker would provide personal guarantees, (ii) Mr Spiegel caused the Claimant companies not to advance any funds until late 2012 because the guarantees had not yet been signed, (iii) Mr Schneider drafted and Mr Drukker signed the guarantees in November 2012, and (iv) the Claimants thereafter advanced funds to the Respondents. All of this is consistent with the funds having been advanced by way of loan, not as an equity investment.
(14) The Respondents admit that, for a period of about 25 years, (i) Mr Spiegel had periodically made loans to companies controlled by Mr Drukker, (ii) all such loans had been provided pursuant to written agreements and (iii) they had been secured by personal guarantees from Mr Drukker and his wife.148 That pattern of dealings is consistent with the Loan Agreements in these proceedings also being genuine loans.
(15) The Respondents say that Mr Drukker injected about $15 million of his own money into the Bender Oil project.149 It is notable that his evidence in the New York proceedings is that he invested that money "through loans which I personally extended".150 Although Mr Drukker emphasises that he has not sought repayment, the fact remains that he provided funding by way of loans, whereas be claims that Mr Spiegel agreed to invest by way of equity. If this was (as the Respondents contend) a joint venture between the two men, there would have been no obvious commercial reason (and none has been suggested by the Respondents) why Mr Spiegel would have agreed to make an equity investment of several million Dollars, while Mr Drukker (the initiator of the project) was only making loans.
(16) Finally, Mr Spiegel's evidence is that neither the Respondent companies nor Mr Drukker ever claimed that the Loan Agreements were shams until after these arbitration proceedings had been commenced. There is certainly no documented record of any such claim having been made, and the Respondents have not pleaded that any such claim was made before the Request for Arbitration in November 2016. In the circumstances, the Tribunal accepts Mr Spiegel's evidence in this regard. That provides further inferential support for the conclusion that the Respondents' argument that the Loan Agreements are shams is a recent invention by them which has been raised in an attempt to resist the claim for repayment.
• 30 November: CHF1,900,000 @ 1.0792647328 USD.CHF = US$2,050,602.99
• 3 December 2012: CHF 3,490,500 @ 1.0809434530 USD/CHF = US$3,773,033.12
|Date||Days||Mazlin Loan I ($)||Rate||Interest||Total ($)|
|Date||Days||Mazlin Loan 2 ($)||Rate||Intrest||Total($)|
|5 6||01/10/2016- 30/09/2017||365||2,850,088.60||10%||285,008.86||1,040,757.35|
|Date||Days||Shireen Loan ($)||Rate||Intrest calculation($)||Total($)|
|5||01/10/2016- 30/09/2017||365||3,773,033.12||10% :||377,30331||1,397,279.93|
"The Arbitral Tribunal shall make its decisions on both Arbitration Costs and Legal Costs on the general principle that costs should reflect the parties' relative success and failure in the award or arbitration or under different issues, except where it appears to the Arbitral Tribunal that in the circumstances the application of such a general principle would be inappropriate under the Arbitration Agreement or otherwise. The Arbitral Tribunal may also take into account the parties' conduct in the arbitration, including any co-operation in facilitating the proceedings as t o time and cost and any non-co-operation resulting in undue delay and unnecessary expense. Any decision on costs by the Arbitral Tribunal shall be made with reasons in the award containing such decision."
(1) The Respondents have consistently refused to comply with the LCIA's directions to pay the advances to fund the Arbitration Costs. As a result, the Claimants have had to make substitute payments.
(2) After being given a full opportunity to respond to the Claimants' proposals for procedural directions in the Mazlin claim, the Respondents then sought unreasonably to invite the Tribunal to reopen the directions it had given in Mazlin PO2.164
(3) The Respondents have consistently sought to procure a dismissal or stay of these arbitration proceedings on the basis that the true agreement between the relevant parties is governed by New York law. For the reasons set out in detail in this Award, the Tribunal has rejected that case. The Tribunal considers that the Respondents' allegations are unsustainable, and that their efforts to resist arbitration amount to forum-shopping.165
(4) The Respondents' stated preference for the dispute to be resolved in the New York proceedings was ostensibly based on their contention that (i) the New York court has wider powers of disclosure against different parties from those available to this Tribunal in these arbitral proceedings, (ii) there was a "reasonable expectation" that the evidence obtained on discovery there "will be relevant to the subsequent entertainment (by the Tribunal) of the Respondents' principal claim"166 and (iii) compliance by the Respondents with any disclosure order in these proceedings might cause "irreparable harm to the position of the Respondents in the New York proceedings".167 In the event, however, (a) the Respondents have never attempted to specify exactly what documents, or categories of document, they say will be disclosable in the New York proceedings to assist their case, (b) they have not produced any evidence before the Tribunal to suggest that any such documents exist, (c) they have not explained exactly what harm would be caused to their interests in the New York proceedings by complying with the directions for disclosure in these proceedings, and (d) they have not explained the apparent inconsistency between that assertion and the fact that they were content to exhibit over a dozen documents to their Statements of Defence without, apparently, causing irreparable harm to their position in the New York proceedings.
(5) Although the Respondents were fully aware of the timetable laid down in the Procedural Orders that had been made in each arbitration, they waited until the last minute before notifying the Tribunal and the Claimants that they did not propose to offer any disclosure.168
(1) In the context of the amounts claimed in the Mazlin claim, and for that matter in the Shireen claim, the Tribunal does not consider the overall costs claimed to be disproportionate. Since the costs represent costs claimed in both proceedings, it is inappropriate to compare the costs against the debt claimed in the Mazlin claim only.
(2) The Respondents' second observation is correct. However, directions were made in the proceedings, to which the Respondents did not object, that the Mazlin claim and the Shireen claim proceed in parallel to avoid delay and added costs and with a view to any evidential hearing and oral arguments being heard concurrently.169 The proceedings did largely proceed on that basis and, of course, the hearings were concurrent. As a consequence, the Tribunal's view is that the Claimants have acted reasonably in incurring their costs in this manner which is likely to have resulted in an overall costs saving. For the purposes of this award, the Tribunal has split the costs between the Mazlin claim and the Shireen claim in the proportions 55% and 45% respectively in order to reflect the additional time taken in the Mazlin claim to deal with the Respondents' initial procedural objections, and to reflect the fact that the costs attributable to the Mazlin claim (which was in essence the lead claim) might be slightly greater than those attributable to the Shireen claim.
(3) The Costs Schedule was submitted in a form consistent with §30 of Mazlin P02 and §33 of Shireen POl, which did not specify the level of detail to be provided against each heading. The Tribunal finds that the level of detail provided by the Claimants is reasonable, particularly when taking into account the overall reasonable level of costs claimed.
(4) The Tribunal deals with the Claimants' claims in respect of the costs of foreign proceedings in §193-195 below.
"(i)the question of costs be reserved during the hearing,
(ii) the Claimant be asked to provide a more detailed submission on costs that would inter alia provide:
- a break-down between the two arbitrations;
- copies of invoices and payments in relation to disbursements; and
- detailed narratives and chronology for the hours incurred; and
(iii) that the Respondents be there after allowed a submission commenting on these costs."
(1) injunction proceedings issued in Cyprus to obtain a worldwide freezing order against the Respondents in the sum of US$76,098.77;
(2) Hungarian legal advice in relation to enforcement action in Hungary and in relation to the sale by Stubrick of a wholly-owned Hungarian company BVDH Ingatlanhasznosito Kft in the sum of US$10,000;
(3) defence of the proceedings in New York in the sum of US$96,068.63.
(1) Heading (a) - Preparation and drafting documents: allowed in full - US$69,875
(2) Heading (b) - Attendance on opponent: allowed in full - US$8,355
(3) Heading (c) -Attendance on client and witnesses: allowed in full - US$56,465
(4) Heading (d) - Attendance on LCIA and Tribunal: allowed in full - US$9,615
(5) Heading (e) - Preparation for and attendance at hearings: allowed in full - US$50,085
(6) Heading (f) - Disbursements and travel costs: Arbitration Costs excluded, otherwise allowed in full -US$70,945.32
(7) Heading (g) - Attendance on Counsel: allowed in full -US$21,790
(8) Heading (h) - Attendance on third parties: allowed in full -US$16,160
(9) Heading (i) - Costs incurred in foreign proceedings: partially allowed - US$86,098.77
|Registration fee LCIA's administrative charges Tribunal's fees and expenses||£1,750.00£11,447.15£50,064.66|
|Final Costs of the Mazlin claim||£67,261.81|
Any remaining deposits shall be returned to the Claimants.
(1) Mazlin is entitled to repayment of the monies advanced under the Mazlin Loan Agreement in the amounts of US$2,050,602.99 and US$2,850,088.60;
(2) Mazlin is entitled to simple interest on US$2,050,602.99 at 6% per annum from 1 December 2013 to 30 September 2015 in the sum of US$349,969.58;
(3) Mazlin is entitled to simple interest on US$2,050,602.99 at 10% per annum from 1 October 2015 until payment in lull. As at the date of this award, such interest is payable in the sum of USS472,777.91, and continues at a daily rate of US$569.61;
(4) Mazlin is entitled to simple interest on US$2,850,088.60 at 6% per annum from 3 January 2013 to 30 September 2015 in the sum of USS470,739.63;
(5) Mazlin is entitled to simple interest on US$2,850,088.60 at 10% per annum from 1 October 2015 until payment in full. As at the date of this award, interest is payable in the sum of US$657,103.76, and continues at a daily rate of US$791.69;
(6) Mazlin is entitled to Legal Costs of US$214,164.00; and
(7) Mazlin is entitled to Arbitration Costs of £67,261.81.
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