Andrew Smith J clarifies what claims he decided in Fiona Trust…4 years on

20/03/15

Fiona Trust v Privalov

Andrew Smith J has handed down a further judgment in the long-running Fiona Trust case. The same Judge gave judgment in December 2010 after the 6 month trial. The case involved allegations of corruption affecting a variety of shipping-related transactions.

The Claimants were companies within the Sovcomflot group, Russia’s largest shipping company and included certain shipowning companies (“the Owners”).  One aspect of the dispute was whether the Owners were entitled to rescind a number of charterparties on the grounds that they were vitiated by bribery. In October 2007, the House of Lords (in its well known Fiona Trust v Privalov decision) held that that issue fell within the scope of the arbitration clauses contained in the charters and had to be determined in arbitration, not in the Court proceedings. Shortly after that House of Lords decision, the arbitration proceedings were effectively put on hold to await the outcome of the trial in the Commercial Court.

The Owners contend they have outstanding consequential financial claims which depend on first establishing that they were entitled to rescind the charters (an issue which remains to be decided in the arbitration reference).  The parties were in disagreement as to whether Andrew Smith J had already decided these consequential financial claims when he handed down judgment after the trial in December 2010.

The parties returned to Court to seek clarification from Andrew Smith J as to whether he had already determined the consequential financial claims.  The Owners sought a declaration (or relief under the slip rule if necessary) that the financial claims had yet to be determined.

In a judgment handed down on 5 March 2015:

1. Without deciding the point, Andrew Smith J indicated that his understanding was that the consequential financial claims had been stayed in favour of arbitration – contrary to the parties’ shared understanding that those claims had not been so stayed.

2. The judge exercised the Court’s inherent jurisdiction to vary an order to make its meaning and intention clear (of which the slip rule was simply a specific aspect) so as to clarify that he had intended to dismiss all claims that had not been stayed (except in so far as he had granted relief on them).

The judgment is here.