Gazprom Export LLC v. DDI Holdings Limited and others

At a glance

Parties

Gazprom Export LLC v. DDI Holdings Limited, Sasho Georgiev Dontchev, Overgas Mrezhi AD, Overgas Inc. AD, Overgas Holding AD and DD Management AD

Case no.

CL-2018-000161; [2020] EWHC 303 (Comm)

Court

High Court of Justice of England and Wales, Business and Property Courts, Commercial Court (QBD)

Forum and rules

English court proceedings; strike-out application under CPR rule 3.4(2)(b)

Treaty

None; EU competition law (Articles 101 and 102 TFEU) and the New York Convention were discussed

Underlying award(s)

ICC Final Award of 12 December 2018 (Overgas Inc v. Gazprom Export, seated in Switzerland; tribunal of Christer Söderlund, Kaj Hobér and Vladimir Yarkov)

Court

Peter MacDonald Eggers QC, sitting as a Deputy Judge of the High Court

Sector

Natural gas supply and distribution

Outcome

Gazprom Export's application to strike out the defendants' competition-law defence and counterclaim as an abuse of process was dismissed (14 February 2020).

Amount

Gazprom Export said about US$105 million was owed to it by Overgas Inc under the Supply Contract. No sum was awarded in this judgment.

The dispute

Gazprom Export (GPE) and companies controlled by Sasho Dontchev ran a joint venture through Overgas Inc, owned 50/50 by GPE/Gazprom PJSC and Overgas Holding. GPE supplied gas to Overgas Inc under a Supply Contract until 31 December 2015. In an ICC arbitration seated in Switzerland, the tribunal rejected Overgas Inc's claims that GPE had breached EU and Bulgarian competition law, and it allowed GPE's counterclaim. In the English proceedings, GPE claimed damages from the defendants for a scheme to dilute Overgas Inc's shareholding in the distributor Overgas Mrezhi from about 99.628% to 38.471% by issuing shares to DDI Holdings at an undervalue. The defendants other than Overgas Inc (the "Principal Defendants") defended themselves partly by alleging that GPE had broken competition law, and Overgas Mrezhi counterclaimed on that basis. GPE applied to strike out these pleas as an abuse of process, on the ground that they were a collateral attack on the ICC Award.

Key holdings

1. Where there is no res judicata or issue estoppel, relitigation is an abuse only if it would be manifestly unfair to a party or would bring the administration of justice into disrepute. Such cases are rare where the earlier decision was not between the same parties or their privies. Arbitration is a private process, and that is a relevant factor. The burden on the applicant is high. ¶ 37
2. The competition-law allegations in the ICC arbitration and in the English proceedings are substantially the same. But the losses claimed by Overgas Mrezhi are distinct from those claimed by Overgas Inc. Overgas Mrezhi was not a party or privy to the arbitration, so no estoppel applies. ¶¶ 48–52, 58
3. No abuse of process. Overgas Mrezhi is entitled to claim for its own distinct loss. It had no full or reasonable opportunity to present that claim in a private arbitration limited to GPE and Overgas Inc. Giving documents or evidence to Overgas Inc did not amount to such an opportunity. ¶¶ 60–65
4. Barring the claim would deny Overgas Mrezhi any effective means of recovering damages for alleged breaches of EU competition law. That would be contrary to the principle of effectiveness (Courage v Crehan; Manfredi; Article 12 of Directive 2014/104/EU). ¶¶ 67–68
5. Recognition of the ICC Award under section 101 of the Arbitration Act 1996 and the New York Convention binds only the parties to the award. Any later question of refusing recognition or enforcement is for a relevant application, and it did not change the decision. ¶ 69
6. The common directors and Overgas Inc's former majority holding did not show interests close enough to amount to abuse. There was no safe evidence that Overgas Mrezhi funded the arbitration. Laing v Taylor Walton and Arts & Antiques v Richards are distinguishable. The court found no collateral purpose, and the application was dismissed. ¶¶ 70–77

Procedural history

1. 1 January 1997Gas supply under the Supply Contract between GPE and Overgas Inc begins.
2. 31 December 2015GPE ceases to supply gas to Overgas Inc.
3. February 2016Overgas Inc commences ICC arbitration against GPE in Switzerland.
4. April 2016Overgas Inc's shareholding in Overgas Mrezhi is diluted to 38.471% by a share issue to DDI Holdings.
5. 5–9 March 2018ICC hearing on the merits.
6. 12 December 2018ICC Final Award dismisses Overgas Inc's claims and allows GPE's counterclaim.
7. June 2019Swiss Federal Tribunal dismisses Overgas Inc's challenge to the ICC Award.
8. 3–4 December 2019High Court hears GPE's strike-out application.
9. 14 February 2020High Court dismisses the strike-out application.

Tribunal, counsel and experts

Decided by

• Peter MacDonald Eggers Judge, High Court of Justice of England and Wales, Commercial Court (Sitting as a Deputy Judge of the High Court)

For the claimant

Baker & McKenzie

For the respondent

Squire Patton Boggs

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Keywords

• abuse of process
• collateral attack
• strike-out
• CPR 3.4(2)(b)
• ICC award
• non-party to arbitration
• res judicata
• issue estoppel
• Article 102 TFEU
• Article 101 TFEU
• EU competition law
• principle of effectiveness
• Damages Directive 2014/104/EU
• New York Convention
• Gazprom
• Overgas
• Bulgargaz
• natural gas Bulgaria

Summary generated with AI from the published documents — refer to the award for the authoritative text.