Sparebank 1 Nord-Nordge v. Saint-Petersburg Commercial Bank Tavricheskyi

At a glance

Parties

Sparebank 1 Nord-Nordge (Norway) v. Saint-Petersburg Commercial Bank Tavricheskyi (Russia)

Case no.

Kyiv Court of Appeal, Case No. 796/191/2018 (appeal proceeding No. 2-k/824/18/2019)

Court

Kyiv Court of Appeal (Київський апеляційний суд), Ukraine; Judge-rapporteur O.V. Zhelepa

Underlying award(s)

Arbitral award of 14 June 2017, rendered by a three-member tribunal under the Norwegian Arbitration Act (arbitrators' names are anonymised in the published judgment)

Forum and rules

Recognition and enforcement under the New York Convention 1958 (Articles IV and V), Ukrainian Code of Civil Procedure Articles 474–479 and Law on International Commercial Arbitration Articles 35–36

Treaty

Arbitration clause (section 13) of the subordinated loan agreements of 16 July 2010 and 23 August 2011

Sector

Banking; subordinated loans

Outcome

Application granted (10 January 2019): the award was recognised and leave to enforce it in Ukraine was given; a writ of execution was ordered.

Amount

Enforced: EUR 12,011,331.23, plus NOK 1,336,881 and USD 159,307 as arbitration costs. Court fee of UAH 1,762.00 charged to the respondent.

The dispute

Sparebank 1 Nord-Nordge, a Norwegian bank based in Tromsø, lent money to Saint-Petersburg Commercial Bank Tavricheskyi under two subordinated loan agreements. The first, of 16 July 2010, was for EUR 4,000,000 and was fully drawn by 28 January 2011. The second, of 23 August 2011, was for EUR 10,000,000, of which EUR 7,700,000 was drawn by 3 October 2011. The Russian bank did not repay, and the lender started arbitration under the loans' arbitration clause, which provided for arbitration under the Norwegian Arbitration Act with its seat in Tromsø. In the arbitration the borrower argued that Russian law, under a participation plan approved by the Central Bank of Russia to prevent its bankruptcy, required it to cancel the debt. The tribunal ruled for the lender on 14 June 2017. The lender then applied in Ukraine to have the award recognised and enforced. The debtor filed no objections and did not appear.

Key holdings

1. A Ukrainian court deciding on recognition cannot review whether the award is lawful or correct on the merits. It checks only the time limit, the form and content of the application, and whether any ground for refusal exists. The New York Convention, in force for Ukraine and to which Norway is a party, sets out an exhaustive list of such grounds. pp. 2–3
2. The debtor was properly notified of the arbitration. The award shows that it filed objections in the arbitration. The proceedings were conducted in writing because neither party asked for an oral hearing. p. 3
3. The burden of proving a ground for refusal lies on the party resisting enforcement. The debtor offered no arguments or evidence. pp. 4–5
4. No ground under Article V of the Convention or Article 478 of the Code of Civil Procedure applied. The arbitration agreement was valid. The award stayed within the agreement. The tribunal's composition and the procedure complied with the agreement. The award was binding, had not been set aside or suspended, and became final on 14 June 2018. The dispute was arbitrable, and enforcement did not breach Ukrainian public policy. pp. 3, 5
5. The applicant did not ask for conversion into hryvnia, so the court stated the amounts in the award's currencies. The operative part recognises EUR 12,011,331.23, plus NOK 1,336,881 and USD 159,307 as arbitration costs, and orders a writ of execution. The respondent was also ordered to pay UAH 1,762.00 in court fees. pp. 5–6

Procedural history

1. 16 July 2010First subordinated loan agreement concluded (EUR 4,000,000).
2. 23 August 2011Second subordinated loan agreement concluded (EUR 10,000,000).
3. 14 June 2017Arbitral award orders the borrower to pay EUR 12,011,331.23, penalty interest from 8 July 2015, and costs. The award became final on 14 June 2018.
4. 30 August 2018Sparebank 1 Nord-Nordge applies to the Court of Appeal of Kyiv City for recognition and enforcement.
5. 3 October 2018Case transferred to the newly created Kyiv Court of Appeal and assigned to Judge O.V. Zhelepa.
6. 10 January 2019Kyiv Court of Appeal grants recognition and leave to enforce, and orders a writ of execution. The full text was prepared on 16 January 2019. The ruling could be appealed to the Supreme Court within thirty days.

Tribunal, counsel and experts

Decided by

• O.V. Zhelepa Judge, Kyiv Court of Appeal (judge-rapporteur)

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Keywords

• New York Convention
• recognition and enforcement
• Article V
• Article IV
• Ukraine
• Kyiv Court of Appeal
• Norwegian Arbitration Act
• Tromsø
• subordinated loan
• banking
• Tavricheskiy
• bankruptcy prevention
• Central Bank of Russia
• public policy
• burden of proof
• written proceedings
• writ of execution

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