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International Arbitration Forum

Centerra Gold Inc., Kumtor Gold Company CJSC and Kumtor Operating Company CJSC v. The Kyrgyz Republic and Kyrgyzaltyn OJSC

Case summary

At a glance

Parties
Centerra Gold Inc. (Applicant) v. Entes Industrial Plants Construction and Gebre LLC (Objectors); Sistem Muhendislik Insaat Sanayi Ticaret S.A. also filed materials
Case no.
Court File No. CV-22-00680400-00CL; 2022 ONSC 5491
Court
Ontario Superior Court of Justice (Commercial List), C. Gilmore, J.
Forum and rules
Application under section 192 of the Canada Business Corporations Act; Rules of Civil Procedure 14.05(2) and 14.05(3)(f)
Sector
Gold mining (Kumtor Gold Mine)
Outcome
Costs endorsement: the objectors to Centerra's approved Plan of Arrangement must pay costs jointly and severally, at a lower amount than Centerra sought.
Amount
Centerra sought $264,985 (elevated partial indemnity scale; $227,130 at the usual partial indemnity scale). The Court awarded $100,000, payable jointly and severally within 30 days.

The dispute

Centerra Gold Inc. asked the Ontario court to approve a Plan of Arrangement for the Kumtor Gold Mine in the Kyrgyz Republic. The Arrangement was meant to end Centerra's ties with the Republic and to resolve the Republic's claims against it. Gebre LLC and Entes Industrial Plants Construction, creditors of the Republic, objected. Entes also brought a separate motion to garnish payments to Kyrgyzaltyn (KGC). The objectors argued that KGC and the Republic were the same entity, and that the Arrangement was designed to shield Centerra from legitimate creditors of the Republic. The Court approved the Arrangement in decisions of 28 July 2022 and 17 August 2022. This endorsement deals only with costs. The objectors argued that Centerra could not recover costs because it had not asked for them in its Application, and that the amount it claimed was disproportionate. They also disagreed with each other on how any costs should be split between them.

Key holdings

  1. Centerra could claim costs even though its Application did not request them. The Court had told counsel that costs would be dealt with in writing. Neither objection had taken shape until after the scheduling appearance before Justice Conway on 21 June 2022. As respondent to the Entes garnishment motion, Centerra was entitled to costs in the normal course. ¶¶ 33–34
  2. Section 248 of the CBCA gives the Court wide discretion over costs. The case law differs on whether objectors to an approved Plan of Arrangement should pay costs. ¶¶ 24–32
  3. No costs on an elevated scale. The objectors' positions failed but were not improper. ¶ 35
  4. The $264,985 sought was neither reasonable nor proportionate. The hearing lasted half a day and reused material from the related Bolturuk case, where the Court had awarded $310,000. The Court set costs at $100,000. ¶¶ 38–40
  5. Gebre and Entes are jointly and severally liable. They presented a common front in opposing the Arrangement. Being represented by different counsel, and the different shares of oral argument each took, do not justify departing from the standard approach. ¶¶ 41–50

Procedural history

  1. 21 June 2022Scheduling appearance before Justice Conway. It became clear that Gebre would oppose the Plan of Arrangement.
  2. 28 July 2022Decision approving the Arrangement (endorsement).
  3. 17 August 2022Fuller reasons released. Entes has appealed the order on its garnishment motion.
  4. 27 September 2022Costs endorsement: $100,000 awarded to Centerra, payable jointly and severally by the objectors.

Tribunal, counsel and experts

Decided by
  • C. Gilmore Judge, Ontario Superior Court of Justice
For the claimant
Kent E. Thomson · Derek D. Ricci · Maureen Littlejohn · Alexander D. Rose · Eliot N. Kolers · Zev Smith
For other participants
Ryder Gilliland · Corey Groper · Derek J. Bell · Katelyn Ellins · Emma Cosgrave · H. Scott Fairley · N. Joan Kasozi · Salma Kebeich · Darren Frank

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Keywords

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