Court in London considers Artyom Avetisyan’s business habits unfair

A London court refused to ban Vostochny from conducting proceedings in Russia against Michael Calvey, but found the Finvision methods, which gained control of the bank, to be dishonest.
29.11.2019
RBC
Origin source
The High Court of England and Wales (located in London) did not prohibit Vostochny Bank from conducting proceedings in Russia against the founder of the Baring Vostok fund, Michael Calvey, and the Cypriot structure Evison, through which the fund owns 42% of the bank. RBC reviewed the court decision of October 31.

The reason for considering the case was the claims of Finvision Artem Avetisyan (successor of Cyprus Finvision), which controls Vostochny Bank with partners (Baring has been a minority shareholder of the bank since this summer). On July 30, Vostochny filed lawsuits against Evison in arbitration of the Amur Region and personally against Calvi, who was under investigation for compensation for losses of 10 billion rubles, and the bank managed to seize Evison's share in the bank as part of interim measures. In November, the bank filed another lawsuit, already at 8.8 billion rubles.

In September, Evison applied to the High Court for a ban on trials in another jurisdiction (anti-suit injuction), since the agreement between the shareholders of Vostochny implies the resolution of disputes in the British arbitration. The court did not support her in this, but noted that the company has a chance to “reverse” the exercise of the option by almost 10% of Vostochny’s shares in favor of Finvision, due to which Baring Vostok lost control of the bank.

Shareholder Conflict History

In 2016, Baring Vostok and Finvizhn merged their Vostochny and Uniastrum banks, gaining 52 and 32% in the new bank, respectively (another 10% were held by Avetisyan’s partners). The parties entered into a number of agreements and assumed that Avetisyan’s side would eventually gain control in the bank, so Finvizhn gave an option for a 9.99% stake. The partners did not fulfill their plans: Baring revealed cases of fraud in Uniastrum before the merger, said Calvi, who is now under house arrest. This did not suit the fund, and instead of exercising the option in the spring of 2018, he went to the London International Tribunal (LCIA).

The amount of claims by Baring Vostok on the allegation of fraud by Finvision is 17.5 billion rubles, Calvey said. Finnish to Baring Vostok also got their claims (22 billion rubles). A year later, in February 2019, against the Calvey and three other Baring Vostok managers, the Investigative Committee opened a criminal case on fraud worth 2.5 billion rubles. according to the statement of the business partner Avetisyan and the minority shareholder of Vostochny Sherzod Yusupov. After that, Finvision won several processes in the Amur Court and forcibly exercised the option for a 9.99% stake in Vostochny, becoming its controlling shareholder.

The Vostochny press service noted that the English court recognized the bank’s right to conduct proceedings for claims for damages in Russia, found its claim justified and awarded Evison the payment of legal costs. “Vostochny’s leadership acts in the interests of the bank, and the request to prohibit the continuation of such actions is unjustified,” the press service emphasized, indicating that the bank will continue litigation in Russia and hopes for full compensation for damage “caused by individual managers Baring Vostok Foundation. ” According to a source close to the bank, Evison reimbursed legal costs of £ 130 thousand.

Baring Vostok reported that they were satisfied with the decision of the High Court, as it “once again confirmed that all Finvision claims against Evison in Russia are illegal and the relevant decisions of the Russian courts can be challenged. “Vostochny” cannot be prohibited from conducting court proceedings in Russia, since the bank is not a party to an arbitration clause, Baring said, expressing the hope that the fund will sooner or later be able to prove that Finvizhn obtained control in the bank illegally, then the bank will be able to present “multi-billion claims ”is already the company Avetisyan. Finvision declined to comment.

Arguments of the parties in London

Evison believes that Finvision entered into a conspiracy with the bank to have Vostochny begin proceedings in Russia to obstruct the London arbitration process. The representative of Evison considered the claims themselves to be “unscrupulous” and pointed out the risks of losing the company’s stake in Vostochny within three months due to these processes. The company Baring Vostok as evidence presented evidence of the former management of the bank Alexander Nesterenko.

Vostochny objected to the satisfaction of the ban on proceedings before the national courts and pointed to the naturalness of their conduct in Russia. The bank also accused Evison of not providing all the information to the English judges about the trial in Russia (the Amur court on September 2 rejected the Evison petition challenging compliance of the Russian jurisdiction with the dispute, but Evison did not inform the London court about this, the arbitrator said).

Finvizhn, for its part, denied accusations that it was in collusion with the bank, and provided a letter to the bank as evidence in which it asked to stop the proceedings in the Amur court. The company also stated that it was prepared to abandon references in future proceedings in London to any arguments arising from the decisions of the Amur Court on Vostochny claims.

This is not the first time Baring Vostok has appealed to a London court about a ban on proceedings in Russia - he filed such claims against Finvision, and in the spring the London court granted them.

Finvizhn obviously violated these orders, the judge noted in the latest decision: the company achieved the decisions of the Amur arbitration, which allowed it to gain control of Vostochny along with affiliated shareholders on June 18, 2019.

What the court decided

“I have no doubt that Vostochny’s processes are nothing more than another front of the ongoing corporate battle between Evison and Finvision and related companies. There is an assumption that the proceedings initiated by Vostochny were coordinated by the controlling shareholder, this assumption is not refuted by the correspondence with which I got acquainted, ”the British arbitrator wrote. But in the case of the latest claims, Vostochny’s claims are his own claims, which can only be considered in Russia, the judge pointed out. Finvision claims overlap with Vostochny’s claims, but the bank must be the plaintiff, and the same claims from Finvision submitted to the LCIA may be called into question, the judge drew attention.

“In such circumstances, it would be unusual for this court (High Court. - RBC) to restrict a public foreign company to the possibility of presenting its claims,” the arbitrator concluded. The court also considered legitimate claims made by Vostochny to Michael Calvey.

What alarmed the High Court of London

Along with the decision on the main issue, the judge expressed concern about “flagrant violations of orders on the prohibition of proceedings in Russia by Finvizhn.” “Although Finvision’s methods of gaining control over Vostochny can be called unscrupulous, I don’t think that it immediately makes the decisions of the bank management unscrupulous,” he emphasized.

The arbiter noted that Evison should seek “other remedies” from Finvision. The company, for example, has already begun proceedings on alleged contempt of court. “Evison may have good reasons for obtaining a court decision obliging Finvision to reverse the exercise of the option for the bank’s shares, at least temporarily, and achieve a strike out of the claims filed by Finvision [at LCIA],” wrote the judge, indicating that he was not ready to express an opinion on whether Evison's arguments would be accepted by the London arbitration. A spokesman for Baring Vostok said the fund is considering all options.

Not the only trial

Finvision has already won the LCIA trial: in June, the arbitrators recognized Avetisyan’s right to exercise the option for a 9.99% stake in the bank, and considered the actions of Evison to be unscrupulous.

In January 2020, it was scheduled to consider in London Evison allegations of fraud in Uniastrum, but it was postponed for several months at the initiative of Baring Vostok, a source close to the fund told RBC. He explained this by saying that top managers of the fund, including Calvi, are under arrest and cannot testify.

“Unfortunately, the key witnesses for the charge against Finvizhn Avetisyan in the London tribunal continue to remain in jail or under house arrest and cannot take part in the hearings,” the representative of the fund said.

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