Case against Kremlin-controlled GTLK Europe must go to English court, judge rules

A company suing Russian-state-controlled GTLK Europe DAC for $20 million (€18.2 million) over the delivery of raw materials to an alumina refinery in Co Limerick must bring its action in England, the Irish High Court has ruled.

Mr Justice Michael Twomey did not believe requiring Compagnie de Bauxite et D’Alumine de Dian-Dian SA, based in Guinea, to pursue its claim against the firm through the English courts would amount to a “manifest injustice”.

Last month, the High Court appointed liquidators to Irish-based GTLK Europe DAC and GTLK Europe Capital DAC, worth an estimated €4.1 billion, which faced financial difficulties due to being subjected to European Union sanctions following Russia’s invasion of Ukraine.

Under the terms of a 2021 guarantee contract with GTLK Europe DAC, all disputes between Compagnie and GTLK are subject to the “exclusive jurisdiction” of the English courts.

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Compagnie brought its claim here because, due to the sanctions, GTLK needs a derogation from the Central Bank of Ireland to allow payment of the $20 million out of its frozen assets.

It would amount to a “manifest injustice”, Compagnie claimed, if it was obliged to issue its proceedings in the English courts. An order from the English court would have to be enforced via another order made in an Irish court, it said, arguing that this could instead be bypassed if its entire case proceeded in this State.

The proceedings arise out of Compagnie’s supply of bauxite, a sedimentary rock, from Guinea to Russian-owned Aughinish Alumina’s refinery in Limerick. Kremlin-linked Russian oligarch Oleg Deripaska is a key shareholder in the Limerick plant.

Under a 2017 shipping agreement, Compagnie required Cypriot firm Pola Logistics Limited to procure a $20 million guarantee as security for its obligations to transfer bauxite from Guinea to Ireland. Pola procured GTLK to enter the guarantee in favour of Compagnie.

Compagnie claims Pola breached its obligations under the 2017 agreement and, therefore, it is entitled to enforce the guarantee against GTLK.

Last June it sent a letter of demand for payment in full of $20 million from GTLK.

GTLK responded saying it was not clear why the demand in full was requested and, noting it is the subject of an EU asset-freezing provision, it said it was “unable to perform any payments under the guarantee until such restrictions are lifted”.

Mr Justice Twomey said Compagnie pointed out that GTLK did not seek a derogation from the Central Bank for its alleged obligations under the guarantee, although it did for other matters.

With GTLK disputing its obligations under the guarantee, the judge said it was “hard to see that there was any obligation” upon it to seek a derogation.

Considering Compagnie’s various complaints in the round, the judge said they appeared to be primarily in the nature of an additional inconvenience. That is a “long way from constituting a manifest injustice” that would permit the court to allow the contract not to be honoured, the judge said.

He acceded to GTLK’s request to set aside service of Compagnie’s Irish proceedings on it.

While GTLK was entirely successful in its application, which would normally result in it being awarded its legal costs, the judge considered whether GTLK’s approach to the issues meant court time had been needlessly wasted.

Court resources and taxpayer money could have been spared if GTLK had given an undertaking to Compagnie to seek a derogation from the Central Bank in the event Compagnie is successful in the English courts, the judge said.

The failure by GTLK to make such a concession, although not legally obliged to do so, has to be considered in light of the court’s obligation to use costs orders to encourage “responsible and efficient litigation”, he said.

It seemed to the judge that responsible litigation included making a concession that would settle a dispute but not prejudice the position of the conceding party, he added.

Mr Justice Twomey said he wanted submissions from the parties on this before he makes a decision about legal costs.