Summary

Related to LCIA Arbitration Cases:
Sezaria Ltd v. Tandum Ltd (LCIA Arbitration Case No. 142738)
Sezaria Ltd v. Tandum Ltd (LCIA Arbitration Case No. 142739)
Sezaria Ltd v. Telman Ismailov (LCIA Arbitration Case No. 142740)

Mr. Telman Ismailov, a Russian national born in Baku, Azerbaijan, had the fame of rich entrepreneur and appeared to be living an eccentric life. Sergey Yanchokov, ultimate beneficial owner of Sezaria Ltd, was a Russian entrepreneur active in the business of energy, natural gas, mining of gold and land development. Mr. Yanchokov met with Mr. Alekper Ismailov and Mr. Sarkhan Ismailov, sons of Mr. Telman Ismailov, who presented themselves as entrepreneurs active in the business of their father. The Ismailov bothers invited Mr. Yanchokov to meet Mr. Telman Ismailov at Skolkovo, near Moscow. During this meeting Mr. Telman Ismailov asked for a loan of USD 10 million from Mr. Yanchokov explaining that the money was necessary for completing land development. They agreed and Loan Agreement No. 1 of September 16, 2010 was made between Sezaria Ltd and Tandum Ltd, both companies incorporated in Cyprus. Within six months they met again and Mr. Telman Ismailov requested a further loan of USD 10 million. They agreed and Loan Agreement No. 2 of February 4, 2011 was made between same companies. Agreement No. 1 and Agreement No. 2 were amended, extending the dates that repayment was due and introducing a collateral security with a floating charge on all assets of Tandum Ltd in favor of Sezaria Ltd. Then Mr. Yanchorov searched for assets in order to secure the loans and discovered that no land development or other investment was taking place. In view of this Mr. Telman Ismailov accepted to personally guarantee the repayment of the loans and the Guarantee Agreement of May 13, 2013 was made.

As disputes arose from said agreements, which provided a clause for arbitration before the LCIA, Sezaria Ltd filed three requests for arbitration, one for each agreement (LCIA Arbitration Case Nos 142738, 142739 and 142740) for breach of contract and / or conspiracy, unjust enrichment, conversion and knowing deceit / dishonest assistance.

On March 11, 2014 Sezaria Ltd exercised its rights under the agreements and appointed Mrs Kitromilidou as Receiver of Tandum Ltd. On May 8, 2014 Mrs Kitromilidou, as Receiver of Tandum Ltd applied for interim orders freezing the company's assets, including its bank accounts, prohibiting the alienation of the company's registers and accounting books and ordering the company to state in all its correspondence that it has been placed under a Receiver. The requests were granted and a security of USD 500,000 was posted (District Court of Nicosia, interim order of May 8, 2014 - not publicly available). Tandum Ltd filed an application requesting to strike out a phrase from an affidavit that had been filed, as it was a matter discussed between the parties 'without prejudice' in good faith. The Court, despite of the document bearing the phrase 'without prejudice', found that the discussions were not taking place in good faith. Thus, it rejected the request (District Court of Nicosia Civil Case No. 366/2014, interim judgment of November 21, 2014). Tandum Ltd requested the increase of the security to USD 2.5 million, but failed to convince the Court. Thus, the request was rejected (District Court of Nicosia Civil Case No. 366/2014, interim judgment of June 26, 2016). It is not clear whether a final judgment was issued.

Sezaria Ltd filed an application with the District Court of Nicosia against the officers of Tandum Ltd - not Tandum Ltd itself - and Mr. Telman Ismailov requesting international mareva injunctions and Norwich Pharmacal orders for disclosure of information. The Court noted that the evidence submitted establish no relationship between the litigation parties. With reference to Mr. Telman Ismailov, who signed the Guarantee Agreement, the Court found that Sezaria Ltd had not demonstrated that the money claimed in the arbitration shall be alienated by Mr. Telman Ismailov. The Court then underlined that a substantive cause of action had not been established. Thus, it denied the requests (District Court of Nicosia Civil Case No. 3737/2014, interim judgment of November 11, 2014). It is not clear whether a final judgment was issued.

Sezaria Ltd, in support of the case Sezaria Ltd v. Telman Ismailov LCIA Arbitration Case No. 142740, requested an international mareva injunction for the purpose of freezing the assets of Mr. Telman Ismailov and preserving the status quo. It also requested a Norwich Pharmacal order. The Court initially rejected the requests against persons who were not parties to the LCIA arbitration. Then, having taken into consideration that a mareva injunction had been issued in different litigation proceedings among the same parties for the same dispute (District Court of Nicosia Civil Case No. 3737/2014 - interim judgment of July 2, 2014 (not publicly available)), it found that res judicata applied and denied the requests. As a consequence, it equally rejected the application for a Norwich Pharmacal order (District Court of Nicosia Civil Case No. 1024/2014 - interim judgment of May 29, 2015). An application for a certiorari order annulling this interim judgment was rejected, as appeal would have been the appropriate legal remedy (Supreme Court of Cyprus Civil Petition No. 75/2015). It is not clear whether a final judgment was issued in the Civil Case No. 1024/2014 before the District Court of Nicosia.

Sezaria Ltd requested an extension of time for registering a floating charge on Tandum Ltd under the agreements with the Registrar of Companies and Official Receiver. The Court was not convinced by the objections raised by Tandum Ltd and allowed the request (District Court of Nicosia Civil Petition No. 814/2015, judgment of July 21, 2016).

In this document: Six litigation proceedings before the Courts of Cyprus

Sezaria Ltd v. Telman Ismailov and Tandum Ltd, District Court of Nicosia Civil Case No. 1024/2014

• interim judgment of May 29, 2015

Re Sezaria Ltd, Supreme Court of Cyprus Civil Petition No. 75/2015

• judgment of June 26, 2015

Re Kitromilidou, District Court of Nicosia Civil Petition No. 366/2014

• interim judgment of November 21, 2014
• judgment of June 26, 2015
• judgment of May 16, 2016

Re Tandum Ltd, Supreme Court of Cyprus Civil Petition No. 131/2014

• judgment of July 22, 2014

Sezaria Ltd v. Menwin Management Ltd a.o., District Court of Nicosia Civil Case No. 3737/2014

• interim judgment of November 11, 2014

Re Sezaria Ltd, District Court of Nicosia Application No. 814/2015

• judgment of July 21, 2016 (on the application for extension of time to register a floating charge with the Registrar of Companies and Official Receiver)