Summary

Arricano Real Estate PLC v. Stockman Interhold S.A. LCIA Arbitration Case No. 101732

Summary

Stockman Interhold S.A. of BVI ('Stockman') and Arricano Real Estate PLC (formerly Arricano Trading Limited) of Cyprus ('Arricano') signed a share purchase agreement and a shareholders' agreement to the end of establishing a consortium. That had the form of a Cyprus company, Assofit Holdings Ltd, which served the purpose of managing a shopping center in Ukraine via subsidiaries, including Pryzma Beta and Dneproskaya Prystan. Further, a call option agreement was signed between the same companies. Later, Hillar Teder, the Estonian shareholder of Retail Red Estate SA of Luxembourg, that at the time was the sole shareholder of Arricano, in search of a co-investor in Arricano, sold some of his shares to Dragon-Ukranian Properties & Development Ltd of the UK, without the consent of Stockman. Following this Retail Red Estate SA issued a press release. Stockman alleged that both those acts constituted a violation of the confidentiality obligations enshrined in said agreements. It therefore terminated these agreements. A few days earlier Arricano exercised its call option. These disagreements led to an LCIA arbitration under the call options agreement initiated by Arricano on 9 November 2010, as well as an UNCITRAL in London under the shareholders' agreement initiated by Stockman.

The first arbitral procedure was LCIA Arbitration Case No. 101732. The first award was issued on 13 December 2011 ruling that claimants rightfully terminated the call option agreement. The tribunal issued another award on 5 May 2016 (the 'Seventh Award'), according to which respondent had violated its contractual obligations and claimant was entitled to the call option shares for a consideration that would be offset against the damages due to respondent.

Assofit Holding Ltd was placed under liquidation and an interim receiver was appointed (District Court of Larnaca Application No. 26/2012, judgments of 5.3.2013, 29.3.2013, 22.4.2013 and 28.5.2013). It is not clear how this procedure ended.

Arricano also sought to issue protective orders against Assofit Holding Ltd. The Court was not persuaded that the necessary requirements were fulfilled. It thus rejected the application (District Court of Nicosia Application No. 200/2013, judgments of 17.4.2013 and 24.5.2013).

Another aspect of the aforementioned arbitration proceedings (unfortunately the transcript does not specify whether it was the LCIA or the UNCITRAL) was in the middle of another dispute before the Courts in Cyprus. This related to the amount due of approx. USD 97 million by the Ukrainian Limited Liability Company 'Pryzma Beta' to the Cyprus company Filgate Credit Enterprises Ltd that was kept under trust in favor of Stockman and Arricano (District Court of Limassol Civil Case No. 219/2012, judgment of 8.5.2012). It is not clear how this procedure ended.

Stockman filed an application requesting the Court to appoint a receiver to Filgate Credit Enterprises Ltd. The Court underscored that Stockman failed to disclose its control over the assets of Filgate Credit Enterprises Ltd, which were at the center of this proceeding. Thus, it rejected the application (District Court of Nicosia Civil Case No. 6573/2013, judgment of 18.3.2014).

Arricano further filed an action against Assofit, its interim receiver, Stockman, Andrey Adamovskyi, Alexander Granovskyi, Liudmyla Parkhomenko, Torsem Co Ltd and Petron Holding Corp. However, neither the scope nor the outcome of this proceeding are evident from the public record (District Court of Nicosia Civil Case No. 5514/2014, judgments of 18.11.2015, 18.11.2015 and 8.12.2015).

In a separate proceeding, Arricano requested the liquidation of Assofit Holdings Ltd alleging that Stockman, as the majority shareholder, and/ or Assofit Holdings Ltd alienated the latter company's assets and/ or acted in a manner contrary to the arbitral award of 9.6.2011 (no further specifications are offered). The request was denied (District Court of Larnaca Liquidation Application No. 26/2012, judgments of 21.10.2014 and 14.6.2016).

Further, an entity, that is not specified, made an effort to register and enforce in Cyprus the judgment of the Eastern Caribbean Supreme Court in the High Court of Justice Virgin Island of 1 October 2014 against Stockman and Andrey Gr. Adamovsky for the amount of USD 35.016.078,05 plus interest and expenses; same judgment ordered Andrey Gr. Adamovsky to additionally pay the amount of USD 1.095.196,18. The Cyprus Court found that it lacked jurisdiction, as the respondent was a B.V.I. company and the allegation of that company having property in Cyprus was vague and unsubstantiated (District Court of Nicosia Application No. 281/2015, judgment of 16 October 2015).

Stockman initiated litigation procedure in Cyprus to the aim of assisting the LCIA Arbitration Case No. 101732 (District Court of Nicosia Case No. 266/2016, judgments not publicly available).

Stockman also applied for the recognition, registration and enforcement of the Seventh Award. Arricano objected alleging lack of finality of this award as well as abuse of process; the objections were rejected (District Court of Nicosia Application No. 416/2016, judgment of 25.8.2017). Arricano further raised the objections of the award being tainted with fraud as well as against public policy. These were also rejected (District Court of Nicosia Application No. 416/2016, judgment of 3.4.2018). Arricano applied for an extension of time for filing a notice of appeal. In view of finding, that a honest mistake was made, and the extension of time being two days, the Court accepted the application (District Court of Nicosia Application No. 416/2016, judgment of 6.2.2010).

Later, as Stockman had still not transferred its shares to Arricano, the latter filed an application for the Court to amend the shareholders' ledger accordingly. The Court, recognizing that Arricano had a right to have these shares transferred, noted that the relevant forms had not been prepared and the apposite procedure had not been initiated. These constituted the reasons for rejecting the application (District Court of Nicosia Application No. 537/2018, judgments of 13.7.2020 and 30.11.2020).