Court File and Parties
CITATION: Stans Energy Corp. v. Kyrgyz Republic et al., 2015 ONSC 42
DIVISIONAL COURT FILE NO.: 511/14
DATE: 20150105
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
MARROCCO A.C.J.S.C.
BETWEEN:
STANS ENERGY CORP. Applicant
– and –
KYRGYZ REPUBLIC, KYRGYZALTYN JSC AND CENTERRA GOLD INC. Respondents
COUNSEL:
Lincoln Caylor and Ranjan Agarwal, for the Applicant
Matthew Latella and Matt Saunders, for the Respondent Kyrgyzaltyn JSC
Vanessa Voakes, for the Respondent Centerra Gold Inc.
HEARD: December 3, 2014
Endorsement
MARROCCO A.C.J.S.C.
[1] Stans Energy Corp. successfully applied ex parte for a Mareva injunction. It has styled itself as the applicant despite the fact that it is responding to this motion. Kyrgyzaltyn JSC has styled itself as the respondent despite the fact that it is applying for leave to appeal. Accordingly I will refer to the parties by name. Centerra Gold Inc. took no position on the return of the Mareva injunction. I will refer to it by name as well.
[2] The Arbitration Court of the Moscow Chamber of Commerce and Industry made an arbitration award in favour of Stans Energy Corp. and against the Kyrgyz Republic. The Moscow Convention on the Protection of the Rights of the Investor, which helps define the jurisdiction of the Arbitration Court of the Moscow Chamber of Commerce and Industry, provides that disputes within the framework of the Convention are to be decided by the Economic Court of the Commonwealth of Independent States.
[3] The Economic Court of the Commonwealth of Independent States issued a decision or opinion which seems to state that the Arbitration Court of the Moscow Chamber of Commerce and Industry lacked jurisdiction to issue the award. This decision or opinion did not purport to quash the award. This decision or opinion was issued in both a long form and a short form.
[4] The short form of the decision was available in Russian on September 23, 2014, the day it was released. The short form decision was two pages in length. The English translation was in the possession of counsel for Stans Energy Corp. on October 10, 2014 when the Mareva injunction was issued in an ex parte proceeding. No English translation was provided to the judge issuing the Mareva injunction. The judge was informed that the Krygyz Republic had challenged the jurisdiction of the Arbitration Court of the Moscow Chamber of Commerce and Industry.
[5] The long form decision was 18 pages in length and was released to the parties on October 6, 2014. The existence of this decision was not disclosed to the judge issuing the Mareva injunction.
[6] On October 20, 2014 counsel for both parties appeared before a judge of this court and made representations concerning the continuation of the Mareva injunction. Counsel for Stans Energy Corp. stated during argument that the failure to disclose the English translations was due to inadvertence and counsel’s explanation was accepted by the judge hearing the motion to continue.
[7] The respondents were unsuccessful in varying the Mareva injunction and seek leave to appeal that decision which is reflected in paragraph two of the order continuing the Mareva injunction.
[8] The test for granting leave is set out in Rule 62.02(4) of the Rules of Civil Procedure, which states:
(4) Leave to appeal shall not be granted unless,
(a) there is a conflicting decision by another judge or court in Ontario or elsewhere on the matter involved in the proposed appeal and it is, in the opinion of the judge hearing the motion, desirable that leave to appeal be granted; or
(b) there appears to the judge hearing the motion good reason to doubt the correctness of the order in question and the proposed appeal involves matters of such importance that, in his or her opinion, leave to appeal should be granted. R.R.O. 1990, Reg. 194, r. 62.02 (4).
[9] The first branch of the test provides that leave shall not be granted unless there are conflicting decisions on a matter involved in the proposed appeal and it is in the opinion of the judge hearing the motion for leave that it is desirable that leave be granted.
[10] Leave to appeal paragraph two of the learned motions judge’s order is granted.
[11] There are conflicting decisions setting out the test for materiality in a situation where a party has applied ex parte for a Mareva injunction. The materiality of the disclosure is a matter involved in the proposed appeal.
[12] One version of the test is set out in Walden Electrical v. Lopes et al. (2006), 274 D.L.R. (4th) 545, at para. 42 as follows: “… any fact that would have been weighed or considered by the motions judge in deciding the issues, regardless of whether its disclosure would have changed the outcome, is material.”
[13] A second version of the materiality test has been described as follows: “…if full disclosure had been given the ex parte order may well not have been made” or “is it likely the order would still have been granted.” See Factor Gas Liquids Inc. v. Jean, 2010 ONSC 2454 (Div. Ct.), at para. 47 and Promo-Ad & Associates Inc. v Keller, 2013 ONSC 1633, at para. 53.
[14] I cannot safely conclude that both tests would have yielded the same result on the motion to continue.
[15] A Mareva order is an extraordinary remedy and it is not in the public interest that there be any confusion about the disclosure obligation on the party moving ex parte for the order.
[16] It is my opinion that it is desirable that the appeal proceed for two reasons.
[17] This case involves the freezing of approximately CAD$140 million.
[18] This case involves the evidentiary importance of an arbitration award. This latter issue arises in the following way.
[19] There is an ongoing dispute over mining rights to a property in the Kyrgyz Republic. Counsel for Stans Energy Corp. submitted the dispute to the Arbitration Court of the Moscow Chamber of Commerce and Industry claiming its interests in the mining property had been unlawfully expropriated. The Arbitration Court of the Moscow Chamber of Commerce and Industry issued an award in favour of Stans Energy Corp. This award has not been rescinded or quashed. There is, however, an opinion or decision from a foreign court that appears to be a court of competent jurisdiction which opines that the award was made without jurisdiction.
[20] A party seeking a Mareva injunction must show that it has a strong prima facie case. The evidentiary significance an Ontario court attaches to an arbitration award in these circumstances is a matter relevant to this jurisdiction’s suitability as a centre for international commercial arbitrations and that is a matter which transcends the interests of the parties to this dispute.
[21] Centerra Gold Inc. took no position on the motion to extend the Mareva injunction, however, it is required to hold in trust to the credit of this proceeding amounts payable to the Krygyz Republic and Kyrgyzaltyn JSC. Specifically, the judge who granted the Mareva injunction required Centerra Gold Inc. to hold in trust all amounts declared payable as dividends or distributions. The learned motions judge refused to vary this term of the Mareva injunction. The applicants seek leave to appeal this refusal. Leave to appeal these terms of the learned motions judge’s order (i.e. paragraphs three and four) is refused because Kyrgyzaltyn JSC is permitted by the Mareva injunction to apply to vary the number of shares restrained by an amount equal to the declared dividend or distribution.
[22] The parties agreed that costs in the amount of $10,000 inclusive of disbursements and applicable taxes was appropriate. Accordingly costs will be awarded to Kyrgyzaltyn JSC in that amount.
MARROCCO A.C.J.S.C.
Released: 20150105
CITATION: Stans Energy Corp. v. Kyrgyz Republic et al., 2015 ONSC 42
DIVISIONAL COURT FILE NO.: 511/14
DATE: 20150105
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
MARROCCO A.C.J.S.C.
BETWEEN:
STANS ENERGY CORP. Applicant
– and –
KYRGYZ REPUBLIC, KYRGYZALTYN JSC AND CENTERRA GOLD INC. Respondents
leave to appeal endorsement
Released: 20150105