Adjudicated Disputes concerning Shareholder Agreements 

Filatona Trading Ltd. and Anr.


Navigators Equities Ltd. & Ors.

(Jurisdiction: London)

Acts/Rules referred: 

UK Arbitration Act 1996

Heard in: December, 2019

Judgment Delivered in: 2020


The dispute arose under a shareholder agreement (SHA) concerning land in central Moscow.  Ms. Danilina and Mr. Deripaska were named as parties to the SHA. Ms. Danilina’s former partner, Mr. Chernukhin, was not.  Mr. Chernukhin’s position was that Ms. Danilina was acting as his nominee or agent and that, consequently, he was the true party to the SHA by virtue of being Ms. Danilina’s disclosed principal and the beneficial owner of Ms. Danilina’s shares. Ms. Danilina and Mr. Deripaska disputed this. SHA had a reference to Arbitration.

In arbitration proceedings (LCIA) between Mr. Chernukhin and Mr. Deripaska, challenge was made to jurisdiction of arbitral tribunal, and it was concluded by tribunal that it had jurisdiction to determine the Chernukhin Parties’ Claim (Partial Award). By way of second partial award, the arbitral tribunal found that Chernukhin Parties’ had suffered oppressive conduct as minority shareholder and therefore ordered Mr. Deripaska to pay $95 million to “buy out” Mr. Chernukhin’s shareholding in the relevant Cypriot company. In all arbitration proceedings were concluded by Tribunal by the award declaring Mr. Chernukhin was a party to SHA and ordered buy-out of Mr. Chernukhin’s shareholding because of minority oppression.

Challenge to arbitral award (LCIA Award) was made before English Court. Grounds of challenge were; (a) (Section 67 challenge) The tribunal did not have jurisdiction to make the award. (b) (Section 68 challenge) The tribunal acted ultra vires by ordering buy-out which the courts at first place did not have power in relation to a foreign company. Hence any relief which court can’t grant even tribunal cannot.


The court held that The SHA provided the Tribunal with the power to settle “all disputes and disagreements arising from this Agreement or in connection herewith“. The Court noted that a Cypriot court would have the power to make a buy-out order in respect of a Cypriot company. However, given that the parties had chosen to refer all disputes and agreements to arbitration, a dispute concerning shareholder oppression in the Cypriot company to which the SHA relates and requiring a buy-out order would not come before the Cypriot court but an arbitral tribunal.  The Court concluded that a reasonable person would not understand the parties to have intended that all disputes would be resolved by an arbitral tribunal, except those concerning shareholder oppression requiring a buy-out order which would need to be brought before a Cypriot court.  Rather, a reasonable person would understand the parties to have intended the SHA to provide a ‘one-stop shop’ for dispute resolution.  On that basis, the Court found that the SHA did grant the tribunal the necessary power to make the buy-out order.  Consequently, the Section 68 Challenge was dismissed, as there was no serious irregularity

Click Here

Ashish Bhakta and Kush Shah

*The contents hereof should not be construed as legal opinion. This provides general information existing at the time of preparation and is intended as a news update and ANB Legal neither assumes nor accepts any responsibility for any loss arising to any person acting or refraining from acting as a result of any material contained herein. It is recommended that professional advice be taken based on the specific facts and circumstances. The contents hereof do not substitute the need to refer to the original pronouncements.