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| SVEA COURT Section 04 Rotel 0410 |
FINAL DECISION 2023-01-16 |
Case no ÖÄ 13682-21 |
Nacka District Court's final decision 2019-07-05 in cases Ä 6686-17, Ä 6620-18, Ä 6339-18,
Ä 4354-18, Ä 4353-18, Ä 2544-18, Ä 1977-18, Ä 1976-18, Ä 1859-18, Ä 1857-18,
Ä 1223-18, Ä 1222-18, Ä 1221-18 and Ä 2543-18, see Annex A
Complainant
1. Republic of
Kazakhstan c/o Ministry
of Finance 11 Zhenis
Avenye
010000, Nur-Sultan
Kazakhstan
Represented by: Fredrik Ringquist, Malin Berggren, lawyers, and Julia Fermbäck,
associate
Mannheimer Swartling Advokatbyrå AB
Box 1711
111 87 Stockholm
Represented by: Alexander Foerster, lawyer
Birger Jarlsgatan 2
114 34 Stockholm
2. National Bank of Kazakhstan
21 Koktem-3
050040, Almaty
Kazakhstan
Represented by Karl Guterstam, Linda Landén and Magnus Nygren, lawyers, and
Stina Isaksson, associate
Sandart & Partners Advokatbyrå KB
Box 7131
103 87 Stockholm
Counterparties
1. Ascom Group S.A.
75 A. Mateevici Street
Chisinau, MD-2008
Moldova
Doc.Id 1886879
| Postal address | Visiting address | Phone | Fax | Shipping time |
|---|---|---|---|---|
| Box 2290 103 17 Stockholm |
Birger Jarls Torg 16 | 08-561 670 00 08-561 672 50 E-mail: [email protected] www.svea.se |
Monday - Friday 09:00-16:30 |
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2. Anatolia States
20 Dragomirna Street
Chisinau, MD-2008
Moldova
3. Gabriel States
1A Ghioceilor Street
Chisinau, MD-2008
Moldova
4. Terra Raf Trans Traiding Ltd
No 41 Unit 1.2.02 Block 1 Eurotowers Gibraltar
GX11 1 AA
Gibraltar
Representing 1-4: Ginta Ahrel, Therése Isaksson and Bo G H Nilsson, lawyers, and Tom
Sundin, associate lawyer
Westerberg & Partners Advokatbyrå AB
Box 3101
103 62 Stockholm
Foreclosure
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Following a dispute between Ascom Group S.A., Anatoile Stati, Gabriel Stati and
Terra Raf Trans Traiding Ltd (the Investors) and the Republic of Kazakhstan
(Kazakhstan), the Investors invoked arbitration before the Stockholm Chamber of
Commerce under Article 26 of the Energy Charter Treaty (ECT). In December 2013,
an arbitration award was rendered ordering Kazakhstan to pay approximately USD 500
million plus interest and reimbursement of the Investors' legal costs.
Kazakhstan challenged the arbitration award and requested that it be declared null and
void. In support of their action, Kazakhstan argued, inter alia, that the arbitral award
and the manner in which it was made were contrary to public policy. By judgment of 9
December 2016 in Case T 2675-14, the Court of Appeal dismissed Kazakhstan's
action.
Kazakhstan subsequently complained of miscarriage of justice and applied for a
reversal of the Court of Appeal's judgment. The Supreme Court rejected both the
appeal for a miscarriage of justice and the application for leave to appeal in case no.
Ö 613- 17.
Kazakhstan brought a new action for annulment of the arbitration award, arguing,
inter alia, that the award was contrary to public policy.
In its decision of 9 March 2020 in case T 12462-19, the Court of Appeal found that
there was a procedural impediment as the matter was the same as in the earlier
complaint, and therefore dismissed Kazakstan's action.
Kazakhstan has subsequently re-applied for a stay, which was rejected by the
Supreme Court in Case No Ö 1888-20.
After the Investors requested enforcement of the arbitration award, the Enforcement
Authority ordered the attachment of securities held in a securities deposit account at
SEB, funds in a cash account at SEB and claims related to the securities. The securities
consisted of shares in some thirty listed Swedish companies. The attachment orders
were made on the grounds that the property was considered to belong to Kazakhstan.
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Kazakhstan and the National Bank of Kazakhstan (National Bank) appealed against
the attachment decisions. They argued that the enforcement of the award was
precluded because the property did not belong to Kazakhstan for the purposes of
attachment law, because the securities were not located in Sweden and because the
property was covered by State immunity. Kazakhstan and the National Bank argued in
the case that the property belonged instead to the National Bank. The District Court
dismissed the appeals in a decision of 5 July 2019 in case no Ä 2453-18. The decision
was appealed to the Court of Appeal.
The Court of Appeal decided on 17 June 2020 in case no ÖÄ 7709-19 to annul the
enforcement authority's decision on attachment as the property was covered by state
immunity and could not be attached.
The Supreme Court, in its decision of 18 November 2021 in Case No Ö 3828-20,
declared that there was no immunity from enforcement and set aside the decision of
the Court of Appeal and referred the case back to the Court of Appeal for further
proceedings.
Kazakhstan and the National Bank have requested the Court of Appeal to set aside the
attachments contained in the contested orders, to relieve them of the obligation to pay
the Investors' costs in the District Court and to order the Investors to pay their costs
therein instead.
The investors have opposed the amendments.
The parties have applied for reimbursement of their costs in the Court of Appeal and
the Supreme Court. The investors have further requested that, irrespective of the
outcome of the case, Kazakhstan should be ordered to pay them SEK 475 900 for their
work in the public policy part.
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Kazakhstan and the National Bank have objected that there is an obstacle to the seizure
of the property seized under the contested decisions. In support of their objection, they
submit that the property does not belong to Kazakhstan and that the securities are not
located in Sweden. In addition to the above, Kazakhstan has also argued before the
Court of Appeal that enforcement is contrary to public policy.
The investors have contested the existence of an impediment to enforcement on any of
the grounds put forward by Kazakhstan and the National Bank.
By order of 28 October 2022, the Court of Appeal rejected the evidence adduced by
Kazakhstan and the National Bank in support of their objection that enforcement was
contrary to public policy.
In the Court of Appeal, the parties have relied on certain new evidence in the form
of legal opinions and statements from foreign courts. In addition, the investigation
is essentially the same as in the District Court.
The property seized consists of nominee-registered shares issued by voting companies
registered in Sweden and whose shares are held in an account in accordance with the
Act (1998:1479) on Central Securities Depositories and the Holding of Financial
Instruments in Accounts (Kontoföringslagen). They are held in an account with the
Swedish Central Securities Depository
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Euroclear. Euroclear has granted SEB in Sweden the right to take registration
measures on its own behalf and on behalf of others and the right to be registered as
nominee for the shares. The Bank of New York Mellon (BNY) is registered as
nominee in SEB's register. The shares are admitted to trading on the Swedish market.
The property further consists of cash assets related to the securities in the form of
dividends, sales proceeds from subscription rights, coupon tax refunds and cash in a
cash account with SEB in Sweden linked to the securities deposit.
In its investigation, the Enforcement Authority has been able to locate the property to
SEB and identify and specify the shares which were registered with the address
"BNYMSANV RE ANVLON RE MINISTRY OF BNYM, POBEDA AVENUE,
ASTANA 10000,
KAZAKSTAN" at the above-mentioned securities depository with account number 01-
100261060. Other assets could be linked to the above-mentioned cash account with
account number 5555 85 062 45.
It has now been established that the property is located in Sweden and not at BNYM
in London, as claimed by Kazakhstan and the National Bank. The Crown Prosecution
Service has therefore also been empowered to take the decisions in question.
Chapter 5, Section 3 of the Financial Instruments Trading Act (1991:980) sets out a
rule on which country's law is applicable to the effects in rem that may arise, inter alia,
from the transfer of dematerialised financial instruments. The provision does not cover
legal issues relating to bonds in connection with a transfer (see prop. 1999/2000:18 p.
96 et seq. and prop. 2004/05:30 p. 90).
The question of whether Kazakhstan owns the property in question is a question of
law of obligations. The fact that the National Bank has claimed that it is the owner of
the property does not mean that the provision in question is applicable.
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As previously stated, the property is located in Sweden and Swedish law is therefore
applicable.
According to Chapter 4, Section 17 of the Enforcement Code, movable property may be
attached if it is clear that the property belongs to the debtor.
The burden of proving that the property belongs to the debtor is on the applicant.
The shares in question have been registered in a custody account (01-100261060) with
SEB. At the request of Euroclear, and in accordance with the regulation contained in
Chapter 3, Section 12 of the Account Processing Act, SEB has provided information
on the shareholders whose shares SEB manages and the number of shares of various
types held by each shareholder. The information has been compiled in Euroclear's
public nominee lists. The list of nominees of Handelsbanken lists "BNYMSANV RE
ANVLON RE MINISTRY OF BNYM, POBEDA AVENUE, ASTANA 10000,
KAZAKSTAN" as the owner of a certain number of shares. The address belongs to the
Kazakh Ministry of Finance.
The account description at SEB for all securities in the securities account is
"BNYMSANV RE SANVLON RE MINISTRY OF FINANCE OF THE REPUBLIC
OF KAZAKHSTAN".
It is therefore clear that SEB managed the shares on behalf of BNY, with Kazakhstan
as shareholder, and there is therefore no confusion between the securities held in the
securities account (01-100261060) and the other assets held in the cash account (5555
85 062 45).
The inclusion of the seized assets in the National Fund has previously been claimed by
Kazakhstan and the National Bank. The Supreme Court has also in its decision, p. 41,
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concluded that this is the case. It has therefore been established that the seized property was
part of the National Fund.
The National Fund was established by Kazakhstan in 2000 in accordance with
Presidential Decree No. 402. The purpose of the Fund was stated to be, inter alia, to
ensure stable economic development in the country. The Decree states that the assets
of the Fund are accumulated on behalf of Kazakhstan and that the President decides on
the size and direction of the Fund and decides on the use of the funds on the basis of
proposals from the Government.
The assets of the Fund are accumulated in the National Bank, which also has a
fiduciary mandate under an agreement with the government (the so-called National
Fund Agreement). The Agreement sets out the framework for the fiduciary mandate
and Article 2(2) states that the National Bank shall transfer money to the government
within ten working days of receiving instructions to do so from the government.
Article 7(4) states that the National Fund Agreement can only be terminated by
decision of the President.
The Kazakh Budget Law states that the National Fund is financed, inter alia, by state
revenues derived from oil and natural gas extraction, tax revenues and royalties, and
Articles 21(3) and 21(4) state that the state may make withdrawals from the National
Fund by transfer to the state budget in the form of planned withdrawals or when
necessary for specific purposes.
The National Bank's annual accounts show that the assets of the National Fund have
not been recorded as an asset of the National Bank.
Thus, it appears that the ownership of the assets of the National Fund belongs to
Kazakhstan and that the National Bank has only managed the Fund. The fact that
Kazakhstan and the National Bank referred to the National Fund Agreement as "Trust
management" does not affect this assessment.
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The National Bank's Global Custody Agreement with BNY, Articles 2(a) and 2(b),
states that the National Bank has entrusted BNY with the task of acting as custodian of
securities of a certain type and number.
The agreement between BNY and SEB has not been presented in the case but nothing else
has emerged other than that SEB had a fiduciary relationship similar to the one BNY had
with the National Bank.
In line with this, SEB has, in accordance with the provision of Chapter 3, Section 12 of
the Account Management Act, provided Euroclear with information on the
shareholders whose shares it managed. It also emerged from the hearing of Catharina
Buresten that SEB in turn received this information from BNY.
It appears from this that the property that has been traced to accounts held with SEB in
Sweden and identified and specified has been managed only by BNY and SEB and that
the ownership has not been transferred to either BNY or SEB.
Other circumstances indicating that Kazakhstan is the owner of the shares are that the
Minister of Finance of Kazakhstan has authorised BNY to exercise on behalf of
Kazakhstan all the rights normally accorded to a shareholder, such as voting rights and
the right to claim reimbursement of coupon tax in accordance with the applicable tax
treaties. The tax authorities have also granted Kazakhstan the right to repayment of
coupon tax paid on 41 occasions in 2016-2018. Furthermore, in the list of shareholders
of AB Electrolux, the Ministry of Finance of Kazakhstan has been registered as a
shareholder of 0.7% of the shareholding.
All of these facts strongly indicate that Kazakhstan is the owner of the property.
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Finally, Kazakhstan and the National Bank claim that the enforcement of the arbitral
award may not take place under Chapter 3, Section 21 of the Code of Execution
because it would be contrary to public policy since the arbitral award was obtained by
fraud. The facts relied on by Kazakhstan and the National Bank in this respect are the
same as those examined in the earlier actions for annulment and nullity. There is no
reason to make a different assessment now. There is therefore no obstacle to
enforcement on this ground. The fact that courts in other countries may have come to a
different conclusion does not affect this assessment.
The seized property is located in Sweden and Kazakhstan is the owner of the property.
There is no other obstacle to enforcement.
The appeal by Kazakhstan and the National Bank must therefore be dismissed.
In this case, it is appropriate to apply the provisions on costs in Chapter 18 of the Code
of Judicial Procedure, in accordance with Paragraph 32 of the Act (1996:242) on court
cases.
In view of the outcome of the cases, Kazakhstan and the National Bank are ordered to
jointly and severally pay the Investors' costs in the Court of Appeal and in the Supreme
Court. In view of the scope of the dispute, the amounts claimed appear to be
reasonable.
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by 2023-02-06
Judges Sven Johannisson and Pernilla Svärd, Judges-Rapporteur, and Katarina Fabian,
Assistant Judge, and Boel Hilding Berggren, Acting Assistant Judge.