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1. This is the Plaintiffs' application for an interlocutory injunction restraining the Defendant, its servants or agents, from dealing with or charging or otherwise alienating its assets in this jurisdiction or elsewhere so as to reduce the value of the said assets below US$20 million. On 20th November, 1998 I granted an interim order in the foregoing terms on foot of an ex-parte application made on behalf of the Plaintiffs. On 25th November, 1998 I varied that order by discharging it to the extent necessary to enable the Defendant to make a payment of $2.1 million into the Savings Bank of the Russian Federation to the account of Avisma.

2. Simultaneously with the Interim Order obtained in this jurisdiction, the Plaintiffs obtained an Order from the High Court of Justice of the Isle of Man on 20th November, 1998 against TMC (Holdings) Limited (Holding) and TMC Trading Limited (Trading) restraining each by its directors, officers, servants or agents or in any other manner howsoever from the moving or allowing to be removed from the jurisdiction of the Court of the Isle of Man or disposing of or dealing with in any manner howsoever any of its assets whatsoever within the jurisdiction of the Court of the Isle of Man, save insofar as such assets exceed a sum of US$20 million and in any way disposing or dealing or diminishing the value of any of its assets whether within or outside the jurisdiction of that Court up to the same value. That Order was subject to certain exceptions including a saver for dealing with or disposing of assets "in the ordinary and proper course of business".

3. The primary relief sought by the Plaintiffs in the Plenary Summons issued herein on 20th November, 1998 is a declaration that the assets of the Defendant in this jurisdiction and elsewhere, subject to a maximum figure of US$20 million or whichever sums this Court may determine, are the property of the Plaintiffs or their nominees or a Russian company, JSC AVISMA Titano-Magnesium Combine (Avisma) or, alternatively, are held in trust to the benefit of the Plaintiffs or their nominees or Avisma. A further declaration is sought, without prejudice to the primary relief, that the monies and assets of the Defendant derived either directly or indirectly from dealings after 6th December, 1997 by it or associated companies with Avisma are the property of the Plaintiffs or their nominees or Avisma or, alternatively, are held by the Defendant in trust for the Plaintiffs or their nominees or Avisma.

4. The factual background to this application is one of considerable complexity and the affidavits filed disclose an enormous degree of conflict.

5. In broad outline, the evidence presented to the Court on 20th November, 1998, on foot of which the interim order was granted, was that Avisma is a Russian company which produces titanium sponge. In December 1987 the Plaintiffs invested US£85,640,000 and acquired a 58% majority shareholding in Avisma from two Russian companies, Rosprom and Bank Menatep. In the course of the negotiations leading up to that acquisition, the Plaintiffs were told by their agent, Creditanstalt Investment Bank, Moscow (Creditanstalt), that a significant part of the profits which Avisma was able to earn on the sale of its product were taken off-shore through a group of companies, which were referred to collectively as TMC and which in these proceedings have been identified as being the Defendant, Holding and Trading, that TMC was owned or controlled by the majority shareholders in Avisma, namely, Rosprom and Bank Menatep, and that this proportion of the profits of Avisma from the sale of its product was available directly to Avisma's majority shareholders. In particular, the Plaintiffs rely on the following statement in a circular issued by Creditanstalt to prospective investors in Avisma:-

6. The Plaintiffs contend that the acquisition by them of rights to the profits being accrued through TMC was an integral part of the transaction under which they acquired the 58% majority shareholding in Avisma from Rosprom and Bank Menatep.

7. The acquisition of the interest of Rosprom and Bank Menatep was the first stage in a two stage process which had as its objective the creation of the world's largest fully integrated producer of titanium products. The second stage involved the Plaintiffs' majority stake in Avisma being acquired by another Russian company, which is also a substantial producer of titanium products, VSMPO, in return for new shares in VSMPO to be allotted to the Plaintiffs. That swop was effected and the Plaintiffs now hold 28% of the shares in VSMPO, which is now Avisma's holding company.

8. In essence, the Plaintiffs' complaint is that, although they acquired the profits of Avisma which had been accruing through TMC to Rosprom and Bank Menatep prior to their acquisition of the majority stake in Avisma, they have not received those profits, which they estimate at $20 million on the basis of the statement in the circular quoted above, since completion. There is also a dispute as to the date of completion, whether it was 6th December, 1997 or 31st December, 1997, but that is peripheral to the issues on this application.

9. One of the sources of evidence relied upon by the Plaintiffs in support of their contention that they acquired the right to those profits is the transcript of a telephone conversation between Bill Browder, acting on behalf of the Second and Sixth Plaintiffs, and Peter Bond (Mr. Bond), acting on behalf of TMC, which telephone conversation took place of 24th September, 1998.

10. Two matters in particular were relied on by the Plaintiffs as evidencing that there was a risk that the Defendant would dissipate its assets to the detriment of the Plaintiffs. The first was a transfer by the Defendant of approximately US$2.5 million to Bank Menatep, which has been insolvent since the commencement of the Russian economic crisis in August 1998, which was perceived by the Plaintiffs as being unauthorised and improper. The second was the creation by Holding on 23rd September, 1998 of a composite debenture in favour of Barclays Bank, Dublin to secure all sums and on the same day the creation by the Defendant of several charges in favour of Barclays Bank, Dublin, including a charge on a "security account" at the Dublin branch of Barclays Bank. The Plaintiffs' position is that they gave no authority to create these charges and that they indicate that TMC may not be holding the relevant assets to the order of those who are beneficially entitled thereto. The Plaintiffs also suggested, on the basis of a report commissioned by Creditanstalt from Ernst & Young, Accountants, in Moscow and Douglas, Isle of Man with respect to the financial records of the TMC companies, that "funds may be freely moved around among them".

11. The totality of the affidavits filed discloses certain uncontroverted facts in relation to the TMC companies. The Defendant is a company registered in the State under the Companies Acts, 1963-1990. It was incorporated on the 19th June, 1995. The Defendant is a wholly owned subsidiary of Holding, which is a company incorporated in the Isle of Man. Trading is a company incorporated in the British Virgin Islands with an established and registered place of business in the Isle of Man.

12. The affidavits filed on behalf of the Defendant raise a fundamental conflict as to the ultimate beneficial ownership of the Defendant and the nature of its operations. The Defendant's position is that the ultimate beneficial owner of the Defendant is LCM Trust, which is the family trust of Mr. Bond, a resident of the Isle of Man. Mr. Bond, in an affidavit sworn by him has asserted that the transcript of his telephone conversation with Mr. Browder, relied on by the Plaintiffs, has been edited and, in any event, he has disputed the construction put by the Plaintiffs on the exchanges between Mr. Browder and himself.

13. The Defendant's position is that the Defendant is a trading company and acts as agent for Trading. Its activities involve procuring raw material for Avisma and the purchase of titanium and magnesium in Russia from Avisma and the sale of these metals on the international market. The monies it receives are held on behalf of Trading, its principal. The Defendant operates under a Distribution Agreement with Avisma dated 10th January, 1996, which is subject to renewal annually on 1st January in each year. The Defendant's position is that the Defendant is a separate and independent legal entity from Avisma and that Avisma has no right or control over its assets, contract or business. Its relationship with Avisma is that of a distributor pursuant to the Distribution Agreement. It is actively engaged in trade for profit on its own account and it is not, as alleged by the Plaintiffs, a company which was set up as a device to avoid anti-dumping legislation in the United States and is not engaged in avoiding that legislation. It has made no distribution of profits since the beginning of May 1998.

14. In relation to the two matters which the Plaintiffs put forward as evidence of the risk of dissipation of the Defendant's assets, the Defendant has advanced the following explanations:-

15. At the hearing of the application, Mr. Brady, on behalf of the Plaintiffs, and Mr. Gallagher, on behalf of the Defendant, made detailed submissions on the issues which arise on the application, namely, whether there is a serious issue to be tried, where the balance of convenience lies, whether damages are an adequate remedy for either party and, in particular, whether the Plaintiffs' undertaking as to damages is adequate. Exigencies of time prevent me from outlining the submissions here. Suffice it to say that controversy arose on each issue. I find it unnecessary to determine any of the controversies because I have come to the conclusion, to adopt a sporting metaphor used by Mr. Gallagher, that the Plaintiffs do not "get to first base".

16. In my view, in this case, the Plaintiffs have not adduced evidence to show or to entitle me to infer that the Defendant is likely to dissipate its assets with the intention of evading its obligations, if any, to the Plaintiffs. The evidence adduced by the Defendant in relation to the two specific matters put forward by the Plaintiffs as indicating a risk of dissipation, in my view, sufficiently dispels the concerns expressed by the Plaintiffs. As regards the payment to Menatep Bank in October 1998, the documentary evidence put before the Court by the Defendant evidencing money transfers from the Defendant to banks in Russia to the account of Avisma through the medium of the Dublin branch of Barclays Bank between July 1998 and November 1998 is sufficiently cogent to allow me conclude, for the purposes of this application, that the transfer to Menatep Bank was made in error and that the Defendant is endeavouring to retrieve the monies transferred and that, in any event, the monies were destined for Avisma in which the Plaintiffs, through the medium of VSMPO, have a stake. On the face of it there is nothing sinister about this transaction. As regards the various securities given by the Defendant over its assets to Barclays Bank on 23rd September, 1998, the evidence adduced by the Defendant, in my view, is sufficiently cogent to allow me to conclude, for the purposes of this application, that the charges were created in the ordinary course of business to secure facilities afforded or to be afforded by Barclays Bank to the Defendant. There was nothing covert about these transactions, and, as was necessary to ensure their validity, particulars thereof were registered in the Companies Office pursuant to the provisions of Section 99 of the Companies Act, 1963.

17. On behalf of the Plaintiffs, Mr. Brady attempted to characterise the Plaintiffs' claim as a proprietary claim rather than a claim for a Mareva injunction. In particular, he relied on the following passage from the judgment of Staughton L.J. in Republic of Haiti -v- Duvalier , (1989) 1 All E.R. 456:-

18. The question I have to consider is whether, on the evidence, the Plaintiffs have shown that they have or have reasonable ground for claiming a proprietary interest in assets of the Defendant. The primary relief they seek has some semblance of proprietary claim, in that they seek a declaration that the assets of the Defendant are first their property or held in trust for them. As so formulated, the claim is not a derivative claim. However, the claim is limited to a "maximum figure of US$20 million or whichever sums" the Court may determine, so that in reality it is not formulated as a claim to a proprietary interest in specific assets. More importantly, the evidence adduced by the Plaintiffs supports a claim to the profits of Avisma which Rosprom and Menatep Bank were accruing through TMC before the completion of the acquisition of the stake in Avisma acquired by the Plaintiffs in December 1997. In my view, even accepting the Plaintiffs' assertions as to the nature of the deal done with Rosprom and Bank Menatep, which was completed in December 1997, at face value, having regard to the evidence adduced by the Defendant as to the nature of the trading activities of the Defendant, the Plaintiffs have not established that their claim is in the nature of a proprietary claim in relation to the assets of the Defendant.

19. The Plaintiffs are not entitled to the interlocutory relief they have sought and the interim order and the Plaintiffs' undertaking as to damages lapse. I express no view whatsoever as to the effect of the order of the High Court of Justice of the Isle of Man on the assets of the Defendant, the acknowledged agent of Trading.