CALDERWOOD & HARKNESS LLP Solicitors and International Arbitration Counsel 45 Moorgate, London EC2R 6AR, United Kingdom Tel: +44 (0)20 7496 8200
6 December 2024
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION
To: Ioanna Christodoulou, General Counsel Thalassa Shipping & Logistics SA 14 Akti Miaouli, 4th Floor Piraeus 185 35, Greece
CC: Nikolaos Papadimitriou, Chairman & CEO, Thalassa Shipping & Logistics SA Elena Stavridis, CFO, Thalassa Shipping & Logistics SA
From: Hannah Brinkley, Lead Associate, Calderwood & Harkness LLP
Reviewed by: Samuel Eklund, Responsible Partner, Calderwood & Harkness LLP
Re: Enforcement of LCIA Award No. 224718 — Thalassa Shipping & Logistics SA v. Korinthian Maritime Holdings Ltd. — Bi-Weekly Status Report #6
Reference: Matter No. SC/TSL/2024-0341; Claim No. CL-2024-000487 (England); Case No. 2247/2024 (Cyprus); OS No. 872/2024 (Singapore); Case No. 1893/2024 (UAE)
1. EXECUTIVE SUMMARY
This is the sixth bi-weekly status report prepared by Calderwood & Harkness LLP ("C&H") in connection with the ongoing multi-jurisdictional enforcement of LCIA Award No. 224718 dated 28 June 2024 (the "Award") in favour of Thalassa Shipping & Logistics SA ("TSL") and against Korinthian Maritime Holdings Ltd. ("KMH"). This report covers the period from approximately 22 November 2024 through 6 December 2024 (the "Reporting Period").
We are pleased to report that significant progress has been made across all four enforcement jurisdictions during the Reporting Period. The cumulative total recovered to date stands at approximately £77,850,000, representing approximately 71.7% of the Award plus costs of £108,600,000. The enforcement campaign continues to advance on schedule and within the agreed fee budget.
The key milestones achieved since our last report (Bi-Weekly Status Report #5, dated 22 November 2024) are as follows:
• Cyprus — Recovery Complete: The Cyprus enforcement proceedings have concluded. The total Cyprus recovery of £22,350,000 was confirmed as complete on 8 November 2024. All funds have been remitted to TSL's designated recovery account at Ionian National Bank SA. Our local counsel, Kyprianos Makrides & Partners, are winding down their involvement and are expected to submit their final invoice shortly.
• Singapore — Judicial Sale of M/V *Crimson Horizon* Completed: The judicial sale of the M/V Crimson Horizon (IMO 9801334) was completed on 15 November 2024, achieving a sale price of USD $22,800,000. After deduction of Singapore court and Sheriff's costs, the net sale proceeds were received by TSL on 2 December 2024, equating to approximately £18,330,000 at the prevailing exchange rate. This brings the total Singapore recovery to approximately £36,780,000, and Singapore enforcement is now effectively concluded.
• UAE — Enforcement Order Granted: In a significant milestone for the UAE enforcement, the Dubai Court of First Instance granted the enforcement order on 20 November 2024 in Case No. 1893/2024. This order permits execution against KMH's assets in the UAE, including the conversion of the precautionary attachment over accounts of Korinthian DMCC at Emirates Gulf Commercial Bank PJSC ("EGCB") into an execution attachment. Our local counsel, Al-Rashid Hatem & Associates ("ARH"), are now actively processing execution against those accounts.
The remaining enforcement actions are focused on two principal objectives: (i) execution against Korinthian DMCC's accounts at EGCB, where recoverable balances are estimated at approximately AED 53,400,000 (approximately £11,340,000); and (ii) the pursuit and potential arrest of the M/V Volga Spirit (IMO 9756892), a Panamax bulk carrier last reported at Fujairah anchorage, UAE, with an estimated value in the range of USD $18–22 million.
Post-award interest continues to accrue at 5.25% per annum simple on the principal sum of £96,450,000 from 29 June 2024, as provided for in the Award. This amounts to approximately £13,875 per day.
KMH's application to set aside the Award was dismissed on 11 October 2024 by Mr. Justice Ashworth in the Commercial Court. The 28-day appeal period has now expired without a notice of appeal being filed. No further challenge proceedings are pending in any jurisdiction. KMH's posture appears to have shifted from active resistance to selective compliance, although no concrete settlement proposal has been received.
The sections below provide a detailed jurisdiction-by-jurisdiction update, followed by a cumulative recovery summary, an asset tracing update, a review of opposing party activity, an outline of remaining enforcement actions and next steps, a fee and budget status update, an assessment of risk factors, and our recommended client actions.
2. ENGLAND & WALES — STATUS UPDATE
2.1 Enforcement Judgment and Set-Aside Proceedings
Permission to enforce LCIA Award No. 224718 as a judgment of the Commercial Court was granted by Mr. Justice Ashworth on 2 August 2024 pursuant to section 66 of the Arbitration Act 1996 (Claim No. CL-2024-000487). The enforcement order was served on KMH and its English solicitors, Harkness Whitford & Co., in accordance with the directions of the court.
KMH filed an application to set aside the Award on 19 August 2024 pursuant to sections 68 and 69 of the Arbitration Act 1996. The application relied on allegations of serious irregularity under section 68 (contending that the tribunal had failed to deal with certain issues put before it and had adopted unfair procedures) and an appeal on a point of law under section 69 (contending that the tribunal had erred in its construction of certain provisions of the amended charter-party). Both grounds were vigorously contested by TSL.
Following a contested hearing, Mr. Justice Ashworth dismissed KMH's application in its entirety on 11 October 2024. The judgment found that the section 68 grounds disclosed no serious irregularity and that the section 69 grounds did not meet the threshold for leave to appeal, let alone demonstrate any error of law. The court awarded costs to TSL on the indemnity basis, reflecting the court's view of the unmeritorious nature of KMH's challenge.
No further challenge proceedings have been filed. The 28-day period for filing a notice of appeal under CPR Part 52 expired on 8 November 2024 without any such notice being filed. Accordingly, the enforcement judgment is now final and unappealable. This is an important development, as it removes any residual uncertainty regarding the enforceability of the Award in England and Wales, and it strengthens the position in other enforcement jurisdictions where the English proceedings might have been cited as a basis for resisting enforcement.
2.2 Worldwide Freezing Order
The worldwide freezing order (the "WFO") was granted without notice by Mr. Justice Ashworth on 16 July 2024, in the amount of up to £108,600,000, representing the full value of the Award plus costs. The WFO was continued with modifications at the return date hearing on 30 July 2024, at which KMH was represented and made submissions. The modifications related principally to the carve-outs for ordinary course business expenditure and legal fees, which were adjusted by agreement between the parties subject to the court's approval.
The WFO remains in full force and effect. It prohibits KMH and its officers from dealing with, disposing of, or diminishing the value of its assets worldwide up to the value of £108,600,000. The WFO applies to assets whether they are in the name of KMH or are assets that KMH has the power, directly or indirectly, to dispose of or deal with as if they were its own.
Pursuant to the ancillary disclosure provisions of the WFO, KMH has provided asset disclosure through its English solicitors. The information obtained from this disclosure has been shared with Hartwell Pemberton LLP ("HP"), our instructed asset tracing specialists, who have used it in conjunction with their own investigative work to identify and confirm the location of enforceable assets. The disclosure has been of significant practical value in guiding the enforcement strategy across jurisdictions.
We note that evidence of potential non-compliance with the WFO has been identified in the course of HP's tracing work. In particular, the supplemental report on post-award asset movements (dated 25 November 2024) identifies certain transfers from KMH and subsidiary accounts that may not have been made in the ordinary course of business and that were not disclosed in KMH's asset disclosure affidavit. No contempt proceedings have been initiated to date. We are currently reviewing the evidence in detail to assess whether an application for committal would be appropriate and proportionate in light of the overall enforcement strategy. We will revert to TSL with a recommendation on this point in our next report.
2.3 Third-Party Debt Order — Meridian Trust Bank Ltd.
A third-party debt order was made against Meridian Trust Bank Ltd. (50 Lombard Street, London EC3V 9EA) in respect of funds held in accounts in the name of KMH. The interim order was obtained on 12 August 2024, and the final order was made absolute on 3 September 2024 following a hearing at which Meridian Trust Bank Ltd. appeared but raised no objection.
The amount garnished and received by TSL was £18,720,000. These funds were remitted to TSL's designated recovery account at Ionian National Bank SA, 22 Stadiou Street, Athens 105 64, Greece, in accordance with the client's standing instructions.
No further recoverable English assets have been currently identified. HP continues to monitor for any new assets that may come within the jurisdiction of the English courts, including any receivables payable by English-domiciled entities to KMH or its subsidiaries. We will advise immediately if any such assets are identified.
2.4 Costs Recovery — England
An indemnity costs order was obtained following the dismissal of KMH's set-aside application on 11 October 2024. The detailed assessment of costs is underway, as the parties have not yet agreed quantum. A costs schedule was served on Harkness Whitford & Co. on 25 October 2024 in accordance with the court's directions. Harkness Whitford & Co. (SRA Registration No. 614823) has been notified of the costs order and the associated costs schedule. To date, we have not received a substantive response from Harkness Whitford & Co. regarding agreement on quantum. If agreement is not reached within a reasonable period, we will proceed to a detailed assessment hearing before a costs judge.
The costs recoverable under this order are in addition to the costs already awarded in the Award itself. We anticipate that the assessed costs of the English enforcement and set-aside proceedings will be significant and will contribute to the overall recovery for TSL.
3. CYPRUS — STATUS UPDATE
3.1 Recognition and Enforcement
An application for recognition and enforcement of the Award under the New York Convention (to which Cyprus is a signatory) and the Cyprus Arbitration Law (Cap. 4) was filed on 9 August 2024 in the Nicosia District Court (Case No. 2247/2024). The application was filed by our local counsel, Kyprianos Makrides & Partners ("KM&P") (Mr. Andreas Kyprianos and Ms. Nadia Makrides, 15 Grivas Digenis Avenue, Nicosia 1066, Cyprus), acting on our instructions on behalf of TSL.
Opposition to the enforcement application was filed by Vassiliadis & Economou LLC (Mr. Georgios Vassiliadis and Ms. Eleni Economou, 7 Stasinou Avenue, 3rd Floor, Nicosia 1060, Cyprus) on behalf of KMH. The grounds of opposition included: (a) an allegation that enforcement would be contrary to the public policy of the Republic of Cyprus, on the basis that the arbitral proceedings were allegedly conducted in a manner inconsistent with principles of natural justice; and (b) an allegation that KMH had not been given proper notice of the arbitral proceedings and had been unable to present its case. Both grounds were fully contested by TSL through KM&P, who filed detailed written submissions and supporting evidence demonstrating that KMH had been afforded full opportunity to participate in the arbitral proceedings and had indeed done so through leading counsel.
The Nicosia District Court found all grounds of opposition to be without merit and granted the enforcement order on 30 September 2024. The court's reasoning confirmed that the Award was entitled to recognition and enforcement under the New York Convention and that none of the grounds for refusal under Article V of the Convention had been established. This was consistent with the well-established pro-enforcement bias of the Cyprus courts in respect of New York Convention awards.
3.2 Freezing Injunction
A freezing injunction was granted by the Nicosia District Court on 12 August 2024, shortly after the filing of the enforcement application. The injunction froze: (a) KMH's shares in Oceangate Ventures Ltd. (Cyprus company registration number HE 401293), the intermediate holding company for certain fleet SPVs including Dnepr Shipholding Inc. (BVI Company No. 2014876); and (b) KMH's Cyprus bank accounts. The injunction remained in full force and effect until the enforcement order was obtained and execution commenced. The injunction served its purpose of preventing KMH from dissipating its Cyprus-based assets during the recognition and enforcement process.
3.3 Recovery
Following the granting of the enforcement order, execution commenced on 22 October 2024 against the following assets:
(a) KMH's shareholding in Oceangate Ventures Ltd. (registered office: 28 Themistokli Dervi Avenue, Suite 604, Nicosia 1066, Cyprus). Oceangate Ventures Ltd. is an intermediate holding company in the KMH corporate structure and holds, among other interests, the shares in Dnepr Shipholding Inc. (BVI Company No. 2014876), the registered owner of the M/V Volga Spirit. A forced sale of KMH's shares in Oceangate Ventures was conducted pursuant to the enforcement order.
(b) KMH's Cyprus bank accounts, from which funds were directly recovered through the execution process.
The forced sale of the Oceangate Ventures shares was completed in the period between 22 October 2024 and early November 2024, and the recovery from KMH's Cyprus bank accounts was effected concurrently. The total Cyprus recovery, including both the proceeds of the share sale and the amounts recovered from the bank accounts, was £22,350,000 (GBP equivalent, converted from EUR at the prevailing exchange rates at the time of remittance).
Recovery was confirmed as complete on 8 November 2024, per confirmation received from Ms. Nadia Makrides at KM&P. All funds have been remitted to TSL's designated recovery account at Ionian National Bank SA, 22 Stadiou Street, Athens 105 64, Greece.
KM&P fees incurred to date in connection with the Cyprus proceedings amount to €285,000, which we understand to be substantially the final figure, subject to a small final invoice for wind-down activities.
3.4 Remaining Cyprus Actions
No further identifiable Cyprus-based assets of KMH have been located. The Cyprus enforcement is considered complete. KM&P are in the process of winding down their involvement and are expected to submit their final invoice in the coming weeks. We will review and approve the final invoice for payment in accordance with the agreed fee arrangements.
We note that the forced sale of the Oceangate Ventures shares may have implications for the ownership chain of the M/V Volga Spirit, which is discussed further in Section 5.4 and Section 9.2 below. The purchaser of the Oceangate Ventures shares at the forced sale is a third party unconnected with KMH. The implications of this change of ownership for the beneficial ownership structure of Dnepr Shipholding Inc., and in turn for the M/V Volga Spirit, are being analysed by HP and will inform the UAE arrest strategy.
4. SINGAPORE — STATUS UPDATE
4.1 Leave to Enforce
An application for leave to enforce the Award was filed on 14 August 2024 in the Singapore High Court (Originating Summons No. 872/2024) by our local counsel, Straits Meridian LLP ("SM") (Mr. David Teo Wei Lin and Ms. Priya Subramaniam, 1 Raffles Place, #44-01 One Raffles Place Tower 2, Singapore 048616), acting on our instructions on behalf of TSL.
Leave to enforce was granted on 6 September 2024 pursuant to the International Arbitration Act (Cap. 143A) and the relevant provisions of Singapore law implementing the New York Convention. KMH did not file any application to set aside the leave order or to resist enforcement in Singapore. The 14-day period for filing such an application expired without any challenge being lodged. This stands in contrast to KMH's active resistance in England and Cyprus and is consistent with the assessment that KMH's resources for litigation have been diminishing as the enforcement campaign has progressed.
4.2 Garnishee Proceedings — Pinnacle Bank (Singapore) Ltd.
Following the grant of leave to enforce, garnishee proceedings were commenced against Pinnacle Bank (Singapore) Ltd. (6 Battery Road, #20-01, Singapore 049909) in respect of accounts held by Korinthian Bulkers (Singapore) Pte. Ltd. (80 Robinson Road, #14-02, Singapore 068898), a wholly-owned subsidiary of KMH. A garnishee order to show cause was obtained, directing Pinnacle Bank to show cause why the funds standing to the credit of Korinthian Bulkers (Singapore) Pte. Ltd.'s accounts should not be paid to TSL in satisfaction (or part satisfaction) of the enforcement judgment.
The garnishee order was made absolute on 18 October 2024. The amount recovered pursuant to the garnishee order was SGD $31,200,000, which equates to approximately £18,450,000 at the prevailing exchange rate of approximately £0.5913/SGD at the time of conversion. These funds have been remitted to TSL's recovery account at Ionian National Bank SA.
4.3 Arrest and Judicial Sale of M/V *Crimson Horizon*
The M/V Crimson Horizon (IMO 9801334, Handymax Bulk Carrier, 37,500 DWT, Liberian flag) was arrested in Singapore waters by the Sheriff of the Supreme Court on 20 August 2024. The vessel is owned by Korinthian Bulkers (Singapore) Pte. Ltd., and the arrest was effected in connection with the enforcement of the Award and the garnishee proceedings against that company. KMH did not provide security to release the vessel, despite being given reasonable opportunity to do so through its solicitors.
An application for appraisement and sale of the vessel was thereafter made to the Singapore High Court (Admiralty Division) and was duly granted. An independent valuation of the vessel was conducted by Northcape Maritime Advisory Ltd. (Captain Ian Forsyth, 3 Thomas More Square, London E1W 1WY), who are specialist maritime valuation consultants. The valuation report was provided to the court in support of the sale application and assisted the court in establishing a minimum reserve price.
The judicial sale of the M/V Crimson Horizon was completed on 15 November 2024. The sale was conducted under the auspices of the Sheriff of the Supreme Court in accordance with the established procedures of the Singapore High Court (Admiralty Division). The vessel was sold to a third-party purchaser at a price of USD $22,800,000, which was considered to be at a fair market value and within the range of the independent valuation. The sale attracted competitive interest from multiple prospective purchasers, which is a positive indication that the sale process was conducted effectively and that the vessel was not sold at a distressed price.
The net sale proceeds, after deduction of Singapore court fees and Sheriff's costs, were received by TSL on 2 December 2024. The GBP equivalent of the net proceeds is approximately £18,330,000, calculated at an exchange rate of approximately £0.8039/USD at the time of conversion and remittance.
The funds have been remitted to TSL's designated recovery account at Ionian National Bank SA. Confirmation of the receipt and remittance of the sale proceeds was received from Ms. Priya Subramaniam at Straits Meridian LLP on 5 December 2024.
4.4 Total Singapore Recovery
The total recovery achieved through the Singapore enforcement proceedings is summarised as follows:
• Garnishee order (Pinnacle Bank (Singapore) Ltd.): £18,450,000
• Judicial sale of M/V Crimson Horizon: £18,330,000
• Total Singapore recovery: approximately £36,780,000
SM fees incurred to date in connection with the Singapore proceedings amount to SGD $480,000. This figure is expected to be substantially final, as SM are now finalising their involvement and no further substantive work is anticipated in Singapore.
4.5 Remaining Singapore Actions
No further Singapore-based assets of KMH or its subsidiaries have been identified. The Singapore enforcement is effectively concluded. SM are in the process of finalising their involvement, including the completion of any remaining administrative matters and the preparation of their final fee note. We will review and approve SM's final invoice in the ordinary course.
5. UNITED ARAB EMIRATES — STATUS UPDATE
5.1 Enforcement Application
An application for enforcement of the Award was filed on 22 August 2024 in the Dubai Court of First Instance (Case No. 1893/2024) by our local counsel, Al-Rashid Hatem & Associates ("ARH") (Mr. Tariq Al-Rashid and Ms. Leila Hatem, Office 1802, Emirates Financial Towers (South Tower), DIFC, Dubai). The application was filed under UAE Federal Law No. 6 of 2018 (the UAE Arbitration Law) and the New York Convention, to which the UAE is a signatory.
The application was supported by certified Arabic translations of the LCIA Award, the arbitration agreements (being the arbitration clauses contained in the relevant charter-party agreements), and other supporting documentation required under UAE procedural law. All documents were duly legalised through the UK Foreign, Commonwealth and Development Office (FCO) and the UAE Embassy in London, in accordance with the established legalisation procedures applicable to the enforcement of foreign arbitral awards in the UAE.
We are pleased to report that the enforcement order was granted on 20 November 2024. This is a significant milestone in the enforcement campaign. The granting of the enforcement order permits execution against KMH's assets in the UAE and, critically, enables the conversion of the precautionary attachment previously granted over the accounts of Korinthian DMCC at EGCB (as described below) into an execution attachment.
KMH did not file any application to resist or challenge the enforcement proceedings in the UAE. This is consistent with KMH's overall shift from active resistance to selective compliance, as discussed in Section 8 below.
5.2 Precautionary Attachment — Korinthian DMCC at EGCB
A precautionary attachment (equivalent to a freezing injunction) was granted by the Dubai Court on 28 August 2024 over the accounts and receivables of Korinthian DMCC (Unit 3407, Almas Tower, Jumeirah Lake Towers, Dubai) held at Emirates Gulf Commercial Bank PJSC ("EGCB") (Gate Village 3, DIFC, Dubai). Korinthian DMCC is a Dubai-registered entity that operates as KMH's principal trading and commercial hub for activities in the Middle East and broader Gulf region.
The precautionary attachment secured the funds standing to the credit of Korinthian DMCC's accounts at EGCB and certain receivables due to Korinthian DMCC. The attachment has been in place since 28 August 2024 and has effectively prevented KMH from dissipating these assets during the pendency of the enforcement application.
Following the granting of the enforcement order on 20 November 2024, the precautionary attachment is now being converted to an execution attachment. The estimated recoverable amount from the Korinthian DMCC accounts at EGCB is AED 53,400,000, which equates to approximately £11,340,000 at the current exchange rate of approximately £0.2124/AED.
5.3 Execution — Next Steps
ARH are now actively processing the execution against Korinthian DMCC's accounts at EGCB. The conversion of the precautionary attachment to an execution attachment requires the filing of certain procedural documents with the Dubai Execution Court, which ARH are currently preparing and expect to file in the period commencing 10 December 2024. The execution process in the UAE typically takes several weeks from the date of filing, and we anticipate that recovery from the EGCB accounts will be completed over the ensuing weeks.
The anticipated recovery from the EGCB execution is approximately AED 53,400,000 (approximately £11,340,000). The precise amount will depend on the balance standing to the credit of the accounts at the time of execution and may vary slightly from the estimated figure.
In addition to the EGCB accounts, ARH are investigating the existence and attachability of receivables owed to KMH and/or Korinthian DMCC by sub-charterers in the UAE region. Preliminary analysis suggests that there may be up to £4,200,000 in aggregate receivables across multiple sub-charter arrangements that could potentially be attached in the UAE. HP is providing tracing support to identify the specific debtors, amounts, and applicable contractual terms. This is discussed further in Section 7 and Section 9.3 below.
ARH fees incurred to date amount to AED 620,000. Given that the UAE enforcement is ongoing and the most significant remaining enforcement activity is expected to take place in the UAE, we anticipate that ARH's fees will continue to accrue over the coming weeks.
5.4 M/V *Volga Spirit* — Remaining Arrest Opportunity
The M/V Volga Spirit (IMO 9756892, Panamax Bulk Carrier, 76,400 DWT, Cyprus flag) was last reported at Fujairah anchorage, UAE. This vessel represents the most significant remaining enforcement opportunity and its arrest and sale could substantially close the remaining outstanding balance under the Award.
The vessel is registered in the name of Dnepr Shipholding Inc. (BVI Company No. 2014876), a special purpose vehicle incorporated in the British Virgin Islands. Dnepr Shipholding Inc. was, until the recent forced sale in Cyprus, owned through Oceangate Ventures Ltd. (Cyprus company registration number HE 401293), which was in turn owned by KMH (Cyprus company registration number HE 387421). The ultimate beneficial owner of the entire chain is Mr. Andrei Volkov.
As noted in Section 3.3 above, the forced sale of Oceangate Ventures shares in the Cyprus proceedings may have implications for the ownership chain of the vessel. HP is currently confirming the precise status of the beneficial ownership chain following the Cyprus share sale and will report shortly. This analysis is important because the basis for arresting the M/V Volga Spirit in enforcement of the Award against KMH depends on establishing a sufficient nexus between the vessel (or its owner) and KMH as the award debtor.
ARH are currently assessing the arrest prospects under UAE maritime law, including the Federal Maritime Law (Federal Law No. 26 of 1981 as amended) and the applicable procedural rules. UAE admiralty arrest procedures have specific requirements regarding the establishment of jurisdiction and the basis for arrest, and ARH are analysing whether the M/V Volga Spirit can be arrested in the UAE on the basis of the enforcement judgment against KMH, given the corporate ownership structure involving Dnepr Shipholding Inc.
As an alternative or supplementary strategy, we are monitoring the vessel's AIS (Automatic Identification System) tracking data on a continuous basis. If the M/V Volga Spirit departs Fujairah and proceeds to a jurisdiction where arrest procedures are more straightforward or where the legal basis for arrest is more clearly established, we are prepared to act immediately to effect an arrest in that jurisdiction. A number of potential alternative arrest jurisdictions have been identified and contingency plans have been prepared in coordination with local counsel in those jurisdictions.
Northcape Maritime Advisory Ltd. (Captain Ian Forsyth) has been instructed to provide an updated valuation estimate for the M/V Volga Spirit. The preliminary indicative value, based on the vessel's age, type, and current market conditions for Panamax bulk carriers, is estimated to be in the range of USD $18,000,000 to USD $22,000,000. A formal valuation report is expected within the next two weeks. For the purposes of the recovery projections in this report, we have used a mid-range estimate of approximately USD $20,000,000 (approximately £16,100,000 at current exchange rates), although the actual recovery would depend on the sale price achieved and the costs of arrest and sale.
The arrest and judicial sale of the M/V Volga Spirit is a priority enforcement action and is discussed further in Section 9.2 below.
6. CUMULATIVE RECOVERY SUMMARY
6.1 Tabular Summary of Recoveries to Date
The following table summarises all recoveries achieved to date across the four enforcement jurisdictions:
All recovered funds have been remitted to TSL's designated recovery account at Ionian National Bank SA, 22 Stadiou Street, Athens 105 64, Greece, in accordance with TSL's standing instructions.
6.2 Outstanding Balance Calculation
The outstanding balance under the Award, including costs and post-award interest, is calculated as follows:
Total Award (principal): £96,450,000
Total Costs allocated to KMH:
• LCIA costs (including tribunal fees and institutional fees): £3,240,000
• TSL's legal costs: £8,910,000
• Total Costs: £12,150,000
Award plus Costs: £108,600,000
Post-award interest accrued to date:
• Interest rate: 5.25% per annum simple (as provided in the Award)
• Interest runs on the principal sum of £96,450,000 from 29 June 2024
• Period from 29 June 2024 to 6 December 2024: approximately 161 days
• Calculation: £96,450,000 × 0.0525 × (161 ÷ 365) = approximately £2,232,554
• (Note: This is an approximate running calculation and will be updated by Hartwell Pemberton LLP as part of their periodic reconciliation.)
Grand Total Owed (estimated through 6 December 2024): approximately £110,832,554
Total Recovered to Date: £77,850,000
Outstanding Balance (estimated): approximately £32,982,554
Recovery Percentage (of Award plus Costs, excluding interest): £77,850,000 ÷ £108,600,000 ≈ 71.7%
6.3 Expected Near-Term Recoveries
The following additional recoveries are anticipated in the near term:
(a) UAE execution (EGCB accounts and receivables): Estimated recovery of approximately £11,340,000 from Korinthian DMCC's accounts at EGCB. This recovery is expected to be completed in the period December 2024 to January 2025.
(b) M/V *Volga Spirit* arrest and sale (if achieved): Estimated recovery of approximately £14,500,000 to £17,700,000, depending on the sale price achieved and the costs of arrest and judicial sale. The timing of this recovery is dependent on the successful arrest of the vessel and the completion of the sale process, which could take several months from the date of arrest.
(c) Sub-charterer receivables: Up to approximately £4,200,000 in receivables owed to KMH and its subsidiaries by sub-charterers, which are currently under investigation by HP. If these receivables can be identified and attached, recovery could be achieved through garnishee or attachment proceedings in the relevant jurisdictions.
Potential total near-term additional recovery: up to approximately £33,240,000
If fully realised, the cumulative recovery could reach approximately £111,090,000, which would substantially close the outstanding balance including accrued post-award interest. It is important to note, however, that the actual recovery will depend on a number of factors, including the successful execution of the UAE attachment, the successful arrest and sale of the M/V Volga Spirit, and the collectability of the sub-charterer receivables. The risk factors associated with these anticipated recoveries are discussed in Section 11 below.
7. ASSET TRACING — HARTWELL PEMBERTON LLP UPDATE
Hartwell Pemberton LLP ("HP") (Ms. Rebecca Saunders and Mr. Mark Huxley, 25 Old Broad Street, London EC2N 1HN) continues to provide asset tracing and intelligence services in support of the enforcement campaign. HP's work has been instrumental in identifying enforceable assets across jurisdictions and in guiding the tactical deployment of enforcement resources.
HP's updated asset tracing report dated 1 October 2024 was previously circulated to the client team. A supplemental report on post-award asset movements, dated 25 November 2024, has now been received and is currently under review by the C&H team.
The supplemental report is of particular significance. It analyses specific transfers made from KMH and subsidiary accounts in the period between 28 June 2024 (the date of the Award) and 28 August 2024 (the date on which the precautionary attachment was granted in the UAE and by which time the WFO had been in effect for over six weeks). The report identifies a series of transfers to entities connected to Mr. Andrei Volkov and the Volkov family, including transfers to entities incorporated in jurisdictions with limited transparency requirements. The total value of the identified transfers is substantial, though the precise figures are being verified.
These post-award asset movements are relevant to several aspects of the enforcement strategy:
(a) Potential contempt of the WFO: If any of the identified transfers were made after the WFO was served on KMH (which occurred on 16 July 2024) and were not made in the ordinary course of business or with the court's permission, they may constitute a breach of the WFO. A breach of a freezing order is punishable as a contempt of court, which can result in a fine, sequestration of assets, or in the most serious cases, committal to prison of the responsible individuals. We are reviewing the evidence to assess whether an application for committal would be appropriate.
(b) Ongoing enforcement: The identification of the destination of the transferred funds may reveal additional assets that can be targeted for enforcement. HP is tracing the funds through the recipient entities to determine whether they remain identifiable and recoverable.
(c) Potential further proceedings against third-party recipients: If KMH transferred assets to third parties with the intention of defeating TSL's claims, it may be possible to bring proceedings against the third-party recipients to recover those assets. Such proceedings could take the form of claims under section 423 of the Insolvency Act 1986 (transactions defrauding creditors) or equivalent provisions in other relevant jurisdictions.
HP fees incurred to date amount to £345,000. This expenditure is within the budgeted amount for asset tracing services and reflects the complexity and multi-jurisdictional nature of the tracing work.
HP has been asked to focus their ongoing work on two priority areas: (i) the identification and verification of sub-charterer receivables owed to KMH and its subsidiaries, with a view to supporting attachment applications in the relevant jurisdictions; and (ii) confirmation of the M/V Volga Spirit ownership chain, including the current status of Dnepr Shipholding Inc. following the forced sale of the Oceangate Ventures shares in Cyprus.
8. OPPOSING PARTY ACTIVITY
KMH is represented in the English proceedings by Harkness Whitford & Co. (Mr. Richard Harkness, Ms. Catherine Whitford, and Mr. James Thornbury, 12 Fetter Lane, London EC4A 1JP). In the Cyprus proceedings, KMH was represented by Vassiliadis & Economou LLC (Mr. Georgios Vassiliadis and Ms. Eleni Economou, 7 Stasinou Avenue, 3rd Floor, Nicosia 1060, Cyprus). KMH did not instruct local counsel to oppose the proceedings in Singapore or the UAE.
Following the dismissal of the set-aside application by Mr. Justice Ashworth on 11 October 2024 and the series of enforcement orders obtained across the four jurisdictions, KMH's posture appears to have shifted materially. Whereas KMH actively resisted the enforcement proceedings in the early stages — filing the set-aside application in England, opposing recognition in Cyprus, and contesting the WFO on the return date — it has more recently adopted a posture of selective compliance. KMH made no application to set aside or resist the enforcement proceedings in Singapore or the UAE, and it did not appeal the dismissal of the set-aside application in England.
Without prejudice discussions have taken place between C&H and Harkness Whitford & Co. regarding the possibility of voluntary payment of a portion of the remaining balance. These discussions have been conducted on a without prejudice basis and their content is not detailed in this report. In summary, however, Harkness Whitford & Co. has indicated that KMH may be willing to discuss terms for a resolution of the outstanding balance, but no concrete or formal settlement offer has been received to date. The discussions have not progressed beyond an initial and general expression of willingness to engage.
We continue to reserve all of TSL's rights and are proceeding with full enforcement in parallel with any without prejudice dialogue. It is our view that the most effective way to achieve a full recovery for TSL is to maintain maximum pressure through the enforcement process while remaining open to a reasonable settlement proposal that would deliver full or substantially full recovery. We will advise TSL immediately if any formal settlement proposal is received.
9. REMAINING ENFORCEMENT ACTIONS AND NEXT STEPS
9.1 UAE Execution
Priority: High
ARH are proceeding with execution against Korinthian DMCC's accounts at EGCB immediately following the conversion of the precautionary attachment to an execution attachment. The necessary procedural filings are being prepared and are expected to be submitted to the Dubai Execution Court in the period commencing 10 December 2024. The execution process is expected to be completed over the ensuing weeks, with recovery anticipated by mid-January 2025 at the latest, barring any unforeseen procedural delays or challenges from KMH.
Concurrently, ARH are investigating the attachability of receivables owed to KMH and/or Korinthian DMCC by sub-charterers operating in the UAE region. HP is providing tracing support to identify the specific debtors and amounts involved. This investigation is being conducted in parallel with the EGCB execution and will be reported on further as it progresses.
9.2 M/V *Volga Spirit* Arrest
Priority: High
The arrest of the M/V Volga Spirit is the single most significant remaining enforcement opportunity. The vessel is currently located at Fujairah anchorage in the UAE, and AIS monitoring is in place to track any movements in real time.
ARH are assessing the UAE admiralty arrest procedure and the legal basis for arresting the vessel in the UAE in enforcement of the Award against KMH. The key legal issue is the establishment of a sufficient nexus between the vessel's owner (Dnepr Shipholding Inc., BVI Company No. 2014876) and the award debtor (KMH, Cyprus company registration number HE 387421). The beneficial ownership chain runs as follows:
Dnepr Shipholding Inc. (BVI Company No. 2014876) ↳ owned by Oceangate Ventures Ltd. (HE 401293, Cyprus) ↳ owned by Korinthian Maritime Holdings Ltd. (HE 387421, Cyprus) ↳ Ultimate Beneficial Owner: Mr. Andrei Volkov
As noted above, HP is confirming the current status of this ownership chain following the forced sale of the Oceangate Ventures shares in the Cyprus proceedings. This analysis is critical to the arrest strategy and is being treated as a priority.
If the vessel departs Fujairah and proceeds to another jurisdiction, we are prepared to act immediately to effect an arrest in an alternative jurisdiction. Contingency plans have been prepared in coordination with local counsel in a number of potential arrest jurisdictions. The choice of jurisdiction will depend on the vessel's destination and the applicable legal framework for arrest and judicial sale in that jurisdiction.
An updated valuation of the M/V Volga Spirit has been instructed from Northcape Maritime Advisory Ltd. (Captain Ian Forsyth). The preliminary indicative value is in the range of USD $18,000,000 to USD $22,000,000. A formal valuation report is expected within the next two weeks.
9.3 Sub-Charterer Receivables
Priority: Medium
HP is in the process of tracing approximately £4,200,000 in receivables owed to KMH and its subsidiaries by sub-charterers. These receivables arise under various sub-charter arrangements and are payable by a number of different entities across multiple jurisdictions. Once the specific debtors and amounts have been confirmed and verified, attachment or garnishee applications will be filed in the relevant jurisdictions to intercept these receivables before they are paid to KMH.
The sub-charterer receivables represent a meaningful but secondary source of recovery. The investigation is ongoing and further details will be provided as they become available.
9.4 WFO Maintenance and Possible Partial Discharge
The WFO remains in place at its full value of £108,600,000. As recoveries are credited to TSL and the outstanding balance decreases, it will be necessary to apply to the Commercial Court for a partial discharge of the WFO to reflect the reduced maximum sum required to be frozen. The timing of any such application will be carefully considered to ensure that the WFO continues to provide adequate protection for TSL's interests while reflecting the actual outstanding balance at the relevant time. We propose to time any application for partial discharge to coincide with the near-completion of the remaining enforcement activities, so as to avoid any premature reduction in the scope of the WFO that might prejudice the enforcement campaign.
9.5 Settlement Discussions
Without prejudice dialogue with Harkness Whitford & Co. is ongoing. TSL's position, as previously confirmed in instructions, is that TSL will accept voluntary payment of the full outstanding balance (including post-award interest accrued to the date of payment) in exchange for an agreed orderly discharge of the WFO and cessation of all enforcement proceedings across all jurisdictions. TSL is not willing to accept a discounted settlement unless there are compelling reasons to do so, given the strong enforcement position and the realistic prospect of achieving full or near-full recovery through the enforcement process.
No settlement will be agreed without TSL's express instructions. If Harkness Whitford & Co. makes a formal proposal, we will immediately circulate it to the client team with our analysis and recommendation.
10. FEE AND BUDGET STATUS
The fee and budget position is summarised as follows:
Calderwood & Harkness LLP fees:
• Fees billed to date: approximately £3,500,000 (against the agreed fee cap of £4,200,000 for Phase 2 — Enforcement, excluding disbursements and local counsel fees)
• Remaining amount under fee cap: approximately £700,000
• The budget remains on track. Given that the Cyprus and Singapore enforcement proceedings are now effectively concluded, the remaining fee expenditure will be focused on the UAE enforcement, the M/V Volga Spirit arrest, the asset tracing oversight, and any settlement discussions. We are confident that the remaining budget is sufficient to complete the enforcement campaign.
Disbursements:
• Disbursements to date: approximately £380,000 (comprising court fees across all jurisdictions, travel costs, and expert fees, including Northcape Maritime Advisory Ltd. valuation fees)
Local counsel fees:
• Kyprianos Makrides & Partners (Cyprus): €285,000 (final or near-final)
• Straits Meridian LLP (Singapore): SGD $480,000 (near-final)
• Al-Rashid Hatem & Associates (UAE): AED 620,000 (continuing; fees will continue to accrue as the UAE enforcement and M/V Volga Spirit arrest proceed)
Hartwell Pemberton LLP fees:
• Fees to date: £345,000 (continuing; further fees will be incurred in connection with the ongoing sub-charterer receivables investigation and the M/V Volga Spirit ownership chain analysis)
Success fee provision:
• As agreed in the engagement letter, a success fee of 2.5% is payable on amounts recovered in excess of £80,000,000.
• Current cumulative recovery: £77,850,000. The success fee has not yet been triggered, as the recovery has not yet exceeded the £80,000,000 threshold.
• However, the success fee is expected to be triggered with the anticipated UAE recovery from the EGCB accounts. If the EGCB execution yields the estimated £11,340,000, the cumulative recovery would reach approximately £89,190,000, and the success fee would be 2.5% × (£89,190,000 − £80,000,000) = 2.5% × £9,190,000 = £229,750 (indicative, subject to the precise recovery amount).
• The success fee will be calculated and invoiced at the conclusion of the enforcement campaign, or at such earlier time as may be agreed.
Overall, the budget remains on track and within the agreed fee cap. We are monitoring expenditure carefully and will advise immediately if any developments arise that could cause the fee cap to be exceeded.
11. RISK FACTORS AND OBSERVATIONS
The following risk factors and observations are brought to TSL's attention:
(a) Risk of M/V *Volga Spirit* departure from Fujairah: There is a risk that the M/V Volga Spirit may depart Fujairah anchorage and proceed to a jurisdiction where arrest would be more difficult or where the legal framework for enforcement is less favourable. The vessel's AIS tracking is being monitored continuously, and contingency plans are in place for arrest in alternative jurisdictions. However, if the vessel were to proceed to a jurisdiction where enforcement of the Award is not possible (for example, a jurisdiction that is not a party to the New York Convention or that has a history of non-enforcement), the arrest opportunity could be lost. We assess this as a material risk and are acting with urgency to advance the arrest application in the UAE.
(b) Currency fluctuation risk: A significant portion of the outstanding expected recoveries is denominated in foreign currencies, principally AED (for the EGCB execution) and potentially USD (for any future vessel sale proceeds). Fluctuations in exchange rates between the date of recovery and the date of conversion to GBP could result in the GBP-equivalent recovery being higher or lower than currently estimated. We recommend that TSL consider its hedging policy in respect of these anticipated foreign currency receipts.
(c) Sub-charterer receivables collectability risk: There is a risk that the sub-charterer receivables identified by HP may prove partially or wholly uncollectible. Some of the sub-charterers may dispute the amounts owed, may have set-off claims, or may not have sufficient funds to pay the amounts due. The investigation of these receivables is ongoing and the estimated £4,200,000 figure should be treated as a maximum potential recovery, not a guaranteed amount.
(d) Risk of further challenge proceedings by KMH: Although KMH has not filed any further challenge proceedings following the dismissal of the set-aside application and the expiry of the appeal period, there is a residual risk that KMH may seek to initiate challenge or annulment proceedings in other jurisdictions. We assess this risk as low, given KMH's failure to challenge the Singapore and UAE proceedings and the lack of any credible grounds for setting aside or refusing enforcement of the Award. Nevertheless, we continue to monitor for any such proceedings.
(e) Continuing accrual of post-award interest: Post-award interest continues to accrue at 5.25% per annum simple on the principal sum of £96,450,000. This equates to approximately £13,875 per day (£96,450,000 × 0.0525 ÷ 365). While the accrual of interest increases the total amount owed by KMH, it also increases the outstanding balance that must be recovered. The enforcement strategy is designed to achieve recovery as quickly as possible to minimise the impact of continuing interest accrual.
12. RECOMMENDED CLIENT ACTIONS
In light of the current status of the enforcement campaign and the matters discussed in this report, we respectfully recommend the following client actions:
1. Approve continuation of UAE enforcement and M/V *Volga Spirit* arrest: TSL is requested to confirm its approval for the continuation of enforcement proceedings in the UAE, including the execution against Korinthian DMCC's accounts at EGCB and the pursuit of the arrest of the M/V Volga Spirit. These are the two highest-priority enforcement actions and represent the most significant remaining recovery opportunities.
2. Confirm settlement instructions: TSL is requested to confirm its instructions regarding the parameters for any settlement discussions with KMH, in the event that Harkness Whitford & Co. makes a formal proposal. In particular, TSL should confirm whether it would be willing to consider any discount to the full outstanding balance (including post-award interest) or whether its position remains that full payment is required.
3. Confirm receipt of Singapore vessel sale proceeds: TSL is requested to confirm receipt of the Singapore vessel sale proceeds at Ionian National Bank SA and to advise of any discrepancies in the amount received relative to the figures set out in this report.
4. Provide intelligence on KMH fleet movements and commercial activities: If TSL has any updated intelligence on KMH's fleet movements, commercial activities, or the activities of Mr. Andrei Volkov and the Volkov family that may assist the enforcement efforts, we would be grateful to receive this information. In particular, any information regarding the commercial trading status of the M/V Volga Spirit, the identity of its current charterer, or any planned movements would be of significant value.
13. NEXT REPORT
Bi-Weekly Status Report #7 is expected to be issued on or about 20 December 2024. That report will cover: