PRIVILEGED AND CONFIDENTIAL — SUBJECT TO LEGAL PROFESSIONAL PRIVILEGE
Calderwood & Harkness LLP 45 Moorgate London EC2R 6AR United Kingdom
Tel: +44 (0)20 7936 4400
Fax: +44 (0)20 7936 4401
DX: 530 London/City
Samuel Eklund Responsible Partner, Litigation (General) Direct Line: +44 (0)20 7936 4472
Email: s.eklund@calderwoodharkness.com
Ref: SE/HLB/TSL-KMH/0041
1 August 2024
Rebecca Saunders Partner, Forensic & Investigative Services Hartwell Pemberton LLP 25 Old Broad Street London EC2N 1HN United Kingdom
Dear Ms Saunders,
Re: Engagement of Hartwell Pemberton LLP — Global Asset Tracing and Forensic Analysis Thalassa Shipping & Logistics SA v. Korinthian Maritime Holdings Ltd. and Related Entities LCIA Award No. 224718
1. Introduction and Purpose of Engagement
We write to formally instruct Hartwell Pemberton LLP ("HP" or "you") on behalf of our client, Thalassa Shipping & Logistics SA ("TSL"), a Société Anonyme organised under the laws of the Hellenic Republic, with its registered address at 14 Akti Miaouli, 4th Floor, Piraeus 185 35, Greece. Calderwood & Harkness LLP ("C&H" or "we") acts as TSL's solicitors in connection with the matters described herein.
TSL is the award creditor under LCIA Award No. 224718, a final award dated 28 June 2024 rendered in favour of TSL in the total principal sum of £96,450,000, together with costs in the amount of £12,150,000 (giving an aggregate of £108,600,000), plus post-award interest at the rate of 5.25% per annum simple on the principal sum of £96,450,000 from 29 June 2024 until the date of payment (the "Award"). The Award arises from a charter-party dispute between TSL and Korinthian Maritime Holdings Ltd. ("KMH"), a private limited company incorporated in the Republic of Cyprus (Registration No. HE 387421), with its registered address at 28 Themistokli Dervi Avenue, Suite 601, Nicosia 1066, Cyprus.
Despite the passage of more than four weeks since the issuance of the Award, KMH has failed to make any payment in satisfaction of the Award. On the basis of the intelligence available to us, we believe that KMH is actively seeking to restructure its asset base and place assets beyond the reach of enforcement. We are accordingly undertaking a multi-jurisdictional enforcement campaign in England & Wales, Cyprus, Singapore, and the United Arab Emirates.
The purpose of this letter is to engage HP to provide comprehensive global asset tracing, forensic accounting, and interest calculation services in support of that enforcement campaign. This letter sets out the scope of the engagement, the deliverables we require, the timeline within which those deliverables are needed, and the terms upon which the engagement is to proceed. We emphasise at the outset that this matter is of the utmost urgency. A worldwide freezing order (the "WFO") was granted by Mr Justice Ashworth in the Commercial Court on 16 July 2024, and the return date for that order is 30 July 2024. Further enforcement applications are imminent across multiple jurisdictions. The preliminary asset tracing report that we require from HP is needed no later than 15 August 2024 in order to support those applications.
2. Background to the Dispute and Award
We set out below a summary of the factual and procedural background to this matter, to the extent relevant to your engagement. A more detailed factual briefing will be provided at the kick-off meeting, together with copies of the key documents identified in Section 5 below.
2.1 The Parties
Thalassa Shipping & Logistics SA ("TSL")
TSL is a Greek-headquartered shipping and logistics company operating a diversified fleet of thirty-four (34) vessels, comprising bulk carriers, tankers, and container feeders. TSL's fleet trades globally, with particular concentration in the Mediterranean, Black Sea, West Africa, and Southeast Asian routes. TSL reported annual revenues of approximately €620 million for the financial year ended 31 December 2023. TSL is privately held: approximately 72% of its issued share capital is held by the Papadimitriou family through a trust structure, with the remaining 28% held by Aegean Capital Partners SA, a Greek private equity fund. The key personnel relevant to this matter are as follows:
• Nikolaos Papadimitriou — Chairman and Chief Executive Officer
• Elena Stavridis — Chief Financial Officer
• Captain Dimitrios Kouretas — Head of Chartering and Operations
• Ioanna Christodoulou — General Counsel
Korinthian Maritime Holdings Ltd. ("KMH")
KMH is a Cypriot private limited company (Registration No. HE 387421), registered at 28 Themistokli Dervi Avenue, Suite 601, Nicosia 1066, Cyprus. KMH operates as a vessel-owning and chartering company, controlling a fleet of approximately eighteen (18) dry-bulk carriers through a network of single-purpose vehicle subsidiaries incorporated in Cyprus, the British Virgin Islands, and Singapore. KMH is beneficially owned by the Volkov family through a chain of BVI and Cypriot holding structures, the details of which form a central part of the asset tracing exercise described in Section 3 below. The estimated pre-dispute net asset value of KMH and its group entities is approximately USD $280 million. The key personnel relevant to this matter are as follows:
• Andrei Volkov — Ultimate beneficial owner and de facto director; Russian national, believed to be resident in Cyprus and/or the UAE
• Sergei Volkov — Director; understood to be the brother of Andrei Volkov
• Marina Kazakova — Chief Financial Officer
• Alexei Demidov — Director of Fleet Operations
KMH is represented in the arbitration and enforcement proceedings by Harkness Whitford & Co., solicitors, of 12 Fetter Lane, London EC4A 1JP (SRA Registration No. 614823).
2.2 The Charter-Party Dispute
The dispute underlying the Award arises from three time charter-party agreements entered into between TSL (as charterer) and KMH (as disponent owner) in respect of three dry-bulk carriers. Each of the charter-parties is governed by English law and contains an LCIA arbitration clause with London as the seat of arbitration. The relevant charter-parties and vessels are as follows:
(a) M/V *Aegean Fortuna* (IMO 9784521) — a Supramax Bulk Carrier, 58,200 DWT, registered under the flag of the Republic of the marshall Islands, owned by Dnepr Shipholding Inc. (a BVI company within the KMH group). The time charter-party was signed on 15 March 2019 for a period of five years.
(b) M/V *Crimson Horizon* (IMO 9801334) — a Handymax Bulk Carrier, 37,500 DWT, registered under the flag of the Republic of Liberia, owned by Korinthian Bulkers (Singapore) Pte. Ltd. (a Singapore company within the KMH group). The time charter-party was signed on 22 January 2020 for a period of four years.
(c) M/V *Volga Spirit* (IMO 9756892) — a Panamax Bulk Carrier, 76,400 DWT, registered under the flag of the Republic of Cyprus, owned by Dnepr Shipholding Inc. The time charter-party was signed on 10 June 2021 for a period of five years.
KMH's breaches of the three charter-parties are summarised as follows:
(a) M/V Aegean Fortuna: KMH effected a wrongful early redelivery of the vessel on 18 June 2022, approximately fourteen (14) months before the contractual redelivery date. The early redelivery was not justified by any of the contractual redelivery provisions and was found by the Tribunal to constitute a repudiatory breach.
(b) M/V Crimson Horizon: KMH failed to pay hire from 1 July 2022 onwards, resulting in hire arrears of £4,280,000 before TSL exercised its contractual right to withdraw the vessel on 15 September 2022. The Tribunal found that KMH's failure to pay hire constituted a breach of its principal obligation under the charter-party and that TSL's withdrawal was lawful.
(c) M/V Volga Spirit: KMH made fabricated off-hire deductions totalling approximately £2,740,000, purportedly based on periods of alleged mechanical breakdown and port detention. The Tribunal found that the off-hire claims were unsupported by the contemporaneous documentation and, in certain instances, were contradicted by the vessel's operational records and AIS data. The deductions were held to be wrongful.
2.3 The LCIA Award
The arbitration was conducted under the auspices of the London Court of International Arbitration ("LCIA"). The procedural history is summarised below:
• LCIA Case Reference No.: 224718
• Request for Arbitration: Filed by TSL on 14 November 2022
• Tribunal constituted: 8 February 2023
• Tribunal composition:
• Sir Malcolm Fenton-Clarke (Presiding Arbitrator)
• Professor Athena Drakopoulos (Claimant-nominated Arbitrator)
• Dr. Henrik Dalmqvist (Respondent-nominated Arbitrator)
• Fiona Beckett (Tribunal Secretary)
• Evidentiary hearing: 11 September 2023 through 22 September 2023 (10 hearing days), conducted at the International Dispute Resolution Centre ("IDRC"), 70 Fleet Street, London EC4Y 1EU
• Final Award issued: 28 June 2024
The Tribunal awarded TSL the following sums:
At the prevailing exchange rate as of the date of the Award (28 June 2024), the Grand Total of £108,600,000 was equivalent to approximately USD $135,110,000 (at £1 = USD $1.2441). The total principal award of £96,450,000 was equivalent to approximately USD $120,012,000.
The Award further provides for post-award interest at the rate of 5.25% per annum simple on the unpaid principal sum of £96,450,000 from 29 June 2024 until the date of payment.
2.4 Enforcement Status at the Date of Instruction
The enforcement campaign is proceeding simultaneously across four jurisdictions. As of the date of this letter, the following steps have been taken or are imminent:
(a) England & Wales: An application for leave to enforce the Award as a judgment of the court pursuant to section 66 of the Arbitration Act 1996 was filed in the Commercial Court on 15 July 2024 (Claim No. CL-2024-000487). A worldwide freezing order was granted ex parte by Mr Justice Ashworth on 16 July 2024 in the sum of £108,600,000 (the "WFO"). The WFO contains the standard asset disclosure provisions, requiring KMH to disclose the nature, value, and location of its assets worldwide within seven days. The return date for the WFO is 30 July 2024. Applications for third-party debt orders (garnishment) against Meridian Trust Bank Ltd. are under preparation.
(b) Cyprus: Local counsel (Kyprianos Makrides & Partners, 15 Grivas Digenis Avenue, Nicosia 1066) have been instructed to register the Award and to apply for interim protective measures against KMH's Cypriot-registered assets.
(c) Singapore: Local counsel (Straits Meridian LLP, 1 Raffles Place, #44-01 One Raffles Place Tower 2, Singapore 048616) have been instructed to enforce the Award pursuant to the International Arbitration Act and to apply for Mareva relief and garnishment orders against the assets of Korinthian Bulkers (Singapore) Pte. Ltd.
(d) UAE: Local counsel (Al-Rashid Hatem & Associates, Office 1802, Emirates Financial Towers (South Tower), DIFC, Dubai) have been instructed to ratify the Award through the DIFC Courts and to apply for attachment of the assets of Korinthian DMCC.
It is against this background that the asset tracing and forensic analysis engagement described in this letter is urgently required. The identification and quantification of KMH's assets across jurisdictions is essential to the effective prosecution of the enforcement campaign, to the continuation of the WFO, and to the detection of any steps taken by KMH or the Volkov family to dissipate or conceal assets.
3. Scope of Engagement
The scope of HP's engagement is set out in detail below. We anticipate that the scope may need to be refined or expanded as the enforcement campaign progresses and additional information becomes available, but the following workstreams represent the core of the engagement as presently conceived.
3.1 Mapping KMH's Corporate Structure
HP is instructed to carry out a comprehensive mapping of KMH's global corporate structure, including all subsidiaries, affiliates, single-purpose vehicles ("SPVs"), joint ventures, and holding companies, whether directly or indirectly owned or controlled by KMH or by members of the Volkov family. The objective of this workstream is to produce a complete organisational chart of the KMH group, identifying the ownership chains, beneficial ownership, and any nominee or fiduciary arrangements.
The following entities have been identified to date and should form the starting point of your investigation:
(a) Korinthian Maritime Holdings Ltd. (Registration No. HE 387421) — the parent entity, incorporated in Cyprus with its registered address at 28 Themistokli Dervi Avenue, Suite 601, Nicosia 1066, Cyprus. This is the named respondent in the arbitration and the principal judgment debtor.
(b) Korinthian Bulkers (Singapore) Pte. Ltd. — a company incorporated in Singapore, with its registered address at 80 Robinson Road, #14-02, Singapore 068898. This entity is the registered owner of M/V Crimson Horizon and is believed to have held proceeds from vessel operations and the potential sale or sub-charter of the vessel. We understand from preliminary intelligence that this entity may also hold charter hire receivables from third-party charterers.
(c) Dnepr Shipholding Inc. — a BVI business company (Company No. 2014876), with its registered agent at Vantage Corporate Services Ltd., Road Town, Tortola, British Virgin Islands. This entity is the registered owner of M/V Aegean Fortuna and M/V Volga Spirit. The ownership chain between Dnepr Shipholding Inc. and KMH is not yet fully mapped and requires investigation.
(d) Korinthian DMCC — a company registered with the Dubai Multi Commodities Centre, with its registered address at Unit 3407, Almas Tower, Jumeirah Lakes Towers, Dubai, United Arab Emirates. This entity is understood to serve as the KMH group's Middle Eastern operational hub, handling operational funds, agency arrangements, and trade receivables arising from the group's chartering activities in the Arabian Gulf and Indian Ocean regions.
(e) Oceangate Ventures Ltd. — a company incorporated in Cyprus (Registration No. HE 401293), with its registered address at 28 Themistokli Dervi Avenue, Suite 604, Nicosia 1066, Cyprus. Our preliminary analysis indicates that Oceangate Ventures Ltd. functions as an intermediate holding company in the ownership chain between KMH and the fleet SPVs, and may hold participations in other vessel-owning entities not yet identified.
In addition to the entities identified above, HP is instructed to:
(i) Identify any additional entities (whether corporate, trust, foundation, or otherwise) beneficially owned or controlled by Andrei Volkov, Sergei Volkov, or any other members of the Volkov family, whether directly or through nominees, fiduciaries, or agents. We are aware that the Volkov family has business interests extending beyond the maritime sector, including in real estate and commodities trading, and any such interests may constitute attachable assets or provide intelligence relevant to the tracing exercise.
(ii) Conduct corporate registry searches in Cyprus, Singapore, the British Virgin Islands, the United Arab Emirates (including the DMCC registry and the DIFC registry), and any other jurisdictions that are identified as relevant during the course of the investigation.
(iii) Identify the current and historical directors, shareholders, and officers of each entity within the KMH group, together with any changes to such positions that may indicate restructuring or the interposition of nominee arrangements.
(iv) Map the beneficial ownership chains for each entity, with particular attention to the use of nominee shareholders, bearer instruments (to the extent they may still be in circulation in respect of older BVI structures), or trust arrangements that may obscure the ultimate beneficial ownership.
The deliverable for this workstream should be a detailed corporate structure chart, accompanied by a narrative explanation of each entity's role within the group, the basis for each ownership connection identified, and any gaps or limitations in the information available.
3.2 Identification of Bank Accounts and Financial Assets
HP is instructed to identify, to the extent ascertainable from publicly available records, commercial databases, and any disclosure materials obtained under the WFO, all bank accounts and financial assets held by KMH and its related entities across jurisdictions. This workstream is of critical importance to the enforcement campaign, as the primary mechanism for realising the Award will be through garnishment and attachment of funds held in bank accounts.
The following banking relationships are known to C&H and should be investigated as a matter of priority:
(a) Meridian Trust Bank Ltd. (50 Lombard Street, London EC3V 9EA) — KMH's primary London correspondent bank. We understand that KMH maintains at least one USD-denominated and one GBP-denominated account at this institution, through which the hire payments under the three charter-parties were historically routed. A third-party debt order application against Meridian Trust Bank Ltd. is under preparation and any intelligence as to the likely balances held in these accounts would be of immediate use.
(b) Pinnacle Bank (Singapore) Ltd. (6 Battery Road, #20-01, Singapore 049909) — the bank at which Korinthian Bulkers (Singapore) Pte. Ltd. is understood to maintain its operating accounts. These accounts are believed to have received charter hire income from third-party sub-charters arranged by the Singapore entity.
(c) Emirates Gulf Commercial Bank PJSC (Gate Village 3, DIFC, Dubai, UAE) — the bank at which Korinthian DMCC is understood to maintain its operating accounts. The balances held at this institution are relevant to the UAE enforcement proceedings.
In addition to the known banking relationships identified above, HP should:
(i) Identify any additional bank accounts, deposit accounts, or money market accounts held by KMH or any related entity in any jurisdiction, to the extent ascertainable from available sources.
(ii) Identify any investment accounts, brokerage accounts, or holdings of financial instruments (including but not limited to bonds, equities, fund interests, and derivatives) held by KMH or any related entity.
(iii) Identify any letters of credit, bank guarantees, performance bonds, or other contingent financial instruments issued for the benefit of, or at the request of, KMH or any related entity, the proceeds of which may constitute attachable assets.
(iv) Where possible, estimate the balances held in identified accounts, based on available information. We recognise that precise balance information will not be available for all accounts, but indicative estimates based on transactional volumes, disclosed financial statements, or other available intelligence will be of significant value.
We will provide HP with copies of all WFO asset disclosure materials as and when they are received from KMH or its solicitors, Harkness Whitford & Co. HP should be prepared to analyse and verify the completeness of those disclosures against its own findings.
3.3 Identification of Physical and Tangible Assets
HP is instructed to identify all physical and tangible assets belonging to, or held by or on behalf of, KMH and its related entities. The principal tangible assets of the KMH group are its vessels, but the investigation should not be limited to the fleet.
Vessel Ownership Analysis
HP should confirm the ownership, flag state registration, classification society, and current location of all vessels linked to KMH and its SPVs. Particular attention should be given to the following three vessels, which are the subject of the underlying charter-party dispute:
(a) M/V *Aegean Fortuna* (IMO 9784521) — a Supramax Bulk Carrier, 58,200 DWT, registered under the flag of the Republic of the marshall Islands. The registered owner is Dnepr Shipholding Inc. (BVI). HP should confirm the current flag state registration, identify any mortgages or encumbrances registered against the vessel, and ascertain the vessel's current trading position and location.
(b) M/V *Crimson Horizon* (IMO 9801334) — a Handymax Bulk Carrier, 37,500 DWT, registered under the flag of the Republic of Liberia. The registered owner is Korinthian Bulkers (Singapore) Pte. Ltd. HP should confirm the current registration, identify any recent changes in ownership or flag state, and determine whether the vessel has been sold, mortgaged, or otherwise encumbered since the date of the Award.
(c) M/V *Volga Spirit* (IMO 9756892) — a Panamax Bulk Carrier, 76,400 DWT, registered under the flag of the Republic of Cyprus. The registered owner is Dnepr Shipholding Inc. (BVI). HP should confirm the current registration and ascertain the vessel's trading position and location.
In addition to the three vessels identified above, HP should identify all other vessels within the KMH group's fleet (understood to comprise approximately eighteen dry-bulk carriers in total), including the names of the owning SPVs, the flag state registrations, and any known encumbrances.
We note that vessel valuations are being conducted separately by Northcape Maritime Advisory Ltd. (Captain Ian Forsyth, 3 Thomas More Square, London E1W 1WY), who have been engaged to provide desktop and, where feasible, physical survey-based valuations of the KMH fleet. HP should coordinate with Northcape as necessary to avoid duplication of effort, but vessel valuations themselves fall outside the scope of HP's engagement.
Other Physical and Tangible Assets
HP should also investigate and identify:
(i) Any real property (whether freehold, leasehold, or otherwise) held by KMH, its related entities, or the Volkov family personally, in any jurisdiction. We have preliminary intelligence suggesting that Andrei Volkov may hold residential property in London, Limassol, and Dubai, and commercial premises in Cyprus, but this has not been verified.
(ii) Any equipment, plant, machinery, or other tangible moveable assets of material value held by KMH or its related entities.
(iii) Any trade receivables, charter hire receivables, freight receivables, demurrage claims, or other contractual entitlements owed to KMH or its related entities by third parties. These may constitute attachable debts in the hands of third-party debtors.
(iv) Any insurance claims, P&I club entries, or pending insurance recoveries in favour of KMH or its vessel-owning subsidiaries. We note that the KMH fleet is understood to be entered with the Westvale Indemnity Co., and any claims or refunds due from the club may represent recoverable assets.
3.4 Tracing Post-Award Asset Movements
This workstream is of critical importance and should be treated as a priority. HP is instructed to trace all movements of funds and assets from KMH and its related entities from 28 June 2024 (the date of the Final Award) to the present, and to continue monitoring such movements on a rolling basis as further information becomes available.
The objective of this workstream is twofold:
(a) To identify any steps taken by KMH, the Volkov family, or any person or entity acting on their behalf, to dissipate, conceal, remove, or restructure assets with the purpose or effect of placing them beyond the reach of enforcement. Such steps may include, without limitation: transfers of funds to third-party entities; sale or re-flagging of vessels; novation or assignment of charter-parties; creation of security interests in favour of related parties; transfers of shares in SPVs; distributions to shareholders; and changes to corporate structures designed to distance assets from KMH.
(b) To provide evidence in support of the continuation of the WFO (the return date for which is 30 July 2024), applications for freezing or attachment orders in other jurisdictions (Cyprus, Singapore, and the UAE), and, if warranted, applications for contempt of court in the event that the terms of the WFO have been breached.
HP's analysis should be supported by, and cross-referenced against, bank records and financial documents obtained through KMH's asset disclosure obligations under the WFO. C&H will provide copies of all such materials as they are received. Where HP identifies gaps or inconsistencies in the disclosure provided by KMH, these should be flagged in the report, as they may form the basis for further applications to the court.
We draw to your attention that, during the course of the arbitration, KMH exhibited a pattern of behaviour that gives rise to serious concerns about the risk of dissipation. In particular:
(i) Between September 2022 and February 2023, KMH transferred at least two vessels out of the name of Dnepr Shipholding Inc. and into a previously unknown BVI entity (identity to be confirmed), without apparent commercial justification.
(ii) KMH's disclosed financial statements for FY2022, produced during the arbitration, revealed a significant and unexplained decline in the book value of its net assets, from approximately USD $280 million (FY2021) to approximately USD $195 million (FY2022).
(iii) KMH failed to comply with various disclosure orders made by the Tribunal during the arbitration, including in respect of intercompany transfers.
These matters were relied upon in the without-notice application for the WFO and form part of the evidential basis for the contention that there is a real risk of dissipation. HP's post-award asset movement analysis will be a critical component of the evidence in support of the continuation of the WFO and the parallel applications in other jurisdictions.
3.5 Interest Calculations
HP is instructed to carry out the following interest calculation work:
(a) Verification and reconciliation of the pre-award interest calculation. The Final Award provides for pre-award interest at the rate of 5.25% per annum simple, calculated from the respective dates of breach to the date of the Award (28 June 2024), in the total amount of £6,780,000. HP should verify this calculation by reference to the underlying dates of breach and the principal sums to which interest applies, and confirm that the Tribunal's arithmetic is correct. This is a standard precaution in enforcement proceedings and will also serve to familiarise HP with the structure of the Award for the purposes of the ongoing interest calculations.
(b) Preparation of a running post-award interest calculation. HP should prepare a schedule calculating post-award interest at the rate of 5.25% per annum simple on the principal sum of £96,450,000 from 29 June 2024. The schedule should be designed so that the accrued interest can be calculated as at any given date, and should be capable of being updated on a rolling basis to account for partial payments or recoveries as and when they occur across any of the enforcement jurisdictions.
(c) Cross-jurisdictional recovery tracking. As recoveries are made in the various enforcement jurisdictions, HP should maintain a consolidated schedule that tracks the allocation of recoveries against the principal and interest components of the Award, ensuring that the outstanding balance is accurately calculated at all times. This schedule will be required by the courts in each enforcement jurisdiction, and must be precise and defensible.
3.6 Quantification of Attachable Assets
Drawing together the outputs of the workstreams described above, HP is instructed to provide, for each of the four enforcement jurisdictions (England & Wales, Cyprus, Singapore, and the UAE), an estimate of the total attachable assets linked to KMH. This estimate should identify:
(a) The specific assets located or held within each jurisdiction.
(b) The estimated value of each asset (or, where a precise valuation is not possible, a range).
(c) Any legal or practical impediments to attachment or execution against each asset (for example, the existence of prior security interests, the interposition of holding company structures, or the need to pierce the corporate veil or obtain recognition of the Award in the relevant jurisdiction).
(d) A recommendation as to the priority in which assets should be targeted for enforcement, based on the likely recovery amount, the speed of the enforcement mechanism, and the associated costs and risks.
This jurisdictional asset summary will feed directly into C&H's enforcement strategy and jurisdictional priority assessment, and will be shared with local counsel in each jurisdiction (subject to appropriate privilege protections).
4. Deliverables
The deliverables required under this engagement are as follows:
4.1 Preliminary Asset Tracing Report
Due date: 15 August 2024 (approximately two weeks from the date of this instruction).
This report should cover, at a minimum: (a) the corporate structure mapping described in Section 3.1, based on the information available at that date; (b) the known bank accounts, estimated balances, and financial assets described in Section 3.2; (c) the vessel ownership analysis and identification of other tangible assets described in Section 3.3; and (d) initial findings on post-award asset movements described in Section 3.4.
The preliminary report is urgently needed to support the continuation of the WFO (following the return date on 30 July 2024, it is anticipated that further hearings may be required), the England garnishment application against Meridian Trust Bank Ltd., and imminent enforcement filings in Cyprus, Singapore, and the UAE. We cannot overstate the importance of meeting this deadline. If any element of the report cannot be completed by this date, please notify us immediately so that we can prioritise.
4.2 Updated / Supplemental Asset Tracing Report
Due date: approximately 1 October 2024.
This report should incorporate all additional information obtained from KMH's WFO disclosure, intelligence from local counsel in each enforcement jurisdiction, and the results of HP's ongoing tracing work. It should provide a materially more complete picture of KMH's asset base than the preliminary report, and should include a detailed analysis of post-award asset movements and any evidence of dissipation identified to date.
4.3 Post-Award Asset Movement Analysis
Due date: approximately 25 November 2024.
This should be a standalone, detailed report analysing the totality of KMH's post-award asset movements, with a particular focus on evidence of deliberate dissipation, concealment, or restructuring of assets. The report should be prepared in a form suitable for deployment in court proceedings, including in support of applications for contempt of court (if warranted) and in support of freezing or attachment applications in overseas jurisdictions.
4.4 Interest Calculation Schedule
An initial interest calculation schedule should be provided with the preliminary report (by 15 August 2024) and should be updated on a rolling basis as recoveries occur. The schedule should be provided in both PDF and Excel format, with the Excel version containing the underlying formulae so that C&H and local counsel can run calculations for specific dates as needed.
4.5 General Requirements for All Deliverables
All reports should be prepared in a form suitable for use as exhibits in court proceedings across multiple jurisdictions. Reports should be factual, evidence-based, clearly sourced, and expressed in language that is accessible to a non-specialist judicial audience. Where HP's analysis is based on assumptions or incomplete information, those assumptions and limitations should be clearly stated. Reports should be subject to appropriate expert certification and should contain a statement of HP's qualifications and independence.
5. Information to Be Provided by Calderwood & Harkness
Upon HP's acceptance of this engagement, C&H will provide the following documents and materials as an initial documentation package:
(a) A certified copy of LCIA Award No. 224718, dated 28 June 2024, together with any separate orders on costs.
(b) Copies of the three time charter-party agreements between TSL and KMH, dated 15 March 2019, 22 January 2020, and 10 June 2021 respectively, together with any addenda or amendments thereto.
(c) A sealed copy of the worldwide freezing order granted by Mr Justice Ashworth on 16 July 2024 (Claim No. CL-2024-000487), together with all supporting evidence filed in connection with the ex parte application.
(d) Any asset disclosure provided by KMH pursuant to the WFO, as and when received from Harkness Whitford & Co.
(e) Corporate registry filings and other publicly available information relating to KMH and its known group entities, as compiled by C&H to date.
(f) Correspondence and documents received from local counsel in each enforcement jurisdiction, namely:
• Kyprianos Makrides & Partners (15 Grivas Digenis Avenue, Nicosia 1066, Cyprus) — Cyprus proceedings
• Straits Meridian LLP (1 Raffles Place, #44-01 One Raffles Place Tower 2, Singapore 048616) — Singapore proceedings
• Al-Rashid Hatem & Associates (Office 1802, Emirates Financial Towers (South Tower), DIFC, Dubai, UAE) — UAE proceedings
(g) Any additional documents, records, or intelligence that become available during the course of the enforcement campaign and are relevant to HP's workstreams.
We will endeavour to provide the initial documentation package within two business days of receiving HP's acceptance of this engagement.
6. Coordination and Reporting
The primary C&H contact for this engagement will be Hannah Brinkley, Lead Associate (direct line: +44 (0)20 7936 4518; email: h.brinkley@calderwoodharkness.com), with oversight by the undersigned, Samuel Eklund, Responsible Partner. All substantive deliverables should be addressed to both Hannah Brinkley and Samuel Eklund.
We understand that HP's lead personnel on this engagement will be Rebecca Saunders (Partner) and Mark Huxley (Director, Forensic & Investigative Services). We would be grateful if you could confirm the team composition, including any additional members of the HP team who will have access to the engagement materials.
During the first month of the engagement (August 2024), we propose weekly progress calls, to be held on Wednesdays at 10:00 BST. Thereafter, progress calls should be scheduled on a bi-weekly basis, unless the pace of developments requires more frequent communication. Ad hoc calls may be arranged as needed.
All communications in connection with this engagement are privileged and confidential. HP is instructed as forensic experts by solicitors acting for TSL, and all reports, work product, and communications produced in connection with the engagement are protected by litigation privilege, having been created for the dominant purpose of conducting or advising on the enforcement litigation across multiple jurisdictions. HP should not disclose any engagement materials or findings to any third party without the prior written consent of C&H.
We anticipate that HP may need to liaise directly with local counsel in each enforcement jurisdiction in order to obtain information, verify findings, or coordinate investigative steps. C&H will facilitate introductions to the relevant local counsel contacts and will authorise specific information-sharing on a case-by-case basis. Any such communications should be conducted under the umbrella of litigation privilege and should be copied to C&H.
7. Fee Arrangements
HP's fee estimate for the full scope of work described in this letter is £345,000 (three hundred and forty-five thousand pounds sterling), inclusive of all disbursements incurred by HP (including but not limited to corporate registry search fees, database access charges, and travel expenses), and exclusive of Value Added Tax at the prevailing rate.
The indicative breakdown of fees by workstream is as follows:
The following terms shall apply to HP's fees and billing:
(a) Fees shall be billed monthly in arrears, accompanied by detailed time records specifying the work performed, the personnel involved, and the applicable hourly rates.
(b) Payment shall be due within thirty (30) days from the date of each invoice.
(c) C&H shall be invoiced directly and shall be responsible for payment. The ultimate principal and beneficiary of the engagement is TSL (as our client), but the contractual relationship for billing purposes is between C&H and HP.
(d) Any material variation to the scope of work, or any anticipated increase in fees beyond the estimate set out above, must be agreed in advance in writing with Samuel Eklund. HP should notify C&H promptly if it appears that the fee estimate is likely to be exceeded, providing a revised estimate and an explanation of the additional work required.
(e) The fee estimate set out above is based on the scope of work as currently understood. If additional workstreams are required (for example, if the investigation identifies assets in jurisdictions not currently contemplated), the parties will agree an appropriate fee supplement in advance.
8. Confidentiality and Privilege
All information, documents, and materials provided to HP in connection with this engagement are strictly confidential. Such materials are provided subject to, and protected by, legal professional privilege and/or litigation privilege, as applicable.
HP must not disclose any information relating to the engagement, the parties, or the subject matter of the engagement to any third party without the prior written consent of C&H. This obligation extends to all members of the HP team and to any sub-contractors, agents, or service providers engaged by HP in connection with the engagement (if any such engagement is contemplated, HP should seek C&H's prior written approval).
HP's reports, working papers, and all other work product created in connection with this engagement are prepared for the dominant purpose of ongoing and anticipated litigation, namely the enforcement proceedings in respect of LCIA Award No. 224718 across multiple jurisdictions. Such materials are accordingly subject to litigation privilege and must not be disclosed or made available to any person or entity outside the privileged circle without C&H's prior written consent.
HP acknowledges its obligations under applicable data protection legislation, including the UK General Data Protection Regulation (UK GDPR) and the Data Protection Act 2018, in respect of any personal data processed in connection with this engagement. HP shall ensure that all personal data is processed in accordance with applicable law and shall implement appropriate technical and organisational measures to protect such data against unauthorised access, loss, or destruction.
9. Conflicts
We request that HP carry out a full conflicts check in relation to the following parties before accepting this engagement:
(a) Korinthian Maritime Holdings Ltd. (Cyprus Registration No. HE 387421) (b) Korinthian Bulkers (Singapore) Pte. Ltd. (c) Dnepr Shipholding Inc. (BVI Company No. 2014876) (d) Korinthian DMCC (Dubai, UAE) (e) Oceangate Ventures Ltd. (Cyprus Registration No. HE 401293) (f) Andrei Volkov (g) Sergei Volkov (h) Marina Kazakova (i) Alexei Demidov (j) Harkness Whitford & Co. (SRA Registration No. 614823)
HP should confirm in writing that it has no current or prior engagement with any of the above-named parties (or with any entity known to be associated with them) that would give rise to a conflict of interest, whether actual or potential. If any potential conflict is identified, HP should disclose the nature and extent of the potential conflict to C&H before proceeding with the engagement, so that the parties can determine whether appropriate safeguards can be put in place.
10. Terms of Engagement
This letter of instruction shall, together with HP's standard terms of engagement (a copy of which was provided to C&H on 22 July 2024 and has been reviewed by us), constitute the contractual basis for HP's engagement. In the event of any conflict or inconsistency between the terms of this letter and HP's standard terms of engagement, the terms of this letter shall prevail.
The engagement shall be governed by and construed in accordance with the laws of England and Wales. Any disputes arising out of or in connection with this engagement shall be subject to the exclusive jurisdiction of the courts of England and Wales.
Either party may terminate this engagement upon thirty (30) days' written notice to the other party. In the event of termination, HP shall be entitled to payment for all work performed and disbursements properly incurred up to the effective date of termination, in accordance with the fee arrangements set out in Section 7 above. Upon termination, HP shall promptly return to C&H all documents and materials provided in connection with the engagement and shall deliver all work product (including draft reports and working papers) to C&H.
11. Acceptance and Next Steps
We would be grateful if you could countersign and return a copy of this letter at your earliest convenience to confirm HP's acceptance of the engagement on the terms set out herein. A countersignature block is provided at the foot of this letter for this purpose.
Upon receipt of the countersigned letter, C&H will immediately provide the initial documentation package described in Section 5 above, and we will arrange a kick-off call with the full C&H and HP teams to discuss the engagement in detail, agree the priorities for the first two weeks, and establish the working arrangements for the weekly progress calls.
We reiterate the urgency of this engagement. The preliminary asset tracing report is needed by 15 August 2024 to support imminent enforcement filings and court hearings across multiple jurisdictions. Any delay in commencing the work may have a direct and material impact on TSL's ability to recover the sums due under the Award. We are confident that HP is well-placed to deliver the required work within the timeline, and we look forward to working with your team on this matter.
We are grateful for your attention to this matter and look forward to receiving your confirmation of acceptance at your earliest convenience. Please do not hesitate to contact me or Hannah Brinkley should you have any questions regarding the terms of this instruction.
Yours sincerely,
CALDERWOOD & HARKNESS LLP
By: ________
Samuel Eklund Responsible Partner, Litigation (General) Calderwood & Harkness LLP 45 Moorgate London EC2R 6AR
Date: 1 August 2024
ACCEPTANCE
Hartwell Pemberton LLP hereby accepts the engagement on the terms set out in this instruction letter and confirms that it has carried out a conflicts check in accordance with Section 9 above and that no conflict of interest has been identified.