PRIVILEGED AND CONFIDENTIAL — SUBJECT TO LEGAL PROFESSIONAL PRIVILEGE
CALDERWOOD & HARKNESS LLP
45 Moorgate, London EC2R 6AR
MEMORANDUM
This memorandum is subject to legal professional privilege. It has been prepared for the exclusive use of the addressees and is not to be disclosed, copied, or distributed to any third party without the prior written consent of Calderwood & Harkness LLP. Nothing in this memorandum constitutes advice to any person other than the addressees.
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1. PURPOSE AND SCOPE
This memorandum analyzes the corporate structure of Oceangate Ventures Ltd. ("Oceangate"), a company incorporated in the Republic of Cyprus under Registration No. HE 401293, with a view to supporting the enforcement of LCIA Award No. 224718 (dated 28 June 2024) against Korinthian Maritime Holdings Ltd. ("KMH") in the Republic of Cyprus. The Award was rendered in favour of our client, Thalassa Shipping & Logistics SA ("TSL"), and the total sums due from KMH under the Award and the Costs Order amount to £108,600,000, exclusive of post-award interest. Enforcement proceedings are pending before the Nicosia District Court under Case No. 2247/2024, and this memorandum is prepared in advance of the anticipated enforcement order.
The scope of this memorandum encompasses the following:
(i) mapping KMH's ownership of Oceangate and Oceangate's downstream holdings, including the fleet single-purpose vehicle ("SPV") entities and their associated vessels;
(ii) assessing the value of Oceangate shares as an enforceable asset available for recovery in Cyprus;
(iii) analyzing the legal mechanism for forced sale of shares under Cypriot execution law, including the procedural steps, likely timeline, and coordination requirements with the English Worldwide Freezing Order ("WFO"); and
(iv) identifying practical considerations, risks, and potential obstacles to enforcement, together with recommended mitigation strategies.
This memorandum draws principally upon the following sources:
• Hartwell Pemberton LLP's ("HP") Preliminary Asset Tracing Report dated 15 August 2024 (the "Preliminary HP Report");
• HP's Updated Asset Tracing Report dated 1 October 2024 (the "Updated HP Report");
• Cyprus Registrar of Companies filings for Oceangate Ventures Ltd. (HE 401293) and Korinthian Maritime Holdings Ltd. (HE 387421);
• Information obtained through KMH's disclosure obligations under the Worldwide Freezing Order granted by the English Commercial Court on 16 July 2024 in Claim No. CL-2024-000487 (the "WFO Disclosure"); and
• Publicly available vessel registry and maritime databases.
This memorandum has been prepared in support of our instructions to local counsel in Cyprus, Kyprianos Makrides & Partners ("KM&P"), of 15 Grivas Digenis Avenue, Nicosia 1066, Cyprus. The team at KM&P is led by Andreas Kyprianos (Senior Partner) and Nadia Makrides (Partner), who have conduct of the enforcement proceedings in Case No. 2247/2024 before the Nicosia District Court. KM&P's advice on questions of Cypriot procedural law should be treated as authoritative; this memorandum addresses the English law, factual, and strategic dimensions of the enforcement analysis.
This memorandum should be read in conjunction with our separate memoranda on (a) the Cyprus enforcement procedure under the New York Convention and the Cyprus Arbitration Law, Cap. 4 (the "NYC Enforcement Memo"), and (b) our response to KMH's opposition arguments in Case No. 2247/2024 (the "Opposition Response Memo"). It is also informed by and should be read alongside the HP Reports referenced above, which are not reproduced herein but are available on the matter file.
2. BACKGROUND
2.1 The Award and Enforcement Context
The Tribunal and the Award
LCIA Award No. 224718 was issued on 28 June 2024 following a substantive hearing conducted over twelve sitting days between 8 January 2024 and 2 February 2024. The arbitral tribunal was constituted as follows:
• Presiding Arbitrator: Sir Malcolm Fenton-Clarke
• Claimant-nominated Arbitrator: Professor Athena Drakopoulos
• Respondent-nominated Arbitrator: Dr. Henrik Dalmqvist
• Tribunal Secretary: Fiona Beckett
The Award was rendered unanimously in favour of TSL. The total sum awarded comprises the following:
In addition, the Tribunal allocated 85% of the total costs of the reference to KMH, resulting in the following costs order:
The grand total of the sums due from KMH to TSL under the Award and Costs Order is therefore £108,600,000. In addition, post-award interest accrues at the rate of 5.25% per annum simple on the principal sum of £96,450,000 from 29 June 2024 until payment. As at the date of this memorandum, the accrued post-award interest amounts to approximately £1,264,000 and continues to accrue at approximately £13,870 per day.
The Award Debtor — Korinthian Maritime Holdings Ltd.
The Award Debtor is Korinthian Maritime Holdings Ltd. ("KMH"), a private limited company incorporated in the Republic of Cyprus under Registration No. HE 387421. KMH's registered address is 28 Themistokli Dervi Avenue, Suite 601, Nicosia 1066, Cyprus. KMH is the parent entity of a substantial international shipping group that, prior to the dispute, controlled a fleet of approximately 18 dry-bulk carriers held through single-purpose vehicle subsidiaries.
KMH is beneficially owned by the Volkov family through a series of BVI and Cypriot holding structures. The key individuals associated with KMH are as follows:
• Andrei Volkov — Ultimate beneficial owner ("UBO") and de facto director. Russian national, resident in Cyprus since approximately 2015. Mr. Volkov is understood to exercise ultimate control over all KMH group entities and to direct the commercial and financial affairs of the group.
• Sergei Volkov — Director of KMH. Son of Andrei Volkov. Cypriot and Russian dual national. Mr. Volkov's role is principally in the direction of chartering and commercial operations.
• Marina Kazakova — Chief Financial Officer of the KMH group. Russian national. Ms. Kazakova is responsible for the group's financial management, treasury functions, and banking relationships.
• Alexei Demidov — Director of Fleet Operations. Russian national. Mr. Demidov oversees vessel technical management, classification society compliance, and operational matters.
KMH's estimated pre-dispute net asset value was approximately USD $280,000,000, derived principally from the fleet of dry-bulk carriers and associated receivables, bank balances, and operational assets. The group's revenues are generated from time-charter and voyage-charter income, with chartering operations coordinated from Nicosia and Dubai.
The Award Creditor — Thalassa Shipping & Logistics SA
The Award Creditor is Thalassa Shipping & Logistics SA ("TSL"), a Société Anonyme organized under Greek law, with its registered office at 14 Akti Miaouli, 4th Floor, Piraeus 185 35, Greece (Tax Identification Number AFM: EL-801456729). TSL was founded in 1987 by the Papadimitriou family and has grown to operate a fleet of 34 vessels. TSL's annual revenues for the financial year ending 31 December 2023 were approximately €620,000,000. The ownership of TSL is divided between the Papadimitriou family trust (72%) and Aegean Capital Partners SA (28%).
TSL is represented in the English proceedings by this firm, Calderwood & Harkness LLP, and in the Cypriot proceedings by KM&P.
2.2 Multi-Jurisdictional Enforcement Proceedings
TSL has pursued a coordinated, multi-jurisdictional enforcement strategy designed to maximize the prospects of full recovery of the sums due under the Award. The principal proceedings are summarized below.
England and Wales
An application for enforcement of the Award under section 66 of the Arbitration Act 1996 was filed on 15 July 2024 in the Commercial Court under Claim No. CL-2024-000487. Permission to enforce the Award as a judgment of the court was granted by Mr. Justice Ashworth on 2 August 2024.
A Worldwide Freezing Order was granted on an ex parte basis on 16 July 2024, restraining KMH from dealing with or disposing of its assets worldwide up to the value of £108,600,000. The WFO was continued with modifications following an inter partes hearing on 30 July 2024. The WFO imposes disclosure obligations on KMH, requiring identification and disclosure of all assets worldwide exceeding £10,000 in value. The WFO Disclosure provided by KMH has been a primary source of information for the asset tracing exercise conducted by HP and for the preparation of this memorandum.
An interim third-party debt order was granted against Meridian Trust Bank Ltd. (50 Lombard Street, London EC3V 9EA) on 5 August 2024 in respect of funds held in KMH's accounts at that bank. The order was made final on 3 September 2024, resulting in the garnishment of £18,720,000, which has been received into TSL's English solicitors' client account.
KMH filed a set-aside application under sections 68 and 69 of the Arbitration Act 1996 on 19 August 2024. That application was dismissed by Mr. Justice Ashworth on 11 October 2024, with costs awarded to TSL on an indemnity basis. The set-aside application has therefore not impeded the enforcement process.
Cyprus. An application for recognition and enforcement of the Award under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958), as implemented by the Cyprus International Commercial Arbitration Law (Law 101/1987) and the Arbitration Law, Cap. 4, was filed on 9 August 2024 in the Nicosia District Court under Case No. 2247/2024.
A freezing injunction was granted by the Nicosia District Court on 12 August 2024, restraining KMH from disposing of, dealing with, or diminishing the value of its shares in Oceangate Ventures Ltd. (HE 401293) and its Cyprus bank accounts, pending determination of the enforcement application. The freezing injunction is the critical preservation measure underpinning the analysis in this memorandum. KMH, through its Cyprus counsel Vassiliadis & Economou LLC, has opposed the enforcement application; their arguments are addressed in the Opposition Response Memo.
The enforcement order is pending at the date of this memorandum and is anticipated to be granted in the near term.
Singapore. An application for leave to enforce the Award under the International Arbitration Act (Cap. 143A) was filed on 14 August 2024 in the Singapore High Court under Originating Summons No. 872/2024. Leave to enforce was granted on 6 September 2024.
In parallel, an in rem arrest of the M/V Crimson Horizon (IMO 9801334, Handymax Bulk Carrier, 37,500 DWT, Liberian flag) was effected on 20 August 2024 while the vessel was at berth at Jurong Port, Singapore. The vessel was owned by Korinthian Bulkers (Singapore) Pte. Ltd. (80 Robinson Road, #14-02, Singapore 068898), an entity within the KMH group structure which is understood to sit within the Oceangate holding structure. The arrest and subsequent proceedings in Singapore are addressed in a separate memorandum.
United Arab Emirates
An application for recognition and enforcement of the Award was filed on 22 August 2024 in the Dubai Court of First Instance under Case No. 1893/2024. A precautionary attachment order was granted on 28 August 2024 over bank accounts held by Korinthian DMCC at Emirates Gulf Commercial Bank PJSC. The UAE proceedings are ongoing.
KMH's Legal Representation
KMH is represented in the English proceedings by Harkness Whitford & Co. (12 Fetter Lane, London EC4A 1JP; SRA No. 614823), with the matter being handled by Richard Harkness (Senior Partner) and Catherine Whitford (Partner). In Cyprus, KMH is represented by Vassiliadis & Economou LLC (7 Stasinou Avenue, 3rd Floor, Nicosia 1060), with the matter being led by Georgios Vassiliadis (Managing Partner) and Eleni Economou (Partner).
2.3 Relevance of Oceangate to Enforcement
KMH's 100% shareholding in Oceangate Ventures Ltd. represents one of the most significant identifiable assets located in Cyprus that is available for enforcement. The significance of the Oceangate shareholding as an enforcement target arises from three principal factors.
First, the shareholding is a direct, registered asset of the judgment debtor (KMH), held in KMH's own name. Unlike downstream vessel-level assets, which are owned by separate legal entities and require either piercing the corporate veil or in rem proceedings against individual vessels, the Oceangate shares can be seized and sold as a straightforward exercise of execution against the judgment debtor's property in Cyprus.
Second, the value of the shareholding is substantial. As the primary intermediate holding vehicle through which KMH controls the majority of its fleet of approximately 18 dry-bulk carriers, Oceangate's net asset value — even after accounting for vessel-level debt and the recoveries already made in other jurisdictions — is estimated to be in the range of USD $80,000,000 to USD $120,000,000. A forced sale of the shares, even at a significant discount, would represent a material recovery toward satisfaction of the outstanding judgment.
Third, the freezing injunction granted on 12 August 2024 by the Nicosia District Court specifically covers the Oceangate shares, preventing KMH from disposing of or transferring its shareholding pending enforcement. This preservation measure ensures that the shares remain available for execution once the enforcement order is granted.
The analysis of the Oceangate shareholding is therefore central to the overall enforcement strategy in Cyprus, and to the prospects of achieving a meaningful recovery in this jurisdiction.
3. CORPORATE STRUCTURE ANALYSIS
3.1 Oceangate Ventures Ltd. — Key Entity Details
The key corporate particulars of Oceangate Ventures Ltd. are as follows:
It is notable that Oceangate's registered address at Suite 604, 28 Themistokli Dervi Avenue, Nicosia 1066, is in the same building complex as KMH's registered address at Suite 601 of the same building. This is consistent with the two entities sharing administrative and corporate services, and confirms Oceangate's position as a closely related group entity managed from the same offices as KMH. The shared registered address is a common feature of Cypriot holding structures in the international shipping sector, where a corporate services provider or a small in-house administrative team manages multiple group entities from a single location.
Oceangate's role within the KMH group is that of an intermediate holding company, interposed between KMH (the parent and award debtor) and the fleet SPVs that own or operate the individual vessels. Oceangate does not itself appear to have any independent trading operations, employees, or revenue-generating activities. Its value is derived entirely from its holdings in downstream subsidiary entities.
The precise details of Oceangate's incorporation date, authorized and issued share capital, current directors, and registered charges or encumbrances need to be confirmed through a fresh Cyprus Registrar of Companies search to be conducted by KM&P. This is addressed in the Recommendations section of this memorandum (Section 8 below).
3.2 Ownership of Oceangate — KMH's 100% Shareholding
Based on the Preliminary HP Report, the Updated HP Report, the WFO Disclosure provided by KMH in the English proceedings, and the Cyprus company registry filings reviewed to date, KMH holds 100% of the issued share capital of Oceangate Ventures Ltd. The shares are registered in the name of Korinthian Maritime Holdings Ltd. (HE 387421) on Oceangate's register of members.
No minority shareholders, nominee holders, or other registered shareholders have been identified. The HP Reports confirm that no evidence has been found of any transfer, assignment, charge, pledge, or encumbrance affecting KMH's shares in Oceangate as at the date of the freezing injunction (12 August 2024). The WFO Disclosure made by KMH in the English proceedings is consistent with this position, as KMH disclosed its shareholding in Oceangate as an asset without identifying any encumbrances.
However, it is important to note two caveats. First, the information available from the Cyprus Registrar of Companies reflects the position as at the date of the most recent filings, and it is possible that changes may have been made to the share register that have not yet been reflected in the public filings. The freezing injunction granted on 12 August 2024 should, as a matter of law, prevent any such changes from being given effect, but the possibility of non-compliance cannot be entirely excluded. Second, it is possible that informal or unregistered arrangements (such as equitable charges, beneficial trust arrangements, or side agreements) may exist in relation to the shares, which would not appear on the register. The WFO Disclosure obligations imposed on KMH should have required disclosure of any such arrangements, but the completeness and accuracy of KMH's disclosure cannot be taken for granted.
We therefore recommend that KM&P conduct a fresh search of the Cyprus company registry to confirm the current position as at the date closest to the anticipated enforcement order, and to identify any changes that may have been registered since the freezing injunction was granted.
3.3 Oceangate's Downstream Holdings — Fleet SPV Structure
Oceangate serves as the direct or indirect parent of multiple single-purpose vehicle entities that own individual vessels within the KMH fleet. The use of single-purpose vehicle subsidiaries to hold individual vessels is standard practice in the international shipping industry and serves to segregate vessel-level liabilities (including ship mortgage debt, maritime liens, and operational claims) from the broader group. The key downstream entities identified through HP's asset tracing work are set out below.
3.3.1 Dnepr Shipholding Inc.
Dnepr Shipholding Inc. ("Dnepr") is a BVI-incorporated entity that serves as the vessel-owning SPV for two of the vessels central to the underlying LCIA arbitration. The vessels owned by Dnepr are as follows:
M/V *Aegean Fortuna* (IMO 9784521): A Supramax Bulk Carrier of 58,200 DWT, registered under the marshall Islands flag. This vessel was the subject of the principal head of claim in the arbitration — the wrongful early redelivery claim — for which the Tribunal awarded damages of £42,300,000. KMH had effected early redelivery of the vessel on 18 June 2022, approximately 14 months before the contractual redelivery date, in circumstances that the Tribunal found constituted a repudiatory breach of the charterparty. The vessel remains an operational asset within the KMH fleet and contributes to the value of the Dnepr SPV and, by extension, of Oceangate.
M/V *Volga Spirit (IMO 9756892): A Panamax Bulk Carrier of 76,400 DWT, registered under the Cyprus flag. This vessel was the subject of the fabricated off-hire deductions claim, for which the Tribunal awarded restitution of £2,740,000. The Tribunal found that KMH had manufactured fictitious off-hire events and submitted fabricated maintenance reports in order to reduce hire payments. The M/V Volga Spirit is a larger and likely more valuable vessel than the M/V Aegean Fortuna and was last reported at Fujairah anchorage. As a Cyprus-flagged vessel, the Volga Spirit presents additional enforcement possibilities, and its current location at Fujairah makes it a potential target for in rem* arrest in the UAE as a complementary enforcement measure.
Dnepr is held by Oceangate, either directly or through another intermediate entity within the group structure. HP's tracing work has confirmed the chain of ownership running from KMH through Oceangate to Dnepr, though the precise intermediate steps (if any) remain to be fully documented. The existence of any intermediate entities does not affect the core analysis: the value represented by Dnepr and its vessels ultimately flows to Oceangate as the immediate parent (or grandparent) holding company.
3.3.2 Other Fleet SPVs
HP's asset tracing work has identified that Oceangate holds interests in additional fleet SPVs beyond Dnepr, although the precise number and identities of all such SPVs require further investigation. The WFO Disclosure provided by KMH identified certain subsidiaries, but the disclosure was structured at a high level and did not provide a comprehensive organizational chart of the entire group. The Updated HP Report is continuing to refine the picture of the full group structure.
One additional entity that has been identified is Korinthian Bulkers (Singapore) Pte. Ltd., registered at 80 Robinson Road, #14-02, Singapore 068898. This entity owned the M/V Crimson Horizon (IMO 9801334, Handymax Bulk Carrier, 37,500 DWT, Liberian flag), which was the subject of the outstanding hire and damages claim in the arbitration (£28,150,000). The M/V Crimson Horizon was arrested in Singapore on 20 August 2024, and subsequent proceedings have been commenced there. Korinthian Bulkers (Singapore) Pte. Ltd. appears to sit within the Oceangate structure, though its precise position in the holding chain — whether it is a direct subsidiary of Oceangate or is held through further intermediate entities — requires confirmation through the ongoing HP investigation and the WFO Disclosure follow-up.
Overall, Oceangate appears to be the primary intermediate holding vehicle through which KMH controls the majority of its fleet of approximately 18 dry-bulk carriers. While the three vessels central to the arbitration (M/V Aegean Fortuna, M/V Crimson Horizon, and M/V Volga Spirit) have been specifically identified, the remaining fleet — which may comprise approximately 15 additional vessels — is also understood to be held, in whole or in part, through Oceangate and its subsidiary SPVs. The aggregate value of these vessels is a critical component of the overall value of Oceangate shares, as discussed in Section 4 below.
3.4 Volkov Family Ultimate Beneficial Ownership
The ultimate beneficial ownership of the KMH group, including Oceangate, traces to Andrei Volkov. The ownership chain, as identified by HP's asset tracing work, runs as follows:
Andrei Volkov (UBO, Russian national, Cyprus resident)
→ BVI and Cypriot holding structures (precise vehicles to be confirmed, but likely including one or more BVI companies and/or Cypriot trusts)
→ Korinthian Maritime Holdings Ltd. (HE 387421, Cyprus) — the Award Debtor
→ Oceangate Ventures Ltd. (HE 401293, Cyprus) — 100% owned by KMH
→ Fleet SPVs (including Dnepr Shipholding Inc. and Korinthian Bulkers (Singapore) Pte. Ltd.)
→ Individual vessels
Sergei Volkov, son of Andrei Volkov, serves as a Director of KMH. He may also hold directorships or officer positions in Oceangate and/or one or more of the fleet SPVs, a matter that should be verified through the Cyprus registry search recommended in Section 8.
The multi-layered structure — with BVI and Cypriot holding entities above KMH, and Oceangate and further SPVs below — is typical of international shipping groups operated by high-net-worth individuals. Such structures are designed in part to provide limited liability protection at the vessel level, to facilitate vessel financing (where ship mortgage lenders typically require single-purpose vehicle ownership), and to achieve tax efficiency across multiple jurisdictions. For the purposes of the present enforcement analysis, however, the critical fact is that KMH's 100% ownership of the Oceangate shares is a direct, registered, enforceable asset of the judgment debtor. The shares are not held through nominee structures or separated from KMH by any intermediary: they are registered in KMH's own name, and KMH is the entity against which the Award has been made.
3.5 Corporate Structure Diagram
A simplified corporate structure diagram is set out below and is reproduced in full in Appendix A. This diagram reflects the current understanding of the group structure based on HP's Reports and the WFO Disclosure, and is subject to refinement as further information becomes available.
Figure 1: Simplified Corporate Structure — KMH Group
Andrei Volkov (UBO — via BVI/Cypriot holding structures)
↓ Korinthian Maritime Holdings Ltd. (HE 387421, Cyprus) — Award Debtor
↓ (100% shareholding) Oceangate Ventures Ltd. (HE 401293, Cyprus) — Intermediate Holding Company
↓ Dnepr Shipholding Inc. (BVI, Co. No. 2014876) — M/V Aegean Fortuna (IMO 9784521, Supramax, 58,200 DWT, marshall Islands) — M/V Volga Spirit (IMO 9756892, Panamax, 76,400 DWT, Cyprus)
↓ Korinthian Bulkers (Singapore) Pte. Ltd. (Singapore) — M/V Crimson Horizon (IMO 9801334, Handymax, 37,500 DWT, Liberia) — sold post-arrest
↓ [Other fleet SPVs] — estimated to hold remaining vessels from approximately 18-vessel fleet
↓ (direct subsidiary) Korinthian DMCC (Dubai, UAE) — operational funds and receivables
↓ [Other direct KMH subsidiaries]
It should be noted that the precise position of Korinthian Bulkers (Singapore) Pte. Ltd. in the chain (whether directly or indirectly held by Oceangate) is subject to confirmation, as noted in Section 3.3.2 above. Similarly, the identities and holding positions of the other fleet SPVs are subject to the ongoing HP investigation.
4. VALUATION OF OCEANGATE SHARES
4.1 Approach to Valuation
The value of KMH's 100% shareholding in Oceangate derives entirely from Oceangate's underlying holdings — principally the fleet SPVs and the vessels they own and operate. Oceangate is a holding company with no independent trading operations, no employees, and no revenue-generating activities of its own. Its financial statements (to the extent available) are expected to reflect primarily the carrying value of its investments in subsidiaries, any intercompany receivables or payables, and minimal administrative costs.
In these circumstances, the most appropriate valuation methodology is a net asset value ("NAV") approach. Under this approach, the value of the Oceangate shares is derived by:
(a) determining the aggregate gross asset value of Oceangate's subsidiaries and their underlying assets (principally the vessels), at fair market value;
(b) deducting all liabilities at each level of the structure, including vessel-level financing (ship mortgage debt), intercompany loans, trade creditors, and any other operational or contingent liabilities; and
(c) arriving at the net equity value attributable to the Oceangate shares.
Two important caveats apply to this approach. First, the NAV methodology provides an indication of the intrinsic value of the shares, but the price achievable in a forced sale will almost certainly be lower than the NAV, due to the factors discussed in Sections 4.3 and 4.5 below (including the limited buyer pool for private holding company shares, information asymmetry, and the compulsory nature of the sale process). Second, the NAV calculation is only as reliable as the underlying data on vessel values and liabilities, and at this stage certain key data points remain estimates pending formal valuations and further disclosure.
4.2 Vessel Values — Key Assets
The principal assets underlying the Oceangate shareholding are the vessels held through Oceangate's subsidiary SPVs. The values of the three vessels central to the arbitration are as follows:
M/V *Aegean Fortuna* (IMO 9784521)
The M/V Aegean Fortuna is a Supramax Bulk Carrier of 58,200 DWT, registered under the marshall Islands flag. The vessel was built in approximately 2017 and is understood to be in good operational condition, with classification maintained through a recognized classification society. Based on market comparables provided by Northcape Maritime Advisory Ltd. ("Northcape"), the estimated fair market value of the vessel is in the range of USD $20,000,000 to USD $25,000,000, subject to formal valuation by Northcape and pending confirmation of the vessel's survey status, trading record, and maintenance history. The vessel is currently understood to be trading in the Indian Ocean / Persian Gulf region.
M/V *Volga Spirit* (IMO 9756892)
The M/V Volga Spirit is a Panamax Bulk Carrier of 76,400 DWT, registered under the Cyprus flag. It is a larger and more valuable vessel than the Aegean Fortuna, and its Panamax classification gives it access to a wider range of trades, including Panama Canal transits. Based on Northcape's preliminary market analysis, the estimated fair market value of the vessel is in the range of USD $25,000,000 to USD $32,000,000, subject to formal valuation. The vessel was last reported at Fujairah anchorage and may be currently idle or awaiting cargo. The Volga Spirit's value is significant not only for the purposes of the Oceangate share valuation but also as a potential independent enforcement target, should in rem arrest proceedings be commenced in the UAE or elsewhere.
M/V *Crimson Horizon* (IMO 9801334)
The M/V Crimson Horizon is a Handymax Bulk Carrier of 37,500 DWT, previously registered under the Liberian flag. As noted above, the vessel was arrested in Singapore on 20 August 2024. The vessel has since been sold by judicial sale, which took place on 15 November 2024 and achieved a sale price of USD $22,800,000 (approximately £18,330,000 at prevailing exchange rates). The proceeds of this sale have been recovered through the Singapore proceedings, with SGD $31,200,000 (approximately £18,450,000) recovered via garnishee proceedings against the proceeds.
The Korinthian Bulkers (Singapore) Pte. Ltd. SPV may retain residual cash balances following the judicial sale and satisfaction of ship mortgage and maritime lien claims. The position regarding any such residual proceeds is being monitored by the Singapore team. For the purposes of the Oceangate share valuation, the value attributable to the Crimson Horizon SPV has been substantially realized and should be excluded from the forward-looking NAV calculation, save for any residual amounts.
Additional Fleet Vessels
Beyond the three vessels central to the arbitration, KMH controlled a fleet of approximately 18 dry-bulk carriers prior to the dispute. Even accounting for the three named vessels and any sales or disposals that may have occurred in the interim, the remaining fleet held through Oceangate SPVs represents substantial value. HP's Updated Report estimates that the remaining fleet may comprise approximately 12 to 15 vessels, with an aggregate fair market value (before deduction of vessel-level debt) in the range of USD $180,000,000 to USD $250,000,000. These figures are necessarily approximate and depend on vessel ages, types, trading patterns, and current market conditions in the dry-bulk sector. A more precise valuation will require identification of all vessels within the Oceangate structure and individual valuations by Northcape.
4.3 Estimated NAV of Oceangate
KMH's estimated pre-dispute net asset value was approximately USD $280,000,000, with a significant proportion of that value held through Oceangate and its subsidiary SPVs. However, several factors have reduced the net assets available through Oceangate since the commencement of the dispute:
(a) the judicial sale of the M/V Crimson Horizon in Singapore and the recovery of proceeds by TSL through the garnishee proceedings;
(b) the garnishment of £18,720,000 from KMH's accounts at Meridian Trust Bank Ltd. in London;
(c) any other asset disposals, operational losses, or increases in indebtedness that may have occurred since the dispute arose; and
(d) the ongoing accrual of operational costs, financing costs, and legal fees across the group.
HP's analysis, drawing on the WFO Disclosure and publicly available information, suggests that the remaining net asset value of Oceangate — after accounting for the Crimson Horizon sale and other known dispositions — is estimated to be in the range of USD $80,000,000 to USD $120,000,000. This range is based on HP's assessment of the remaining fleet values (gross) less estimated vessel-level debt (ship mortgage financing), intercompany liabilities, and operational creditors. The range is necessarily broad, reflecting the uncertainty around several key variables, including:
• the precise number and identities of all vessels held through Oceangate SPVs;
• the current fair market values of those vessels, which are subject to dry-bulk market fluctuations;
• the outstanding balances of ship mortgage loans secured against individual vessels;
• the existence and quantum of intercompany loans or payables between Oceangate, KMH, and the SPVs; and
• any undisclosed liabilities or contingent claims.
For forced sale purposes, a discount from NAV is typical. The level of discount depends on a number of factors, including market conditions, the depth and quality of the buyer pool, the availability of information for due diligence, and the urgency of the sale process. Based on comparable transactions and HP's experience, a discount in the range of 20% to 40% from NAV is likely for a forced sale of the Oceangate shares. This would yield an estimated forced sale value in the range of approximately USD $48,000,000 to USD $96,000,000 (or approximately £38,000,000 to £77,000,000 at current exchange rates). The wide range reflects the significant uncertainty around both the NAV and the applicable discount.
4.4 Encumbrances and Liabilities
The valuation of the Oceangate shares is directly affected by the liabilities that sit within the Oceangate structure. The principal categories of liabilities are as follows:
Ship mortgage financing. It is standard practice in the shipping industry for vessel-owning SPVs to fund vessel acquisitions partially through ship mortgage loans provided by commercial banks or specialist shipping lenders. These loans are typically secured by first-priority ship mortgages over the relevant vessels, assignments of earnings and insurances, and corporate guarantees from the parent entity (here, KMH or Oceangate). The outstanding balance of ship mortgage debt across the Oceangate SPVs will reduce the equity value available to the shareholder (KMH) through the Oceangate shares. HP's preliminary estimates suggest that vessel-level debt across the Oceangate fleet may be in the range of USD $80,000,000 to USD $120,000,000, but this requires verification.
Intercompany loans. It is common in multi-entity shipping groups for intercompany loans to exist between the parent, intermediate holding companies, and SPVs. If KMH or related parties (including entities above KMH in the holding chain) hold intercompany claims against Oceangate, these could be asserted to reduce the distributable value of the Oceangate shares. Conversely, if Oceangate holds intercompany receivables from KMH or other entities, these may constitute additional assets. The nature and quantum of intercompany balances need to be verified through the WFO Disclosure and KM&P's inquiries with the Cyprus court.
Operational liabilities. These include unpaid trade creditors (bunker suppliers, port agents, repair yards), crew wage claims, and other operational liabilities of the SPVs. While these are typically vessel-level liabilities and would not normally appear as direct obligations of Oceangate, they affect the equity value of the SPVs and therefore the value of Oceangate's shareholdings in those SPVs.
Contingent liabilities. These may include pending or threatened litigation, regulatory claims, environmental liabilities, or other contingent obligations. No specific contingent liabilities have been identified to date, but the possibility cannot be excluded.
The verification of these liabilities is essential to refining the valuation of the Oceangate shares and should be prioritized in the next phase of the enforcement preparation.
4.5 Valuation for Forced Sale Purposes in Cyprus
For the purposes of the forced sale process in the Nicosia District Court, the court will need to determine (or at least consider) the value of the shares being sold. Under Cypriot execution procedures, the court may order an appraisement of the asset to be sold, and the court may decline to approve a sale at a price that is manifestly below the value of the asset.
We recommend the following approach to the valuation evidence:
(a) Instruct a Cyprus-qualified valuer, in coordination with KM&P, to provide a formal independent valuation of the Oceangate shares for the purposes of the forced sale. The valuer should be experienced in the valuation of private company shares in holding structures and should be acceptable to the Nicosia District Court.
(b) Supplement the Cyprus valuation with Northcape Maritime Advisory's vessel valuations for the underlying fleet. Northcape should be instructed to prepare formal desktop valuations for all identified vessels within the Oceangate structure, based on market comparables, recent sale data, and current dry-bulk market conditions. These valuations will underpin the NAV calculation.
(c) Prepare a comprehensive NAV model that aggregates the vessel values, deducts identified liabilities (ship mortgage debt, intercompany balances, operational creditors), and arrives at a range for the equity value of the Oceangate shares. HP should assist in preparing this model, drawing on the financial information obtained through the WFO Disclosure and their independent investigations.
The formal valuation evidence should be prepared in a form suitable for filing with the Nicosia District Court and should be ready to deploy promptly once the enforcement order is granted.
5. FORCED SALE MECHANISM UNDER CYPRIOT EXECUTION LAW
5.1 Legal Framework
Following the grant of the enforcement order in Case No. 2247/2024 — which application is currently pending before the Nicosia District Court — TSL will be entitled to execute the judgment against KMH's assets in Cyprus. The enforcement order, once granted, will recognize the LCIA Award as equivalent to a judgment of the Nicosia District Court, entitling TSL to avail itself of the full range of Cypriot execution remedies.
Under the Cypriot Civil Procedure Rules (as applied by the Courts of Justice Law 14/1960 and the Civil Procedure Law, Cap. 6) and the relevant execution provisions, shares in a Cypriot company constitute attachable movable property that can be seized and sold by way of forced (judicial) sale in satisfaction of a money judgment. The forced sale of shares is a recognized and established execution remedy under Cypriot law, and KM&P have confirmed that the procedural framework is well-settled, although the procedure is used relatively infrequently and the practical mechanics may require careful management.
The freezing injunction granted on 12 August 2024 already prevents KMH from disposing of, dealing with, or diminishing the value of its shares in Oceangate, thereby preserving the shares for execution. The freezing injunction will continue in effect until the enforcement order is granted and the execution process is completed, unless discharged earlier by order of the court.
5.2 Procedural Steps for Forced Sale of Shares
The forced sale of KMH's shares in Oceangate will proceed through the following procedural steps, as advised by KM&P and consistent with the Cypriot Civil Procedure Rules:
Step 1: Obtain Enforcement Order. The application for recognition and enforcement of the Award under the New York Convention is pending in Case No. 2247/2024. The grant of the enforcement order is a prerequisite for all subsequent execution steps. Based on the strength of the application and the analysis in the NYC Enforcement Memo, we are optimistic that the order will be granted in the near term. KMH's opposition arguments, as addressed in the Opposition Response Memo, do not present a substantial basis for refusal.
Step 2: Application for Execution. Following the grant of the enforcement order, TSL (through KM&P) will apply to the Nicosia District Court for a writ of execution (entoli ekteleseos) specifically targeting KMH's shares in Oceangate Ventures Ltd. (HE 401293). The application will identify the asset to be seized (100% of the issued share capital of Oceangate, registered in the name of KMH) and the judgment to be enforced (the enforcement order recognizing LCIA Award No. 224718).
Step 3: Registration of Charge or Notice. A notice of the execution will be filed with the Cyprus Registrar of Companies against Oceangate's share register, to give public notice of the seizure and to prevent any subsequent dealings with the shares. This step provides additional protection beyond the existing freezing injunction and ensures that any third party who may attempt to acquire the shares is on notice of TSL's execution rights.
Step 4: Valuation. The court may order an appraisement of the shares prior to the sale. As discussed in Section 4.5 above, we recommend proactively providing valuation evidence to the court — including a formal independent valuation of the Oceangate shares and supporting vessel valuations from Northcape — in order to establish a credible baseline for the sale price and to facilitate the court's determination. The provision of robust valuation evidence will also help to resist any attempt by KMH to argue that the shares are being sold at an undervalue.
Step 5: Court-Ordered Sale. The shares will be offered for sale pursuant to the court's directions. The sale may take the form of either a public auction or a private sale, as directed by the court. In practice, the court bailiff (epoptis) will conduct the sale under the supervision of the court. The court may impose a reserve price based on the valuation evidence. The mechanics of the sale — including the method of advertising, the period for the submission of bids, and the terms and conditions of sale — will be determined by the court, with input from the parties.
Given the specialized nature of the asset (shares in a private shipping holding company), a private sale process may be more appropriate than a public auction, as it would allow for a more targeted marketing effort to potential purchasers from the shipping industry and investment fund communities. KM&P should be consulted on the court's likely preference and the procedural requirements for each method.
Step 6: Transfer of Shares. Upon completion of the sale and receipt of the purchase price, the court will order the transfer of the shares in Oceangate from KMH to the purchaser. The court order will direct the directors of Oceangate (or, if they fail to cooperate, a person appointed by the court) to register the transfer of shares on Oceangate's register of members. The Cyprus Registrar of Companies will also register the change of ownership. The court order overcomes the need for KMH's consent to the transfer, which would otherwise be required as a matter of company law for a private limited company.
Step 7: Distribution of Proceeds. The sale proceeds will be received by the court bailiff and distributed in the following order of priority:
(a) costs and expenses of the execution process (including the bailiff's fees, valuation costs, and legal costs of the sale);
(b) satisfaction of TSL's judgment, up to the full amount outstanding under the enforcement order; and
(c) any surplus to be returned to KMH.
5.3 Practical Considerations
Several practical considerations bear on the likely outcome of the forced sale process.
Buyer pool. The shares in Oceangate are shares in a private holding company that controls shipping SPVs owning dry-bulk carriers. This is a specialized asset that will be of interest to a limited buyer pool, most likely comprising established shipping companies, maritime investment funds, and potentially private equity funds with shipping sector experience. The limited buyer pool may depress the achievable price, as there will be fewer competitive bidders. However, the underlying vessels are liquid assets with readily ascertainable market values, which should attract interest from sophisticated buyers capable of assessing the value proposition.
Information asymmetry. A prospective purchaser of the Oceangate shares will want to conduct thorough due diligence on Oceangate's subsidiaries, the vessels, their charter arrangements, their technical condition, their regulatory compliance, and the liabilities at each level of the structure. The forced sale process, particularly if conducted by public auction, may not facilitate comprehensive due diligence. This information asymmetry typically results in a risk discount applied by bidders, which reduces the achievable price. To mitigate this, TSL should seek to make available to potential purchasers as much information as possible (consistent with the disclosure obtained through the WFO and HP's investigations), and should seek the court's assistance in requiring Oceangate and KMH to cooperate with the provision of information to prospective purchasers.
KMH's potential cooperation or obstruction. KMH, through Andrei Volkov, Sergei Volkov, and the other officers of the group, may seek to obstruct the sale process. Possible tactics include refusing to cooperate with the transfer of shares, withholding information about Oceangate's subsidiaries and liabilities, causing Oceangate or its SPVs to take actions that reduce the value of the shares (such as entering into unfavourable contracts, incurring additional debt, or disposing of assets at the SPV level), or challenging the sale process through procedural applications in the Cyprus court. The freezing injunction and WFO disclosure obligations provide significant protection against such tactics, but they do not eliminate the risk entirely. Vigilant monitoring by HP and prompt enforcement action in the event of non-compliance will be essential.
Intercompany liabilities. If KMH or related parties (including entities above KMH in the holding chain, or Andrei Volkov personally) hold intercompany claims against Oceangate, these claims could be asserted in the context of the forced sale process to argue that the shares have little or no equity value. Such claims may be genuine (reflecting historical funding arrangements within the group) or may be fabricated or inflated as a defensive tactic. TSL should seek full disclosure of all intercompany claims and balances as part of the execution process, and should be prepared to challenge any claims that appear to be artificial or exaggerated.
Downstream vessel arrests as alternative or complement. If the forced sale process for the Oceangate shares proves difficult, protracted, or yields insufficient proceeds, TSL retains the option of pursuing alternative enforcement measures against the underlying assets. In particular, TSL may pursue in rem arrest of individual vessels owned by Oceangate's SPVs in jurisdictions where such vessels are located. The M/V Volga Spirit, owned by Dnepr Shipholding Inc. (a subsidiary of Oceangate), is last reported at Fujairah anchorage and is a prime candidate for arrest in the UAE. Vessel arrest proceedings can be pursued independently of, and in parallel with, the forced sale of the Oceangate shares, subject to the overall cap of the WFO and the obligation not to over-recover.
5.4 Coordination with the England WFO
The Worldwide Freezing Order granted on 16 July 2024, continued with modifications on 30 July 2024, by Mr. Justice Ashworth in Claim No. CL-2024-000487, covers KMH's assets worldwide up to the value of £108,600,000. KMH's 100% shareholding in Oceangate falls within the scope of the WFO as an asset of KMH.
Before the forced sale of the Oceangate shares is commenced in Cyprus, TSL should ensure that the English Commercial Court is notified of the intended execution, consistent with the standard practice under a WFO and any specific notification obligations contained in the WFO order. The purpose of this notification is to keep the court informed of the progress of enforcement across all jurisdictions and to maintain the integrity of the WFO regime. It is important to note, however, that the WFO does not prevent TSL from executing against KMH's assets — its purpose is to prevent KMH from dissipating its assets in advance of or in defiance of enforcement. TSL, as the judgment creditor, is fully entitled to execute the judgment against any of KMH's assets, including assets subject to the WFO.
Once the proceeds of the forced sale are received, these must be credited against the total outstanding amount under the Award and Costs Order, and the maximum sum frozen under the WFO may need to be adjusted downward to reflect the recovery. This adjustment should be effected by application to the English Commercial Court. The coordination of multi-jurisdictional recoveries and the adjustment of the WFO maximum is addressed in further detail in the separate conflict of laws memorandum prepared by this firm.
5.5 Expected Timeline
Assuming that the enforcement order in Case No. 2247/2024 is granted on or about 30 September 2024, the forced sale process for the Oceangate shares is estimated to proceed on the following indicative timeline:
The actual timeline will depend on the Cyprus court's calendar, any procedural applications by KMH, the time required for valuation, and the mechanics of the sale process. KM&P should be instructed to commence the execution application promptly following the enforcement order, with a target completion by late October or early November 2024.
KM&P have indicated that, subject to the court's timetable and absent significant procedural challenges from KMH, the timeline set out above is realistic and achievable.
6. BANK ACCOUNTS IN CYPRUS
6.1 KMH Cyprus Bank Accounts
In addition to the Oceangate shares, KMH holds bank accounts in Cyprus which are also subject to the freezing injunction granted by the Nicosia District Court on 12 August 2024. These bank accounts represent a second category of KMH assets in Cyprus available for enforcement.
Specific account details have been identified through the WFO Disclosure provided by KMH in the English proceedings and through HP's independent asset tracing investigations. The identities of the banks, account numbers, and approximate balances are recorded in HP's Updated Report and have been communicated to KM&P for the purposes of the enforcement proceedings. For security and confidentiality reasons, the detailed account information is not set out in this memorandum but is available on the matter file and has been shared with KM&P under separate cover.
The enforcement strategy in Cyprus contemplates pursuing both the forced sale of the Oceangate shares and the garnishment or attachment of KMH's Cyprus bank accounts in parallel, in order to maximize the total recovery from the Cyprus jurisdiction. The combined recovery from both avenues is targeted at approximately £22,350,000 (GBP equivalent from EUR at prevailing exchange rates), reflecting the aggregate of the anticipated forced sale proceeds and the bank account balances.
Proceeds recovered from the Cyprus bank accounts, as well as proceeds from the forced sale of the Oceangate shares, will be 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. The mechanics of the remittance, including any currency conversion and transfer arrangements, are being coordinated by KM&P and TSL's treasury department.
The garnishment of the Cyprus bank accounts may be effected through the same execution process as the forced sale of the Oceangate shares, or through a separate garnishee order application. KM&P should be instructed to advise on the most efficient procedural route for the bank account recovery and to pursue it in parallel with the Oceangate share sale.
7. RISKS AND MITIGATION
7.1 Opposition by KMH
KMH, through its Cyprus counsel Vassiliadis & Economou LLC (Georgios Vassiliadis, Managing Partner; Eleni Economou, Partner), has opposed the enforcement application in Case No. 2247/2024. KMH's opposition arguments are addressed in detail in the separate Opposition Response Memo. In summary, KMH's principal grounds of opposition relate to alleged procedural irregularities in the arbitration, an assertion that the Award is contrary to Cypriot public policy, and various technical objections to the form of the enforcement application. Based on our analysis and KM&P's advice, none of these grounds presents a substantial basis for refusal of recognition and enforcement under the New York Convention, and we remain confident that the enforcement order will be granted.
Beyond the enforcement application itself, KMH may also seek to challenge or delay the forced sale process through further procedural applications, including applications to stay execution, appeals against the enforcement order, and objections to the valuation or the terms of the sale. Early preparation of comprehensive valuation evidence, proactive engagement with the Nicosia District Court (through KM&P), and a robust procedural posture will help to mitigate the risk of delay. KM&P should be instructed to anticipate and prepare for such procedural challenges and to respond promptly to any applications by KMH.
7.2 Asset Stripping / Transfer Risk