IN THE HIGH COURT OF JUSTICE BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES COMMERCIAL COURT (QBD)
Claim No. CL-2024-000487
BETWEEN:
THALASSA SHIPPING & LOGISTICS SA Claimant
— and —
KORINTHIAN MARITIME HOLDINGS LTD. Defendant
SKELETON ARGUMENT ON BEHALF OF THE CLAIMANT IN SUPPORT OF THE APPLICATION FOR A WORLDWIDE FREEZING ORDER
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I. INTRODUCTION
1. This skeleton argument is filed in support of the Claimant's application, made without notice to the Defendant, for a worldwide freezing order (hereinafter referred to as a "WFO") against the Defendant, Korinthian Maritime Holdings Ltd. ("KMH"), a private limited company incorporated under the laws of Cyprus and registered at the Department of Registrar of Companies and intellectual Property in Nicosia, Cyprus, under Registration No. HE 387421, with its registered address at 28 Themistokli Dervi Avenue, Suite 601, Nicosia 1066, Cyprus.
2. The application is made pursuant to section 37(1) of the Senior Courts Act 1981 and CPR Part 25.1(1)(f), in support of the Claimant's application under section 66 of the Arbitration Act 1996 (filed on 15 July 2024) for permission to enforce LCIA Award No. 224718 dated 28 June 2024 (the "Award") as a judgment of this Court. The application for permission to enforce was filed under the same Claim No. CL-2024-000487 and is pending before this Court.
3. The amount sought to be restrained under the WFO is up to £108,600,000 (one hundred and eight million, six hundred thousand pounds sterling), being the aggregate of the following sums awarded in the Award:
(a) the principal sum of the Award in the amount of £96,450,000, comprising damages, restitution, loss of profit, and pre-award interest across three heads of claim arising from KMH's repudiatory breaches of three time charter-party agreements;
(b) costs of the arbitration allocated to KMH in the amount of £12,150,000, comprising LCIA administrative and tribunal costs of £3,240,000 and the Claimant's legal costs of £8,910,000;
(c) together with continuing post-award interest at the rate of 5.25% per annum simple on the principal award sum of £96,450,000 from 29 June 2024 until satisfaction of the Award.
4. The Claimant, Thalassa Shipping & Logistics SA ("TSL"), is a Société Anonyme organised and existing under the laws of the Hellenic Republic, headquartered at 14 Akti Miaouli, 4th Floor, Piraeus 185 35, Greece. TSL is a substantial international shipping and logistics operator, managing and operating a fleet of 34 vessels comprising bulk carriers, tankers, and container feeders. The company provides integrated logistics services across the Mediterranean, Black Sea, and Arabian Gulf regions. TSL's audited annual revenues for the financial year ending 31 December 2023 were approximately €620 million. TSL is privately held, with the Papadimitriou family trust holding a 72% equity interest and Aegean Capital Partners SA holding the remaining 28%.
5. The Claimant respectfully submits that the three well-established requirements for the grant of a WFO are plainly satisfied in the present case, and indeed are satisfied to a degree that renders the grant of relief particularly compelling:
(a) Good arguable case on the merits. This requirement is not merely met but substantially exceeded. The Claimant does not rely upon a mere cause of action; it holds a final and binding arbitral award issued after a full 10-day evidentiary hearing before a distinguished three-member LCIA tribunal, in which the tribunal found KMH liable on all heads of claim and awarded damages in the sum of £96,450,000 plus costs of £12,150,000.
(b) Real risk of dissipation. The evidence before the Court demonstrates that KMH has engaged in active post-award asset transfers, operates through an opaque multi-jurisdictional corporate structure specifically designed to obscure beneficial ownership, disperses its assets across at least four jurisdictions, was found by the Tribunal to have engaged in dishonest conduct (including the fabrication of off-hire deductions), and has failed to make any payment or engage constructively in response to the Award.
(c) Just and convenient. The balance of convenience overwhelmingly favours the grant of a WFO. The Award is for a very substantial sum. Without freezing relief, there is a real and pressing risk that the Claimant will be left with an unenforceable judgment. The impact on KMH of a standard-form WFO permitting payments in the ordinary course of business would be proportionate and not oppressive.
6. The Claimant sets out the detailed basis for the application below.
II. THE PARTIES AND BACKGROUND
A. The Claimant — Thalassa Shipping & Logistics SA
7. TSL was founded in 1987 by the Papadimitriou family and has since grown to become a well-established and respected operator in the international shipping industry. The company has been in continuous operation for over 37 years and has built a substantial reputation in the bulk carrier, tanker, and container feeder markets, particularly within the Mediterranean, Black Sea, and Arabian Gulf trading regions.
8. The key personnel of TSL who are relevant to this application are as follows:
(a) Nikolaos Papadimitriou, Chairman and Chief Executive Officer. Mr. Papadimitriou is a second-generation member of the founding family and has served as CEO since 2004. He provides the First Witness Statement in support of this application. Mr. Papadimitriou has direct personal knowledge of the charter-party agreements at the centre of the underlying dispute and of the arbitration proceedings.
(b) Elena Stavridis, Chief Financial Officer. Ms. Stavridis has served as CFO since 2016 and is responsible for TSL's financial operations, treasury management, and financial reporting. Her evidence is relevant to the Claimant's ability to honour the cross-undertaking in damages.
(c) Captain Dimitrios Kouretas, Head of Chartering and Operations. Captain Kouretas oversees the negotiation and management of TSL's time charter-party agreements and was directly involved in the chartering arrangements with KMH that give rise to this dispute.
(d) Ioanna Christodoulou, General Counsel. Ms. Christodoulou has oversight of TSL's legal affairs, including the management of the LCIA arbitration and the present enforcement proceedings.
9. Between 2019 and 2021, TSL entered into three separate time charter-party agreements with KMH for the charter of three dry-bulk carriers. All three charter-parties were governed by English law and contained LCIA arbitration clauses providing for the resolution of disputes by arbitration under the LCIA Rules with a London seat. The details of these charter-parties are set out in Section II.C below.
10. TSL is, and at all material times has been, a company of substantial financial standing. Its audited accounts for the financial year ending 31 December 2023, extracts of which are exhibited to the Witness Statement of Nikolaos Papadimitriou, demonstrate annual revenues of approximately €620 million, a fleet of 34 vessels, and a healthy balance sheet. These matters are relevant both to the standing of the claim and to the Claimant's ability to give a meaningful cross-undertaking in damages.
B. The Defendant — Korinthian Maritime Holdings Ltd.
11. The Defendant, KMH, is a private limited company incorporated under the laws of the Republic of Cyprus under Registration No. HE 387421, with its registered address at 28 Themistokli Dervi Avenue, Suite 601, Nicosia 1066, Cyprus. KMH operates as a holding company controlling a fleet of approximately 18 dry-bulk carriers, which are held through a series of single-purpose vehicle subsidiaries incorporated across multiple jurisdictions.
12. KMH is beneficially owned and controlled by the Volkov family, specifically:
(a) Andrei Volkov, who is the ultimate beneficial owner and de facto director of KMH. Mr. Volkov is a Russian national resident in Cyprus. Although not formally listed as a director of KMH in the Cypriot companies register, the evidence before the Court (including the findings of the Tribunal in the Award and the Hartwell Pemberton LLP asset tracing report) demonstrates that Mr. Volkov exercises ultimate decision-making authority over KMH and its subsidiaries.
(b) Sergei Volkov, who is a registered director of KMH. Mr. Volkov is the son of Andrei Volkov and appears to serve as the formal director of record for KMH and certain of its subsidiaries.
13. The Volkov family's interest in KMH is held through a series of BVI and Cypriot holding structures, the details of which are set out in the corporate structure chart prepared by Hartwell Pemberton LLP and exhibited to the Witness Statement of Nikolaos Papadimitriou at Exhibit NP-6. The nature and complexity of this corporate structure is itself a matter of relevance to the dissipation risk analysis, as set out in Section VI below.
14. KMH's estimated pre-dispute net asset value was approximately USD $280 million, comprising principally the value of its fleet, receivables from chartering operations, and cash balances held across multiple jurisdictions. The key subsidiaries and single-purpose vehicles relevant to this application are as follows:
(a) Korinthian Bulkers (Singapore) Pte. Ltd., a company incorporated in Singapore and registered at 80 Robinson Road, #14-02, Singapore 068898. This entity held the proceeds from the sale of the vessel M/V Crimson Horizon and maintained operational bank accounts at Pinnacle Bank (Singapore) Ltd. The significance of this entity to the dissipation risk analysis is that it was used as the vehicle through which the attempted post-award sale of the M/V Crimson Horizon was conducted.
(b) Dnepr Shipholding Inc., a company incorporated in the British Virgin Islands under Company No. 2014876, with its registered agent being Vantage Corporate Services Ltd., Road Town, Tortola, BVI. Dnepr Shipholding Inc. is the registered owner of the vessels M/V Aegean Fortuna and M/V Volga Spirit. As a BVI entity, it benefits from the limited disclosure requirements of that jurisdiction.
(c) Korinthian DMCC, a free zone entity incorporated in the Dubai Multi Commodities Centre, with its registered address at Unit 3407, Almas Tower, Jumeirah Lakes Towers, Dubai, UAE. This entity holds operational funds and receivables from chartering activities in the Gulf region. It maintains bank accounts at Emirates Gulf Commercial Bank PJSC.
(d) Oceangate Ventures Ltd., a company incorporated in Cyprus under Registration No. HE 401293, with its registered address at 28 Themistokli Dervi Avenue, Suite 604, Nicosia 1066, Cyprus. Oceangate Ventures Ltd. serves as an intermediate holding company within the KMH group, sitting between KMH and the fleet SPVs. The evidence of post-award restructuring of this entity (including changes to its board of directors and share register) is set out in Section VI below.
C. The Charter-Party Disputes
15. The underlying disputes between TSL and KMH arose from three time charter-party agreements entered into between 2019 and 2021. Each of the three charters was for a dry-bulk carrier, was governed by English law, and contained an LCIA arbitration clause providing for the resolution of disputes under the LCIA Rules with a London seat. The details of each charter-party and the nature of KMH's breach are as follows:
16. M/V *Aegean Fortuna (IMO 9784521). The M/V Aegean Fortuna* is a Supramax Bulk Carrier of 58,200 DWT, flagged in the marshall Islands. The charter-party was signed on 15 March 2019 for a period of five years from delivery. KMH wrongfully redelivered the vessel on 18 June 2022, approximately 14 months prior to the contractual charter expiry date. The wrongful early redelivery constituted a repudiatory breach of the charter-party. TSL accepted the repudiatory breach and claimed damages for loss of bargain representing the difference between the charter rate and the market rate for the unexpired period. The Tribunal assessed damages for this head of claim at £42,300,000, reflecting the 14 months of lost charter hire at approximately £3,021,429 per month, taking into account the substantial rise in dry-bulk freight rates during the relevant period.
17. M/V *Crimson Horizon (IMO 9801334). The M/V Crimson Horizon* is a Handymax Bulk Carrier of 37,500 DWT, flagged in Liberia. The charter-party was signed on 22 January 2020 for a period of four years from delivery. KMH ceased making hire payments from 1 July 2022 onwards, and hire arrears in the amount of £4,280,000 accrued before TSL exercised its contractual right to withdraw the vessel from KMH's service on 15 September 2022. TSL claimed the outstanding hire arrears together with loss of bargain damages for the unexpired period of the charter. The Tribunal assessed the total award for this vessel at £28,150,000, comprising the outstanding hire of £4,280,000 and loss of bargain damages of £23,870,000.
18. M/V *Volga Spirit (IMO 9756892). The M/V Volga Spirit* is a Panamax Bulk Carrier of 76,400 DWT, flagged in Cyprus. The charter-party was signed on 10 June 2021 for a period of three years from delivery. During the currency of the charter, KMH made off-hire deductions totalling approximately £2,740,000 which the Tribunal found to be fabricated. Specifically, the Tribunal found that KMH had manufactured claims for alleged mechanical breakdowns and delays that had not in fact occurred, or which were attributable to KMH's own failures, in order to reduce the hire payable under the charter-party. The Tribunal ordered restitution of the fabricated off-hire deductions in the full amount of £2,740,000. The finding of dishonesty in relation to these deductions is of particular significance to the dissipation risk analysis, as set out in Section VI below.
19. Copies of the three charter-party agreements are exhibited to the Witness Statement of Nikolaos Papadimitriou at Exhibits NP-2, NP-3, and NP-4 respectively.
III. THE LCIA ARBITRATION AND AWARD
A. Procedural History
20. TSL commenced arbitration proceedings against KMH by filing a Request for Arbitration with the LCIA on 14 November 2022. The arbitration was registered under LCIA Case Reference No. 224718.
21. The Tribunal was constituted on 8 February 2023, following the appointment procedures under the LCIA Rules. The Tribunal comprised:
(a) Sir Malcolm Fenton-Clarke (Presiding Arbitrator), appointed by the LCIA Court. Sir Malcolm is a former judge of the English High Court, Commercial Division, and a highly respected international arbitrator with particular expertise in shipping and commodities disputes.
(b) Professor Athena Drakopoulos (Co-Arbitrator), nominated by the Claimant. Professor Drakopoulos is Professor of Maritime and Commercial Law at the University of Piraeus and a Fellow of the Chartered Institute of Arbitrators.
(c) Dr. Henrik Dalmqvist (Co-Arbitrator), nominated by the Respondent (KMH). Dr. Dalmqvist is a partner at a leading Scandinavian law firm specialising in maritime arbitration and a member of the LMAA.
22. The Tribunal Secretary was Ms. Fiona Beckett. The arbitration proceeded in an orderly fashion, with full participation by both parties. Both sides were legally represented throughout: TSL by Calderwood & Harkness LLP (London), and KMH by Harkness Whitford & Co. (London).
23. The procedural timetable included the exchange of detailed memorials, witness statements, and expert reports. Factual witnesses were called on both sides, and the parties adduced competing expert evidence on matters of market rates and quantum.
24. The substantive evidentiary hearing was held over a period of 10 days, from 11 to 22 September 2023, at the International Dispute Resolution Centre (IDRC) in London. The hearing involved the examination and cross-examination of factual and expert witnesses, followed by closing submissions.
25. Post-hearing briefs were exchanged, and the Tribunal reserved its decision. The Final Award was issued on 28 June 2024, approximately nine months after the close of the evidentiary hearing. The Award is exhibited to the Witness Statement of Nikolaos Papadimitriou at Exhibit NP-1.
B. The Award
26. The Tribunal found KMH liable on all heads of claim advanced by TSL. The Award was unanimous. The Tribunal's detailed reasoning extends to 187 pages and addresses each head of claim, the relevant factual findings, and the assessment of quantum. The Award provides as follows:
(a) Damages for wrongful early redelivery of M/V *Aegean Fortuna*: £42,300,000. The Tribunal found that KMH's early redelivery of the vessel on 18 June 2022, approximately 14 months before the contractual expiry of the charter-party, constituted a repudiatory breach. Damages were assessed at approximately £3,021,429 per month for the 14-month unexpired period, reflecting the difference between the contractual charter rate and the available market rate at the date of breach, in accordance with the applicable measure of damages for wrongful redelivery under English law.
(b) Outstanding hire and damages for M/V *Crimson Horizon*: £28,150,000. This sum comprises outstanding hire arrears of £4,280,000 (representing the unpaid hire from 1 July 2022 to the date of withdrawal on 15 September 2022) and loss of bargain damages of £23,870,000 (representing the loss suffered by TSL as a result of KMH's repudiatory breach in failing to pay hire, accepted by TSL's withdrawal of the vessel).
(c) Restitution of fabricated off-hire deductions for M/V *Volga Spirit*: £2,740,000. The Tribunal made a specific finding that KMH had fabricated claims for off-hire periods in respect of the M/V Volga Spirit, manufacturing false claims for mechanical breakdowns and operational delays in order to reduce the hire payable. The Tribunal ordered restitution of the full amount of the fabricated deductions.
(d) Loss of profit and market differential damages across all three charters: £16,480,000. In addition to the vessel-specific damages set out above, the Tribunal assessed further loss of profit and market differential damages attributable to the combined effect of KMH's breaches on TSL's fleet operations and chartering programme.
(e) Pre-award interest: £6,780,000. The Tribunal awarded pre-award interest at the rate of 5.25% per annum simple from the respective dates of breach to the date of the Award (28 June 2024), in accordance with the LCIA Rules and the Tribunal's discretion. The aggregate of pre-award interest across all heads of claim was £6,780,000.
27. The total of the principal Award (comprising items (a) through (e) above) was therefore £96,450,000, equivalent to approximately USD $120 million at the prevailing exchange rate of £1 = USD $1.2441 as at 28 June 2024.
28. The Tribunal further ordered that the costs of the arbitration be allocated 85% to KMH and 15% to TSL, reflecting the Tribunal's assessment of the outcome on the merits and the parties' respective conduct during the proceedings. The costs allocated to KMH comprised:
(a) LCIA administrative costs and the fees of the Tribunal: £3,240,000;
(b) TSL's legal costs of the arbitration (solicitors' fees, counsel's fees, expert fees, and disbursements): £8,910,000;
(c) Total costs allocated to KMH: £12,150,000.
29. The grand total of the Award plus costs is therefore £108,600,000.
30. The Tribunal further ordered that post-award interest should accrue 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 full satisfaction of the Award. At the date of this skeleton argument, no part of the Award has been paid, and interest continues to accrue.
C. Finality and Enforceability
31. The Award is final and binding upon the parties pursuant to Article 26.8 of the LCIA Rules and sections 58 and 66 of the Arbitration Act 1996. Under Article 26.8 of the LCIA Rules, an award is final and binding on the parties from the date it is made, and by agreeing to arbitration under the LCIA Rules, the parties have undertaken to carry out any award immediately and without any delay. The parties to the arbitration waived their right to any form of appeal, review, or recourse to any state court or other judicial authority insofar as such waiver may be validly made.
32. At the date of this application (16 July 2024), no application has been filed by KMH to set aside or challenge the Award under sections 67, 68, or 69 of the Arbitration Act 1996. The Claimant notes, for the purposes of full and frank disclosure, that KMH subsequently filed an application under sections 68 and 69 of the Arbitration Act 1996 on 19 August 2024; however, this is immaterial to the WFO criteria and is noted for the return date. The mere filing of a challenge application does not affect the finality or enforceability of the Award, and the Claimant submits that any such challenge is unlikely to succeed given the high thresholds applicable under those provisions and the thorough nature of the Tribunal's reasoning.
33. The application under section 66 of the Arbitration Act 1996 for permission to enforce the Award as a judgment of this Court was filed on 15 July 2024 under Claim No. CL-2024-000487. The present application for a WFO is made in support of that enforcement application.
34. The existence of a final and binding arbitral award for the sum of £96,450,000 plus costs of £12,150,000, issued by a tribunal of the highest calibre after a full 10-day evidentiary hearing, plainly satisfies — and substantially exceeds — the "good arguable case" threshold that is the first requirement for the grant of a WFO. This matter is addressed in greater detail in Section V below.
IV. LEGAL FRAMEWORK FOR A WORLDWIDE FREEZING ORDER
A. Jurisdiction.
35. The Court's power to grant freezing injunctions, including worldwide freezing orders, derives from section 37(1) of the Senior Courts Act 1981, which provides that the High Court may by order grant an injunction in all cases in which it appears to the Court to be just and convenient to do so. The specific procedural mechanism for applying for a freezing injunction is provided by CPR Part 25.1(1)(f), which identifies a freezing injunction restraining a party from removing assets from the jurisdiction or dealing with assets whether within or outside the jurisdiction as one of the interim remedies available to the Court.
36. The Court's power to grant freezing relief in support of the enforcement of arbitral awards is well established. In Mobil Cerro Negro Ltd v Petroleos de Venezuela SA [2008] EWHC 532 (Comm), Walker J confirmed that the Court has jurisdiction to grant freezing relief in support of an application for permission to enforce an arbitral award under section 66 of the Arbitration Act 1996. The same principle was applied in Cruz City 1 Mauritius Holdings v Unitech Ltd [2014] EWHC 3131 (Comm), where Males J (as he then was) granted a WFO in support of the enforcement of a foreign arbitral award.
37. In the present case, the Court's jurisdiction to grant freezing relief is engaged in support of the Claimant's application under section 66 of the Arbitration Act 1996 for permission to enforce the Award as a judgment of this Court. The Award is an LCIA award with a London seat, and the enforcement application has been filed in this Court. There can be no doubt as to jurisdiction.
B. Requirements.
38. The principles governing the grant of a WFO are well established. As set out in Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft mbH & Co KG (The Niedersachsen) [1983] 1 WLR 1412 and the substantial body of subsequent authority, the Court must be satisfied of three matters before granting freezing relief:
(a) Good arguable case. The applicant must demonstrate a good arguable case on the substantive claim — that is, a case that is more than barely capable of serious argument, though not necessarily one that the court considers more likely than not to succeed at trial.
(b) Real risk of dissipation. The applicant must demonstrate that there is a real risk that the defendant will remove assets from the jurisdiction, or will otherwise deal with or dispose of assets so as to render any judgment or award unenforceable or substantially more difficult to enforce. The risk must be a real risk, assessed objectively on the basis of solid evidence, but the court should not require proof to the standard of the balance of probabilities.
(c) Just and convenient. The court must be satisfied that it is just and convenient to grant the order, having regard to the balance of convenience between the parties, including the potential impact on the defendant of the order and any safeguards that may be built into the order to mitigate any such impact.
39. These three requirements are considered in detail in Sections V, VI, and VII of this skeleton argument respectively.
C. Without-Notice Applications
40. The present application is made without notice to the Defendant. The Claimant recognises the heightened obligations that attach to a without-notice application, and in particular the duty of full and frank disclosure.
41. The duty of full and frank disclosure on a without-notice application is a fundamental principle, established in R v Kensington Income Tax Commissioners, ex parte Princess Edmond de Polignac [1917] 1 KB 486 and repeatedly affirmed in subsequent authority. The duty requires the applicant to make a fair presentation to the court of all material matters, including matters that are or may be adverse to the applicant's case. The duty extends to drawing the court's attention to significant factual, legal, and procedural matters that the court would need to consider in order to reach a fair assessment of whether the relief sought should be granted. A failure to comply with the duty of full and frank disclosure may result in the discharge of any order obtained.
42. The Claimant takes its duty of full and frank disclosure seriously and addresses specifically in Section IX below the matters that it considers potentially adverse to its application, so that the Court may have a full and fair picture of the relevant circumstances.
43. The Claimant is also willing to give the usual cross-undertaking in damages, as required for the grant of freezing relief on a without-notice application. The Claimant's financial capacity to honour such a cross-undertaking is addressed in Section VII.C below.
V. GOOD ARGUABLE CASE
44. The first requirement for the grant of a WFO is that the applicant must demonstrate a good arguable case on the substantive claim. The test is whether the applicant has a "good arguable case" that the defendant owes the applicant the relevant sum. As expressed by Mustill J (as he then was) in The Niedersachsen [1983] 1 WLR 1412, the test requires that the claim be one which has a reasonable prospect of success, though the court is not required to conduct a mini-trial of the merits.
45. In the present case, the Claimant need not merely show a good arguable case based upon a cause of action that has yet to be determined. The Claimant holds a final and binding arbitral award issued by a three-member LCIA tribunal, following a full 10-day evidentiary hearing at which both parties were represented, witnesses were called and cross-examined, and expert evidence was adduced and tested. The Award is for the sum of £96,450,000, together with costs of £12,150,000, making a total of £108,600,000.
46. The Award (exhibited at NP-1) demonstrates:
(a) Unanimous findings on liability. The Tribunal found unanimously that KMH was in repudiatory breach of all three charter-party agreements. The Tribunal's findings on liability were based upon a comprehensive analysis of the documentary and witness evidence and were set out in detailed reasoning extending to 187 pages. The Tribunal rejected KMH's defences in their entirety.
(b) Detailed damages assessment. The Tribunal conducted a thorough and rigorous assessment of quantum under each head of claim, taking into account the competing expert evidence on market rates and loss of bargain. The damages awarded were fully reasoned and supported by the evidence before the Tribunal.
(c) Cost allocation reflecting conduct. The Tribunal's allocation of 85% of the costs to KMH reflects the Tribunal's assessment not only of the outcome of the proceedings (in which TSL succeeded on all heads of claim) but also of the conduct of the parties during the arbitration. In particular, the Tribunal noted that KMH had advanced defences that were unsupported by the evidence and had failed to engage constructively with TSL's legitimate claims.
47. It is well established that a final arbitral award provides a stronger foundation for a freezing order than a mere cause of action that has yet to be adjudicated. In Econet Wireless Ltd v Vee Networks Ltd [2006] EWHC 1568 (Comm), the court held that where an applicant has obtained a final arbitral award in its favour, the "good arguable case" requirement is amply satisfied, because the applicant has more than a good arguable case — it has a case that has already been adjudicated and determined in its favour by a competent tribunal.
48. The same principle applies with even greater force in the present case, where the Award was issued by a three-member tribunal of the highest calibre (including a former High Court judge as presiding arbitrator), following a full evidentiary hearing, and where the Tribunal's findings were unanimous.
49. It is also relevant that KMH has not satisfied the Award voluntarily, despite the passage of more than two weeks since the Award was issued on 28 June 2024. A pre-enforcement demand letter was sent by Calderwood & Harkness LLP on behalf of TSL to KMH's solicitors, Harkness Whitford & Co., on 8 July 2024, demanding payment of the full amount of the Award within 14 days. No substantive response has been received, and no payment whatsoever has been made. The demand letter is exhibited at NP-5.
50. The Claimant accordingly submits that the "good arguable case" requirement is not merely met but is satisfied to the highest possible degree.
VI. REAL RISK OF DISSIPATION
A. Legal Principles
51. The second requirement for the grant of a WFO is that the applicant must demonstrate a real risk that the defendant will dissipate its assets — that is, will remove assets from the jurisdiction or otherwise deal with them so as to render any judgment or award unenforceable or substantially more difficult to enforce.
52. The risk of dissipation must be assessed objectively on the basis of solid evidence. As stated by Burton J in Congentra AG v Sixteen Thirteen Marine SA (The Nicholas M) [2008] EWHC 1615 (Comm), the court must be satisfied on the evidence that there is a real risk, not merely a theoretical or fanciful one, that the defendant will take steps to frustrate enforcement.
53. The court may infer a risk of dissipation from a combination of factors, including (but not limited to): the nature and structure of the defendant's assets; evidence of pre-existing or post-judgment asset movements; the defendant's behaviour in the underlying dispute; the corporate structures used by the defendant; the geographical dispersal of assets; and the defendant's response (or lack of response) to the judgment or award in question.
54. While solid evidence is needed, the court should not set the bar too high. As the Court of Appeal emphasised in Lakatamia Shipping Co Ltd v Morimoto [2019] EWCA Civ 2203, the court must adopt a realistic and practical approach to the assessment of dissipation risk. The court is entitled to look at the cumulative effect of the evidence, and individual factors that might not be sufficient on their own may, when taken together, provide a compelling basis for a finding of dissipation risk.
55. The Claimant submits that the evidence in the present case provides an overwhelming basis for a finding of real risk of dissipation. The Claimant relies upon five categories of evidence, each of which is addressed in turn below.
B. Evidence of Dissipation Risk in the Present Case
(i) Post-Award Asset Transfers and Restructuring.
56. The most compelling evidence of dissipation risk is the evidence of actual post-award asset transfers and corporate restructuring. The preliminary asset tracing report prepared by Hartwell Pemberton LLP, a specialist forensic investigation firm, dated 15 August 2024, is exhibited to the Witness Statement of Nikolaos Papadimitriou at Exhibit NP-7. The key findings of that report establish that KMH has, in the period following the issuance of the Award on 28 June 2024, engaged in a series of material transfers and restructuring steps that are inconsistent with the ordinary course of business and consistent only with a deliberate strategy to place assets beyond the reach of TSL as award creditor.
57. The evidence of post-award dissipation includes the following:
(a) Transfers to entities connected to Andrei Volkov personally. The Hartwell Pemberton report identifies a series of transfers from KMH's bank accounts and the accounts of its subsidiaries to entities connected to Andrei Volkov personally, outside the ordinary course of business. These transfers occurred after the Award date and appear to involve the movement of funds from KMH group accounts to entities that are outside the KMH corporate structure but are beneficially owned or controlled by Mr. Volkov. The nature and timing of these transfers are highly suspicious and support the inference that they were made for the purpose of placing assets beyond the reach of TSL.
(b) Attempted sale of M/V *Crimson Horizon*. The evidence indicates that Korinthian Bulkers (Singapore) Pte. Ltd. has, following the date of the Award, engaged in or attempted to engage in the sale of the vessel M/V Crimson Horizon (IMO 9801334). This vessel was one of the three vessels at the centre of the underlying charter-party disputes. The attempted sale of a significant fleet asset in the period immediately following the Award, without any notification to TSL or engagement with the enforcement process, is a clear indicator of dissipation. The proceeds of any such sale, if held in Singapore or channelled through the KMH group's multi-jurisdictional structure, could rapidly be moved beyond the reach of enforcement.
(c) Re-flagging of vessels. The evidence indicates that KMH has taken steps to re-flag certain of its vessels in the period following the Award. The re-flagging of vessels from one registry to another can serve to complicate enforcement by creating additional jurisdictional hurdles and by obscuring the identity and ownership of assets. The timing of these re-flagging activities — in the period immediately following the Award — supports the inference that they are motivated by a desire to frustrate enforcement.
(d) Restructuring of Cypriot entities. The evidence indicates that KMH has carried out a restructuring of its Cypriot entities, including changes to the board of directors and the share register of Oceangate Ventures Ltd. (HE 401293), the intermediate holding company for fleet SPVs within the KMH group. The nature of these changes is consistent with an attempt to interpose additional layers between KMH and its underlying assets, or to transfer control of those assets to entities or persons outside the reach of any freezing or enforcement order.
58. The evidence of these post-award movements is set out in detail in the Hartwell Pemberton report at Exhibit NP-7 and in the supporting documents at Exhibit NP-8. These movements are consistent with a deliberate and coordinated strategy to place assets beyond the reach of TSL as award creditor, and they provide compelling evidence of a real risk of continued and future dissipation.
(ii) Complex and Opaque Corporate Structure.
59. KMH operates through a web of single-purpose vehicle subsidiaries across multiple jurisdictions, including Cyprus, Singapore, the British Virgin Islands, and the United Arab Emirates. As set out in Section II.B above, the KMH group includes at least four key subsidiaries (Oceangate Ventures Ltd., Korinthian Bulkers (Singapore) Pte. Ltd., Dnepr Shipholding Inc., and Korinthian DMCC), each incorporated in a different jurisdiction, with the fleet vessels held through further SPVs beneath these intermediate holding companies.
60. The beneficial ownership chain runs through multiple layers of corporate entities, with BVI and Cypriot holding structures interposed between the Volkov family (as ultimate beneficial owners) and the underlying assets. The corporate structure chart prepared by Hartwell Pemberton LLP (Exhibit NP-6) identifies at least seven layers of corporate ownership between Andrei Volkov and the individual vessel SPVs that own the fleet.
61. The use of this type of complex, multi-layered, and multi-jurisdictional corporate structure has been repeatedly recognised by the courts as a factor supporting a finding of dissipation risk. In VTB Capital Plc v Nutritek International Corp [2013] UKSC 5, the Supreme Court acknowledged the significance of opaque corporate structures as a factor in the assessment of dissipation risk, recognising that such structures can be used to obscure the location and ownership of assets and to facilitate the rapid movement of assets between jurisdictions.
62. The particular features of the KMH corporate structure that are relevant to the dissipation risk analysis include the following:
(a) The use of BVI entities (such as Dnepr Shipholding Inc.) as vessel-owning SPVs, taking advantage of the limited disclosure requirements and ease of corporate restructuring in that jurisdiction.
(b) The use of multiple intermediate holding companies across different jurisdictions (Oceangate Ventures Ltd. in Cyprus, Korinthian Bulkers (Singapore) Pte. Ltd. in Singapore, Korinthian DMCC in Dubai), which makes it difficult for a creditor to trace and attach assets without a comprehensive freezing order.
(c) The evidence that Andrei Volkov exercises de facto control over the entire structure, despite not being formally listed as a director in many of the relevant corporate registries, which facilitates the movement of assets on his instructions without generating the kind of paper trail that would be expected in a more transparent corporate governance structure.
(d) The evidence of recent restructuring of the Cypriot entities within the group, including changes to the board and share register of Oceangate Ventures Ltd., which suggests active manipulation of the corporate structure in the post-award period.
63. The complexity and opacity of the KMH corporate structure is not merely a neutral feature of international shipping operations. It is a structure specifically designed to obscure beneficial ownership and to facilitate the rapid movement of assets between jurisdictions, and it provides a ready-made mechanism for the dissipation of assets in the face of enforcement proceedings.
(iii) International Dispersal of Assets.
64. KMH's assets are dispersed across at least four jurisdictions: England, Cyprus, Singapore, and the United Arab Emirates. The evidence before the Court identifies the following key asset locations:
(a) England: Bank accounts at Meridian Trust Bank Ltd., 50 Lombard Street, London EC3V 9EA.
(b) Singapore: Bank accounts at Pinnacle Bank (Singapore) Ltd., held by Korinthian Bulkers (Singapore) Pte. Ltd.
(c) United Arab Emirates (Dubai): Operational funds and receivables held by Korinthian DMCC at Emirates Gulf Commercial Bank PJSC.
(d) Cyprus: Corporate assets and share interests held through Oceangate Ventures Ltd. and KMH itself.
65. In addition to the cash and bank account assets, KMH's fleet of approximately 18 dry-bulk carriers is flagged across multiple registries, including the marshall Islands, Liberia, and Cyprus. The vessels themselves constitute significant assets (the three vessels at the centre of the underlying dispute alone have an estimated aggregate value of approximately USD $95 million), but their mobile nature and the dispersal of their registration across multiple flag states means that they can be moved, sold, or encumbered relatively quickly.
66. The pre-dispute net asset value of the KMH group was estimated at approximately USD $280 million. However, the dispersal of those assets across multiple jurisdictions and the holding of assets through SPV structures in different jurisdictions makes individual asset recovery extremely difficult absent a freezing order. Without a WFO, TSL would be forced to pursue enforcement in multiple jurisdictions simultaneously, with the attendant risk that assets could be moved from one jurisdiction to another ahead of any local enforcement measures.
67. The multi-jurisdictional dispersal of assets is itself a factor that increases the risk of dissipation, because it provides KMH with multiple options for moving assets to frustrate enforcement. This factor has been recognised in the authorities as relevant to the dissipation risk assessment, and it is of particular significance in the present case given the evidence of actual post-award asset movements set out in Section VI.B(i) above.
(iv) Conduct in the Underlying Dispute.
68. The nature of the Defendant's conduct in the underlying commercial relationship and in the arbitration proceedings is a relevant factor in the assessment of dissipation risk. In Madoff Securities International Ltd v Raven [2011] EWHC 3102 (Comm), Flaux J (as he then was) held that evidence of dishonest conduct in the defendant's commercial dealings is highly relevant to the assessment of dissipation risk, because it demonstrates a willingness to act improperly to secure a financial advantage, which in turn supports the inference that the defendant may be willing to act improperly to frustrate enforcement.
69. In the present case, the Tribunal made the following findings regarding KMH's conduct:
(a) Wrongful early redelivery of M/V *Aegean Fortuna*. The Tribunal found that KMH wrongfully redelivered the vessel 14 months before the contractual expiry of the charter-party, in deliberate breach of its contractual obligations, in circumstances where KMH was motivated by a desire to take advantage of a decline in the dry-bulk market to reduce its chartering commitments at the expense of TSL.
(b) Deliberate failure to pay hire for M/V *Crimson Horizon*. The Tribunal found that KMH's failure to pay hire from 1 July 2022 onwards was a deliberate decision, not the result of financial difficulty or genuine dispute, but part of a strategy to extricate itself from charter-party commitments that it no longer wished to honour.
(c) Fabrication of off-hire deductions for M/V *Volga Spirit*. Most significantly, the Tribunal found that KMH had fabricated claims for off-hire periods in respect of the M/V Volga Spirit, manufacturing false claims for mechanical breakdowns and operational delays that had not in fact occurred or were attributable to KMH's own failures. The fabricated off-hire deductions totalled approximately £2,740,000. This finding of dishonesty by the Tribunal is of the highest significance to the dissipation risk analysis.
70. The finding of fabricated off-hire deductions is particularly important. It demonstrates that KMH was willing to engage in dishonest conduct — the deliberate manufacture of false claims — in its commercial dealings with TSL. If KMH was willing to fabricate commercial claims to secure a financial advantage during the currency of the charter-party, it can readily be inferred that KMH may also be willing to take dishonest steps to place assets beyond the reach of enforcement. The inference is strengthened by the evidence of actual post-award asset movements discussed in Section VI.B(i) above.
71. The Tribunal's cost allocation of 85% to KMH also reflects the Tribunal's adverse assessment of KMH's conduct, both in the underlying commercial relationship and during the arbitration proceedings.
(v) Failure to Satisfy the Award.
72. Despite the Award being issued on 28 June 2024, and despite a formal pre-enforcement demand letter having been sent by Calderwood & Harkness LLP to Harkness Whitford & Co. (SRA No. 614823) on 8 July 2024 demanding payment of the full amount of the Award within 14 days, KMH has made no payment whatsoever. No substantive response to the demand letter has been received. The demand letter is exhibited at NP-5.
73. The failure to engage constructively with a final and binding award of this magnitude from a reputable international arbitral institution is itself a factor that supports an inference of dissipation risk. The Award is for £96,450,000 plus costs of £12,150,000 — a total of £108,600,000. The LCIA is one of the world's leading international arbitral institutions, and its awards carry the highest presumption of finality and enforceability. KMH's complete failure to engage with the Award, even to the extent of responding substantively to a demand for payment, is inconsistent with the conduct of a bona fide commercial actor that intends to honour its obligations. It is, rather, consistent with a strategy of delay, obfuscation, and dissipation.
74. The failure to pay is all the more significant given KMH's estimated pre-dispute net asset value of approximately USD $280 million. If KMH genuinely intended to comply with the Award, it would have the financial capacity to make at least some payment or to propose a structured timetable for satisfaction. Its complete silence, combined with the evidence of active post-award asset movements, provides compelling evidence that KMH has no intention of voluntarily satisfying the Award and is instead taking active steps to ensure that the Award cannot be enforced against its assets.
C. Assessment — Cumulative Effect
75. The Claimant submits that the evidence set out above, taken cumulatively, establishes a clear and compelling case that there is a real risk of dissipation such as to justify the grant of a WFO.
76. Taken individually, each of the five categories of evidence provides support for a finding of dissipation risk:
(a) The evidence of actual post-award asset transfers and restructuring demonstrates that dissipation is not merely a theoretical risk but is already in progress.
(b) The complex and opaque corporate structure provides a ready-made mechanism for the rapid movement and concealment of assets.
(c) The international dispersal of assets across at least four jurisdictions provides KMH with multiple options for moving assets beyond reach.
(d) The Tribunal's findings of dishonest conduct, and in particular the fabrication of off-hire deductions, demonstrate a willingness to act dishonestly to secure financial advantage.
(e) The failure to satisfy the Award or engage constructively with the enforcement process is inconsistent with bona fide conduct and supports the inference that KMH intends to frustrate enforcement.
77. Taken cumulatively, these factors present an overwhelming case. The combination of actual post-award dissipation, an opaque corporate structure designed for asset concealment, international dispersal of assets, a proven history of dishonest conduct, and a complete failure to engage with the Award leaves no reasonable basis for concluding that a freezing order is unnecessary. To the contrary, the evidence compels the conclusion that without the immediate intervention of the Court by way of a WFO, KMH will succeed in placing its assets beyond the reach of TSL and rendering the Award unenforceable.
VII. JUST AND CONVENIENT — BALANCE OF CONVENIENCE
A. In Favour of Granting the Order
78. The third requirement for the grant of a WFO is that the court must be satisfied that it is just and convenient to grant the order, having regard to the balance of convenience between the parties.
79. The Claimant submits that the balance of convenience overwhelmingly favours the grant of the order sought for the following reasons:
(a) Magnitude of the claim. The Award is for £96,450,000 plus costs of £12,150,000 — a total of £108,600,000, equivalent to approximately USD $135 million including post-award interest to date. This is a very substantial sum by any measure. The potential prejudice to TSL if the Award is rendered unenforceable by the dissipation of KMH's assets would be severe and, in practical terms, irremediable.
(b) Existing loss. TSL has already suffered the losses arising from KMH's repudiatory breaches of the three charter-party agreements, which occurred from mid-2022 onwards. TSL has been deprived of the benefit of those charter-parties for over two years and has incurred substantial costs in prosecuting the LCIA arbitration to a successful conclusion. A further failure to recover the sums awarded by the Tribunal would compound the injustice already suffered by TSL and leave it with a pyrrhic victory.
(c) Quality of the claim. The claim is of the highest quality. It is not a contested cause of action with uncertain prospects; it is a final and binding arbitral award, rendered unanimously by a distinguished tribunal after a full evidentiary hearing. The Award involves multiple heads of loss — wrongful early redelivery, unpaid hire, fabricated off-hire deductions, and loss of profit — each independently established on the evidence. There is no realistic prospect that the Award will be set aside.
(d) Evidence of active dissipation. This is not a case where the applicant relies solely on a theoretical risk of dissipation based upon the defendant's corporate structure. The evidence before the Court demonstrates that active dissipation is already occurring, which strengthens the case for immediate freezing relief.
B. Impact on KMH
80. The Claimant submits that the impact of a WFO on KMH would be proportionate and not oppressive:
(a) Ordinary course of business. The standard Commercial Court form of WFO permits the defendant to make payments in the ordinary and proper course of business, including the payment of reasonable legal fees and expenses. The order does not prevent KMH from continuing to operate its shipping business, chartering its vessels, and meeting its ordinary commercial obligations. KMH's operations would not be shut down by the grant of a WFO.
(b) Right to apply to vary. KMH would have the right to apply to the Court to vary the order if particular business needs arise that are not accommodated by the standard provisions. The availability of this right provides an important safeguard against any undue hardship.
(c) Asset position. KMH's estimated pre-dispute net asset value is approximately USD $280 million, which substantially exceeds the amount of the order sought (£108,600,000, equivalent to approximately USD $135 million). The WFO would therefore not prevent KMH from dealing with all of its assets; it would merely prevent KMH from dealing with assets in a manner that would reduce their value below the level required to satisfy the Award. This is not an oppressive outcome; it is the necessary and proportionate consequence of KMH's obligation to satisfy the Award.
(d) Return date. A return date of 30 July 2024 has been proposed, which would give KMH a full two weeks from the date of the without-notice hearing to prepare and file submissions in opposition. KMH will have a full opportunity to be heard before the Court determines whether the order should be continued.
C. Cross-Undertaking in Damages
81. The Claimant is willing to give the usual cross-undertaking in damages, as is required for the grant of a WFO on a without-notice application. The cross-undertaking provides a further safeguard for KMH, ensuring that if the order is subsequently discharged and KMH has suffered loss as a result, TSL will be liable to compensate KMH for that loss.
82. TSL is a substantial company with ample means to honour any cross-undertaking in damages. As set out in the Witness Statement of Nikolaos Papadimitriou:
(a) TSL has annual revenues of approximately €620 million (FY2023).
(b) TSL operates a fleet of 34 vessels, with a combined fleet value of approximately USD $1.2 billion.
(c) TSL is a going concern with a strong balance sheet, low debt-to-equity ratio, and no history of financial difficulty or insolvency.
(d) TSL has substantial banking relationships with major international financial institutions and has access to credit facilities that would enable it to meet any liability under the cross-undertaking.
83. The Claimant submits that there can be no concern as to the adequacy of the cross-undertaking in the present case. TSL's financial standing is of a wholly different order from the typical applicant for freezing relief, and the risk that KMH would be unable to recover under the cross-undertaking in the event that the order is discharged is negligible.
VIII. SCOPE OF THE ORDER SOUGHT
84. The Claimant seeks a worldwide freezing order in the standard Commercial Court form, as adapted to the circumstances of this case, up to the value of £108,600,000 (being the Award of £96,450,000 plus the costs allocation of £12,150,000), together with continuing post-award interest at the rate of 5.25% per annum simple on the principal award sum from 29 June 2024.
85. The order should cover all assets of KMH, whether within or outside the jurisdiction of England and Wales, including but not limited to:
(a) Bank accounts within the jurisdiction, including accounts at Meridian Trust Bank Ltd. (50 Lombard Street, London EC3V 9EA) and any other accounts maintained by KMH or its subsidiaries with banks or other financial institutions in England and Wales.
(b) Shares and interests in subsidiary and SPV entities, including shares in or other interests in:
(i) Oceangate Ventures Ltd. (Cyprus, HE 401293);
(ii) Korinthian Bulkers (Singapore) Pte. Ltd.;
(iii) Dnepr Shipholding Inc. (BVI, Company No. 2014876);
(iv) Korinthian DMCC (Dubai);
(v) any other subsidiary, SPV, or associated entity within the KMH group.
(c) Vessels beneficially owned through SPV structures, including:
(i) M/V Aegean Fortuna (IMO 9784521, Supramax Bulk Carrier, 58,200 DWT, marshall Islands flag);
(ii) M/V Crimson Horizon (IMO 9801334, Handymax Bulk Carrier, 37,500 DWT, Liberian flag);
(iii) M/V Volga Spirit (IMO 9756892, Panamax Bulk Carrier, 76,400 DWT, Cyprus flag);
(iv) any other vessels beneficially owned by KMH directly or through its subsidiaries and SPVs.
(d) Receivables and contractual entitlements, including charter hire receivables, freight receivables, insurance claims, and any other debts or sums owed to KMH or its subsidiaries.
(e) Real property and any other assets, whether tangible or intangible, wherever situated.