TELENOR EAST HOLDING II AS V ALTIMO HOLDINGS & INVESTMENTS LTD

[2011] EWHC B5 (Comm), Queen's Bench Division, Commercial Court, 1 March 2011, Mrs Justice Gloster

Arbitration - Judicial support - Application for interim injunction preventing shares being issued - Whether respondent giving appropriate undertakings pending appointment of arbitration tribunal - Arbitration Act 1996, section 44

The dispute in this case was in relation to shares in VimpelCom, a major telecommunications company. Its two major shareholders were the Telenor Group, holding 36.03 per cent of the shares, and Altimo, holding 44.65 per cent of the shares. There was a shareholder agreement (SHA) governed by New York law and subject to UNCITRAL Rules arbitration in London, which made provision for pre-emption rights in respect of newly-issued shares to ensure that the percentage shareholding of the parties was maintained. The pre-emption rights did not apply to shares issued on a "Permitted Basis". VimpelCom wished to implement "Project Varsity", a takeover proposal which involved the issue of new shares to the seller. Telenor asserted that the SHA required it to be offered a proportion of the new shares in accordance with its pre-emption rights, whereas VimpelCom asserted that the shares could be issued without pre-emption rights because they fell within the "Permitted Basis" exception. Telenor commenced arbitration proceedings but the panel had not been fully constituted and it sought a temporary injunction under section 44(3) of the Arbitration Act 1996 pending the appointment of the arbitrators. It was common ground that the elements of section 44 had been satisfied, in that the measure was to protect assets (in this case, a contractual right), that the matter was one of urgency and that the arbitrators were unable to act. However, Gloster J did not grant an injunction, as VimpelCom gave undertakings which in her view provided the appropriate balance between the interests of the parties.