



COURT OF APPEAL FOR ONTARIO

CITATION: Sistem Mühendislik A.S. v. Kyrgyz Republic, 2014
    ONCA 576

DATE: 20140807

DOCKET: M43792 (C58711)

Juriansz J.A. (In Chambers)

BETWEEN

Sistem
    Mühendislik Inșaat Sanayi ve Ticaret Anomic

Sirketi

Respondent

and

Kyrgyz Republic and
Kyrgyzaltyn JSC

Appellant, Kyrgyzaltyn JSC

J.B. Casey, for the appellant

S. Frankel, for the respondent

Heard: July 31, 2014

On motion regarding stay pending appeal.

Juriansz J.A.:

[1]

This dispute arises out of the enforcement of a foreign arbitral award.
    On January 5, 2011, Justice Echlin of the Superior Court ordered the Kyrgyz
    Republic (the Republic) to pay Sistem Mühendislik Inșaat Sanayi Ve Ticaret
    Anomic Sirketi (Sistem) an amount in Canadian currency sufficient to purchase
    US$9,147,470 to satisfy an award of the International Center for Settlement of
    Investment Disputes, an organ of the World Bank. Sistem obtained a writ of
    seizure and sale issued February 11, 2011 in respect of the property of the
    Republic.

[2]

Kyrgyzaltyn JSC (the Company) is an entity that is wholly owned by the
    Republic. The Company holds shares in Centerra Gold, a Canadian public
    corporation with its head office in Toronto. Centerra Gold resisted Sistem
    enforcement initiatives by taking the position that the Republic was not the
    owner of any of its shares and that it was the Company that was the registered
    and beneficial owner of some of its shares. Sistem obtained an order adding the
    Company as a party respondent and also obtained an interim order and Mareva
    injunction that has resulted in Centerra Gold holding in trust more than $11
    million in dividend monies to the credit of Sistems proceeding.

[3]

That is the background.

[4]

The order under appeal, that of Thorburn J. dated April 15, 2014,
    declared that the Republic has an equitable interest in the Centerra Gold
    shares issued in the name of the Company and ordered that the Sheriff could
    seize monies held in trust by Centerra Gold to satisfy the award.

[5]

In the motion before me, the Company seeks a declaration that the
    Thorburn order is subject to the automatic stay provided by rule 63.01(1), and
    in the alternative seeks an order staying the order.

Is there an automatic stay?

[6]

Rule 63.01(1) provides as follows:

The delivery of a notice of appeal from an
    interlocutory or final orders stays, until the disposition of the appeal, any
    provision of the order for the payment of money, except a provision that awards
    support or enforces a support order.

[7]

In submitting that the order is subject to the automatic stay, counsel
    for the Company places reliance on
Debora v. Debora
, [2005] O.J. No.
    6378, a decision of MacFarland J.A. in chambers. The order under appeal in that
    case declared the wife to be the owner of certain monies the husband had
    removed from the bank and ordered the husband to repay the monies to the wife.
    Counsel for the Company submits that the order in this case is analogous: the
    order declared that the Republic was the owner of the Centerra Gold shares and
    ordered that the Sheriff could seize them and their proceeds.

[8]

In my view the
Debora
case is very different. In
Debora
,
    MacFarland J.A. said I am of the view that the term of the judgment requiring
    the husband to repay the funds is a term requiring the payment of money
    referenced in the Rules. There is no order of repayment in this case. The
    only order that requires the payment of any money is the order of Echlin J.,
    which ordered the Republic to pay money to Sistem. Echlin J.s order was not
    appealed. The order under appeal does not order the Company to pay or repay
    any monies to anyone.

[9]

I conclude that the order under appeal is not automatically stayed.

Should a stay be imposed?

[10]

It
    is conceded that the appeal raises a serious issue to be decided.

[11]

If
    the order is not stayed the Company will clearly suffer irreparable harm.
    Sistem has no business and no assets in Canada. If the Company is successful on
    appeal it will be unable to recover any monies that the Sheriff pays out to
    Sistem.

[12]

On
    the other hand, if the order is stayed, Sistem faces harm. There is the
    prospect that other international arbitration creditors will also seek to
    enforce their awards against the Republic in Canada as Sistem has done. Sistem
    submits it will be prejudiced if any monies seized by the Sheriff must be
    shared proportionately among several execution creditors.

[13]

Counsel
    for the Company responds that the prospect of the proportionate sharing of
    execution monies is not legally cognizable harm. That is, he submits, because proportionate
    sharing of the monies obtained by the sheriff among execution creditors is part
    of the public policy and law of the province. He submits that any negative
    consequences to Sistem that result from the implementation of the law cannot
    constitute legally cognizable harm.

[14]

The
    law in question, s. 4 of the
Creditors Relief Act
, S.O. 2010, C. 16,
    provides that monies received by the sheriff shall be shared proportionately
    among those execution creditors whose executions are filed with the sheriff at
    the time the sheriff received the monies or
within a one-month period
after the date the sheriff receives the monies. At the time of the order under
    appeal and at the present, Sistem is the only execution creditor of the
    Republic. From the information provided to the court, I gather it is unlikely
    that there will be any other judgment creditor who will file an execution with
    the sheriff within a one-month period should the sheriff execute the writ of
    seizure now. I am satisfied that the harm Sistem faces if the order is not
    stayed is legally cognizable.

[15]

I
    conclude that the balance of convenience in this case would be best served by
    staying the order under appeal on the term that the company file a letter of
    credit in the amount of the outstanding judgment against the Republic. Should
    the company fail to file the letter of credit in 15 days of this decision,
    Sistem may proceed to enforce the order under appeal.

[16]

Costs
    of the motion are reserved to the panel hearing the appeal.

R.G. Juriansz J.A.


