An article in yesterday’s Times (‘Former Soviet oligarchs march on London to fight legal battles’) describes how the largest group of foreign litigants in High Court commercial cases originate from former Soviet countries. This continues the trend seen over a number of years.
Of the foreign litigants in commercial cases in 2018, Kazakhstan and Russia were in second and third place – 36 litigants from Kazakhstan (one fewer than the USA) and 29 from Russia. 25 Ukrainian litigants also litigated in the court, putting it in sixth place. In addition, a significant number of the 28 Cypriot litigants are likely to be Cypriot companies owned by citizens of former Soviet countries.
The article highlights how Russian, Kazakh and Ukrainian litigants tend to be individuals, rather than companies or governments, noting that they ‘often face worldwide freezing orders and the cases can involve complicated issues concerning jurisdiction’.
Littleton Chambers has considerable expertise in litigation from Russia and the former Soviet Union and its members appeared in many of the cases included in these statistics. As the article notes, these cases featured worldwide freezing orders and complicated issues of jurisdiction, two areas in which chambers has particular specialism.
Kazakh cases took top billing amongst former Soviet countries, in large part because of the enormous and long-running Ablyazov fraud litigation, in which BTA bank claimed US$6 billion misappropriated by its former chairman, Mukhtar Ablyazov. Recent incarnations of the case have focused on the alleged conspiracy between Mr Ablyazov and his son-in-law Ilyas Khrapunov to hide assets and deprive the bank of the benefit of a worldwide freezing injunction. Charles Samek Q.C. and Marc Delehanty appeared for Mr Khrapunov multiple times in the Commercial Court and also in the Court of Appeal and recently in the Supreme Court: BTA Bank v Khrapunov. The case is now the leading decision on unlawful means conspiracy, deciding for the first time that a breach a freezing order can count as unlawful means for the purposes of the tort.
The article highlights three cases in which Ukrainian oligarch Igor Kolomoisky was a defendant. Marc Delehanty appeared in one of the largest of them, PrivatBank v Kolomoisky, in which he successfully challenged the court’s jurisdiction over a civil fraud claim for US$2 billion brought by a Ukrainian bank against its former shareholders and a number of English shell companies used in the fraud. It was found that the claim was brought against the English companies for the sole purpose of joining Mr Kolomoisky (who now lives in Switzerland) and the English court did not have jurisdiction against him. An appeal is due to be heard by the Court of Appeal in July.
Russians have been some of the most high-profile litigants in London for the past two decades. Littleton Chambers counts two fluent Russian speakers amongst its members, Rupert D’Cruz and Alexander Halban. Rupert is a recognised expert in Russian and CIS litigation. He due to appear next month in the trial in Bestolov v Povarenkin, a Commercial Court dispute over mining projects in the Russian Far East. The case also featured a significant jurisdiction challenge (included in the previous year’s statistics) which established that Mr Povarenkin was domiciled in England, despite carrying on business in Russia. Alexander appeared recently in the Commercial Court in National Bank Trust v Yurov (included in the above figures), in which a Russian bank claimed US$1 billion allegedly misappropriated by its former directors and shareholders via a network of offshore companies. The bank was bailed out by the Russian state and taken over by another Russian bank which, the defendants alleged, used the bailout funds to support itself and inflated the claims against them. The trial, which lasted for nine weeks, raised complex issues of Russian law and financial evidence. Judgment is awaited.
The article suggests that these figures – and the record number of Commercial Court claims issued last year in general – shows that London remains the world’s premier dispute resolution centre, despite the prospect of Brexit.
Litigation from former Soviet countries is in many ways unlikely to be unaffected by Brexit. There will not often be assets in other EU countries (except sometimes held by offshore Cypriot companies) and so there will be no need to enforce judgments under the EU Judgments Regulation. Many of the litigants are oligarchs who live in London and will likely continue to do so after Brexit – although there has been increased scrutiny of visas issued to Russian oligarchs (Roman Abramovich being the most famous example of a recent refusal) which may reduce future numbers. English law and jurisdiction remain the most popular choice for contracts between Russian parties – despite attempts by the Russian government to bring litigation back to Russia.
Russians also favour English arbitration, which offers the major attraction of resolving their disputes confidentially and being enforceable in a large number of countries. The statistics in the article only cover litigants in court, not arbitration. However, there are still large numbers of London arbitrations from former Soviet countries: in the LCIA’s most recent statistics, Russia takes third place for number of parties, after the UK and the USA. Littleton Chambers wide arbitration experience with many of its members appearing as counsel and sitting as arbitrators. It also has a dedicated team of international arbitrators, including Sir Michael Burton, a former Commercial Court judge who recently decided Maximov v NMK (included in the previous year’s statistics), a claim to recognise a Russian arbitration award for £100 million, which had been set aside by the Russian courts.