A claim by one Russian oligarch against another for US$5.6 billion (yup, that’s billion) has been dismissed by Mrs Justice Gloster in the Chancery court in London: Berezovsky v Abramovich (action 2007, folio 942; for now, only a summary of the decision is available, with reasons to follow). Boris Berezovsky (oligarch B) alleged that he, Roman Abramovich (oligarch A) and a third, since deceased oligarch (oligarch D) had entered into an oral agreement about the holding of their ownership interests in Sibneft, an oil company. Oligarch B claimed that he had been forced to sell his interests to oligarch A at a significant discount, backed up by threats that failure to cooperate would oblige oligarch A to ask his good buddy Vladimir Putin to expropriate oligarch B’s holdings and make life generally unpleasant. Oligarch B complied, and oligarch A sold his Sibneft holdings for a massive profit. A second claim by oligarch B was that he, oligarchs A and D, and yet another oligarch had entered into a further oral agreement with respect to the pooling of ownership interests in RusAl, an aluminum company, on some sort of trust, and that oligarch A had breached his fiduciary obligations by selling his interests without oligarch B’s consent.
While previous aspects of the case have generated some interesting legal analysis, Mrs Justice Gloster’s decision turns solely on the credibility of the main witnesses. Hard evidence was lacking, as oligarchs tend to make oral agreements (usually at the Dorchester Hotel in London) in order to keep records of ownership interests to a minimum (expropriation and mysterious death being endemic to this sphere). The judge found that oligarch A was a ‘careful and thoughtful witness’, not afraid to give answers that did not serve his interests, ‘truthful, and on the whole, reliable…’ Oligarch B, in contrast was an ‘inherently unreliable’ witness who ‘regarded truth as a transitory, flexible concept’ who ‘would have said almost anything to support his case’. It also emerged that some of oligarch B’s witnesses stood to gain financially in the event he was successful. The judge concluded that there were no agreements in relation to either Sibneft or RusAl. Oligarch B’s claim to have been threatened by oligarch A was not supported by evidence. His ‘blame the lawyers’ strategy also backfired. The claims against oligarch A were dismissed in their entirety.
It is understood that oligarch B’s solicitors have racked up over £100 million in fees under some form of contingency arrangement, with third-party insurance. It will be interesting to see how that plays out, especially if the insurance has an exclusion for litigation that is wholly without merit.
[Link available here].