The claimants sought damages alleging a massive fraud by the defendants. The court considered whether the parties could receive a fair trial of the action in Russia.
Held: They could. Christopher Clarke J said: ‘Firstly, this case is in no way comparable to Cherney v Deripaska, [2008] EWHC 1530 (Comm), in which the claimant, a Russian exile and persona non grata in Russia, was given permission to serve out in circumstances where the agreement sued on, as a result of which he claimed a 20% interest in the largest aluminium company in the world, was made in England. The evidence gave grounds for believing that if the proceedings took place in Russia (a) he faced a greater risk of assassination (there having been a previous Russian originated attempt on his life); (b) there was a real risk that he might be arrested on trumped up charges; (c) and, because of the very close links between Mr Deripaska and the Russian state, he might very well not receive a fair trial. ‘
Here Yugraneft a Russian company, one of whose shareholders is the City of Moscow, is a seasoned litigator in Russia. It has not been without success. In the bankruptcy proceedings it has enjoyed complete success, as appears from the course of proceedings summarised in Appendix 5. It is open to it to appeal the investigator’s refusal but it has decided not to do so. Mr Kotov says that he did not initiate an appeal because he considered it likely that it would be dismissed for reasons unconnected with the merits of the complaint. This view appears to be based on a conversation reported to him by an officer at the Ministry of Internal affairs involved in pre-investigative research into the complaint which that officer had had with Mr Davidovich in which the latter had said that the investigation ‘has no prospects’, ‘does not mean anything’ and ‘will be closed anyway so there is no point in you talking to me’.
Professor Eksarkhopulo’s evidence indicates that there can be real problems in securing the prosecution of important people for economic crimes, and that a thriving practice has grown up known as ‘raiding’ whereby property is unlawfully seized in the belief that no criminal case will come of it as a result of the investigators’ incompetence or corruption. Yugraneft claims that there are well recognised problems of corruption in the Russian Courts. Presidents Putin and Medvedev have acknowledged as much, as has Valery Zorkin, the President of the Constitutional Court. In October 2004 he told Izvestiya that
‘the courts are very vulnerable to attack from business in the form of corruption. Bribe-taking in the courts has become one of the strongest corruption markets in Russia. Judicial corruption is built into various corruption networks operating at different levels of power: for example, networks for causing criminal cases to collapse and for taking over businesses’.
In May 2008 President Medvedev expressed the ‘particular concern of the state’ in relation to the ‘corruption in the law enforcement bodies and the judiciary’.
Reliance is placed on the evidence of Mr Vladimir Soloviev, a Russian broadcaster with a colourful background, who claims to be, inter alia, an investigative journalist. He refers to a failure by the Chairwoman of the Federal Arbitazh Court of Moscow Circuit to procure a prosecution against him for pointing out that she had obtained in dubious circumstances four apartments in Moscow, one of them at an undervalue from a party in a case before her at a cost of 50 times her judicial salary. He also refers to a defamation action brought by Mr V. Boyev, an adviser in the Presidential Department for personnel issues and State awards, who took exception to reports he made about the latter’s exercise of improper influence over judges. The action was withdrawn when he obtained the evidence of a judge that Mr Boyev had requested that she change her ruling and told her that if she did not her reappointment as Deputy Chairwoman was in jeopardy.
I have no doubt that Russia has had, and has, corruption problems with some of its judges; and that there is a widespread public perception of judicial corruption and political interference in the judicial process: see ‘Striving for Judicial Independence’, IBA Human Rights Institute Report, June 2005. Professor Eskarkhopulo gives evidence of specific examples of judicial corruption in his second report. I am equally clear that there are many judges who are not corrupt. The evidence is insufficient to persuade me that, if there was an appeal from the investigator’s refusal to initiate a prosecution, it would be likely to be determined contrary to its merits because Yugraneft was the complainant or because Mr Davidovich, Mr Matevosov or Mr Abramovich were the respondents. The litigation in which Yugraneft has so far engaged does not bear tell tale indicia of impropriety such as repeated determinations of different cases by the same judge without good reason, departure from normal curial practice, irrational conclusions or the like. Since Yugraneft has not attempted to appeal the Investigator’s refusals it is not possible to know what a Russian judge would make of the submissions cogently advanced before me in reliance on Professor Eskarkhopulo’s material, or to say that, in the event of a favourable judicial ruling, a subsequent prosecution would, for improper reasons, be doomed never to take place.
Lastly, if and insofar as reliance is placed upon the unsatisfactory nature of a system in which claims based on commercial fraud must await the outcome of a criminal prosecution which may never be brought, that is a characteristic of Russian law under which Sibir and Yugraneft, (behind which there lies, amongst others, the City of Moscow) and Mr Abramovich have chosen to do business. It was at one time part of English law so far as felonies were concerned.’
Judges:
Christopher Clarke J
Citations:
[2008] EWHC 2613 (Comm)
Links:
Statutes:
Council Regulation (EC) No 44/2201)
Jurisdiction:
England and Wales
Cited by:
Cited – Pacific International Sports Clubs Ltd v Soccer Marketing International Ltd and Others ChD 24-Jul-2009
The parties disputed ownership of shares in the football club Dynamo Kiev. Claims were to be made under Ukrainian company law and in equity. The claimant (a company registered in Mauritius) sought to proceed here. The defendants (largely companies . .
Cited – Varsani v Relfo Ltd CA 27-May-2010
The defendant appealed against refusal of a declaration that the court had no jurisdiction to hear the claim. He said that he lived in Kenya, and the claimant had failed first to apply for leave to serve out of the jurisdiction. The claimant had . .
Cited – Calzaghe v Warren QBD 20-Jan-2010
The claimant boxer had secured judgement for fight fees from a company operated by the respondent manager and promoter. After the judgment the defendant had put the company into administration. The claimant now sought payment from the defendant . .
Lists of cited by and citing cases may be incomplete.
Torts – Other, Jurisdiction
Updated: 09 December 2022; Ref: scu.277338
