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27 April 2021
The High Court has allowed conspiracy proceedings brought by two Russian banks against several Russian nationals to proceed in England despite there being "no doubt, and no dispute, that [it] is a Russian case".(1)
The claimants alleged that the seven defendants conspired to bring about transactions in which approximately $800 million of well-performing, secured loans, which had been made by the claimants to a company ultimately owned or controlled by the first four defendants (the Mints), were repaid with the claimants' own money and replaced with illiquid, unsecured and non-income-producing long-term bonds worth a fraction of the price that the claimants had paid for them. At the time, the fifth to seventh defendants (D5 to D7) were the chairs, CEOs and shareholders of the claimants. The claimants alleged that the Mints had dishonestly procured the transactions in conspiracy with the banks' controllers at the time (D5 to D7) to the benefit of the Mints' company and at the expense of the claimants.
Initially, the claimants issued proceedings against only the Mints, who were based in England. However, they later applied for permission to serve the proceedings against the further three defendants, D5 to D7, who were based in the United States, Israel and Russia. This was on the basis that they were necessary or proper parties to the claim against the Mints, who were the anchor defendants. The High Court judge granted permission.
However, D5 to D7 sought to have the permission set aside on the basis that England was not the appropriate jurisdiction to hear the dispute.
The High Court accepted that the case before it was "essentially a Russian dispute"(2) because:
Nonetheless, the court allowed the English proceedings against D5 to D7.
The court accepted the claimants' argument that D5 to D7 should be parties to the English proceedings to avoid the risk of inconsistent decisions if they were instead sued in separate proceedings elsewhere. In doing so, the court acknowledged that there was already a risk of inconsistent judgments as a consequence of extant proceedings relating to the same claims in other jurisdictions (eg, Russia, Cyprus and New York). However, the court considered that the risk would be materially increased if it declined jurisdiction over D5 to D7, and that increased risk was "something which is capable of causing great difficulty not only for the individuals affected but also for the judicial systems of England and Russia". Therefore, it concluded that it should be avoided.(4)
D5 to D7 argued that because the risk of inconsistent judgments had arisen only as a result of the claimants' own decision to sue the Mints in England, the claimants could not rely on that to contend that England was the forum conveniens. The claimants had chosen to sue the Mint defendants in England because they expected to face challenges in enforcing a Russian judgment against the Mints in jurisdictions abroad. Conversely, an English judgment would be more easily enforceable in other jurisdictions (eg, the Cayman Islands, which is where the claimants would seek to enforce it) and was, therefore, a more attractive option.
The court accepted the claimants' position that no rational claimant would have chosen to sue the Mints in Russia. Considering all of the circumstances (ie, the claimants' reason for choosing to sue in England and the material increase in the risk of multiple proceedings and inconsistent judgments), the court held that England was the forum in which the claims against D5 to D7 could be "suitably tried for the interests of all the parties and for the ends of justice".(5)
This decision illustrates that even though key legal, factual and practical aspects of a dispute favour another jurisdiction, the courts of England and Wales may still find the forum conveniens to be England when a risk of a multiplicity of proceedings and issues of enforceability of judgments is at play.
That said, the jurisdictional position in any given case will clearly turn on the precise circumstances, so claimants should consider carefully where to bring their claims in light of all of the circumstances.
For further information on this topic please contact Daniel Wyatt or Karina Plain at RPC by telephone (+44 20 3060 6000) or email (email@example.com or firstname.lastname@example.org). The RPC website can be accessed at www.rpc.co.uk.
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