Berezovsky and Another v Forbes Inc. and Another

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLORD STEYN,LORD NOLAN,LORD HOFFMANN,LORD HOPE OF CRAIGHEAD,LORD HOBHOUSE OF WOODBOROUGH
Judgment Date11 May 2000
Judgment citation (vLex)[2000] UKHL J0511-1

[2000] UKHL J0511-1

HOUSE OF LORDS

Lord Steyn

Lord Nolan

Lord Hoffmann

Lord Hope of Craighead

Lord Hobhouse of Wood-borough

Berezovsky
(Respondent)
and
Michaels

And Others

(Appellants)
and
Glouchkov
(Respondents)
and
Michaels

And Others

(Appellants)

(Consolidated Appeals)

LORD STEYN

My Lords,

1

In the wake of the collapse of the Soviet Union the transition of Russia from communism to a market-orientated economy and society has been accompanied by a dramatic upsurge in organised crime and corruption. There has been great interest internationally in these consequences of the transformation of Russian society. Newspapers and journals specialising in international news, political and economic, published many reports on the criminalisation of Russian society. Forbes, an influential American fortnightly magazine, devoted considerable resources to the investigation and reporting of the situation in the post-Soviet phase in Russia. In 1996 its reporting centred on the role of two considerable figures in the new Russia. The first and most powerful was Mr. Boris Berezovsky. He is a businessman and politician. He has extensive interests in Russian businesses, including cars, oil, media and finance. In October 1996 he became Deputy Secretary of the Security Council of the Russian Federation which is a senior post in the Russian Government. His subsequent career is not directly relevant but I mention it for an understanding of the context. In November 1997 President Yeltsin dismissed Mr. Berezovsky. In April 1998 Mr. Berezovsky was appointed as Secretary of the Commonwealth of Independent Sates, with responsibility for co-operation between the various parts of the Russian Federation. The second figure of interest to Forbes was Mr. Nikolai Glouchkov. In December 1996 he was the First Deputy Manager of Aeroflot, the Russian international airline. He is now the Managing Director of Aeroflot.

2

In its issue of 30 December 1996 Forbes described the two men as "criminals on an outrageous scale". On the contents page Mr. Berezovsky was introduced as follows:

"Is he the Godfather of the Kremlin? Power, Politics, Murder. Boris Berezovsky can teach the guys in Sicily a thing or two."

3

The flavour of the article, which together with a prominent photograph of Mr. Berezovsky was spread over seven pages, is captured by an editorial published by Mr. James W. Michaels, the editor of Forbes. It states:

"… this is the true story of the brilliant, unscrupulous Boris Berezovsky, a close associate of President Boris Yeltsin and a man who parlayed an auto dealership into Russia's most formidable business empire. Berezovsky stands tall as one of the most powerful men in Russia. Behind him lies a trail of corpses, uncollectible debts and competitors terrified for their lives.

4

"A number of Forbes editorial staffers were involved in the reporting and picture-gathering over a period of many months. As one of them puts it. "In Moscow, asking questions about Berezovsky was like being back there in pre-Gorbachev days. At the very mention of Berezovsky's name, people would look around furtively, lower their voices and try to change the subject. "Russians have good reason to be afraid of Berezovsky and people like him: Emulating the old communist bosses, the new crime bosses use KGB-trained assassins and enforcers. In the prevalence of brutality and extralegal power grabs, Russia hasn't finished paying the price for those 70 years of communism. "This is one of the finest pieces of reporting I have seen in my half-century in journalism."

5

In the article Forbes described Mr. Glouchkov as follows:

"Now meet Aeroflot's deputy director, Nikolai Glushkov. This gentleman has an interesting background. He was convicted in 1982 under Article 89 of the Russian criminal code (theft of state property). Later Glushkov served as head of finance for Avtovaz and was one of the founders of Logovaz. In short, an associate of Berezovsky. Are Glushkov and Berezovsky in cahoots to siphon money from Aeroflot? The parallels with Avtovaz are certainly striking."

6

The circulation figures of the issue of Forbes of 30 December 1996 would have been of the following order:

Subscriptions Newstands Total
United States & Canada 748,123 37,587 785,710
England & Wales 566 1,349 1,915
Russia 13 0 13
7

The magazine was also available to be read on the Internet in England and Wales and elsewhere. The readers of Forbes are predominantly people involved in business. Typically, many of its readers would have come from those working in corporate finance departments of banks and financial institutions. There is an agreed estimate that the magazine would have been seen by about 6,000 readers in the jurisdiction.

8

The proceedings

9

Mr. Berezovsky and Mr. Glouchkov both speak English well. Mr. Berezovsky claimed to have extensive personal and business connections with England; Mr. Glouchkov asserted that he had significant connections with England. Both men decided to sue in England rather than in Russia or the United States. On 12 February 1997 they issued separate proceedings for damages for libel and injunctions against Forbes Inc. (the publisher of the magazine) and Mr. Michaels (the editor). The plaintiffs confined their claims for damages to the publication of Forbes within the jurisdiction through distribution of copies of the magazine and through publication on the Internet. They applied under R.S.C., Ord. 11, r. 1(1)(f) for leave to serve the writs out of the jurisdiction. The relevant part of the order makes it permissible to serve a writ out of the jurisdiction where "the claim is founded on a tort and the damage was sustained, or resulted from an act committed, within the jurisdiction": see also Ord. 11, r. 4 which provides that no leave shall be granted unless the case is "a proper one for service out of the jurisdiction". On 7 April 1997 the Forbes parties (to whom I will collectively refer as "Forbes") applied under Order 12, rule 8, to have the writs set aside and the actions dismissed or stayed, on the grounds that England is not the most appropriate jurisdiction for trial of the plaintiffs' claims. It was contended that Russia or the United States were jurisdictions where the action could more appropriately be tried. A large number of affidavits were exchanged. Expert evidence on the law of Russia and the law of the United States was served. Hundreds of pages of press cuttings and other documents were exhibited.

10

At first instance, and in the Court of Appeal, the principal factual dispute was the extent of the connections of the plaintiffs with England and their reputations here. The plaintiffs claimed to have substantial connections with the jurisdiction through visits, business relationships and, in the case of Mr. Berezovsky, personal and family ties. Forbes maintained that the connections were insignificant compared with their connections with Russia, and were insufficient to make this jurisdiction the most appropriate for the trial of the action.

11

On 22 October 1997 Popplewell J. heard the applications by Forbes. He gave two judgments. In the first he correctly held that, notwithstanding that an English tort was established, he had jurisdiction to stay the action on the principles laid down by the House in Spiliada Maritime Corporation v. Cansulex Ltd. [1987] A.C. 460. In the second judgment Popplewell J. considered the merits of the applications. He concluded that the connections of the plaintiffs with the jurisdiction were tenuous. The judge clearly thought Russia was the more appropriate forum because in a judgment given on 19 December 1997 he required Forbes to submit to the jurisdiction of the Russian courts and to abide by the judgment of the Russian courts.

12

The plaintiffs appealed to the Court of Appeal. About four weeks before the appeal was heard the plaintiffs served further evidence about the detrimental effect which the Forbes article had on the reputation of the plaintiffs in London. Forbes also served a further affidavit. Notwithstanding the objections of Forbes the Court of Appeal in exercise of its discretion admitted the new evidence. On 19 November 1998 the Court of Appeal allowed the appeal of both plaintiffs. Hirst L.J., who has vast experience of this class of work, gave the leading judgment and May L.J. and Sir John Knox agreed. Hirst L.J. held that Popplewell J. had misdirected himself on the evidence and that the Court of Appeal was entitled to consider the matter afresh. Hirst L.J. concluded that there was a substantial complaint about English torts in the case of both plaintiffs. Accordingly, there was jurisdiction to try the action in England and in all the circumstances England was the appropriate jurisdiction for the trial of the action. The judgment of the Court of Appeal is only reported in [1999] E.M.L.R. 278 at present.

13

The shape of the appeal to the House

14

The shape of the case changed during the oral argument in the House. At the end of speeches the principal matters in issue were as follows:

  • (1) Did the Court of Appeal err in admitting the plaintiffs' new evidence?

  • (2) Should the House of Lords grant a petition by Forbes to produce new evidence on the appeal to the House and, if so, should the House grant a counter-petition by the plaintiffs.

  • (3) Depending on the answers to the first two issues, what is objectively the realistic view on the primary issue of fact, viz the plaintiffs' connections with England and reputation here?

  • (4) Did the Court of Appeal correctly apply the Spiliada test?

  • (5) Was the Court of Appeal entitled to interfere with the exercise by Popplewell J. of his discretion?

  • (6) Even if the decision of the Court of Appeal in respect of Mr. Berezovsky's action was correct, what is the position...

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