Berezovsky v Abramovich
| Jurisdiction | England & Wales |
| Judge | Laws,Longmore,Stanley Burnton L JJ |
| Judgment Date | 23 February 2011 |
| Court | Court of Appeal (Civil Division) |
| Date | 23 February 2011 |
Court of Appeal (Civil Division).
Laws, Longmore and Stanley Burnton L JJ.
Andrew Popplewell QC, Helen Davies QC and Daniel Jowell (instructed by Skadden, Arps, Slate, Meagher & Flom (UK) LLP) for the appellant.
Laurence Rabinowitz QC, Richard Gillis QC, Simon Colton and Sebastian Isaac (instructed by Addleshaw Goddard Solicitors LLP) for the respondent.
The following cases were referred to in the judgment of Longmore LJ:
Aldi Stores Ltd v Holmes Buildings plcUNK [2003] EWCA Civ 1882.
Al-Koronky v Times Life Entertainment Group LtdUNK [2006] EWCA Civ 1123.
A Ltd v B BankUNK [1997] ILPr 586.
Buttes Gas & Oil Co v HammerELR [1982] AC 888.
Cooke v GillELR (1873) LR 8 CP 107.
Goode v Martin [2002] CLC 420; [2002] 1 WLR 1828.
Gusinsky v Russia Application 70276/01.
Hodges v WebbELR [1920] 2 Ch 70.
Kirkpatrick v Environmental Tectonics Corporation International (1990) 493 US 400; 110 SC 701.
Kuwait Airways Corp v Iraqi Airways Co [2001] CLC 262 (CA); [2003] 1 CLC 183; [2002] 2 AC 883 (HL).
Latreefers Inc v HobsonUNK [2002] EWHC 1586 (Ch).
Morgan v FryELR [1968] 2 QB 710.
Paragon Finance plc v DB Thakerar & CoUNK [1990] 1 All ER 400.
R v Bow Street Metropolitan Stipendiary Magistrate & Ors, ex parte Pinochet Ugarte (No. 3)ELR [2000] 1 AC 147.
Santen v Busnach (1913) 29 TLR 214.
Savings and Investment Bank Ltd v Fincken [2001] EWCA 1639.
Sharon v Time IncUNK (1984) 599 F Supp 538.
Smith v Henniker-Major & CoELR [2003] Ch 182
Steamship Mutual Underwriting Association Ltd v Trollope & Colls (City) LtdUNK (1986) 33 BLR 77.
Stock v London UndergroundUNK (unreported, 30 July 1999).
Tort — Intimidation — Claim that interests in Russian companies expropriated by disposal at undervalue due to intimidation — Alleged breach of fiduciary duty or contract — Russian law not recognising concepts of trust or beneficial interest — Amendment permitted to assert interest arising from joint activity or other sui generis agreement —Substance of proposed amendments not raising new claim or cause of action — Restitution claim if Russian law did not recognise beneficial interest not new claim — Quantum meruit claim not based on facts already pleaded — Threat of expropriation sufficiently pleaded — Doctrines of act of state and non-justiciability not engaged — Amendment permitted to plead express as well as implied agreement that arrangements governed by English law Limitation Act 1980, s. 35 — Civil Procedure Rules 1998, r. 17.4(2).
This was an appeal by the defendant (Mr Abramovich) against a decision allowing the claimant (Mr Berezovsky) to amend his claim and refusing to grant summary judgment in favour of Mr Abramovich.
Mr Berezovsky asserted that he once had a disposable interest in a Russian oil and gas company called Sibneft and in a Russian aluminium company called Rusal. He claimed that, although Mr Abramovich had the legal title to the shares in Sibneft, he (Mr Berezovsky) was intimidated by threats emanating from Mr Abramovich into disposing of his interest in Sibneft to companies controlled by Mr Abramovich at an undervalue and he sought to recover his loss as compensation for the tort of intimidation. He also claimed that, although Mr Abramovich had legal title to the shares in Rusal, Mr Abramovich in breach of contract or fiduciary duty disposed of a large number of shares to companies controlled by Mr Oleg Deripaska, thus rendering his remaining shares much less valuable than before. He sought to recover that loss as compensation for the alleged breaches of duty.
Mr Berezovsky originally asserted that his interest in Sibneft, like his interest in Rusal, was a beneficial interest arising from the terms of the arrangement H by which Mr Abramovich came to have legal title to the shares in Sibneft. After receiving Mr Abramovich's defence that the arrangement made was between Russian citizens in Russia, was governed by Russian law and Russian law did not recognise the concepts of a trust or a beneficial interest, he applied for permission to amend his particulars of claim to delete the words “trust” and “beneficial interest” and their equivalents and to assert merely that he had an interest arising from a joint activity or other sui generis agreement with Mr Abramovich which still gave him a right to sue for intimidation if such interest was sold at an undervalue by reason of Mr Abramovich's threats.
The arrangements in relation to Rusal were allegedly made at the Dorchester Hotel in London and were said to have included an implicit agreement or understanding that Russian law was not to apply because the shares were to be held off shore. Mr Berezovsky's allegation that the shares were held on trust for him beneficially was therefore still maintained together with an assertion that the arrangement relating to them was impliedly governed by English or British Virgin Islands law. Mr Berezovsky also wished to assert by a late amendment that there was an express as well as implied agreement that the arrangements C were to be governed by English law.
The judge gave permission to make the amendments and refused to grant summary judgment in favour of Mr Abramovich and to dismiss the claim. Mr Abramovich appealed.
Held, allowing the appeal in part:
1. The proposed amendments to the Sibneft claim did not give rise to a new claim or cause of action within s. 35(2) of the Limitation Act 1980 or CPR, r. 17.4(2). A new claim involved the addition or substitution of a new cause of action. A cause of action was that combination of facts which gave rise to a legal right. A cause of action in tort had, as its essential ingredients, a plea of duty, breach of duty and consequent damage to the claimant. If it happened to be the case that an element of one of those essential ingredients was misstated, misdescribed or omitted, it did not mean that a correct statement, description or inclusion was a new cause of action; even if the formal result of such a statement, misdescription or omission might technically be that an unaltered claim would have to be dismissed, that still did not mean that a corrective alteration involved or constituted a new cause of action.
2. The bare minimum of essential facts which could be extracted from the original pleading were that Mr Abramovich threatened that he would do his best to procure that the Russian state would expropriate Mr Berezovsky's interest in Sibneft; Mr Abramovich intended to coerce Mr Berezovsky to dispose of such interest; Mr Berezovsky was coerced into disposing of that interest; Mr Berezovsky suffered loss as a result. Those allegations also appeared (albeit with some amendments) in the proposed amended pleading. For a cause of action to arise in tort there had to be a breach of duty which caused loss, but it was permissible to add or substitute further losses if they all stemmed from an original breach of duty which had caused some loss. That happened every day in personal injury claims. In this case the new claim merely claimed the same loss as originally claimed albeit under a different label, namely loss arising from the requirement that he dispose of his “contractual” interests rather than, as originally, his “beneficial” interests. Alternatively, if it was a new loss, different in kind from the old loss, he was nevertheless not substituting a new cause of action for loss caused by intimidation for an original cause of action for loss caused by intimidation. If the loss stemmed from an already pleaded breach of duty the fact that the loss might be measured by a different law from that already pleaded did not necessarily mean that there was a new claim. (Latreefers v Hobson[2002] EWHC 1586 (Ch) considered; Steamship Mutual Underwriting Association Ltd v Trollope & Colls LtdUNK(1986) 33 BLR 77 distinguished.)
3. A restitution claim that, if Mr Berezovsky could not recover the value of any “beneficial” or “contractual” or “other” interest because Russian law did not recognise such interest, he was nevertheless entitled to recover the value of whatever it was that he had, arose out of the same or substantially the same facts as already pleaded. However, a claim that, if Russian law negated the claim completely because it recognised no right of Mr Berezovsky in relation to any interest of any kind in Sibneft, he was nevertheless entitled to be rewarded on a quantum meruit basis for the work done by him in relation to the receipt by Mr Abramovich of the benefit of the majority shareholding in Sibneft, raised questions of fact which went well beyond the ambit of the old particulars of claim. That was a new claim which could not be said to arise from the same or substantially the same facts as the old claim. Permission to amend to plead that claim was refused.
4. The claim for intimidation did sufficiently allege that Mr Abramovich threatened that he would do something illegitimate, as opposed to merely warning that someone else might do something. A reasonable person would understand that Mr Berezovsky was alleging that Mr Abramovich was threatening (at any rate impliedly, if not expressly) that he would do what he could to bring about the threatened expropriation of Mr Berezovsky's Sibneft interests if he was not prepared to sell at an undervalue to Mr Abramovich.
5. The act of state doctrine was not engaged because Mr Berezovsky's case was not that the acts on which he relied were invalid, only that they occurred. The English courts were well equipped to deal with the question whether the facts and matters relied on actually happened and that question did not fall within the sphere of non-justiciability.
6. There was an arguable case that the law governing the alleged fiduciary or contractual relationship of Mr Berezovsky and Mr Abramovich with regard to the Rusal shareholdings was impliedly English law. In the circumstances an amendment should be permitted to allege that there was an express...
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