Boris Abramovich Berezovsky v Roman Arkadievich Abramovich
| Jurisdiction | England & Wales |
| Judgment Date | 28 April 2008 |
| Neutral Citation | [2008] EWHC 1138 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 28 April 2008 |
| Docket Number | 2007 Folio 942 |
[2008] EWHC 1138 (Comm)
IN THE HIGH COURT OF JUSTICE
COMMERCIAL COURT
QUEEN'S BENCH DIVISION
HIS HONOUR JUDGE MACKIE QC (sitting as a Judge of the High Court)
2007 Folio 942
JUDGMENT 22 MAY 2008
Miss Barbara Dohmann QC, Mr Andrew George and Mr Tom Richards (instructed by Cadwalader, Wickersham & Taft) appeared for the Claimant.
Mr Andrew Popplewell QC, Ms Helen Davies QC and Mr Paul Mitchard QC (instructed by Skadden Arps) appeared for the Defendant.
There are two applications before the court. The Claimant applies under CPR 17 to amend the Claim Form and the Particulars of Claim. The Defendant applies under CPR 18 for Further Information about the Particulars of Claim and for an extension of time for service of the Defence. The applications were heard on 18 and 28 April. The application to amend raised a limitation point on which I reserved judgment. For reasons I give below I deal only briefly with the Defendant's request for Further Information.
Background
The Claimant and the Defendant are well known Russian businessmen. The Claimant Mr Berezovsky lives in England and the Defendant Mr Abramovich has interests here including Chelsea Football Club. Mr Berezovsky claims damages and other relief amounting to $4.3 billion arising out of allegedly wrongful actions committed by Mr Abramovich after it is alleged he had been entrusted with responsibility for holding and safeguarding the interests of the Claimant and of his late business partner Mr Patarkatsishvili. Before turning to the claims in more detail I first summarise what has happened in the action so far.
The Action so far
The Claim Form was issued on 1 June 2007 by the Claimant's then legal team. Subsequent efforts to serve Mr Abramovich attracted publicity. Mr Justice Tomlinson granted a four month extension of time within which to serve the claim form until 1 January 2008. On 1 November service was effected by the Claimant's new solicitors who then indicated that the initial Particulars of Claim would be replaced by new ones drafted by fresh Counsel. The new Particulars of Claim were served on 8 January with a draft amended claim form. Once it became clear that the Defendant would not agree to some of the amendments and the Claimant would not supply further information the Defendant's application was issued on 15 February and the Claimant's application was issued on 3 March.
The Claims
The two investments which are the subject of the action were made in Sibneft, an oil and gas company, and in RUSAL, an aluminium company. The nature of the claims, as summarised by the Claimant is as follows. I emphasise that these are the claims of the Claimant. They are strongly denied by the Defendant.
Sibneft
a. In about the summer of 1995, the Claimant, the Defendant and Mr Patarkatsishvili agreed that their ownership interest in Sibneft would be beneficially held as to 50% by the Defendant; 25% by the Claimant; and 25% by Mr Patarkatsishvili and that profits would be shared between them in the same proportions.
b. By 1996, with the Claimant becoming more involved in Russian politics and Mr Patarkatsishvili being responsible for the management of Russia's largest and most politically influential television channel, the Defendant proposed that the Sibneft interests held by the Claimant and Mr Patarkatsishvili should be transferred legally to him or to entities under his control. The Claimant and Mr Patarkatsishvili agreed to this on the basis that, amongst other things, the Claimant and Mr Patarkatsishvili would continue beneficially to own the shares so transferred, which would be held on trust for them by the Defendant, and that the Claimant and Mr Patarkatsishvili would continue to be entitled to dividends and to other payments made by Sibneft to its beneficial owners.
c. By the summer of 2001, the Claimant's active opposition to the policies of President Putin resulted in an orchestrated campaign by the Russian state against the Claimant's interests. By contrast, the Defendant was and remained at all times close to President Putin and part of his inner circle. In these circumstances, the Defendant conducted a campaign of intimidation against the Claimant (through Mr Patarkatsishvili) (1) threatening that the Claimant and Mr Patarkatsishvili's interests in Sibneft could be expropriated; and (2) making it clear that the Claimant and Mr Patarkatsishvili should sell their beneficial interests in Sibneft to the Defendant, or face the consequences. In particular, the Defendant informed the Claimant (through Mr Patarkatsishvili) that if they sold their beneficial interest in Sibneft to him, their close business associate, Mr Nikolai Glushkov, would be released from prison in Russia (where he was being held on charges which the Claimant believes to have been wholly unfounded and politically motivated).
d. Further, the Defendant did not inform the Claimant (nor Mr Patarkatsishvili) that Sibneft would be, or would be likely to be, in a position to make a dividend payment to shareholders that was announced in August 2001 and which ultimately amounted to some $993 million.
e. As a result of the matters set out above, the Claimant was induced to sell his beneficial interest in Sibneft shares to the Defendant (via a third party, Devonia Investments Limited) at a considerable undervalue.
RUSAL
a. At a meeting at the Dorchester Hotel in London on about 14 March 2000, the Claimant, the Defendant, Mr Patarkatsishvili and a Mr Oleg Deripaska agreed to pool their various interests in Russian aluminium companies to form a new entity, RUSAL. 50% of RUSAL was to be owned by Mr Deripaska and his partners and 50% was to be owned by the Claimant, the Defendant and Mr Patarkatsishvili. It was agreed that none of the Claimant, the Defendant, Mr Patarkatsishvili and Mr Deripaska would sell their shares without the agreement of the others.
b. At the same meeting, the Claimant, the Defendant and Mr Patarkatsishvili orally agreed, in respect of their 50% interest in RUSAL that (1) the Defendant would beneficially own one half of that interest (ie 25% of RUSAL); (2) the Claimant and Mr Patarkatsishvili would each beneficially own one quarter of that interest (ie 12.5% of RUSAL each); and (3) the shares beneficially owned by the Claimant and Mr Patarkatsishvili would be controlled and legally owned by the Defendant, or by companies the Defendant owned or controlled, and held on trust by the Defendant for the Claimant and Mr Patarkatsishvili.
c. In about September 2003, and without obtaining the consent of or even informing either the Claimant or Mr Patarkatsishvili, the Defendant sold 25% of RUSAL to Mr Deripaska. According to the Claimant, the Defendant asserted that all of the shares which he sold to Mr Deripaska were “his” shares in RUSAL, rather than those which were beneficially owned by the Claimant or Mr Patarkatsishvili. Inevitably, the price which Mr Deripaska was willing to pay for the shares which gave him majority control over RUSAL was far higher than that which he (or anyone else) was subsequently willing to pay for the remaining shares. The 25% of the RUSAL shares sold in September 2003 (which the Defendant allegedly asserted were “his” shares) were sold for US$1.75bn. The remaining 25% of the RUSAL shares held by the Defendant (which the Defendant allegedly asserted were shares he held on behalf of the Claimant and Mr Patarkatsishvili) were subsequently sold to Mr Deripaska in October 2004 for US$450m.
There is as yet no Defence so the Defendant has not set out his position but, as I have mentioned, most of these allegations, if not all of them will be denied. It emerged from questions I asked that the conversations in 1995, 1996 and 2001 relied on by the Claimant in his Sibneft claim occurred at meetings where only the parties and the late Mr Patarkatsishvili were present. There are no notes, tapes or contemporaneous documents evidencing these discussions. Mr Berezovsky will therefore have to prove these discussions on the basis of the recollections of himself and of Mr Abramovich in the context of the background and of the circumstantial evidence. Mr Berezovsky faces a similar task with RUSAL where much depends on what happened at a meeting at the Dorchester Hotel in March 2000. That too is undocumented and will turn on the recollections of the parties and perhaps that of Mr Deripaska.
The Claimant's application to amend
A number of the amendments proposed by the Claimant have been consented to by the Defendant. I deal only with those in dispute. The starting point for the Court is that a party should have permission to amend his pleadings so that all issues can be effectively adjudicated upon provided that any prejudice to any other party caused by the amendment can be compensated in costs and provided that the public interest in the efficient administration of justice is not significantly harmed. ( Cobbold v Greenwich LBC [1999] EWCA Civ 2074 at [10]).
Paragraph 1 of the Claim Form currently seeks “damages and/or compensation and/or equitable compensation for duress on the part of the Defendant and/or in lieu of rescission on the grounds of duress on the part of the Defendant and/or in respect of tortious liability (in particular for intimidation by the Defendant) arising from the sale by the Claimant in or about June/July 2001 of his beneficial interest in OAO Sibneft to Devonia Investments Ltd.”
The Claimant will not proceed with his duress claims and of course the Defendant does not oppose their deletion. The Claimant seeks to amend paragraph 1 to add claims for breach of trust, breach of duty and an account of profits so that the new paragraph 1 will read:-
“Damages and/or compensation and/or equitable compensation and/or an account of the profits in respect of...
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