Cherney v Deripaska (No 2)

JurisdictionEngland & Wales
JudgeLord Justice Waller,Lord Justice Moore-Bick,Sir John Chadwick
Judgment Date31 July 2009
Neutral Citation[2009] EWCA Civ 849
Docket NumberCase No: A3/2008/2277
CourtCourt of Appeal (Civil Division)
Date31 July 2009
Between
Deripaska
Appellant
and
Cherney
Respondent

[2009] EWCA Civ 849

Before:

Lord Justice Waller

Lord Justice Moore-bick and

Sir John Chadwick

Case No: A3/2008/2277

[2008] Ewhc 1530 (comm)

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

Mr Justice Christopher Clarke

QUEEN'S BENCH DIVISION, COMMERCIAL COURT

Ali Malek QC, Joe Smouha QC, Christopher Harris (instructed by Bryan Cave) for the Appellant

Geoffrey Vos QC, David Foxton QC, David Lord QC and James Weale (instructed by Dechert LLP) for the Respondent

Hearing dates: 20 th, 21 st July 2009

Lord Justice Waller
1

This appeal is concerned simply with where the trial of an action should take place. Christopher Clarke J by a judgment of some 264 paragraphs dated 3 rd July 2008 has granted permission to serve the proceedings out of the jurisdiction and ruled that the proper place to bring the claim is England. In so deciding he found (1) that Mr Cherney had a reasonable prospect of success in respect of his claim [116] and indeed that he had the better side of the argument that the agreements as alleged by him (relating to 20% of the shares in a Russian company known in the proceedings as 'Rusal') were made [119]; (2) that, although Mr Cherney had a good arguable case that English law and English jurisdiction had been orally agreed, he did not have the better argument, indeed on whether jurisdiction had been agreed Mr Deripaska had much the better side of the argument [144]; and thus that CPR 6.20(5)(c) and (d) [now 6BDP.3 -3.1(6)(c) applicable by virtue of CPR 6.36] were not available to Mr Cherney as a basis for the English court taking jurisdiction; (3) that since it was common ground that if the contracts on which Mr Cherney sued were made, they were made in England, the English court had a basis for exercising its discretion to take jurisdiction under CPR 6.20(5)(a) [now 6BPD.3 -3.1(6)(a)]. In considering whether the English court was the proper place for the proceedings to be brought under CPR 6.21(2A) [now CPR 6.37(3)], having considered a great deal of material, he analysed the question in two stages; at the first stage he found that the “natural forum” was Russia but at the second stage he found that “the risks inherent in a trial in Russia (assassination, arrest on trumped up charges, and lack of a fair trial) are sufficient to make England the forum in which the case can most suitably be tried in the interest of both parties and the ends of justice”.

2

In reaching that conclusion he had to consider whether, if the English court declined jurisdiction on the basis that the natural forum was Russia, Mr Cherney would be able to proceed with his claim in Russia. What he found was that Mr Cherney would never go to trial in Russia [198]. He found that Mr Cherney had a well founded fear for his own safety and that he would be more at risk in Russia than England [199]. He found that there was a significant likelihood of Mr Cherney being prosecuted if he returned to Russia and a real possibility that Mr Deripaska might use his influence, or his ability to orchestrate feelings against Mr Cherney, to encourage the authorities to take that course, and a “distinct possibility that the charges would be trumped up” [201]. As regards the question whether Mr Cherney would receive a fair trial, he directed himself as to the need for circumspection in relation to any assertion that a fair trial could not be obtained in a foreign court and as to the need for “positive and cogent evidence” [237]; he recorded the fact that it was common ground between the experts that, in certain cases, the arbitrazh courts in Russia cannot necessarily be expected to perform their task fairly and impartially – for example where “the outcome will affect the direct and material strategic interest of the Russian state” [239]. He found that the affairs of Rusal and Mr Deripaska's group of companies must be of considerable importance, including strategic importance, to the Russian state [243] and there was a close link between the Russian state and Mr Deripaska [246] and thus that there was “a significant risk of improper government interference if Mr Cherney were to bring the present claims in Russia” [248]; what he also made clear was that he was not finding that a fair trial could never be obtained in the Russia—on the contrary [247].

3

He also found that Mr Deripaska appreciated that Mr Cherney would not go to trial in Russia relying on certain correspondence between an English public relations firm Mirepco Limited and a lawyer, or possibly a consultant, who acted for one of Mr Deripaska's companies (the Mirepco documents). One of the strategies for dealing with the litigation outlined in the report was in the following terms:—

“5. Russian (or other jurisdiction) judgement offset. A case can be opened against Cherney in Russia, or any other jurisdiction with which the UK has reciprocal enforcement arrangements (under the Hague Convention). Cherney will probably not defend it, as he will not return to Russia to answer any questions. Thus a default judgement can be obtained against him. If the case in the UK is settled or won by Cherney, and an amount paid, the outstanding judgement debt from the Russian case can be used to offset any such liability by using it to impound any money due to Cherney either under a settlement or a judgement.”

4

Counsel before the judge told the judge on instructions that Mr Deripaska had not commissioned that report and knew nothing about it, but no evidence was filed which offered any explanation. The judge concluded the report was genuine and a reflection of the assessment of Mr Deripaska and his advisers. That finding has not been challenged and there is still no evidence to counter the inference drawn by the judge.

5

When considering at the second stage, whether England was the proper place for the trial, the judge also took account of the fact that neither party were strangers to England. Apart from the contract being made here Mr Deripaska had a house in London and a house in England outside London and considerable assets here [261].

6

As I emphasised at the outset, what the court is at present concerned with is simply where an action should be tried. I appreciate that litigants do often feel strongly about the place where cases should be tried but disputes as to forum should not become state trials. A passage from the speech of Lord Templeman at 465 F-G in The Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 ( The Spiliada) is worth repeating:—

“In the result, it seems to me that the solution of disputes about the relative merits of trial in England and trial abroad is pre-eminently a matter for the trial judge. Commercial court judges are very experienced in these matters. In nearly every case evidence is on affidavit by witnesses of acknowledged probity. I hope that in future the judge will be allowed to study the evidence and refresh his memory of the speech of my noble and learned friend Lord Goff of Chieveley in this case in the quiet of his room without expense to the parties; that he will not be referred to other decisions on other facts; and that submissions will be measured in hours and not days. An appeal should be rare and the appellate court should be slow to interfere. I agree with my noble and learned friend Lord Goff of Chieveley that there were no grounds for interference in the present case and that the appeal should be allowed.”

7

But here we are with an appeal to this court with a mountain of material; an appellant's skeleton argument of 69 pages; respondent's skeleton of 53 pages; a reply skeleton from the appellant of 39 pages. It surely would have been better for both parties and better use of court time if they had expended their money and their energy on fighting the merits of the claim.

8

Permission to appeal was granted by the judge because he was persuaded that there was an arguable point relating to what is termed the second stage in The Spiliada test. It is said by those representing Mr Deripaska that, having found Russia to be the natural forum, that was the end of the matter and the court simply had no business going into the question whether a trial would ever take place in Russia or as to whether a fair trial could be obtained in Russia. That second question might be relevant in a stay case, where the English court has jurisdiction and is considering staying the action, but is not (so it is submitted) a question the court considers when leave is being sought to serve out and the court has concluded that the natural forum is not England. In the alternative it is said if that extreme submission is unacceptable, then reasons for giving permission to serve out, even though the natural forum is not England, must be of the most compelling kind.

9

It is this latter submission that has led Mr Malek QC for Mr Deripaska to ask us to look at the evidence that there was before the judge to support his submission that it was not “cogent” or sufficiently cogent to allow the judge to hold that England was the “proper forum”. He submits (rightly) that the judge's ultimate holding was that cumulatively assassination, arrest on trumped up charges and lack of fair trial persuaded him to rule the way he did and thus, if the evidence in relation to any one of the aspects was not there or was not of the “cogency” required, this court would have to re-assess whether the proper forum was England.

10

When granting permission the judge did not suggest that any of the factual issues or any of the aspects on which he had...

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