Deripaska v Cherney
| Jurisdiction | England & Wales |
| Judge | Waller,Moore-Bick L JJ,Sir John Chadwick |
| Judgment Date | 31 July 2009 |
| Court | Court of Appeal (Civil Division) |
| Date | 31 July 2009 |
Court of Appeal (Civil Division).
Waller and Moore-Bick L JJ and Sir John Chadwick.
Ali Malek QC, Joe Smouha QC and 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.
The Following Cases Were Referred to in the judgments:
Abidin Daver, The [1984] AC 398.
Amin Rasheed Shipping Corp v Kuwait Insurance CoELR [1984] AC 50.
Atlantic Star, The [1974] AC 436.
Connelly v RTZ Corp plc [1997] CLC 1357; [1998] AC 854.
Gusinskiy v Russia (No. 70276/01) (ECtHR, 19 May 2004).
Spiliada Maritime Corp v Cansulex LtdELR [1987] AC 460.
Service out of jurisdiction — Conflict of laws — Natural forum — Proper forum Agreement allegedly made in England conferring 20 per cent interest in shares in substantial Russian aluminium company — No good arguable case that English law and jurisdiction orally agreedRussia natural forumRisks inherent in trial in Russia, including lack of fair trial, meant that claimant would never proceed in Russia — England appropriate forum — Holding that Russia natural forum did not preclude court exercising discretion in favour of trial in England in interests of parties and ends of justice — Evaluation of evidence required to show clearly that England appropriate forum — No need to find connection with England over and above gateway requirement of contract made in England — Claim for constructive trust arising from exchange of shares a claim in respect of contract — Civil Procedure Rules 1998, R. 6.20(5)(a), (c), (d), 6.21(2a).
This was an appeal by the defendant (D) from a judgment of Christopher Clarke J [2008] EWHC 1530 (Comm) granting permission to serve the proceedings out of the jurisdiction and ruling that the proper place to bring the claim was England.
The claimant (C) claimed in essence that D had agreed at a meeting in London to hold 20% of the shares in Rusal, a substantial Russian company, on trust for C. C's case was that the relevant agreements were in writing and that it was orally agreed that the agreements would be governed by English law and be subject to English jurisdiction.
On C's application for permission to serve out of the jurisdiction, the judge held that C had a reasonable prospect of success in respect of his claim and had the better of the argument that the alleged agreement relating to 20% of the shares in Rusal was made; that, although C had a good arguable case that English law and English jurisdiction had been orally agreed, D had much the better of the argument whether jurisdiction had been agreed, so that C could not rely on CPR 6.20(5)(c) and (d) as the basis for the English court taking jurisdiction; that since it was common ground that, if the contracts on which C 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). In considering whether the English court was the proper place for the proceedings to be brought under CPR 6.21(2A) the judge found that the natural forum was Russia: the case concerned the ownership of interests in a major Russian company; significant allegations related to what did or did not occur in Russia; D was Russian and C originally operated from Russia. However, the judge went on to find that C would not pursue proceedings in Russia where he would be subject to risks of assassination and arrest on trumped up charges and where a fair trial might not be possible. Those factors meant that England was the forum in which the case could most suitably be tried in the interest of both parties and the ends of justice.
D appealed arguing that the judge, having found russia to be the natural forum, should not have gone on to consider whether a trial would ever take place in Russia or whether a fair trial could be obtained in Russia. That second question might be relevant in a stay case, where the English court had jurisdiction and was considering staying the action, but was not a question the court should consider when leave was being sought to serve out and the court had concluded that the natural forum was not England. In the alternative D argued that the evidence before the judge was not sufficiently cogent to allow him to conclude that England was the proper forum, based on the cumulative factors of possible assassination, arrest on trumped up charges and lack of a fair trial.
Held, dismissing the appeal:
1. If a court had concluded, in a leave to serve out case, that the natural forum was other than England, it was still open to the court to find that England was the proper forum, meaning the place where, in the interests of the parties and the ends of justice, the case should be tried. The correct approach, in relation to service out, permitted identification of the “natural” forum, as the place with which the case had the closest connection, and ultimately the “appropriate” or “proper” forum, which a claimant could establish, even if England was not the natural forum, if justice required that permission to serve out be given. (Spiliada Maritime Corp v Cansulex LtdELR[1987] AC 460 applied; Connelly v RTZ Corp plc[1997] CLC 1357; [1998] AC 854considered.)
2. Establishing that England was an appropriate forum despite another forum being natural, because justice could not be achieved in that natural forum, required cogent evidence. But it did not follow that there was a requirement for cogent evidence or any particular kind of evidence to establish all other factors which mighty lead the court to be persuaded that, despite somewhere else being the natural forum, England was the forum where it was in the interests of all parties and the ends of justice for the case to be tried. The requirement was that the claimant should clearly establish that England was the appropriate forum in that sense. The judge was deciding whether a discretion should be exercised, and some points might seem more powerful on the evidence that he had and some less, but it was for the judge to evaluate the same and reach his conclusion. (The Abidin Daver [1984] AC 398 considered.)
3. There was no requirement that the court should not hold England to be the appropriate or proper forum unless there was a sufficient English interest overand above the requirement that one of the gateways, such as a contract made in England, was established.
4. The judge was entitled to find that the risks inherent in a trial in Russia (assassination, arrest on trumped up charges and lack of a fair trial) were sufficient to make England the forum in which the case could most suitably be tried in the interests of both parties and the ends of justice. The judge had evidence on which he could make those findings, and there was no valid criticism of his approach.
5. In so far as C claimed that certain shares were held on trust, he had established that the court had jurisdiction to order service out. C alleged that Rusal had merged with two other companies on the basis that 66% of the new company was to be owned by the former shareholders of Rusal, and that as a result 20% of that 66% shareholding, which was held directly or indirectly by D, was held on trust for C, and a declaration was claimed to that effect. Under English law his remedy would be a constructive trust remedy but it arose out of his contractual claim. The claim was a claim in respect of a contract made within the jurisdiction and it did not cease to be that when he claimed that the contractual bargain in relation to one lot of shares attached to other shares for which they had been exchanged. The words “in respect of a contract” in CPR, r. 6.20(5)(a) were to be construed as wide enough to encompass a claim based on rights said to arise out of a contract, even though those rights might be of a proprietary nature. It might be that in due course D would succeed in establishing that the contract was governed by Russian law and that Russian law did not recognise rights of the kind asserted by C. However, the fact that, as the judge held, D had the better of the argument in relation to proper law did not mean that C's case was so weak that it did not give rise to a serious issue to be tried for the purpose of the court's jurisdiction to order service out.
Waller LJ:
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 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 6B PD 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 6B PD 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...
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