OJSC Bank of Moscow v Andrey Valerievich Chernyakov and Others
| Jurisdiction | England & Wales |
| Judge | The Hon. Mr Justice Cranston,Mr Justice Cranston |
| Judgment Date | 20 October 2016 |
| Neutral Citation | [2016] EWHC 2583 (Comm) |
| Docket Number | Case No: CL-2015-000846 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 20 October 2016 |
[2016] EWHC 2583 (Comm)
The Hon. Mr Justice Cranston
Case No: CL-2015-000846
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Stephen Auld QC (instructed by PCB Litigation LLP) for the Claimant
Zoe O'Sullivan QC (instructed by Grosvenor Law) for the Defendants
Hearing dates: 20 and 21 September 2016
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
OJSC Bank of Moscow, now called BM-Bank PJSC ("the Bank"), is a subsidiary of VTB Bank, the second largest bank in Russia and majority owned by the Russian government. It applies for summary judgment against the first defendant, Andrey Valerievich Chernyakov ("Mr Chernyakov") to enforce three judgments against him of Judge Gorodilov sitting in the Meshchansky District Court, Moscow ("the first, second and third Russian judgments"). The judgment sums total approximately £150 million. Mr Chernyakov was president of OOO Nauchno-Proizvodstvennoe Obedinenie Kosmos ("Kosmos"), the holding company of a large construction group in Russia, which he founded in the 1990s. Kosmos was declared insolvent on 20 March 2015. It had a number of major infrastructure contracts with the City of Moscow.
The first of the three Russian judgments is dated 5 February 2015. An appeal from it to the Moscow City Court was dismissed on 8 December 2015, and a subsequent application to challenge it through cassation was refused on 23 June 2016. There are ongoing proceedings about a further challenge by way of cassation. The second and third of the Russian judgments are dated 19 November 2015. Appeals against these judgments were to be heard this August, but they have been adjourned. Both sides accept that the focus should be on the three judgments, despite the appeals so far and any challenges still pending in the higher Russian courts.
The Bank contends that the proceedings in the Commercial Court are straightforward claims to enforce three binding, conclusive and final judgments of the Russian court to which Mr Chernyakov has no arguable defence. The judgments are based on personal guarantees which Mr Chernyakov gave as part of the security the Bank took to support facility agreements it entered with Kosmos and a bank guarantee it gave at Kosmos's request to a third party, OJSC Mostotrest ("Mostotrest"). The Bank's argument is that Mr Chernyakov is playing the system both in England and in Russia as part of an overall strategy to delay the inevitable.
Mr Chernyakov accepts that the English court has jurisdiction over him in these enforcement proceedings by reason of his residence here. However, he resists summary judgment on the grounds that there are triable issues that the judgments were procured by the fraud of the Bank, that they were given in violation of the principles of natural justice and in breach of the right to a free trial in Article 6(1) of the European Convention on Human Rights ("ECHR" or "the Convention"), and that their enforcement would be contrary to public policy. Apart from these arguments, Mr Chernyakov contends that there are compelling reasons why the claims should not be disposed of without a trial.
The legal principles
Enforcing foreign judgments at common law
The legal principles applicable in this case were not in dispute. The general common law rule is that a foreign judgment in personam given by the court of a foreign country with jurisdiction to give that judgment may be enforceable by the courts of England and Wales by a claim for the amount due, provided it is a judgment for a debt or definite sum of money and is final and conclusive: see Dicey, Morris and Collins on Conflict of Laws, 15th edition, 2012, Rule 42(1) (" Dicey"). Moreover, it is also generally the case that a foreign judgment which is final and conclusive on the merits is conclusive as to any matter thereby adjudicated upon, and cannot be impeached for any error either as to fact or law: Dicey, Rule 48. However, these rules apply if the foreign judgment may not be impeached at common law. The various grounds on which this can be done are conveniently collected in Rules 49 to 54 of Dicey. Rule 50 is that such a judgment is impeachable for fraud; Rule 51 states that it may be impeached on the grounds that its enforcement or recognition would be contrary to public policy; and Rule 52 provides that it may be impeached if the proceedings in which it was obtained were opposed to natural justice.
The fraud ground covers fraud on the part of the party in whose favour the judgment is given or fraud on the part of the court pronouncing the judgment. It extends to every kind of fraudulent conduct. A foreign judgment can be impeached for fraud even though no newly discovered evidence is produced and even though the fraud was alleged in the foreign proceedings: see Dicey, para. 14–139. Moreover, it is immaterial that the fraud could have been raised in the foreign proceeding but was not raised at that point.
The public policy ground is not easy to demarcate from the fraud and natural justice grounds. Its ambit is not precise and it may extend to an English court's refusal to recognise or enforce a judgment where the foreign court is corrupt or the judgment was obtained by the exercise of improper influence on the judges: see Altimo Holdings v. Kyrgyz Mobil Tel Ltd [2011] UKPC 7; [2012] 1 WLR 1804, at [101], [117], per Lord Collins; Yukos Capital Sarl v. OJSC Rosneft Oil Co [2012] EWCA Civ 855; [2014] QB 458, [90]. However, the principle of comity demands caution, and cogent evidence will be required if a foreign judgment is said to be infected in this way. It is not contrary to English public policy to refuse to recognise a judgment which is obviously wrong. However, if there is evidence of a perverse refusal by the foreign court to apply the law in a judicial manner, it may be possible to oppose recognition on the ground that the behaviour of the court infringed natural justice: Professor Adrian Briggs, Private International Courts in English Courts, 2014, p. 480.
As to natural justice, first, a defendant must be given the opportunity so that they can put their case in response: Jacobson v. Frachon (1927) 138 L.T. 386; Adams v. Cape Industries Plc [1990] Ch 433, 563G. A mere procedural defect in the proceedings will not be sufficient. What is required is a substantial denial of justice: Aeroflot v. Berezovsky [2012] EWHC 3017 (Ch), [54], per Floyd J. However, a defendant must take all available defences in the foreign court and if they are at fault in not doing so, may not impeach the foreign judgment in England: Israel Discount Bank v. Hadjipateras [1984] 1 WLR 137, 144 C-H, per Stephenson LJ. A corollary of this is that a defendant may not impeach a foreign judgment by raising defences before the English court where the foreign court has considered and rejected them.
Secondly, the defendant must be given notice of the hearing so she is able to put her case. It is not contrary to natural justice that a person "who has agreed to receive a particular mode of notification of legal proceedings should be bound by a judgment in which that particular mode of notification has been followed, even though he may not have had actual notice of them": Valle v. Dumergue (1849) 4 Exch 290. If there was service of the notice of hearing on the party in accordance with the relevant foreign law, but actual notice was not given, the question will be whether substantial injustice was caused by the lack of notice, including whether the defendant had a remedy in the foreign court: see Dicey, para. 14–166. Also where an alleged procedural irregularity has been raised before the foreign court, and rejected by it, it is less likely that an English court will entertain arguments on natural or substantive justice that are based on it: Dicey, para.14–167.
In addition to the position at common law, there is a right to a fair trial under Article 6(1) ECHR, which arises by reason of section 6 of the Human Rights Act 1998. It means that there is a duty directly on an English court not to give effect in England to the judgment of a foreign court where to do so would violate fair trial standards. Russia is a party to the ECHR, and so there is a strong presumption that its courts comply with the procedures of the Convention: see Maronier v. Larmer [2003] QB 620 (CA), [24]–[25], per Lord Phillips MR; Merchant International Co Ltd v. Naftogaz Ukrainy [2012] EWCA Civ 196, [2012]1 WLR 3036, at [71], per Toulson J, Joint Stock Co., Aeroflot-Russian Airlines v. Berezovsky [2014] EWCA Civ. 20, [57]–[58], per Arden LJ.
Summary judgment
CPR 24.2 provides for summary judgement if the court considers that (a) the defendant has no real prospect of successfully defending the claim or issue and (b) there is no other compelling reason why the case or issue should be disposed of at a trial. The principles which apply are well known. By reference to the commentary in the White Book and Lewison J's judgment in Easyair Limited v. Opal Telecom Limited [2009] EWHC 339 (Ch), [15] (approved subsequently by Etherton LJ in A C Ward & Son v. Caitlin (Five) Limited [2009] EWCA Civ 1098, [24]), Simon J enunciated the following points in JSC VTB Bank v. Skurikhin [2014] EWHC 271 (Comm) regarding the...
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