Ras Al Khaimah Investment Authority and Others v Bestfort Development LLP and Others
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Rose |
| Judgment Date | 24 November 2015 |
| Neutral Citation | [2015] EWHC 3383 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC-2015-003056 |
| Date | 24 November 2015 |
[2015] EWHC 3383 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
IN THE MATTER OF AN APPLICATION UNDER SECTION 25 OF THE CIVIL
JURISDICTION AND JUDGMENTS ACT 1982
Royal Courts of Justice
Strand, London, WC2A 2LL
Mrs Justice Rose
Case No: HC-2015-003056
Mr. Stephen Moverley Smith Q.C. and Mr. Alexander Pelling (instructed by Dechert LLP) appeared on behalf of the Applicants
Mr. Philip Marshall Q.C. and Ms Ruth Den Besten (instructed by Peters & Peters Solicitors LLP) appeared on behalf of 1 st, 2 nd, 3 rd, 4 th, 5 th, 6 th, 8 th, 10th, 11 th, 12 th, 13 th and 14 th Respondents
The 7 th and 9 th Respondents did not appear and were not represented
Hearing dates: 10, 11, 12 November 2015
This is an application by six Applicants which are entities forming part of the arrangements for investing the sovereign wealth of the state of Ras Al Khaimah, one of seven Emirates forming the United Arab Emirates. The first three Applicants are based in Ras Al Khaimah and the 4 th 5 th and 6 th Applicants were incorporated to take part in the various investments in the Republic of Georgia which give rise to this application. The Applicants seek ancillary relief including the grant of freezing orders and the appointment of receivers over the assets of the 14 Respondents which are all LLPs registered in England and Wales and said to be connected with Mr Gela Mikadze. He is a Georgian national, a lawyer and businessman, who was a director of the 4 th 5 th and 6 th Applicants between about 2008 and 2013. He also held senior management positions with those Applicants.
The relief is sought pursuant to s 25 of the Civil Jurisdiction and Judgments Act 1982 ('CJJA') in support of claims issued by the Applicants in the Republic of Georgia and in the UAE. They ask the court to freeze each of the Respondent's assets up to a value of $42,561,555. No freezing order or other relief is sought against Mr Mikadze because he is not present in this jurisdiction and so far as the Applicants are aware, he has no assets here apart from his interest in some or all of the Respondent LLPs. The Part 8 claim in this jurisdiction was issued on 1 May 2015 and served on 1 June 2015. An order was made by Richard Spearman QC, sitting as a Deputy High Court Judge on 18 June 2015 adjourning the claim on the basis of certain undertakings given by some of the Respondents and setting a timetable for serving evidence. The main evidence in support of the application is given in an affidavit and a witness statement of Caroline Black and in witness statements of David Hughes, both of them partners in Dechert LLP the solicitors acting for the Applicants. Evidence opposing the application is given in a witness statement from Mr Mikadze and also in statements from Mr Clayman an associate solicitor in Peters & Peters Solicitors LLP acting for Mr Mikadze. Mr Mikadze says he is authorised to give evidence on behalf of all the Respondents except for the 7 th Respondent ('Hornberg') and the 9 th Respondent ('Raystar'). Similarly Mr Marshall QC appeared at the hearing for all the Respondents except those two. Those two were not separately represented though have been served with the proceedings but the Applicants did not invite me to deal with Hornberg and Raystar differently from the other Respondents.
The Respondents divide into 2 groups. One group comprises the 1 st, 3 rd, 5 th and 9 th Respondents (Bestfort, Bellcrown, Tecberg and Raystar). They are defendants to some of the claims brought by the Applicants in Georgia or UAE. The other Respondents are not parties to any claims. Injunctive relief is sought against them on the basis that they are beneficially owned by Mr Mikadze such that their assets would be available to satisfy any judgment awarded against Mr Mikadze in those countries. As regards those Respondents, the Applicants rely on the Chabra jurisdiction named after the decision of Mummery J in TSB Private Bank International v Chabra [1992] 1 WLR 231. The Applicants also seek relief under the Chabra jurisdiction against the Respondents which are also defendants in the foreign proceedings on the basis also that their assets are beneficially owned by Mr Mikadze. The sum to be frozen is thus the totality of the sums claimed against Mr Mikadze regardless of whether the Respondents are defendants to any proceedings or not.
Background
The background to the claims and to this application is the decision in 2006 on the part of the rulers of Ras Al Khaimah to take up investment opportunities in Georgia when Georgia embarked on an ambitious programme of privatisation. The ruling family of Ras Al Khaimah put a Dr Khater Massaad in charge of these plans. Dr Massaad was a close friend and confidant of some at least of the members of the ruling family and had their full confidence and trust. He was Chief Executive Officer of the 1 st Applicant, RAKIA, Chairman of the 3 rd Applicant and Ras Al Khaimah's most prominent economic representative. I have seen evidence of Mr Galadari, an expert in UAE law, setting out the Ras Al Khaimah ordinances that conferred powers and functions on Dr Massaad. It is fair to say that he was given the widest possible powers to pursue investments without apparently needing to have recourse to the ruling family for authorisation. The Emiri Resolutions in particular conferred on Dr Massaad the power to appoint whomever he considered fit to assist him to achieve the state's objectives.
Dr Massaad made contact with Mr Mikadze and after a period during which the two men got to know each other well, Mr Mikadze was invited by Dr Massaad to become Ras Al Khaimah's partner in developing investment opportunities in Georgia. The Applicants assert that thereafter both Dr Massaad and Mr Mikadze abused the trust that had been placed in them and acted in serious breach of the fiduciary duties that they owed to the Ras Al Khaimah entities of which they were in charge. The Applicants allege that Mr Mikadze diverted monies to his personal bank accounts and caused Ras Al Khaimah companies for which he was supposed to be working to enter into lucrative contracts with contractors which were in fact his creatures and which did not in fact provide any services in return for the substantial remuneration paid.
The claims and all allegations of wrongdoing are vigorously disputed by Mr Mikadze. He says that there are entirely proper explanations for all the transactions which are impugned. In his witness statement he paints a very different picture of what has happened and explains in some detail the work he has done in relation to various projects. His case is that he had every reason to think that Dr Massaad continued to have the confidence and trust of the ruling family and assumed that Dr Massaad was discussing with them such details of the projects that he thought they would want to know. Mr Mikadze describes the substantial amount of work he put into the various projects he undertook for the Ras Al Khaimah companies, the problems he encountered and his ingenuity and determination in overcoming those obstacles to make the projects successful. The remuneration he received was agreed between him and Dr Massaad and was commensurate with his efforts. Where the contractors used on the projects were his vehicles, then this was fully disclosed to Dr Massaad and the Ras Al Khaimah entities and those contractors did indeed provide the services that helped make the various projects successful.
Mr Mikadze describes how the situation changed in October 2010 when Sheikh Saud who had been the member of the ruling family most interested in the Georgian investment projects became Emir. The new Emir was less interested in investing outside the UAE and there was a 'new focus', resulting in instructions to Dr Massaad to divest the sovereign wealth fund from its foreign holdings. Further, Mr Mikadze says that once the new Emir was in place, there was a political move to oust and discredit Dr Massaad. Mr Mikadze believes that the 'ousting' of Dr Massaad was at the behest of Sheikh Saud's son who became Crown Prince in December 2010 and wanted to take Dr Massaad's place as the Emir's right-hand man. Control of RAKIA was then taken over by members of the Emir's family. As well as discrediting Dr Massaad, the Ras Al Khaimah ruling family attacked Mr Mikadze, in particular by instigating a criminal prosecution against him in Georgia. Mr Mikadze believes that the 14 civil claims against him and this application are politically motivated and are aimed at clawing back some of the money that he was properly paid for his work.
A number of projects have given rise to particular claims. I will describe each of them before considering in more detail the claims arising from them.
The Tbilisi Mall. Mr Mikadze's evidence is that this was the first project he worked on with Dr Massaad. His initial role was as General Director of the 4 th Applicant, Rakeen Development. The Tbilisi shopping mall ('the Mall') was...
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