Wwrt Ltd v Kostiantyn Valentynovych Zhevago

Hearing dates: 18 th – 19 th December 2023

Approved Judgment

This judgment was handed down remotely at 3:30pm on Friday 26 th January 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives (see eg https://www.bailii.org/ew/cases/EWCA/Civ/2022/1169.html).

A: Introduction

A1: The parties and the proceedings

The application

This is an application by the Defendant (“Mr Zhevago”) to challenge the jurisdiction of the English court in relation to proceedings brought against him by the Claimant (“WWRT”). Mr Zhevago is a Ukrainian citizen, and the present proceedings concern his alleged conduct concerning a Ukrainian bank. WWRT is an English company, albeit owned as to 80% by another Ukrainian citizen and a Ukrainian qualified lawyer, Ms Olga Gutovska.

By an application notice dated 15 September 2022, Mr Zhevago seeks declarations and orders that:

(1) The court has no jurisdiction, or alternatively will not exercise its jurisdiction (and the claim will be stayed), in relation to the claim brought by WWRT;

(2) The Order of Moulder J dated 20 May 2022 granting WWRT permission to serve its claim out of the jurisdiction and for alternative service be set aside.

The parties

WWRT brings the present proceedings as the ultimate assignee of PJSC Finance & Credit Bank (“the Bank”), which is a Ukrainian entity. WWRT is itself an English company, and it is owned as to 80% by Ms Gutovska and as to 20% by a partner in Rosling King LLP, WWRT's solicitors. WWRT is a special purpose vehicle incorporated on 26 February 2020, which is long after the conduct which forms the subject of its present claims. There is no evidence of any connection between WWRT and either the Bank or Mr Zhevago.

Since September 2015, the Bank has been insolvent and its business taken over by the Deposit Guarantee Fund of Ukraine (“the DGF”). WWRT's claim derives from two assignments. The initial assignment was from the DGF to Financial Company Horizon LLC (“Horizon”), and there was then a further onward assignment from Horizon to WWRT.

The effect of the DGF/Horizon assignment is a critical question in the context of whether there is a “serious issue to be tried”. This is because Mr Zhevago contends that this assignment did not effect a transfer to Horizon of the claims which WWRT seeks to bring in these proceedings. If there was no such transfer to Horizon under the first assignment, WWRT cannot have acquired, under the second assignment, rights which Horizon did not have. This issue is addressed in Section B below.

Mr Zhevago's background is described in the witness statement of his solicitor, Mr Daniel Wyatt, who is a partner in Reynolds Porter Chamberlain LLP (“RPC”). He describes Mr Zhevago as a very successful Ukrainian entrepreneur, with substantial management and investment experience gained over a 30-year business career in Ukraine. Since 1996, Mr Zhevago has developed diverse worldwide business interests across multiple sectors, including in the fields of metallurgy, ferrous deposits and ferromagnetic ore, engineering, transport, manufacturing, food, pharmaceuticals, shipbuilding, energy and banking, employing thousands of workers in Ukraine and elsewhere. Aged 35, he was the first Ukrainian national to list a company, now Ferrexpo plc (“Ferrexpo”), an iron ore miner and trader, to a major international stock exchange in 2007. It is Swiss headquartered with its operating base in central Ukraine, with several large institutional investors as shareholders, and as at 15 September 2022 had a market capitalisation of approximately £887m.

Mr Zhevago had a 95% indirect shareholding in the Bank. In September 2015, the National Bank of Ukraine placed the Bank into administration, and then into liquidation in December 2015, putting the DGF in control of its operations. On 7 November 2019 the DGF assigned the Bank's rights under certain loan agreements to Horizon. On 12 January 2021, Horizon assigned its rights to WWRT.

The proceedings and the evidence served by the parties

The present claim was issued by WWRT on 13 December 2021. The four-month period of validity of the claim form for service in the jurisdiction therefore expired on 13 April 2022. WWRT was unable to serve Mr Zhevago within the jurisdiction, and the evidence indicates that this is because he has not in fact come to England at any time since the claim was issued. WWRT therefore, on 12 May 2022, sought permission to serve him out of the jurisdiction. The application for permission to serve out was supported by a witness statement of Ms Gutovska. Her statement exhibited a statement on Ukrainian law from Dr Vadim Tsiura, a Ukrainian attorney, who is a Doctor of Laws and a Professor of Civil Law at the School of Law of Taras Shevchenko National University of Kyiv in Ukraine. His statement addressed issues of substantive Ukrainian law.

On 20 May 2022, Moulder J granted permission to serve out, and also granted an application for alternative service. The methods for alternative service included service on RPC. Moulder J's order was therefore made just under 3 months after the Russian invasion of Ukraine. The effect of that invasion on the Ukrainian court system is a central issue on the forum conveniens issues addressed by the parties.

Mr Zhevago's application challenging jurisdiction was issued in September 2022. The evidence in support of the jurisdictional challenge comprised a witness statement from Mr Wyatt, based upon information obtained from Mr Zhevago and/or others assisting him, and expert evidence from Mr Oleg Alyoshin. Mr Alyoshin is a Ukrainian lawyer and a partner in the firm of Vasil Kisil & Partners. Mr Alyoshin addressed a large number of issues of Ukrainian law, as well as questions concerning the functioning of the Ukrainian court system following the February 2022 Russian invasion.

WWRT's responsive evidence comprised a further witness statement from Ms Gutovska, a responsive report from Dr Tsiura, and a report from Mr Vadim Medvedev. Mr Medvedev is a practising Ukrainian lawyer, and his report addressed the availability and functioning of the Ukrainian courts following the Russian invasion and various related matters relevant to the forum non conveniens argument.

The timetable for service of reply evidence from Mr Zhevago was extended to 9 November 2023, by an order made by Butcher J dated 18 April 2023. That order was later extended until later in November 2023. Mr Zhevago served a witness statement on 24 November 2023, and Mr Alyoshin served a responsive report (addressing the evidence of Dr Tsiura and Mr Medvedev) on 27 November 2023.

The hearing had by that time long been fixed to take place on 18 and 19 December 2023. Very shortly before the hearing, WWRT served a further relatively short witness statement from Ms Gutovska. Although this raised a number of points, the most significant and controversial point was entirely new. It concerned an allegation that Mr Zhevago had sought to bribe the most senior judge of the Ukrainian Supreme Court. The allegation had been reported in the media approximately 6 months earlier, but had not been raised by WWRT either in correspondence or evidence in the intervening period. The extensive evidence hitherto served by the parties (comprising the various reports of Dr Tsiura, Mr Medvedev and Mr Alyoshin) did not raise any issue concerning alleged corruption on the part of Ukrainian judiciary or any individual member. Mr Zhevago objected to the introduction, at this late stage, of the new case which Ms Gutovska sought to raise on that point. There were also objections to the other aspects of her third witness statement, but those other aspects were of far less importance than the bribery/ corruption point which was then the focus of the parties' arguments at the hearing. During the course of the hearing, Mr Pillow KC for WWRT, and Mr Sheehan for Mr Zhevago, made submissions as to whether this further evidence should be admitted, and also as to its effect in the context of the forum non conveniens arguments.

The issues on the jurisdiction application

There were three issues raised by Mr Zhevago, and addressed by the parties, in relation to the jurisdiction application. These can be summarised as follows:

(1) Was there a serious issue to be tried? The question here was whether (there was a serious issue to be tried that) the assignment from DGF to Horizon transferred tortious rights to sue Mr Zhevago. The evidence had debated another issue in the context of serious issue to be tried, namely limitation. In the event, however, Mr Sheehan did not pursue that argument in the context of the present application.

(2) Was there a good arguable case that WWRT's case came within the jurisdictional “gateway” on which it relied, namely the tort gateway in CPR PD 6B paragraph 3.1(9)(b)?

(3) The forum conveniens issue: could WWRT show that England (as opposed to Ukraine) was clearly and distinctly the more appropriate forum for the resolution of its claim?

Mr Zhevago's application would succeed if his case on any of these points were accepted.

Earlier proceedings

The present proceedings follow very similar proceedings brought by, in effect, the same Ukrainian bank from which WWRT now claims to have acquired its...