Ziyavudin Magomedov v PJSC Transneft and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Bright |
| Judgment Date | 21 May 2024 |
| Neutral Citation | [2024] EWHC 1176 (Comm) |
| Court | King's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2023-000401 |
[2024] EWHC 1176 (Comm)
Mr Justice Bright
Case No: CL-2023-000401
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, WC4A 1NL
Stephen Houseman KC and Stephen Donnelly (instructed by Seladore Legal) for the Claimants
Graham Dunning KC, Tom Ford and Oliver Goldstein (instructed by Curtis, Mallet-Prevost, Colt & Mosle LLP) for the Twentieth Defendant
Hearing dates: 8, 9 May 2024
Approved Judgment
This judgment was handed down remotely at 9:30am on 21/05/24 by circulation to the parties' representatives by e-mail and by release to the National Archives.
Introduction
This judgment follows the hearing of the return date in respect of an anti-anti-suit injunction (“AASI”) granted by Foxton J on 21 February 2024, against the 20 th Defendant (“Transneft”). The 1 st Claimant (“Mr Magomedov”) and the 10 th Claimant (“Port Petrovsk”) applied for that injunction without notice. At the current hearing, they sought the continuation of that injunction until the hearing of Transneft's challenge to the jurisdiction of this court.
Shortly before the hearing, the Claimants proposed a draft order which contained additional terms, providing additional relief. The additional relief they thereby sought would amount to an Anti-Enforcement Injunction (“AEI”), which would prevent Transneft from enforcing anti-suit orders against Mr Magomedov and Port Petrovsk, made by a court in Russia on 11 and 25 April 2024 (“the Russian ASI Orders”). Moreover, this additional relief would prevent Transneft from relying in Russia on any actions by Mr Magomedov or Port Petrovsk in these proceedings – referred to by the parties as an Anti-Reliance Injunction (“ARI”).
Transneft asked for Foxton J's order to be set aside, both on the basis that it was wrong for it to have been granted as matter of legal principle, and on the basis that, at the hearing on 21 February 2024, the Claimants did not present the case fairly and failed to make full and frank disclosure.
The parties
Mr Magomedov is a Russian citizen who formerly owned and controlled significant business interests in Russia. He was arrested on 30 March 2018 and on 1 December 2022 was convicted of crimes involving fraud, embezzlement and corruption. He is in prison in Russia, and I have been told that, in that country, he is considered bankrupt.
Port Petrovsk is a BVI company that was, and I believe still is in Mr Magomedov's ownership and control.
Mr Magomedov and Port Petrovsk were represented at the hearing by Mr Stephen Houseman KC and Mr Stephen Donnelly, instructed by Seladore Legal (“Seladore”).
Transneft is an oil pipeline/transportation company, incorporated in Russia. It is owned and controlled by the Russian state. It is a significant business with very substantial assets, mainly in Russia. It is the subject of US and EU sanctions, as well as more limited UK sanctions.
Transneft was represented before me by Mr Graham Dunning KC, Mr Tom Ford and Mr Oliver Goldstein, instructed by Curtis, Mallet-Prevost, Colt & Mosle LLP (“Curtis”).
Procedural chronology
The procedural chronology that provides the context for this hearing is important. The essential steps were as follows.
Mr Magomedov and a number of companies associated with him (including Port Petrovsk) commenced proceedings in England against Transneft and a large number of other Defendants, by a claim form issued on 20 July 2023. The claim form and Particulars of Claim allege two conspiracies to injure Mr Magomedov and the other Claimants by unlawful means:
(1) The “NCSP Conspiracy”, by which Transneft and others are said to have conspired to wrest from Mr Magomedov and from Port Petrovsk the ownership and control of Port Petrovsk's interest in PJSC Novorossiysk Commercial Sea Port (“NCSP”), a Russian company which operated commercial ports in Russia, notably at Novorossiysk on the Black Sea. The NCSP Conspiracy is said to have taken place in 2018.
(2) The “FESCO Conspiracy”, by which various other Defendants are said to have conspired to deprive Mr Magomedov and other Claimants of their rights in relation to the 19 th Defendant (“FESCO”). Transneft is not said to have played any role in the alleged FESCO Conspiracy, which is said to have taken place in 2019–2020 and did not affect Port Petrovsk.
On 4 September 2023, I made an order giving permission for service out of the jurisdiction, by alternative means, on various Defendants including Transneft. Transneft was served on 5 September 2023. It filed an acknowledgment of service on 5 October 2023, indicating that it intended to challenge English jurisdiction. It then sought and obtained various extensions of the time within which it had to issue its challenge.
On 13 December 2023, Butcher J made a notification order, which required Transneft to notify the Claimants' solicitors before re-organising its capital structure or disposing of assets in or outside Russia above certain limits. Butcher J also ordered that Transneft pay costs to the Claimants (“the Costs Order”).
On 31 January 2024, Transneft commenced proceedings in the Arbitrazh (Commercial) Court in Moscow (“the Moscow Court”) seeking the Russian ASI against Mr Magomedov. The Moscow Court accepted the claim by a decision on 1 February 2024, which fixed a preliminary hearing for 27 February 2024.
On 5 February 2024, Transneft commenced proceedings in the Moscow Court for an ASI against Port Petrovsk. The Moscow Court accepted the claim by a decision of 12 February 2024, which fixed a preliminary hearing for 13 March 2024.
The Claimants learned of the Russian ASI proceedings against Mr Magomedov on 5 February 2024, through public media reports. A few days later, they learned that Transneft was also bringing proceedings in Russia against Port Petrovsk; the first inkling being in a witness statement made by Transneft's solicitors in these proceedings, dated 7 February 2024.
On 14 February 2024, Transneft issued its jurisdictional challenge in the proceedings in this court, under CPR Part 11 (“the Transneft Jurisdictional Challenge”). All the other Defendants who have been served have also issued jurisdictional challenges, or (in some cases) summary judgment applications (on the basis that there is no real prospect of the Claimants' claims succeeding).
On 19 February 2024, Mr Magomedov and Port Petrovsk issued their application in this court for an AASI against Transneft. The application was heard by Foxton J, without notice to Transneft, on 21 February 2024 and resulted in an order that Transneft was not to pursue the Russian ASI proceedings until this return date hearing. Foxton J's order of 21 February 2024 also required Transneft to stay and/or adjourn the Russian ASI proceedings, pending determination of the Transneft Jurisdictional Challenge.
At a hearing in Moscow on 11 April 2024, Transneft asked the Moscow Court to adjourn its claims for the Russian ASIs. The Moscow Court refused the adjournment in the case against Mr Magomedov and granted the Russian ASI against him. It also ordered that, if Mr Magomedov failed to comply, Transneft would be entitled to recover the rouble equivalent of US$2.5 billion from Mr Magomedov. The outcome was given on 11 April 2024. The Moscow Court gave its reasons in a judgment issued on 17 April 2024.
By exchanges on 12, 15, 16 and 17 April 2024, the Claimants sought an undertaking and Transneft gave its confirmation that it would take no steps to enforce the Russian ASIs pending this hearing.
At a hearing on 19 April 2024 (the order is incorrectly dated 25 April 2024), I gave directions in relation to the hearing of the various Defendants' jurisdictional challenges. I ordered that the Transneft Jurisdictional Challenge was to be heard on 19–21 November 2024, with the jurisdictional challenges of most of the other Defendants (relating to the FESCO Conspiracy) scheduled to be heard in September 2024.
At a hearing in Moscow on 25 April 2024, the Moscow Court granted the Russian ASI against Port Petrovsk. It also ordered that, if Port Petrovsk failed to comply, Transneft would be entitled to recover the rouble equivalent of US$5 billion from Port Petrovsk.
A number of the points that arise from this chronology merit more detailed elaboration.
Natural forum and the Transneft Jurisdictional Challenge
The Claimants' case when they applied for permission to serve Transneft out of the jurisdiction was that England is the natural forum for the determination of the issues between the parties. This was primarily on the basis that Port Petrovsk's interest in NCSP was held via a Cypriot company, Omirico Limited (“Omirico”), and the NCSP conspiracy resulted in Port Petrovsk purportedly agreeing to sell its shares in Omirico by an agreement dated 31 August 2018 (“the Omirico SPA”). The Omirico SPA expressly provided that it and any non-contractual obligations arising out of or in connection with it were subject to English law.
The Claimants also relied on the fact that there were proceedings under way in this jurisdiction in relation to the FESCO Conspiracy, which they said was related to the NCSP Conspiracy.
At the hearing of the Transneft Jurisdictional Challenge in November 2024, Transneft will say that the natural forum is Russia, this being where most of the relevant parties and potential witnesses are situated, where all the relevant events occurred and where the harm is alleged to have been suffered. It will also say that there is no serious issue to be tried and that there is no good arguable case that claims against it fall within...
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