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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Pacific International Sports Clubs Ltd v Soccer Marketing International Ltd & Ors [2009] EWHC 1839 (Ch) (24 July 2009) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2009/1839.html Cite as: [2009] EWHC 1839 (Ch) |
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CHANCERY DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
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Pacific International Sports Clubs Ltd - and - |
Applicant |
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(1) Soccer Marketing International Ltd (2) Igor Rakhmilyovych Surkis (3) Valentyn Arsentiyovych Zgursky (4) Comerco Commercial Ltd (5) Cognimax Ventures Ltd (6) Castorian Commercial Ltd (7) Jestlic Ventures Ltd (8) Hambay Trading Corporation (9) Laomax Holdings Ltd (10) Oleksandr Valentynovych Zgursky |
Defendants |
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John Brisby QC and Tom Gentleman (instructed by Osborne Clarke) for the Respondents
Hearing dates: 7th, 8th, 11th, 12th, 13th and 14th May 2009
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Crown Copyright ©
Mr Justice Blackburne :
Introduction
The background facts and allegations
Are the BVI defendants entitled to challenge jurisdiction?
Forum non conveniens: the applicable principles
"…the burden of proof rests on the defendant to persuade the court to exercise its discretion to grant a stay. For that purpose, he has to establish that there is another available forum which is clearly or distinctly more appropriate than the English forum in which jurisdiction has been founded by the plaintiff as of right. In considering that question, the court will look first to see what factors there are which point in the direction of another forum, ie connecting factors which indicate that it is with the other forum that the action has its most real and substantial connection. That is the first stage. However, even if the court concludes at that stage that the other forum is clearly more appropriate for the trial of the action, the court may nevertheless decline to grant a stay if persuaded by the plaintiff, on whom the burden of proof then lies, that justice requires that a stay should not be granted. That is the second stage."
"The possibility cannot be excluded that there are still some countries in whose courts there is a risk that justice will not be obtained by a foreign litigant in particular kinds of suits whether for ideological or political reasons, or because of inexperience or inefficiency of the judiciary or excessive delay in the conduct of the business of the court, or the unavailability of appropriate remedies. But where there is already a lis alibi pendens in a foreign jurisdiction which constitutes a natural and appropriate forum for the resolution of the dispute, a plaintiff in English action, if he wishes to resist a stay upon the ground that even-handed justice may not be done to him in that particular foreign jurisdiction, must assert this candidly and support his allegations with positive and cogent evidence."
In the Spiliada at 478D-F,. Lord Goff, in discussing what must be shown if a stay of the proceedings in this country is to be refused, referred to "…the fact, if established objectively by cogent evidence, that the plaintiff will not obtain justice in the foreign jurisdiction…".
The availability of substantial justice: what must be shown
"…a general principle may be derived, which is that, if a clearly more appropriate forum overseas has been identified, generally speaking the plaintiff will have to take that forum as he finds it, even if it is in certain respects less advantageous to him than the English forum. He may, for example, have to accept lower damages, or do without the more generous English system of discovery. The same must apply to the system of court procedure, including the rules of evidence, applicable in the foreign forum. This may display many features which distinguish it from ours, and which English lawyers might think render it less advantageous to the plaintiff. Such a result may in particular be true of those jurisdictions, of which there are many in the world, which are smaller than our own, and are in consequence lacking in financial resources compared without own. But that is not of itself enough to refuse a stay. Only if the plaintiff can establish that substantial justice cannot be done in the appropriate forum, will the court refuse to grant a stay …"
"…It is very well established law that allegations of political, governmental or judicial impropriety in other jurisdictions should not be made and will be rejected out of hand unless there is clear and cogent evidence to support them. Here there is no more than press or political comment, which is wholly unsubstantiated by independent evidence."
"237. An English court will approach with considerable circumspection any contention that a potential claimant cannot obtain justice or a fair hearing in a foreign court and will require "positive and cogent" evidence to persuade it to the contrary: The Abidin Daver [1984] AC 398, 411c. Assertions to that effect are relatively easily made by generalised statements and may be difficult comprehensively to refute. I further accept that research of Russian law may suffer from what Professor Stephan describes as an "echo chamber effect" where one commentator states an impression which is swapped with the impression of another commentator, each citing the other as authority supporting their own thesis without any systematic study of data. It is, however, right to have some regard to any consensus of academic opinion, based on research and personal familiarity, particularly when backed by specific instances …or determinations of the ECHR or other courts
238. In the absence of cogent evidence to the contrary the Court will start with the working assumption, for which comity calls, that courts in other judicial systems will seek to do justice in accordance with applicable laws, and will be free from improper interference or restriction. As this case indicates, where there is evidence to the contrary it may be hotly in dispute and difficult to evaluate. Such evidence is likely, insofar as it derives from reports and articles, to consist of "broad and conclusory allegations, founded on multiple levels of hearsay" and, if so, to be unacceptable as an indictment of a legal system or part of it….But the Court is not blind to the fact that unfairness or partiality may arise from that which occurs behind the scenes rather than centre stage."
In the circumstances of that case, Christopher Clarke J found that a fair trial of Mr Cherney's claims would not be possible in Russia.
"492. Firstly, this case is in no way comparable to Cherney v Deripaska, [2008] EWHC 1530 (Comm), in which the claimant, a Russian exile and persona non grata in Russia, was given permission to serve out in circumstances where the agreement sued on, as a result of which he claimed a 20% interest in the largest aluminium company in the world, was made in England. The evidence gave grounds for believing that if the proceedings took place in Russia (a) he faced a greater risk of assassination (there having been a previous Russian originated attempt on his life); (b) there was a real risk that he might be arrested on trumped up charges; (c) and, because of the very close links between Mr Deripaska and the Russian state, he might very well not receive a fair trial. "
493. Here Yugraneft a Russian company, one of whose shareholders is the City of Moscow, is a seasoned litigator in Russia. It has not been without success. In the bankruptcy proceedings it has enjoyed complete success, as appears from the course of proceedings summarised in Appendix 5. It is open to it to appeal the investigator's refusal but it has decided not to do so. Mr Kotov says that he did not initiate an appeal because he considered it likely that it would be dismissed for reasons unconnected with the merits of the complaint. This view appears to be based on a conversation reported to him by an officer at the Ministry of Internal affairs involved in pre-investigative research into the complaint which that officer had had with Mr Davidovich in which the latter had said that the investigation "has no prospects", "does not mean anything" and "will be closed anyway so there is no point in you talking to me".
494. Professor Eksarkhopulo's evidence indicates that there can be real problems in securing the prosecution of important people for economic crimes, and that a thriving practice has grown up known as "raiding" whereby property is unlawfully seized in the belief that no criminal case will come of it as a result of the investigators' incompetence or corruption. Yugraneft claims that there are well recognised problems of corruption in the Russian Courts. Presidents Putin and Medvedev have acknowledged as much, as has Valery Zorkin, the President of the Constitutional Court. In October 2004 he told Izvestiya that
"the courts are very vulnerable to attack from business in the form of corruption. Bribe-taking in the courts has become one of the strongest corruption markets in Russia. Judicial corruption is built into various corruption networks operating at different levels of power: for example, networks for causing criminal cases to collapse and for taking over businesses".
In May 2008 President Medvedev expressed the "particular concern of the state" in relation to the "corruption in the law enforcement bodies and the judiciary".
495. Reliance is placed on the evidence of Mr Vladimir Soloviev, a Russian broadcaster with a colourful background, who claims to be, inter alia, an investigative journalist. He refers to a failure by the Chairwoman of the Federal Arbitazh Court of Moscow Circuit to procure a prosecution against him for pointing out that she had obtained in dubious circumstances four apartments in Moscow, one of them at an undervalue from a party in a case before her at a cost of 50 times her judicial salary. He also refers to a defamation action brought by Mr V. Boyev, an adviser in the Presidential Department for personnel issues and State awards, who took exception to reports he made about the latter's exercise of improper influence over judges. The action was withdrawn when he obtained the evidence of a judge that Mr Boyev had requested that she change her ruling and told her that if she did not her reappointment as Deputy Chairwoman was in jeopardy.
496. I have no doubt that Russia has had, and has, corruption problems with some of its judges; and that there is a widespread public perception of judicial corruption and political interference in the judicial process: see "Striving for Judicial Independence", IBA Human Rights Institute Report, June 2005. Professor Eskarkhopulo gives evidence of specific examples of judicial corruption in his second report. I am equally clear that there are many judges who are not corrupt. The evidence is insufficient to persuade me that, if there was an appeal from the investigator's refusal to initiate a prosecution, it would be likely to be determined contrary to its merits because Yugraneft was the complainant or because Mr Davidovich, Mr Matevosov or Mr Abramovich were the respondents. The litigation in which Yugraneft has so far engaged does not bear tell tale indicia of impropriety such as repeated determinations of different cases by the same judge without good reason, departure from normal curial practice, irrational conclusions or the like. Since Yugraneft has not attempted to appeal the Investigator's refusals it is not possible to know what a Russian judge would make of the submissions cogently advanced before me in reliance on Professor Eskarkhopulo's material, or to say that, in the event of a favourable judicial ruling, a subsequent prosecution would, for improper reasons, be doomed never to take place.
497. Lastly, if and insofar as reliance is placed upon the unsatisfactory nature of a system in which claims based on commercial fraud must await the outcome of a criminal prosecution which may never be brought, that is a characteristic of Russian law under which Sibir and Yugraneft, (behind which there lies, amongst others, the City of Moscow) and Mr Abramovich have chosen to do business. It was at one time part of English law so far as felonies were concerned.
"247. I should make it clear what I am not deciding. I am not deciding that a fair trial can never be obtained in the Russian arbitrazh system. On the contrary I do not doubt that there [are] many honest and good judges in the system at every level, who conscientiously seek to do justice according to the relevant legal principles and procedures, who are developing the arbitrazh system to relate to the commerce of the new Russia, and who do so without improper interference. Nor is it the case that in the arbitrazh courts the State is practically bound to succeed …
248. I do however regard there as being significant risk of improper government interference if Mr Cherney were to bring the present claims in Russia where they would be very high profile proceedings indeed, such that substantial justice may not be done to him if he is required to proceed there. I am not satisfied that, if he is so required, justice will be done …"
Forum non conveniens: Pacific's contentions
"In Ukraine corruption is one of the problems that need immediate solution. It is very dangerous for democracy. Realisation of law supremacy principle, social progress, national security and formation of civil society."
The decree referred in particular to what it described as a "tangled" situation where judicial authorities are concerned in that "a great deal of violations and abusive practice are registered on the stage of production before court and in the process of legal cases consideration." The decree then referred to the fact that the President of Ukraine had dismissed more than 70 judges because of "breach of duration" and 12 judges on grounds of corruption. (I was told that there are around 9,000 judges in all in the Ukrainian judicial system.)
"I do not believe that it will be possible for individuals like the Surkis brothers, whatever the extent of their power and influence in business and political circles, to be confident that they could assure a particular outcome for any particular case."
Mr Brisby described that comment as "damning with faint praise" those, including Mr Surkis, on whose behalf the evidence was being tendered. He criticised Professor Shcherbyna's report as lacking any indication of his practical experience of the workings of the court and for being short in commenting on what effect the Ukrainian court structure (which he describes in some detail) has, on the operation of the system in practice, particularly the powers for the removal of corrupt judges. He described the professor's conclusion that "it would be wrong to describe the judicial system of Ukraine solely from the negative point of view, and deem it impossible to obtain fair and impartial court decisions for the protection of one's rights" as scarcely a ringing endorsement of the system.
"I only gained limited comfort from this decision. Firstly, I understand it is being appealed. Secondly, the decision expressly allows the security services to have another go at imposing an entry ban on me provided that they do so for proper reasons, and on the basis of another decision taken in a lawful fashion."
He goes on to state that he has no doubt that before long he will be subjected to further harassment but whether or not he would ever actually be allowed to be present in Ukraine when any proceedings relating to Dynamo came to be heard:
"I no longer believe that there is any possibility of receiving substantial justice from the Ukrainian courts given the forces ranged against me. …I would suggest that that belief can hardly be dismissed as irrational."
"The reality is that on one occasion the Surkises complained about a decision of the court and appealed. Because a party complains about a decision of the Court and files an appeal, that does not make that party guilty of using pressure to remove a Judge."
"This is to be contrasted with their earlier decision of 30 January 2008… in which they indicated that they would hear the appeal in the light of the numerous mistakes of substantive and procedural law that had characterised the proceedings before the courts below. The absence of any reasoning in the final decision of the Supreme Court is in itself extraordinary, and indicates to my way of thinking that the members of the court were subjected to outside pressure between the date on which they agreed to entertain Pacific's appeal and the date of the final decision."
"Accordingly, I believe that the purpose of the claim at the Goloseevsky District Court was to provide the Registr with a further conflicting order to which it could refer as a reason for ignoring the order of the Pechersky District Court. This is not an uncommon tactic in Ukrainian litigation, and illustrates the risks endemic in the Ukrainian legal system of receiving radically different decisions from different courts."
Forum non conveniens: the defendants' response
"The political situation in Ukraine changed dramatically at the end of last year. In December 2004, following a disputed election result and a second election, Viktor Yushchenko became President. President Yushchenko has publicly declared his intentions to fight corruption and enforce the rule of law. Mr Surkis is not a political ally of either President Yushchenko or his Prime Minister, Ms Timoshenko. In the light of these political changes, Pacific now considers that it is in a position to obtain a fair consideration of its claims in Ukraine and to enforce rights under Ukrainian law that previously it would have been blocked from perusing."
Mr Malek stressed that there was no suggestion in that affidavit that the judicial system in Ukraine was corrupt or subject to improper influences or of a kind where a litigant such as Pacific could not expect a just disposal of its claims.
Forum conveniens: my conclusions
Owusu
"Subject to the provisions of this Convention, persons domiciled in a contracting state shall, whatever their nationality, be sued in the courts of that state. Persons who are not nationals of the state in which they are domiciled shall be governed by the rules of the jurisdiction applicable to nationals of that state."
"It is well established in the theory and practice of Ukrainian civil and commercial procedure that leaving a claim without consideration is a means of terminating a case without issuing a final judgment. Once the reasons for leaving the claim without consideration are removed the claimant may file the same claim again. The courts treat the subsequent claim as a new and independent claim, as if the previous claim had never existed. Accordingly a claim left without consideration does not have any bearing on a subsequently filed claim dealing with the same matters."
No reasonable cause of action, limitation and abuse of process
Service out and the "gateway" requirements
Result