The Russians are coming (again)
Commercial Court rules that England is the most appropriate forum for claim despite acknowledging that the dispute is “essentially a Russian dispute”.
In PJSC National Bank Trust & Ors v Boris Mint & Ors, the Commercial Court declined to set aside an order permitting service of proceedings out of the jurisdiction on the Fifth Defendant (a Russian national resident in the US), the Sixth Defendant (a Russian national resident in Israel) and the Seventh Defendant (a Russian national still resident in Russia) (the Relevant Defendants).
This is an interesting decision not least because the Court permitted service despite holding that there was “no doubt” that the claim advanced by the Claimants was “a Russian case”, stating “The Claimants and the Defendants are Russian. The alleged wrongdoing by all Defendants occurred in Russia…The alleged losses were sustained in Russia. The causes of action relied upon are creatures of Russian law. Most of the documents are in Russian.”
The Claimant Russian banks brought a claim against the First to Fourth Defendants (referred to as the “Mints Defendants” in the judgment) in relation to fraudulent banking transactions in Russia and obtained freezing orders against them in England. The Mints Defendants now reside in England.
It was alleged that there was a conspiracy between the Mints Defendants and the Relevant Defendants in Russia to bring about the fraudulent transactions in Russia. On that basis, the Claimants sought to join the Relevant Defendants to the existing claim on the basis that they were necessary and proper parties.
This was also to avoid the risk of multiplicity of proceedings and inconsistent judgments as there are other proceedings taking place in Cyprus, New York and Russia, and an arbitration in London.
Which jurisdiction - Russia or England?
The Relevant Defendants argued that, as this is a Russian dispute, England was not the appropriate jurisdiction to hear the claim. They argued that the only reason the Claimants found themselves in the position whereby there was a risk of multiplicity of proceedings was because the Claimants chose to sue the Mints Defendants in England.
The Claimants explained that it would have been irrational to bring the claim against the Mints Defendants in Russia because (i) the Mints Defendants would be careful not to appear in any Russian proceedings; or (ii) the Mints Defendants would allege that the Russian proceedings were unfair when the Claimants tried to enforce any Russian judgment. The Claimants also stated that an English judgment would be easier to enforce in the Cayman Islands (where the Mints Defendants hold interests in certain trusts) than a Russian judgment. There was, therefore, an advantage to bringing the claim against the Mints Defendants in England.
The Court found that, in relation to (i), the Claimants could not establish, based on the materials before the Court, that the Mints Defendants would not have defended the claim. In relation to (ii), the Court examined the Defences of the Mints Defendants and the Fifth and Six Defendants in the foreign proceedings which stated that they believed they would not receive a fair trial and that an unfair campaign was being waged against them. The Court considered that it could be reasonably inferred from these documents that, had the Mints Defendants been sued in Russia, it is likely they would have resisted the enforcement of the judgment for those reasons. As the Fifth and Sixth Defendants also gave similar accounts of unfair campaigns being waged against them, it was likely the same would be true for them.
The Court held that it was reasonable for the Claimants to choose to sue the Mints Defendants in England because of the ease of enforceability of an English, compared to a Russian, judgment. The fact pattern in this case was different so the Judge distinguished it from Lungowe & Ors v Vedanta Resources & Anor in which a similar decision had been made regarding service out of the jurisdiction (in that case, in Zambia), but for different reasons.
Given the foreign proceedings in numerous countries, there was already a risk of inconsistent judgments. The Court decided that this risk would materially increase if the Court declined jurisdiction over the Relevant Defendants: “That increased risk is something which is capable of causing great difficulty not only for the individuals affected but also for the judicial systems of England and Russia…It is obviously something to be avoided, if possible.” In relation to the Seventh Defendant, who was content for the claim to proceed in Russia, the Court conclude that the desirability of the English Court reaching a judgment on this matter outweighed the Seventh Defendant’s personal inconvenience and additional expense.
It remains to be seen if this judgment will lead to a rise in ‘international’ claims before the English courts, whether from the CIS region or elsewhere. However, it does highlight the importance the English court places on avoiding multiple proceedings and enabling enforcement when assessing the scope of its jurisdiction.
  EWHC 692 (Comm)
 Paragraph 37 Ibid
  EWHC 2061 (Comm)
  AC 1045
  EWHC 692 (Comm), paragraph 73