Dismissal of jurisdiction challenge in conspiracy claim

04/10/13

The Commercial Court (Flaux J) has dismissed a jurisdiction challenge brought by two Russian state owned entities in the "Red October" litigation. The Red October steel facility is one of Russia's largest steel works and produces a large proportion of the steel used in the Russian defence industry.

The London branch of Erste Group Bank AG ("Erste") had already obtained summary judgment in its debt and guarantee claims against two of the "Red October" corporate entities. Erste continues to pursue Red October and related Russian entities for damages in tort, alleging, inter alia, a conspiracy between them designed to asset-strip the debtor and guarantor entities so as to avoid payment.

Flaux J's judgment addresses many of the key elements of challenges to the jurisdiction of the English courts, including the standard of proof on the merits and under the jurisdictional gateways, the significance of extant insolvency proceedings in the foreign jurisdiction and forum conveniens (including allegations that of a real risk that justice will not be obtained in the foreign jurisdiction by reason of incompetence, lack of independence or corruption).

The judgment is here.