High Court rejects jurisdiction challenges in fraud claims against deceased oligarch’s relatives and associates

26/05/22

Bourlakova v Bourlakov and 12 others [2022] EWHC 1269 (Ch)

Trower J held today that the English Court has jurisdiction over claims brought by Loudmila Bourlakova, wife of the deceased oligarch Oleg Bourlakov, and companies she owns (the “Claimants”) against her deceased husband’s relatives and associates, arising from a conspiracy to defraud her and her daughters of their rightful share of the family’s assets. The claims exceed US $3 billion. The defendants include Mr Bourlakov’s sister and brother-in-law (the “Kazakovs”) and Mr Semen Anufriev, another relative of Mr Bourlakov, who played a central role in managing his business interests and personal wealth.

Mr Kazakov and Mr Anufriev, domiciled in Estonia and Latvia respectively, sought stays under Article 34 of the Brussels Regulation (Recast) (the “BRR”) in favour of ongoing proceedings in Monaco, including criminal proceedings and proceedings relating to matrimonial property.  Mrs Kazakova argued that, unlike her husband, she was domiciled outside the EU in Russia. On that basis, together with certain Panamanian companies (the “Panamanian companies”), she argued that permission to serve her out of the jurisdiction should not have been granted and a stay should be ordered on the grounds that Monaco, not England, is the appropriate forum.  In addition, Mr Anufriev sought a stay of some of the claims against him  in favour of arbitration under section 9 of the Arbitration Act 1996 (the “1996 Act”). The defendants applied to set aside extensions of the claim form and Mr Anufriev challenged service on him in Latvia.

Trower J dismissed all of the defendants’ applications.

The Judge rejected Mrs Kazakova’s claim that she was domiciled outside the EU in Russia and accepted the Claimants’ submissions that they had established a good arguable case that, like her husband, she was domiciled in Estonia. On that basis, the Judge held that the Claimants did not require permission to serve the claim form on the Kazakovs out of the jurisdiction under the applicable version of CPR 6.33(2).  The Court has power to determine the claims against the Kazakovs and Mr Anufriev in accordance with Article 8(1) of the BRR, because another defendant was domiciled in England and Wales and the claims against all defendants are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments.

The Judge rejected the Article 34 stay applications. A question arose as to whether Article 34 requires that both the current proceedings and the proceedings pending in the foreign jurisdiction fall within the scope of the BRR (i.e. are not excluded by Article 1(2) of the BRR). The Judge preferred the Claimants’ submissions that the proceedings in both states must be within the BRR’s scope, holding in particular that the Court of Appeal’s approach in Moore v Moore [2007] EWCA Civ 361 is highly persuasive, if not determinative.

The Judge further held that in any event the stay should not be granted for three reasons. First, the Judge did not consider that the claims against the Kazakov defendants and Mr Anufriev in these proceedings are “so closely related to the [Monegasque] proceedings that it is expedient to hear and determine the actions together to avoid the risk of irreconcilable judgments” for the purposes of Article 34(1).  Second, the Judge found that the evidence did not establish to a sufficient degree of assurance that the Monegasque proceedings seeking determination of those issues raised in the current English proceedings against those defendants would be consolidated in Monaco.  Third, Trower J found that the fact that the Monegasque matrimonial property proceedings are currently suspended and the nature of the issues in those proceedings mean that a significant delay is inevitable and held that this is “a powerful freestanding reason for refusing a stay.” 

Trower J rejected the Panamanian companies’ stay application based on forum non conveniens on many of the same grounds. He considered the scope and effect of the Supreme Court’s decision in Lungowe v Vedanta Resources plc [2020] AC 1045 to be that, where all of the defendants are either subject to the foreign court’s jurisdiction or have offered to submit to that jurisdiction, the risk of multiple proceedings and the consequential risk of inconsistent judgments is a relevant factor in favour of England but it ceases to be a “trump card”. The Judge held that in such cases “the English court will have to be satisfied both [1] that the foreign court will take jurisdiction to try the claim against an English anchor defendant and all of the defendants capable of being sued in England and [2] that any judgment it gives will be capable of enforcement in England and in such other jurisdictions as may be required to give substantial effect to it, anyway to the same extent as would have been achieved if the defendants had submitted to the jurisdiction of the foreign court.” The Judge analysed in detail the connecting factors and ultimately accepted the Claimants’ submissions that there are a number of weighty considerations which point to England as the appropriate jurisdiction for the resolution of this dispute. The Judge further formed the view that “considerations relating to the multiplicity of proceedings and the avoidance of conflicting judgments shift the focus of the proper forum firmly back to England” particularly in the context of the comparative advantages of England and Monaco in relation to enforcement and the prospects of consolidation in Monaco.

As to Mr Anufriev’s stay application under section 9 of the 1996 Act, the Judge held that such a stay is neither justified nor required because the claims against Mr Anufriev fall outside the scope of the arbitration clause, which is governed by Panamanian law. The Judge also rejected Mr Anufriev’s application that he was not validly and effectively served in Latvia based on the Latvian law evidence before the Court.

Finally, the Judge upheld the extensions of time for service and accepted the Claimants’ submissions that they had taken reasonable steps to serve the Claim Form in accordance with the Court of Appeal’s decision in Cecil v Bayat [2011] 1 WLR 3086. The Judge took into account the volume of work required in preparing the evidence in support of the application for service out of the jurisdiction, including the factors that meant that “properly evidencing the application was a much more complex exercise than would normally be the case”, and approved the Claimants’ and their lawyers’ approach of obtaining expert evidence from local lawyers in Panama, Monaco and Switzerland in order to determine whether there were properly arguable claims against each defendant.  

The judgment is available here.