Russian bank fails to recover disputed assets in trial before Supreme Court of Gibraltar

09/06/16

On 10th February 2014 Eder J, sitting in the Commercial Court in London, gave judgment against Georgy Urumov for just over US$151 million. At the same time he gave judgment for just under US$37 million against Yulia Balk (“the Otkritie trial”).

The judge found that the claimants (“Otkritie”) had been the victim of two frauds committed by Mr Urumov and others. The first (“the signing-on fraud”) consisted of obtaining US$25 million from Otkritie by fraudulent misrepresentations, as a sign-on fee when Mr Urumov and his dealing team joined the bank in October 2010. The second (“the Argentine warrants fraud”) involved the sale of Argentine warrants at an inflated price on 9th March 2011. The loss caused by this fraud was just under US$151 million. The judge found that Ms Balk knowingly assisted her husband in the disposal of the proceeds of the frauds.

Dudley CJ, by Order of 17th June 2014, registered the judgment as a judgment of the Gibraltar Court pursuant to the Brussels-I Regulation (Council Regulation (EC) 44/2001). Otkritie sought to enforce the judgment in this Court against a portfolio of securities (“the GDPM portfolio”) and cash held by Ivory Key at the Jyske Bank (Gibraltar) Ltd. Mr Alexander Kotton, a Russian businessman, had originally on 30th May 2012 transferred these assets to Vandry Limited. Vandry later transferred them back to Ivory Key’s account at the same bank. It is common ground that Ivory Key is under Mr Kotton’s control.

By Order of Dudley CJ made on 8th December 2014 he directed that:

“there be a trial of the issue between the Claimants and the Interested Parties as to whether the judgment made in favour of the Claimants against the Defendants in the High Court of Justice of England and Wales, and registered in Gibraltar in this action, can be enforced against either or both of [Ivory Key or Vandry].”

Pursuant to this Order, a trial took place before the Gibraltar Supreme Court as to whether the GDPM portfolio and the cash held in Ivory Key’s account at Jyske Bank was liable to enforcement at the suit of Otkritie. Otkritie’s case was that the funds held by Ivory Key were in reality the Urumovs’ money, laundered for them by Mr Kotton.

The judge found that there was no issue estoppel which could operate against Ivory Key in the light of the findings of Eder J in the Otkritie trial, to which Ivory Key was not a privy.  He found Mr Kotton to be an honest and credible witness and accordingly dismissed Otkritie’s claim and found in favour of Ivory Key in respect of the assets held in its account. 

The judgment appears here.