US$400 million claim against bank dismissed for second time following retrial

10/10/22

On 10 October 2022, the Court handed down judgment in Arkhangelsky v Bank St Petersburg PJSC [2022] EWHC 2499 (Ch) and dismissed for the second time a US$400 million fraudulent conspiracy case against a bank.

The proceedings have a long history.  After a 6-month trial in 2016, Mr Justice Hildyard gave a 390-page judgment in favour of Bank St Petersburg (the “Bank”) against Dr Vitaly Arkhangelsky in respect of unpaid loans and guarantees worth US$20 million. Dr Arkhangelsky had a counterclaim against the Bank: it made wide-ranging allegations that the Bank’s steps to enforce its security were part of a state-sponsored fraudulent scheme to “raid” the assets of Dr Arkhangelsky’s company group known as Oslo Marine Group (“OMG”). The Court dismissed the counterclaim. However, in 2020 the Court of Appeal ordered a retrial of the counterclaim on the basis that the Judge had not properly applied the standard of proof when considering the fraud allegations in the round ([2020] EWCA Civ 408).   

The retrial of the counterclaim came before Mr Justice Trower. He had to redetermine whether the original judgment’s primary findings of fact gave rise to inferences of the alleged conspiracy and consider the valuation of OMG’s assets (in the light of fresh valuation evidence), said to be worth US$400 million.  The Judge dismissed the counterclaim on all grounds. He held that the none of the inferences of a conspiracy was sustainable and that there had been no raid.

The judgment is here.