Home Information Cases Boris Berezovsky v Roman Abramovich (2012)

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Boris Berezovsky v Roman Abramovich (2012)

Summary

The claimant Russian businessman failed to prove any binding agreement that he was to have an interest in a Russian oil company or a Russian aluminium company.

Facts

The claimant (B) sued the defendant (D) claiming that he had an interest in two substantial Russian companies, Sibneft, an oil company, and RusAl, a company in the aluminium industry.

B and D were Russian businessmen. Sibneft had been privatised by the Russian state and the majority of its shares came to be owned by D. B alleged that it had been agreed in 1995 that the shares in Sibneft would be held as to 50 per cent for D and as to 50 per cent for B and his associate (P); it was further agreed that profits would be distributed in the same percentage proportions and that any future business interests which they acquired, whether or not related to Sibneft, would also be shared between them in the same proportions; the 1995 agreement had been supplemented by a 1996 agreement; thereafter very large sums of money were paid at D's direction to B and P; as a result of intimidation, B and P had been coerced into selling their interests in Sibneft to D in 2001 at a substantial undervalue. B alleged in relation to RusAl that, in accordance with the 1995 agreement, certain aluminium assets had been pooled in RusAl and that it had been agreed that D would beneficially own 25 per cent of RusAl, while B and P would beneficially own 25 per cent between them; D had then sold a 25 per cent shareholding in RusAl without consulting B or P or obtaining their consent which was said to be a breach of contract and/or trust and/or fiduciary duty by D. P had died and B had brought proceedings against members of his family, his estate and others alleging that he had an interest in certain assets or a claim for damages on the basis that he and P had agreed that all commercial investments made by either of them would be shared on a 50:50 basis. D denied any agreement that B would have any interest in Sibneft or its profits; the payments made to B had been ad hoc payments for the exercise of B's political patronage or protection; there was no agreement that B or P should be entitled to participate in any future business venture undertaken by D and therefore they had no interest in the pre-merger aluminium assets or in RusAl.

 

Held

(1) B was not a reliable and truthful witness. D was a truthful and, on the whole, reliable witness (see paras 131-132 of judgment). (2) There was no agreement in 1995 or 1996 that B would receive an interest in the shares or profits of Sibneft. The arrangement between the parties was that D would make payments to B and P in exchange for their assistance and protection. The amounts to be paid were agreed on an ad hoc basis. Although the payments might have reflected the earnings of Sibneft and D's other companies and hence his ability to pay, there was no agreement that B and P would be entitled to a proportionate interest in the profits, whether as a result of a share ownership interest or otherwise (paras 139-142, 520-521). (3) The alleged 1995 agreement would have been governed by Russian law and under that law it would have been invalid for uncertainty, and because the lobbying services which B agreed to provide were not capable of being a lawful contribution to a partnership agreement and because there was no intention to create legal relations. The 1996 agreement would have been invalid for similar reasons (paras 530, 555, 569, 579). (4) D did not make threats to B and P with the intention of intimidating them to dispose of their alleged interests in Sibneft. The sum of $1.3 billion paid by D to B and P did not represent the sale price of their alleged Sibneft interest, but rather was a final lump sum payment in order to discharge what D regarded as his obligations to them for their protection (para.722). (5) A purported agreement by B and P to sell shares in Sibneft to a British Virgin Islands company was a sham, entered into for the purpose of satisfying money-laundering requirements in respect of the payment of $1.3 billion. D was not involved in the agreement and not aware of its terms (paras 832, 957). (6) No agreement was made between D and B that B would have an interest in any pre-merger aluminium assets and there was no agreement that any interest in the pre-merger aluminium assets should be paid for out of B's entitlement to Sibneft or Sibneft related profits. Neither B nor P had any interest in any of the companies which acquired the pre-merger aluminium assets (para.978). There was no agreement that B or P would have a share of the RusAl business created by the merger of the pre-merger aluminium assets (para.1089). The receipt by a company controlled by P of a substantial sum following the sale of RusAl shares by D was to discharge D's obligation to pay an agreed commission to P for his assistance in relation to the aluminium business (para.1222). (7) B's claims in relation to Sibneft and RusAl were dismissed (para.1248).

Claims dismissed

Queen's Bench Division
Gloster J
Judgment date
31 August 2012
References

​LTL 28/9/2012 : [2012] EWHC 2463 (Comm) 

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