Tatneft v Bogolyubov & Ors (2016)
The court granted two defendants summary judgment in a claim against them by a Russian oil company on the basis that the claim had no real prospect of success. It also set aside an order permitting service out of the jurisdiction on two other defendants, as there was no serious issue to be tried. The claimant had no standing to bring the proceedings and the claim was misconceived as a matter of Russian law.
The court dealt with several applications in a claim by a Russian oil company (T) against four defendants.
The first and third defendants sought summary judgment. The second and fourth defendants applied to set aside an order permitting service on them out of the jurisdiction on the basis that there was no serious issue to be tried on the merits of the claim. All four defendants sought the discharge of a freezing injunction made against them, on the basis that the claim did not amount to a "good arguable case", or that there was an insufficient risk of dissipation. T applied to amend its particulars of claim. T's claim was advanced exclusively under the Russian Civil Code art.1064. T alleged that the defendants took part in a dishonest scheme to misappropriate very substantial sums owed to it in respect of oil it had delivered to a Ukrainian company (U). T had not sold the oil directly to U. Instead, it contracted with a "commission agent" (S) to sell the oil to U in S's name via a chain of contracts with three intermediate companies. The allegedly dishonest scheme consisted of the defendants (i) acquiring control over the three intermediate companies; (ii) causing U to inject the monies owed to S, and ultimately to T, into two of the intermediate companies; (iii) causing those two companies to enter into sham share sale agreements in order to siphon the monies into offshore companies controlled by the defendants; (iv) procuring the bankruptcy of the three intermediate companies. T brought the claim as S's assignee, in reliance on an agreement which T and S had entered into in 2015. There were issues as to whether T had standing to bring the claim and whether it was time-barred.
(1) The applications to set aside the order permitting service out of the jurisdiction succeeded on the basis that there was no serious issue to be tried. The applications for summary judgment succeeded on the basis that T's claim had no real prospect of success (see para.134 of judgment).
(2) The 2015 agreement: The rights sought to be asserted by T were not rights which were the subject of the 2015 agreement with S. T had no standing to bring the claim, and had no real prospect of success in seeking to establish otherwise (paras 28-38).
(3) Merits of the claim under art.1064: The claim had no real prospect of success; there was no serious issue to be tried in relation to it. Since the three intermediary companies had all been released from their contractual obligations pursuant to an assignment agreement of 2008, the defendants could not have caused them to breach their contractual obligations to pay the oil money "upstream", and their bankruptcy could not have deprived S of its claims against the last of the intermediaries in the chain. The defendants, therefore, could not have committed the "unlawful acts" alleged against them. The claim described the "harm" caused as being S's contractual rights as against the last of the intermediaries in the chain, but given that such rights had ceased to exist as a result of the 2008 assignment agreement, it was impossible to see how the claim as framed could succeed. Neither the "harm" element nor the "causation" element was made out. Without "harm" and without an "unlawful act", there could not be the necessary "causation". Furthermore, the case as advanced against the third defendant was deficient. There had been a failure to make out a proper art.1064 case against him (paras 39-72).
(4) Limitation: It was common ground that a three-year limitation period in relation to claims under art.1064 ran from the day when a person knew or should have known of the violation of his right. It was not possible, at this stage, to decide that the case that S did not have the requisite constructive knowledge until late 2011 had no real prospect of success. Such a conclusion would involve the court in the type of "mini-trial" which the authorities were clear should not be allowed to take place, Swain v Hillman  1 All E.R. 91 and Kazakhstan Kagazy Plc v Zhunus  EWCA Civ 381,  1 C.L.C. 451 considered (paras 73-84).
(5) Proposed amendments: The proposed amendments introduced a new cause of action which was time-barred, Co-operative Group Ltd v Birse Developments Ltd  EWCA Civ 474,  B.L.R. 383 applied. Even if that were not the case, they suffered the same fatal causation-related difficulties as the case contained in the original particulars of claim. T was in no position to show that there was no reasonably arguable limitation defence to the case which it sought to advance by way of the proposed amendments. Furthermore, the proposed amendments had no real prospect of success. The application for permission to amend was refused (paras 85-101).
(6) Freezing injunction: In view of the conclusions reached, the freezing injunction could no longer stand. However, had the court reached a different decision on the merits-related issues, it would have concluded that T had established a sufficient risk of dissipation (paras 107-118).
Applications granted in part
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