As Latvijas Krajbanka v Vladimir Antonov (2016)
The court exercised its discretionary powers under the Senior Courts Act 1981 s.35A to award interest on a claimant's damages until the date of judgment. Interest was awarded at a rate of 6% per annum on the judgment debt from the date of judgment as would be applied by a Latvian court.
The court was required to assess the amount of interest recoverable by the claimant Latvian bank following its successful claim against the defendant, who had been the majority beneficial owner of the bank.
The bank's case had been that the defendant had caused the bank to enter into transactions which were not in its interests and which were arranged to benefit the defendant. Proceedings had been brought in England because the defendant had re-located to the UK after the bank collapsed, rather than in Latvia where the bank's losses were incurred. The judge found that the defendant had acted dishonestly and in breach of duties owed to the bank under Latvian law. He concluded that, as a result of the defendant's wrongdoing, the bank had suffered losses of over €60 million and US$30 million which it was entitled to recover in damages. The transactions in question spanned three different legal regimes. Three loans were made before 11 January 2009 and fell outside the temporal scope of Regulation 864/2007 (Rome II). Five other transactions fell entirely within the scope of Rome II. The bank claimed interest pursuant to the Latvian Civil Procedure Code art.195 or alternatively under the Senior Courts Act 1981 s.35A at the rate of 6% per annum.
(1) The court exercised its discretionary powers under s.35A. In relation to the bank's claims which fell within Rome II, for which the remedy as well as the right to recover interest were governed by Latvian law pursuant to art.15, no interest should be awarded for the period prior to judgment because such a remedy was not available in Latvian law. In relation to the claims outside the scope of Rome II, where the discretionary remedy provided by s.35A was available, the court should exercise its discretion by awarding interest to compensate the bank for being kept out of its money. It would not be just to deprive the bank of such compensation merely because a similar procedural remedy would not be available from a Latvian court. Even in the case of those transactions which fell within the temporal scope of Rome II, the bank had a right to recover damages under the Latvian Commercial Law art.169 which was outside the subject-matter of Rome II. Pre-judgment interest was awarded under s.35A on all sums which the bank was entitled to recover as damages at 2% above European Central Bank rate for the Euro sum and 2.5% above six month US dollar LIBOR (see paras 13-16 of judgment).
(2) It would not be justifiable to allow interest on the judgment debt to run at 8% per annum. The appropriate rate was the rate of 6% per annum as would be applied by a Latvian court (paras 17-19).
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08 Jul 2016
Queen's Bench Division
George Hayman QC