The Chancery Division (Fancourt J) has today held that the English Court has no jurisdiction over claims brought by Ukrainian bank Privatbank against its former owners, Igor Kolomoisky and Gennadiy Bogolyubov, and discharged worldwide freezing orders obtained by the Bank in support of those claims which the Bank had valued at US$2.6 billion.
In December 2016, the Claimant bank was nationalised, and its previous majority owners, Messrs Kolomoisky and Bogolyubov, were stripped of their shares. Following the nationalisation, the Bank instructed Hogan Lovells and Kroll to pursue claims against the former owners.
Shortly before Christmas 2017, the Bank obtained ex parte Worldwide Freezing Orders against Mr Kolomoisky and Mr Bogolyubov, who were both domiciled in Switzerland when the proceedings were commenced, and a number of companies registered in England and the BVI. Although the prima facie rule is that persons domiciled in a State bound by the Convention should be sued in the courts of that State, the Bank asserted that the English Court had jurisdiction against them under Article 6(1) of the Lugano Convention because it had also sued the three English company defendants. The English defendants had been parties to Supply Agreements with Ukrainian borrowers of the Bank, which the Bank alleged had been instruments of the alleged fraud.
All of the Defendants applied for declarations that the Court did not have jurisdiction over the claims against them, and to discharge the WFOs on the basis of material non-disclosure. They argued that the claims had been artificially constructed in order to implicate the English defendants, who in fact had no relevant assets and had been no more significant in the alleged fraud than a large number of other non-English companies. The Court held that:
The Court awarded the Defendants their costs on the indemnity basis.
The Court granted permission to appeal on the jurisdiction and stay issues, but refused permission in relation to material non-disclosure and the quantum of the claims.
The discharge of the WFO will be stayed pending the Bank’s expedited application for permission to appeal the ruling that it should be discharged on grounds of non-disclosure.
The judgment is here.
Mark Howard QC, Michael Bools QC, Alec Haydon, Richard Blakeley and Ben Woolgar appeared for Mr Kolomoisky, instructed by Fieldfisher LLP.
Thomas Plewman QC appeared for the English Defendants, instructed by Pinsent Masons LLP.
Daniel Jowell QC and Richard Eschwege have been instructed for Mr Bogolyubov since the hearing, and represented him at the hearing for consequential directions, instructed by Enyo Law.