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Judgment in the Fiona Trust litigation


On 10 December 2010, Mr Justice Andrew Smith handed down Judgment (running to 1566 paragraphs) in the Fiona Trust v Privalov case, which was heard together with Intrigue Shipping v H. Clarkson and others, the trial having lasted 6 months between October 2009 and March 2010.  The cases were brought by the Russian State-owned shipping companies, Sovcomflot and Novorossiysk Shipping Company ("Novoship", which is now a Sovcomflot subsidiary).  The claims were pursued against (among others): Russian businessman Mr Yuri Nikitin and various companies under his control; Mr Dimitry Skarga (the former Director General of Sovcomflot); and Mr Tagir Izmaylov (the former President of Novoship).  Sovcomflot and Novoship alleged that Mr Skarga and Mr Izmaylov had been corrupted by bribes paid by the very wealthy Mr Nikitin, including by provision of luxury holidays and private jets.  The claims involved allegations of conspiracy, bribery, breach of fiduciary duty and dishonest assistance.

The Judgment deals with a number of issues of English law relating to dishonest assistance (including the availability of an account of profits as a remedy) and to bribery, as well as the appropriate standard of proof, and also with questions of conflict of laws relating to breach of fiduciary duty, dishonest assistance, knowing receipt and conspiracy.

The Judge found Mr Nikitin liable for conspiring to injure the Sovcomflot and Novoship Groups by unlawful means and for dishonest assistance in relation to the illegitimate diversion of commissions, principally on the sale and purchase of vessels.  Mr Nikitin was found to have been involved in fraudulent conduct between 2001-2004, including the bribery of Mr Yuri Privalov, former head of Sovcomflot's London office, and of conspiracy with Mr Privalov and certain individuals at the two leading London ship brokers, Clarksons and Galbraith's. Commissions on various sale and purchase and new building transactions were wrongly diverted away from the brokers' principals for the benefit of Mr Nikitin.  Final quantum figures are yet to be determined, but it is anticipated that these successful claims will result in payments of around US$65 million to the claimants.

Other claims against Mr Nikitin arising out of other transactions, and all claims against Messrs Skarga and Izmaylov (which were held governed by Russian law), were dismissed, although it was held that Mr Nikitin had made what (in English law) amounted to bribes to Mr Skarga.

Claims previously brought by the claimants against Clarksons and Galbraith's, as well as against Mr Privalov, had been settled at earlier stages with substantial payments having been made to the claimants.

The judgment is here.

Andrew Popplewell QC, Simon Birt and Fionn Pilbrow acted for the claimants.