Russian Oligarchs Seek English Justice in Battles over Billions

Russian Oligarchs Seek English Justice in Battles over Billions

To say that Courtroom 76 is shabby doesn’t begin to convey its dilapidation: the walls are a mess of peeling paint, and a cascade of empty boxes partly blocks the entrance to this attic annex of London’s Royal Courts of Justice. It’s a far cry from the limestone and sandblasted glass interiors of the city’s designer shops that are such a magnet to Russia’s superrich. Yet here and in a neighboring courtroom, four prominent Russian oligarchs have been indulging in what may turn out to be the most expensive shopping spree of their lives. Never mind haute couture: it’s English High Court justice — at some $16,500 per day, with top attorneys charging up to $1,250 per hour — that’s proving the must-have purchase for wealthy Russians this season.

The proceedings unfolding in Courtroom 76, which pit exiled Russian tycoon Boris Berezovsky against his erstwhile protégé Roman Abramovich, began, appropriately enough, in a designer shop. In October 2007, Berezovsky spotted Abramovich browsing in the Hermes boutique in Sloane Street, close to Abramovich’s home and the top London football club, Chelsea, he owns. Berezovsky seized the opportunity, serving a writ on Abramovich that he had carried around with him for six months in the hopes of just such an encounter.
Berezovsky is looking for some $3.3 billion from Abramovich. His tangled skein of allegations centers on Sibneft, an energy concern acquired at the end of 1995 by Berezovsky and Abramovich during the privatization of the Russian energy sector, and Rusal, a company formed in 2000 when Abramovich merged his metals businesses with those of Oleg Deripaska, another prominent oligarch. Stakes in Rusal were also held by Berezovsky and a Georgian businessman, Arkady Patarkatsishvili.

Berezovsky, whose star rose under Boris Yeltsin and plummeted when Vladimir Putin came to power, alleges that Abramovich persuaded him and Patarkatsishvili to part with their interests in both companies at knockdown prices by warning them that the Kremlin would otherwise seize their assets and they would get nothing at all for them. Berezovsky had already been forced to surrender his media enterprises in Russia and fled the country for Britain in 2001. Berezovsky claims that Abramovich also promised to intercede on behalf of Nikolai Glushkov, a former associate of Berezovsky’s who had been arrested on fraud charges and was seriously ill.
It’s an immensely complicated case, made murkier by the passage of time and the February 2008 death, of natural causes, of Patarkatsishvili, who would have been a key witness. His testimony survives in the form of reports from interviews conducted by lawyers, but on July 22, the second day of a pretrial hearing, Abramovich’s lead attorney, Andrew Popplewell, referred to this evidence dismissively as a “sort of smorgasbord” of testimony. Popplewell is seeking to convince the presiding judge that Berezovsky’s case is weak and should be dismissed before it goes to trial.

Much of the argument is highly technical. Neither the complainant’s nor the defendant’s mother tongue is English. Observers without legal training might be forgiven for thinking the attorneys were also speaking a foreign language. Here’s Popplewell again: “The amended pleadings are put forward in substitution to those that are currently pleaded and are abandoned … On the amended pleading what is said is either 1995 rights, 1996 rights or if either of those is of no legal effect, restitution rights.”

The argumentation has been equally dense in the courtroom next door, where Deripaska, who bought out Abramovich’s shares in Rusal in 2003, is appealing an earlier ruling that another Russian-born tycoon, Michael Cherney, can sue him in English courts.
Cherney is demanding 20% of the shares in Rusal as part of an agreement he says was made at the creation of Rusal, when a company he owned was subsumed into the new entity. Berezovsky has supplied depositions to Cherney’s team. Deripaska denies the allegations. His legal team argues that the case should be heard in Russia. Deripaska’s attorney, Ali Malek, told the appeals court that the case had “absolutely nothing to do with [Britain].”

You can see Malek’s point. Deripaska has a house in London, but Cherney is a resident in Israel, and the companies and events at issue are located in Russia, barring a disputed meeting in London at which an agreement may or may not have been reached. But the original decision to allow the case to proceed in Britain was made on the basis that Cherney’s life and freedom could be at risk in Russia and he might not get a fair trial there. The ruling, effectively implying that the Russian court system could not be trusted, has done little to help thaw glacial diplomatic relations between Moscow and London. Still, it signaled another reason why British law firms are finding no shortage of high-profile Russian clients.

Top of the table is Berezovsky. Apart from his suit against Abramovich and tangential involvement in Cherney’s spat with Deripaska, he has filed a lawsuit against Russian metals magnate Vasily Anisimov and his company Coalco for a stake Berezovsky says he owns in Coalco subsidiary Metalloinvest. In addition, Berezovsky’s lawyers have lodged a statement with the court denying that commission is owed on a luxury yacht he just sold. And the tycoon is currently suing a Moscow-based television company for libel. Then there’s the matter of his divorce from his wife Galina, which is currently being negotiated.

As recession hits Russia’s wealthy, the shiny boutiques along Sloane Street may be a little quieter. But the bonanza at London’s courts and law firms looks set to continue.
See pictures of Obama in Russia.
See pictures of Putin.