The Court of Appeal today reversed a Commercial Court ruling stopping London-based, Russian-born property investor Vladimir Chernukhin from suing billionaire Russian oligarch Oleg Deripaska for contempt.
The pair are involved in a long-running and bitter dispute over a valuable portfolio of property in central Moscow owned though a joint venture.
In November 2019, while deep in the dispute, lawyers for Chernukhin applied for a contempt of court order against Deripaska, saying he had breached undertakings given to the court the year before.
In a much-commented on ruling last year, High Court judge Mr Justice Baker struck out Chernukhin’s application, saying the litigation was “vexatious and unfair,” as well as motivated by Chernukhin’s personal dislike of Deripaska.
However, a ruling handed down today by a three-judge panel at the Court of Appeal said that Baker J had erred and failed to appreciate Chernukhin’s situation and the consequences of some of Deripaska’s actions.
At the centre of this part of the dispute is a company called En+, which is involved in the main litigation. In 2019, the company migrated from Jersey to Russia, where it registered as a Russian legal entity.
This, say Chernukhin’s lawyers, breaches an undertaking given to the court by Deripaska to ensure that all assets of the En+ group “remain available for direct enforcement”.
According to today’s judgment, written by Lady Justice Carr, Baker J had mistakenly thought it was “common ground” that moving the En+ shares from Jersey to Moscow wasn’t detrimental to Chernukhin.
In fact, it wan’t common ground and Chernukhin’s lawyers were concerned that assets had moved from a jurisdiction in which they could easily litigate to one in which they couldn’t.
“The [Commercial Court ruling] reflects the judge’s very clear views as to the inappropriateness of the contempt application being launched in the first place. Those views were, in large part, based on the misapprehension that it was common ground that the Jersey shares… continued to exist following the redomiciliation and that the redomiciliation had not (arguably) been damaging to the appellants’ interests,” Carr LJ said in her ruling today.
“That was not, in fact, common ground and it is properly arguable that the Jersey shares were cancelled through the redomiciliation and ceased to exist, and further that the redomiciliation was contrary to the appellants’ interests,” she said.
“The judge failed to pay due heed to the arguable merits of the contempt application and fell into error in treating Mr Chernukhin’s subjective motive as a factor justifying a finding of abuse of process.
“His assessment of the appropriateness of the manner in which the contempt application was presented and pursued by the appellants and their lawyers is undermined by the fact that it was carried out on the incorrect premise that their duty was to prosecute the contempt application solely as guardians of the public interest.”
“For these reasons, I would allow the appeal and remit the matter to the Commercial Court.”
Chernukhin’s lawyers will now be able to have the contempt application heard again at the Commercial Court at a later date.
(1) Navigator Equities Limited and (2) Vladimir Anatolevich Chernukhin v Oleg Vladimirovich Deripaska
Court of Appeal (Asplin LJ, Carr LJ, Snowden LJ) 30 November 2021
