Magomedov Claims Accelerated – Statement by Simon Bushell, Senior Partner, Seladore Legal:

“Last September, our client, Ziyavudin Magomedov, a political prisoner in Russia, launched a $13.8 billion legal action against Russian state entities and others from his prison cell. Since then, he has faced several major obstacles, as defendants have sought to resist and delay the case, by arguing that the English courts do not have jurisdiction to hear his claims.

This is a well-worn tactic in English litigation. Deep-pocketed defendants do not relish serious scrutiny of their actions by the judges of our Commercial Court. Frequently, they look for ways to delay and ramp up costs for their opponents. The jurisdiction challenge was the course taken by Indian mining giant, Vedanta Resources, in response to the claims brought against them on behalf of citizens of Zambia who were claiming compensation for losses (including personal injury) suffered arising from their mining activities. Vedanta argued that the claims should be heard in the Zambian courts where (coincidentally) there was no prospect of the claims being funded successfully to a conclusion. BHP Group took a similar approach when faced with claims brought on behalf of 700,000 Brazilian claimants who claim losses estimated at US$36bn caused by the collapse of the Fundao dam, operated by BHP’s JV company, Samarco. In both of those cases, involving costly appeals to the Supreme Court and Court of Appeal respectively, the claimants’ legal teams were vindicated in their choice of England – alternative venues were not available in terms of providing effective justice.

In a significant ruling this week, Mr Justice Bright granted Mr Magomedov’s application to expedite the defendants’ jurisdiction hearings. Their challenges will now be heard in a 3 week hearing commencing on 10th September. The alternative might have led to a delay until October 2025 and Mr Magomedov will now have the opportunity to swiftly seek to remove one of the major obstacles in his path to justice.

Out of a total of 22 defendants, 15 are challenging the English court’s jurisdiction. In some cases, it is unclear where defendants say they would be tried more appropriately. It is tempting to conclude that they do not really care as long as it is not heard in England any time soon. In the wake of Alexei Navalny’s death,
Mr Magomedov’s precarious position as a Russian dissident makes the question of timing even more critical.

One of the defendants, Transneft, is even arguing that Russia (of all places) is a suitable forum in which Mr Magomedov should fight his claims. Its arguments that the Russian courts are reliable and objective, and not subject to government influence are being supported by an expert witness whose similar opinion was recently rejected entirely by Mr Justice Henshaw in Zephyrus Capital v Fidelis Underwriting [2024].

Consistent with its preference for the Russian courts, Transneft has sought an injunction in Russia preventing Mr Magomedov from pursuing his English High Court claim at all – thus seeking to pre-empt the jurisdiction challenge in England.

Responding to this, Mr Magomedov obtained an “anti-anti-suit injunction” from the English Court to prevent Transneft from pursuing its own injunction application. Transneft were ordered to seek to adjourn its Russian process. However, the Russian courts granted its injunction regardless. Mr Magomedov is now seeking an anti-enforcement injunction from the English Court to stop Transneft from enforcing the prohibition on him from pursuing his English claims.

Some of the defendants also contend that the claims against them are not based on any “serious issue”. This is despite the fact that the English court has already determined that there is a good arguable case against them (a higher threshold than the “serious issue” test), including that representatives of Rosatom were present at a meeting in which “menacing” conduct was found to have been directed at one of Mr Magomedov’s representatives as part of a campaign by which Rosatom was to assume control of his major asset, FESCO.

On top of this, the defendants are demanding Mr Magomedov post “security for costs” for all of these hearings, seeking to drain his resources as he fights to advance his claim. The total estimated spend by the defendants in their jurisdiction challenges is an eye-watering £17 million, with Mr Magomedov being invited to pay security of several million. Whilst security for costs is an accepted orthodoxy for those abroad embarking on commercial claims in England it does present a paradox: a claimant devastated by an unrelenting attack on his business empire is forced to divert huge sums from his depleted resources in order to obtain redress. Such an order would again play into the hands of the defendants – but thanks to the acceleration of the jurisdiction challenges the price to be paid may only be a short term constraint.”