$13.8bn Russia dispute preps for jurisdiction challenge this autumn – The Lawyer

The High Court has ordered that the jurisdiction challenge in the $13.8bn dispute brought by jailed Russian businessman Ziyavudin Magomedov be heard this Autumn following a successful expedition application brought by the claimants.

In December 2022, Magomedov was sentenced to 19 years in jail for embezzlement alongside his brother, having already spent more than four years in prison in 2018 awaiting trial.

Magomedov, represented by Seladore Legal, claims he was wrongly imprisoned and that his business empire was manoeuvred into Russian state hands.

The claim was filed in July 2023 and has as many as 22 defendants, including several Russian state companies.

15 of the defendants have sought to challenge the English Court’s jurisdiction to hear the case.

The jurisdiction challenges were supposed to be heard in 2025 or later, but this week, Mr Justice Bright granted Magomedov’s application to expedite the defendants’ jurisdiction hearings, meaning they will now be heard in a single hearing on 10th September for three weeks.

The news means any full trial could be heard as soon as 2025. Simon Bushell, senior partner at Seladore, said: “Last September, our client, Ziyavudin Magomedov, a political prisoner in Russia, launched a $13.8bn 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 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.”

“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.”

This is an article from The Lawyer

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.”

Russian tycoon’s ‘anti-anti-suit injunction’ succeeds as Transneft to face $14bn English claim – City AM

The English High Court has ordered Russian state-owned oil pipeline company Transneft to adjourn its legal proceedings in a Moscow court.

The oil company is facing a $14bn lawsuit in London after Russian tycoon Ziyavudin Magomedov launched the case last year against the oil company, DP World and Russian state-owned agencies.

Magomedov launched the legal action after his holdings in valuable port operators were seized as part of what he claims is a state-backed conspiracy.

He had a significant stake in one of Russia’s largest ports Novorossiysk Commercial Sea Port (NCSP) as well a stake in a Russian logistics giant FESCO Transport Group.

He is currently in prison after he was arrested in Russia in 2018 and in 2022, and eventually sentenced to 19 years in prison on embezzlement charges and had numerous assets frozen.

Earlier this month, Transneft asked a Moscow court to prohibit Magomedov from continuing the proceedings in England.

Following a hearing in the English High court last week,Magomedov was granted an order which instructed Transneft to adjourn its Russian claim.

According to documents seen by City A.M., the penal notice of this order stated if Transneft or any of its directors and officers disobey this order, they may be held to be in contempt of court and may be imprisoned, fined, or have its assets seized.

There will be a further hearing in respect of this order on 1 March 2024.

Mr Justice Foxton explained that the application was an “anti-anti-suit injunction”, which is intended to prevent the defendants from pursuing anti-suit injunctive relief which they seek in Moscow.

He stated that the issue of anti-anti-suit relief “is a relatively rare phenomenon in English litigation, although becoming progressively less so.”

This ruling comes after Transneft had its ability to move funds restricted last December. The injunction obliges Transneft to inform Magomedov’s lawyers, Seladore Legal, in advance of any significant transactions it wishes to make and applies to Transneft for the foreseeable future, until the dispute between the parties is resolved.

Commenting on the case, his lawyer Simon Bushell, senior partner at Seladore Legal said: “Magomedov faces increasingly deteriorating conditions having recently been transferred to a remote penal colony in Kirov on the notorious Stolypin train, described by Amnesty as ‘cruel, inhuman and degrading’.”

“As he gradually exhausts his avenues of appeal in Russia, Magomedov’s only hope of justice is the continued pursuit of his UK High Court claims. His family and all those seeking to support him are obviously fearful for his health and well-being and concerned that he will be deprived entirely of his ability to liaise properly with his legal team.”

“His Russian lawyers in particular feel intimidated by the recent steps taken to restrain Magomedov from pursuing his legal claims in England. He is now entirely reliant on the safeguards of the international community to ensure that he is not silenced and that he does not suffer the same fate as Alexei Navalny,” he added.

This is an article from City AM.

$13.8bn Russia dispute to continue after Transneft challenge fails – The Lawyer

The English Court has ordered Russian state-controlled pipeline operator Transneft to drop its case in Moscow that sought to prevent jailed businessman Ziyavudin Magomedov from bringing a $13.8bn claim in England against 22 defendants.

Read the full article in the Lawyer.

Simon Bushell comments on the challenges of representing Ziyavudin Magomedov

The passing of Alexei Navalny is a tragedy and a very dark day in Russia’s modern history, signalling the end, for now at least, of any meaningful opposition to President Putin.

Mr Magomedov was unexpectedly arrested in March 2018 following an investigation by personnel involved in the infamous Magnitsky affair. During his pre-trial detention Mr Magomedov’s strategic assets, the Far Eastern Shipping Company and the Black Sea Port Novorossiysk were unlawfully seized and placed into the hands of Kremlin-controlled companies. These assets play a vital role in maintaining Russia’s war economy.

Despite agreeing to post bail, Mr Magomedov was detained for over 4 years before being convicted of financial crimes which he vehemently denies, and sentenced to 19 years imprisonment following a trial which occurred largely in secret.

His real crime was a political one: speaking his mind behind closed doors directly to Russia’s leadership and seeking to resist the disastrous path along which Russia has been taken. These political “crimes” are being aggravated by the pursuit of extensive, eye-opening conspiracy claims advanced in the English High Court which are unsettling the Kremlin, and proxy figures close to the Putin regime.

Mr Magomedov faces increasingly deteriorating conditions having recently been transferred to a penal colony in Kirov, remote Russia on the notorious Stolypin train, described by Amnesty as “cruel inhuman and degrading”.

As he gradually exhausts his avenues of appeal in Russia, Mr Magomedov’s only hope of justice is the continued pursuit of his High Court claims. His family and all those seeking to support him are obviously fearful for his health and well-being and concerned that he will be deprived entirely of his ability to liaise properly with his legal team. His Russian lawyers in particular feel intimidated by the recent steps taken to restrain Mr Magomedov from pursuing his legal claims in England. He is now entirely reliant on the safeguards of the international community to ensure that he is not silenced and that he does not suffer the same fate as Mr Navalny. 

Transneft Hit With Injunction After $14B Conspiracy Claim – Law 360

A London court slapped PJSC Transneft, the world’s largest oil pipeline company, with an injunction linked to a jailed Russian oligarch’s $13.8 billion claim alleging his business empire was unlawfully seized in a sprawling conspiracy led by the Russian state.

The notification injunction will require Transneft to inform Ziyavudin Magomedov’s lawyers of any significant transactions the company wishes to make, because there is a “real risk” its assets will be siphoned away, Judge John Butcher said in a High Court judgment on Wednesday.

The precise terms of the injunction are yet to be finalized, but it is likely Transneft must give notice of any intention to reorganize or alter its capital structure. However, the order would not need to require the pipeline company to give advance notice of its intention to acquire shareholdings or manage litigation proceedings, the judge said.

Read the full article in Law 360.

UK court grants injunction against Russian pipeline firm in $14bn lawsuit – City AM

Russian state-owned oil pipeline company Transneft has had its ability to move funds restricted after a UK court granted an injunction against the firm as part of a $14bn lawsuit.

Russian tycoon Ziyavudin Magomedov – who is currently in prison in Russia – filed the lawsuit at the High Court earlier this year. Magomedov launched the lawsuit after his holdings in valuable port operators were seized as part of what he claims is a state-backed conspiracy.

He was arrested in Russia in 2018 and in 2022, and eventually sentenced to 19 years in prison on embezzlement charges and had numerous assets frozen.

Magomedov had a significant stake in one of Russia’s largest ports Novorossiysk Commercial Sea Port (NCSP) as well a stake in a Russian logistics giant FESCO Transport Group.

His claim targets 22 defendants including Russian state nuclear energy company Rosatom, oil pipeline operator Transneft, private equity firm TPG and UAE-based port operator DP World.

His lawyers filed an application for a notification injunction Transneft to the court last month.

The injunction, which was approved by the court yesterday, obliges Transneft to inform Magomedov’s lawyers, Seladore Legal, in advance of any significant transactions it wishes to make and applies to Transneft for the foreseeable future, until the dispute between the parties is resolved.

The judge found that there was a real risk that Transneft might dissipate its assets prior to any judgment, noting that there had already been redomiciliation of Transneft’s assets outside of Russia and “an elimination of intermediate layers of foreign ownership of Russian assets”.

Commenting on the decision, Simon Bushell, the senior partner of Seladore Legal, acting for Magomedov, said: “This is a welcome decision and a very important step in the right direction.”

Lawyers for Transneft were contacted for comment.

This is an article from City AM.

 

Jailed oligarch accuses TPG of colluding with Kremlin to seize $14bn assets – Financial Times

A jailed Russian oligarch is seeking almost $14bn in damages in London’s High Court from defendants including US private equity group TPG over an alleged Kremlin-led conspiracy to seize his assets.

Lawyers for Ziyavudin Magomedov claimed in filings made public this week that TPG founder David Bonderman was part of a conspiracy to sell a stake in Fesco, which controls the Pacific port of Vladivostok, that Magomedov was entitled to.

Read the full article in the Financial Times.

TPG hit with $14bn claim by jailed Russian oligarch over alleged conspiracy – Financial News

US private equity giant TPG has been sued by a jailed Russian oligarch in London’s High Court over a claim that the firm was involved in a conspiracy to seize or acquire his assets for below-market value.

Ziyavudin Magomedov has brought the nearly $14bn claim against US-listed TPG, according to 31 August court filings, alleging the firm’s involvement in a conspiracy to seize assets from him or to acquire them at less than their market price.

Read the full article in Financial News.

Russian tycoon Magomedov launches $14 billion lawsuit in UK over port holdings – Reuters

Russian tycoon Ziyavudin Magomedov, jailed at home in Russia, has launched a London lawsuit seeking nearly $14 billion over his holdings in valuable port operators, which he says were seized as part of a state-backed conspiracy.

The businessman filed the lawsuit at London’s High Court on July 20 against several defendants, including Russian state nuclear energy company Rosatom, oil pipeline operator Transneft, private equity firm TPG and UAE-based port operator DP World.

Read the full article in Reuters.