Category: News

It has been reported on FESCO’s website that a company associated with Mr Ziyavudin Magomedov withdrew its defence in London Court of International Arbitration proceedings between that company and a subsidiary of FESCO.

The proceedings referred to by FESCO were an LCIA arbitration by a subsidiary of FESCO, called Halimeda, against a company owned by Mr Magomedov (Maple Ridge). In those proceedings, Halimeda sought to enforce certain loans which originated from the acquisition of a stake in FESCO by Mr Magomedov in 2012. Maple Ridge disputed the enforcement of the loans on grounds that the enforcement of those loans by Halimeda (and related actions) formed part of an unlawful means conspiracy to seize control of FESCO and other interests. The conspiracy case is central to the claims pursued by Mr Magomedov and his companies in proceedings currently taking place in the High Court in England against, amongst others, TPG, Rosatom and DP World, as well as Halimeda and FESCO. Mr Magomedov claims damages of well over US$10 billion in those proceedings.

The Defence in the arbitration has been withdrawn in favour of pursuing that claim in the High Court where full disclosure from the alleged conspirators and others can be pursued. The High Court claim is unaffected by the withdrawal from the arbitration. The quantum of the High Court claim is primarily based upon the value of FESCO, meaning that it will reflect a large part of any debt recovery from Maple Ridge.

The English High Court has found that there is a good arguable case of conspiracy against at least some of the alleged conspirators, including ROSATOM, and that there was an evidential basis that they were coordinating, that a ‘hostile takeover’ of FESCO was threatened, and that this was accompanied by menacing behaviour. The Defendants to the English proceedings have challenged jurisdiction and/or sought to strike out the claims in order to avoid any determination on the merits by the English Court. Mr Magomedov is determined to seek a fair hearing of his claims in London.

Judgment is awaited in relation to those jurisdiction challenges.

 

Ziyavudin Magomedov was arrested in March 2018 in the midst of an apparent criminal investigation led by Nicolai Budillo, who was previously involved in the controversial Magnitsky affair – Magnitsky was Bill Browder’s erstwhile lawyer in Moscow who uncovered a tax fraud, and paid with his life – beaten to death in a Russian prison.

As part of his US$14 billion English High Court lawsuit, Ziyavudin Magomedov brought proceedings against Transneft and others in relation to an alleged conspiracy to deprive him of his controlling stake in a strategically important Russian port on the Black Sea. At the time of his arrest, and the Budillo led investigation, Magomedov was in negotiations with Transneft in respect of the sale, but following his arrest and whilst detained in the notorious Lefortov prison, Transneft unlawfully prised the Black Sea port at a massive discount which Magomedov refused to sanction. The eventual sale proceeds of US750m were seized by the Russian state. Budillo now works for Transneft as Head of “Internal Security”.

Mr Magomedov’s claim for compensation was brought principally in the High Court in London. As a secondary step the claim was replicated in a Stockholm arbitration against both Transneft and its subsidiary Fenti.

Transneft has challenged jurisdiction in both forums. In the High Court, a hearing will take place in London in November 2024. At one point, Transneft had suggested that claims against it might be subject to an arbitration agreement and hence Mr Magomedov’s company therefore commenced a protective arbitration, subject to the rules of the Stockholm Chamber of Commerce against Transneft to provide Transneft with an opportunity to have its claims arbitrated. However, in that arbitration (the details of which are confidential), Transneft, in a volte face, disavowed any suggestion that it was party to the arbitration agreement. As a consequence, the arbitration against Transneft has come to an end. But the claim against Fenti remains.

Transneft’s press statement to Interfax and other news Russian outlets this week was therefore misleading and breached the arbitration’s confidentiality regime.

Mr Magomedov’s claim against Transneft will continue to proceed in the High Court. It is striking that Transneft is seeking to challenge jurisdiction in whatever forum the claim is brought, save for Russia, where Mr Magomedov believes he has no prospect of a fair process. It is also notable that, earlier this year Transneft sought an injunction in Russia to seek to prevent Mr Magomedov pursuing his claim in England, and imposing on him a multi-billion dollar fine if he breached the Russia court order. In response to this, Mr Magomedov sought and the English Court issued an “anti-anti-suit” injunction against Transneft requiring it to permit the claim in England to proceed. If the English Court assumes jurisdiction, then the claim will proceed to a full trial.

Simon Bushell, Senior Partner of Seladore Legal, commented:

“Mr Magomedov is determined to proceed with his claim against Transneft in the English Court. Transneft’s propaganda is a blatant breach of arbitral confidentiality and an attempt to convince people that the claim against it has failed, whereas nothing of the sort has occurred.” 

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. 

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.

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.

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. 

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.

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.