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.”