Quillon Law successfully represents Oleg Deripaska in resisting appeal brought by Vladimir Chernukhin



March 20, 2024

The Court of Appeal has today (20 March 2024) handed down judgment in the case of Navigator Equities Limited & Vladimir Chernukhin v Oleg Deripaska, in which the Claimants had appealed against the order of HHJ Pelling KC dismissing their application to commit Mr Deripaska to prison for contempt of court.

The Court of Appeal was unanimous in dismissing the appeal on two bases:

  1. The Court found that the common theme of the committal application notice was that the shares had been “automatically cancelled” and therefore it was critical what was meant by that term. The Court considered that there was no room for doubt that what the Claimants had meant was that the shares in En+ had indeed been cancelled so that they ceased to exist, and that new shares in a new company thereafter came into existence. HHJ Pelling KC was entitled to conclude that the Claimants’ case had not been proved to the criminal standard and was accordingly entitled to dismiss the application. The Court concluded that it was not open to the Claimants, on appeal, to advance an alternative case which was materially different from what was alleged in the application notice; and
  2. The Court also found that the Claimants had failed to prove, to the criminal standard, that the vote of B-Finance in favour of the special resolution to approve the Continuance was determinative of whether the Continuance would take place.

The Claimants’ appeal was dismissed with costs ordered against the Claimants.

Mark Hastings, Partner at Quillon Law, representing Mr Deripaska, commented: “We are pleased that the Court of Appeal has dismissed Mr Chernukhin’s latest attempt to commit our client, Mr Deripaska, to prison.  In doing so, the Court of Appeal expressed surprise that nothing was said by Mr Chernukhin at the time about the redomiciliation, despite the fact that he had read press reports about it.

“The conclusion of the Court in this long running dispute was that either it did not occur to Mr Chernukhin that the redomiciliation constituted a contempt or, if it did, he made a deliberate choice to say nothing about it at the time.”

Background

The contempt application arose in the context of a long running dispute between the Claimants and Mr Deripaska.  In May 2018, following the imposition of US sanctions on Mr Deripaska, the Claimants had obtained a worldwide freezing order (“WFO”) which was the subject of challenge by Mr Deripaska.  In place of the WFO, undertakings were offered over a parcel of shares in En+ Group plc (“En+”), which Mr Deripaska indirectly owned through B-Finance Limited (“B-Finance”).  Broadly speaking, Mr Deripaska agreed to ensure the shares in En+ remained available for direct enforcement and not to inhibit B-Finance in performing its undertakings.

The US sanctions had a serious negative impact on Mr Deripaska’s business interests and in order to save the business of En+, its then chairman, Lord Barker of Battle, formulated a plan, part of which was that En+ would redomicile from Jersey to a special economic zone in Russia (the “Continuance”). En+ redomiciled to Russia in July 2019.

In September 2019, Mr Deripaska procured payment to the Claimants in full satisfaction of the sums due to them.

Notwithstanding that, in November 2019, the contempt application was issued.  The Claimants alleged that at a meeting of En+ shareholders in December 2018, Mr Deripaska (being the ultimate owner of B-Finance) procured and/or permitted B-Finance to vote in favour of a special resolution to approve the Continuance.  The Claimants alleged that the effect of the Continuance was that the shares the subject of the undertakings were “automatically cancelled”.

High Court

At first instance, HHJ Pelling KC held that the Claimants were confined to the alleged breaches as set out in their application notice.  The common theme of each of the alleged breaches was that the shares had been “automatically cancelled” and replaced with “new shares” in a new company.  The Claimants adduced no expert evidence on either Jersey or Russian law as to the effect of the Continuance.  Nor did they plead any relevant proposition of Russian law in the application notice.

The Judge held that the Claimants had neither pleaded nor proved to the criminal standard that the shares were so cancelled and therefore that the contempt application must fail.

Partner Mark Hastings led the Quillon Law team, which included Partner Abigail Healey, Managing Associate James Clark, Associate Charles Anderson and Trainee Solicitor Colette Bacon, instructing Thomas Grant KC of Wilberforce Chambers and Caley Wright of Maitland Chambers.

 

A link to the Court of Appeal’s judgment can be found here.

The case is Navigator Equities Limited & Vladimir Chernukhin v Oleg Deripaska [2024] EWCA Civ 268

This has been reported on in Law360, 20 March 2024, and Solicitors Journal, 27 March 2023.