Trafalgar Developments Ltd v Mazepin

• Jurisdiction: Ireland
• Court: High Court
• Judge: Mr Justice Robert Haughton
• Judgment Date: 23 November 2017
• Neutral Citation: [2017] IEHC 721
• Docket Number: Record no. 2016/9981P
• Date: 23 November 2017

Between:

TRAFALGAR DEVELOPMENTS LIMITED, INSTANTANIA HOLDINGS LIMITED, KAMARA LIMITED

and

BAIRIKI INCORPORATED

Plaintiffs

and

DMITRY MAZEPIN, OJSC UNITED CHEMICAL COMPANY URALCHEM, URALCHEM HOLDING PLC, EUROTOAZ LTD, ANDREY GENNADYEVICH BABICHEV, YULIA BOLOTNIKOVA, BELPORT INVESTMENTS LTD, MILKO EMILOV MINKOVSKI, ANDROULA CHARILAOU, DMITRY KONYAEV

and

YEVGENIY YAKOVLEVICH SEDYKIN

Defendants

[2017] IEHC 721

Haughton Robert J.

Record no. 2016/9981P

THE HIGH COURT

COMMERCIAL

Practice & Procedure – O.19, r.28 of the Rules of the Superior Courts – Dismissal of claim – Abuse of process – Reflective loss – Forum non conveniens – Striking out of proceedings

Facts: The fourth and fifth named defendants sought an order for the dismissal of the plaintiffs' claim against them on the ground that the said claim was an abuse of process of law. The fifth defendant took the plea of forum non conveniens for the stay of proceedings. The plaintiffs were the companies incorporated outside the jurisdiction of Ireland and they had filed a claim for damages for conspiracy and other reliefs against the defendants in Russia.

Mr. Justice Robert Haughton refused to grant the relief to the fourth and fifth defendants. The Court held that there were mixed questions of law and facts involved in the plaintiffs' claim and thus, the dismissal of the proceedings would not be appropriate. The Court noted that the said defendants had failed to adduce the admissible documentary evidence to prove their case to strike out. The Court noted that the argument concerning the forum non conveniens was misplaced as the fifth defendant admittedly spoke Russian and all the relevant documents and witnesses would be in Russia.

Judgment of Mr Justice Robert Haughton delivered this 23rd day of November, 2017

Paragraph Title

1 Introduction

5 The Statement of Claim

6 Basis for primary relief

7 Basis for other reliefs

8 Applicable legal principles

12 The documentary defence

13 Rejection of claim to strike out based on documentation

33 Arguments concerned with Russian Federation Law

34 (1) Challenge to Plaintiff's Locus Standi

35 (2) Whether campaign of vexatious/repeat litigation can form the basis of a claim for conspiracy or injunctive relief under the law of the Russian Federation

42 (3) Reflective loss

49 Abuse of the process

55 Forum non conveniens

64 Preliminary issue on the Statute of Limitations

Introduction

1 This is an application on behalf of the fourth named defendant, Eurotoaz Limited, and its director the fifth named defendant ('Mr Babichev') for the following orders: –

(a) an order dismissing or striking out the action against each of them pursuant to Order 19, rule 28 of the Rules of the Superior Courts, or alternatively pursuant to the inherent jurisdiction of the court on the grounds that the action is frivolous, vexatious, effectually unsustainable and bound to fail, or alternatively as an abuse of the process ('the primary relief');

(b) insofar as Mr Babichev is concerned, an order pursuant to the inherent jurisdiction of the court staying the action against him on the grounds of forum non conveniens;

(c) an order pursuant to Order 63, rule 5 and/or 6 (1), or alternatively pursuant to Order 25, rule 1 and/or Order 34, rule 2 directing a preliminary issue as to whether the claims of the plaintiffs against these two defendants are barred by virtue of section 11 of the Statute of Limitations Act, 1957.

2 The proceedings were commenced by Plenary Summons dated 9 November, 2016, pursuant to order of McDermott J. made on 7 November, 2016, granting leave to issue and serve certain defendants, including Mr Babichev, outside the EU in the Russian Federation, and the seventh named defendant, Belport Investments Limited ('Belport'), in the British Virgin Islands. The defendants resident or based in the EU not covered by this order were Eurotoaz Limited (or 'Eurotoaz') a company registered in Ireland, the second named defendant OJSC United Chemical Company Uralchem, a company registered in Cyprus (being the holding company of the third named defendant Uralchem Holding Plc ('UCCU')), the eighth defendant Mr Minkovski a resident of Bulgaria, and the ninth named defendant Ms Charilaou, a resident of Cyprus.

3 The Statement of Claim delivered on 9 November, 2016, recites that the plaintiffs are companies incorporated in various Caribbean islands and that together they own approximately 70% of the shares in OJSC Togliattiazot ('ToAZ'), a Russian company, which is a fertilizer producer and the largest producer of trade ammonia in Russia, and stated to be worth in excess of US$3 billion 'but for the matters complained of herein'. They claim damages for conspiracy, and for declaratory and injunctive relief in respect of same, arising from the alleged active participation of each of the defendants in an unlawful, corrupt and oppressive scheme to wrest control of ToAZ.

4 Before addressing the Statement of Claim in more detail it is important to note that Eurotoaz Limited by virtue of events in 1994 and 1995 claims to be entitled to 8.806% of the shares in ToAZ.

The Statement of Claim

5 This is the context in which the primary relief sought must be considered. It is a lengthy document running to 162 paragraphs. The most salient features of this allege the following:

• that the defendants 'in concert and on the basis of a shared understanding, committed a series of unlawful acts whose aim and purpose is to damage and/or injure the Plaintiffs by defrauding the Plaintiffs of their shares in ToAZ... by depriving the Plaintiffs of their Shares and/or substantially devaluing them and/or by infringing and/or damaging the property rights in the Plaintiffs' ToAZ Shares and/or preventing the exercise by the plaintiffs of the rights deriving from their Shares.' (para. 2)

• that a 'Scheme' was implemented by the defendants 'through concerted action and on the basis of a shared intention to carry out acts which are flagrantly unlawful, wrongful and oppressive and are designed to enable the Defendants or their nominees to acquire the Plaintiffs' ToAZ Shares at a gross undervalue' (para. 3).

• That the defendants by virtue of the Scheme were guilty of conspiracy to injure the plaintiff's 'by unlawful means' (para. 4).

• that the Scheme was led by the first defendant Mr Mazepin who controls UCCU which has a 9.9% shareholding in ToAZ. Paragraph 6 then pleads: –

'The methods employed in the Scheme include the following unlawful actions, each of which was carried out for the purpose of defrauding the Plaintiffs of the Plaintiffs' ToAZ Shares:

(a) Making direct and indirect unlawful threats against shareholders and officers of ToAZ and persons perceived to be connected with ToAZ, to the effect that improper legal proceedings would be brought against them if the Plaintiffs' ToAZ Shares were not sold to the Defendants at an undervalue;

(b) Repeatedly bringing multiple unfounded civil actions, inter alia, in the name of Eurotoaz Limited ('Eurotoaz'), a company registered in Ireland, against officers of and persons perceived to be connected with ToAZ in Russia, including fraudulent claims that Eurotoaz was entitled to shares in ToAZ;

(c) Repeatedly making multiple unfounded criminal complaints in Russia, inter alia, in the name of Eurotoaz, against ToAZ officers and persons perceived to be connected with ToAZ in Russia;

(d) Uttering false evidence and procuring and deploying false evidence against ToAZ, its officers and persons perceived to be connected with ToAZ, in criminal and civil legal proceedings referred to herein;

(e) Producing forged or sham documents against ToAZ, its officers and persons perceived to be connected with ToAZ in such legal proceedings;

(f) Procuring oppressive and unjust court orders against the Plaintiffs to include, inter alia, improper and unlawful freezing orders against the Plaintiffs' ToAZ Shares and dividends on false pretexts;

(g) Procuring improper arrest warrants and Interpol Red Notices against officers and individuals perceived to be connected to ToAZ;

(h) Illegally procuring the suspension of the Chairman of ToAZ from the board of ToAZ;

(i) Purporting to remove ToAZ's lawful directors and replace them with nominees of the Defendants through unlawful means, namely the use of false evidence and/or documents;

(j) Unlawfully purporting to pass Board Resolutions which would de facto empower the nominee Directors on the Board to dilute the ToAZ shares or misappropriate some or all of them; and

(k) Putting undue and unlawful pressure on judges, criminal investigators, court-appointed experts, and judicial officers in Russia to make improper and unfounded adverse orders against ToAZ, its officers and shareholders.

• that the Scheme was intended to cause 'such catastrophic damage to ToAZ and its business that the plaintiff would be forced to sell their Shares to the Defendants or their nominees at an undervalue' (paragraph 7 (a)), and that these methods were and continue to be utilised 'to deprive the Plaintiffs of the rights attached to their shares on a 'false pretext'' (para 7(c)).

• That the Scheme was primarily devised, orchestrated and directed by Mr Mazepin and that the participants were inter alia the defendants who were 'all linked to Mr Mazepin' and who carried out their actions 'in the clear knowledge and understanding of the illegal and improper purpose of the Scheme' (para 8).

• It is pleaded –

'10. The defendants are each guilty jointly and severally of the unlawful acts identified in respect of each of them. However, the unlawful acts were not committed as an end in themselves. They were committed by the defendants and each of them acting as an active participant in and not merely a facilitator of, the Scheme.

11. If the said acts or any of them were lawful, which is denied, they were...