Cherney v Deripaska

Permission to serve proceedings outside the jurisdiction requires a reasonable prospect of success, a good arguable case that a jurisdictional gateway applies, and satisfaction that England is the proper place for the claim.

A good arguable case ordinarily requires the claimant’s jurisdictional argument to be better, or much better, than the defendant’s argument on the available material. This compares the relative plausibility of arguments without deciding disputed facts on the balance of probabilities.

Although a foreign country is the natural forum, England may be the proper forum where positive and cogent evidence shows a significant risk that substantial justice will not be done there. Risks to the claimant’s safety, exposure to contrived criminal proceedings and improper state interference may be considered.

The claimant alleged that the defendant had agreed in London to hold and sell a substantial beneficial interest in a Russian aluminium business and account for the proceeds, less an advance payment. The defendant denied the alleged partnership and trust arrangement. He maintained that the payment was made to terminate a protection racket and that one of the documents relied upon had never formed part of their agreement.

The claimant applied for permission to serve the amended claim form outside the jurisdiction under CPR 6.20 and 6.21. The principal issues were whether the claims had a reasonable prospect of success, whether the claimant had a good arguable case that a jurisdictional gateway applied, and whether England was the proper place for the proceedings. Russia was the natural forum, but the claimant contended that he faced risks of assassination, contrived prosecution and an unfair trial there.

1. Application granted. The claimant had a reasonable prospect of establishing the alleged agreement and trust. He also had a good arguable case that the agreement was made in England, thereby satisfying a jurisdictional gateway under CPR 6.20. Permission was therefore given to serve the claim form outside the jurisdiction.
2. The good arguable case requirement ordinarily calls for the claimant’s contention about the jurisdictional fact to provide a better, or much better, argument than the contrary contention. The court compares the relative plausibility of the parties’ arguments on the available material. It does not make findings on the balance of probabilities or conduct a premature trial. On the extensive evidence then available, the claimant had much the better argument that both written documents formed part of the agreement. Those conclusions were provisional and reserved for the trial judge.
3. The claimant did not have a sufficiently good arguable case that the parties had orally selected English law or English jurisdiction. The defendant had the better argument on English law and much the better argument on jurisdiction. Those alleged terms therefore supplied no jurisdictional basis.
4. The contractual arrangement arguably gave rise to an intended trust of the beneficial interest. A claim to enforce that trust was a claim in respect of the contract for CPR 6.20 purposes. The use of intermediary companies and foundations did not make the claim untenable. Equity could arguably recognise control exercised through those structures as being held on trust.
5. Russia was the natural forum at the first stage of the Spiliada analysis. The dispute concerned ownership interests in a major Russian industry, and much of the evidence about the alleged partnership, extortion and funding related to Russia.
6. At the second stage, however, positive and cogent evidence established significant risks that substantial justice might not be done in Russia. The claimant had well-founded fears of greater exposure to assassination and possible prosecution on contrived charges. The importance of the aluminium business, the defendant’s relationship with the Russian state and evidence concerning the arbitrazh system also created a significant risk of improper state interference. Without an English trial the claim would probably never be tried fairly elsewhere.
7. Considering those risks, the parties’ connections with England, the making of the agreement in London and the absence of significant prejudice from an English trial, England was the forum in which the case could most suitably be tried in the interests of the parties and the ends of justice.

• High Court: Langley J held on 3 May 2007 that the defendant had not been properly served and was not domiciled in England and Wales for the purposes of article 2 of the Jurisdiction Regulation. The court also refused to dispense with service, extend time or grant permission to appeal.
• Court of Appeal: Longmore LJ refused permission to appeal on 29 June 2007 and directed that any renewed application should await a decision on permission to serve outside the jurisdiction.