OJSC Oil Company Yugraneft v Abramovich & Ors (Rev 1)

In cross-border claims based on dishonest assistance, knowing receipt or unjust enrichment, the applicable law is not selected simply because the proceedings are brought in England. The court must identify the law with the closest and most real connection to the obligation or wrongdoing. A claimant must also show civil actionability under the relevant foreign law where the claim is based on conduct occurring abroad. For tracing, a claimant must identify its own property, a substitute asset and an unbroken transactional chain. A causal increase in the value of a company’s shares is insufficient. For domicile, residence requires a settled or usual place of abode with permanence or continuity and a substantial connection with the relevant part of the United Kingdom.

OJSC Oil Company Yugraneft, a Russian oil company in liquidation, claimed that its 50 per cent participation interest in Sibneft-Yugra had been fraudulently diluted and ultimately included in the sale of Sibneft to Gazprom. It brought claims against Roman Abramovich and Millhouse Capital UK Ltd in dishonest assistance, Russian-law tort, knowing receipt, unjust enrichment and proprietary tracing.

The defendants applied for summary dismissal. Mr Abramovich also challenged jurisdiction, contending that he was not domiciled in England when served. The court considered the effect of earlier proceedings in Russia and the British Virgin Islands, the applicable law, limitation, tracing, issue estoppel, abuse of process and domicile.

1. Disposition. The claims against Millhouse and Mr Abramovich were dismissed. Service on Mr Abramovich was set aside and permission to serve him outside the jurisdiction was refused.
2. Dishonest assistance and choice of law. The claim had to be civilly actionable under Russian law to the same extent as under English law. The relevant events were substantially performed in Russia. The Russian connection included the Russian companies, Russian participation interests, Russian powers of attorney, the meetings in Russia and the conduct of the relevant individuals. The claim was therefore governed by Russian law, either wholly or at least for the purpose of civil actionability.
3. Receipt-based claims. Knowing receipt and unjust enrichment were governed by the proper law of the obligation. That meant the law with the closest and most real connection, not simply the law of the forum or the law of English equity. The relevant enrichment and alleged wrongdoing occurred in Russia in 2002 and 2003. The later sale of Sibneft and later expenditure in England did not alter that conclusion.
4. Limitation. Under Article 200 of the Civil Code of the Russian Federation, the three-year period ran from knowledge of the violation. The Russian practice of refusing to entertain fraud-based civil claims without a criminal finding was procedural and had to be disregarded for English conflict-of-laws purposes. The claims were consequently time-barred. There was no realistic prospect of relying on abuse of rights or ratification.
5. Tracing and proprietary relief. Yugraneft retained its original 5,000-rouble participation interest. The later interests issued to other companies were newly created interests, not substitutes for Yugraneft’s property. Nor was an increase in the value of Abramovich’s Sibneft shares, or the proceeds of their sale, a transactional substitute for Yugraneft’s interest. There was no realistic basis for piercing Sibneft’s corporate veil.
6. Alternative English-law points. Even if English law applied, the knowing-receipt claim would fail for want of receipt of Yugraneft’s property. The sale to Gazprom was not itself dishonest assistance because it did not continue or conceal the original diversion, although an account of profits remained arguable in principle.
7. Estoppel and abuse. Sibir and Yugraneft were privies for issue-estoppel purposes. The technical issue-estoppel requirements were not all satisfied, but the attempt to advance through Yugraneft a position inconsistent with that taken by Sibir in the BVI proceedings was an abuse of process.
8. Domicile. Mr Abramovich’s short and intermittent visits, property ownership, Chelsea Football Club and family connections did not make England his settled or usual place of abode. He was resident in Russia, not England, and there was no good arguable case that he was domiciled here when served.

First-instance judgment. The judgment records earlier proceedings in Russia and the British Virgin Islands, but no appellate history for this Commercial Court decision.