Berezovsky v Abramovich

On an application to amend pleadings facing strike-out or summary judgment, the court should permit the amendment unless it is incoherent, abusive or has no real prospect of success. A change in the legal characterisation of an interest does not necessarily introduce a new cause of action where the essential complaint remains the same.

Strike-out and summary judgment are inappropriate where the claim depends on disputed oral evidence, surrounding circumstances and complex inferences. The claimant need not establish at that stage that the threatened third party would actually have acted, provided the alleged threat was understood as coercive and the defendant had, or was believed to have, the relevant power. Allegations concerning a foreign state may be examined where they form only background to the defendant’s conduct and do not require adjudication against the state itself.

The claimant alleged that the defendant had acquired or controlled interests held jointly in Sibneft and RUSAL. He claimed that coercive threats, including threats involving the Russian authorities, had induced him to dispose of his Sibneft interests at an undervalue. He also alleged breach of trust, fiduciary duty and contract concerning RUSAL.

The defendant applied to strike out the claims or obtain summary judgment under the Civil Procedure Rules. The claimant applied to amend his Particulars of Claim and Reply, including by replacing references to trusts and beneficial interests with alleged Russian-law rights and by pleading that an alleged RUSAL trust was governed by English law. The court had to decide whether the amendments were time-barred, incoherent, abusive or devoid of a real prospect of success, and whether the pleaded claims should be disposed of without a trial.

1. Amendments. The proposed amendments concerning Sibneft did not introduce a new cause of action. The essential factual structure remained an alleged coercive threat which induced the claimant to dispose of an interest and suffer loss. Recharacterising the nature of that interest did not alter the essential tortious complaint. The alternative claim for the value of services might also be maintained if it formed a sufficiently identifiable part of the alleged rights affected by the threats; otherwise its new factual basis would not arise from substantially the same facts. Permission to amend was therefore granted.
2. Threshold for summary disposal. Under CPR 3.4(2) and CPR 24.2, the defendant bore the burden of showing that the claim was fanciful or had no real prospect of success. The court required a high degree of confidence, amounting to substantial certainty, before disposing of a claim without trial. In a complex case involving disputed oral conversations, documentary inferences and evidence concerning events many years earlier, probability was insufficient. The claim should proceed unless its factual basis was clearly fanciful or incontrovertible facts could not establish a legal remedy.
3. Intimidation. The essential structure of the tort was a coercive threat that impermissible conduct would be carried out against the claimant or a third party, causing loss. It was not necessary at the pleading stage to establish an actual joint enterprise between the defendant and the President of Russia. It was sufficient that the claimant believed, and the defendant knew or ought to have known, that the defendant possessed or could exercise the coercive power represented by the threat. Whether threats of conduct that was illegitimate but not unlawful could found two-party intimidation remained doubtful but developing, and was unsuitable for summary determination on the evidence available.
4. Act of State. The pleaded case was directed to the content and effect of the defendant’s alleged threats, not to obtaining relief against Russia or establishing that the Russian state had acted unlawfully. Allegations concerning the President and Russian officials were collateral background to the defendant’s conduct. The Act of State doctrine therefore did not prevent the court from receiving and evaluating the evidence.
5. RUSAL and governing law. The claimant was permitted to plead that the alleged oral trust was expressly or impliedly governed by English law. Under the Recognition of Trusts Act 1987 and the Hague Convention, the governing law of an oral trust could be established from the words used and the surrounding circumstances. The evidence was sufficiently arguable to require a trial. The amendments were allowed in full. The applications to strike out and for summary judgment were refused.