Berezovsky v Abramovich

For limitation purposes, a correction to the legal description of an interest or loss does not itself introduce a new cause of action. The question is whether the essential facts giving rise to the tort have changed. A new head of loss may be advanced where it stems from the same alleged breach, but a quantum meruit claim based on materially additional facts is a new claim.

The tort of intimidation requires a coercive threat, intention, actual coercion and consequential loss. A threat may be implied from its context. The act of state doctrine does not prevent proof that foreign-state acts occurred where their validity and wrongfulness are not in issue. An arguable implied choice of governing law for an oral trust may require evidence of the parties’ agreement and its matrix.

The respondent alleged that the appellant procured the sale of his alleged interest in Sibneft at an undervalue through intimidation. He also alleged breaches of trust, fiduciary duty and contract concerning a disposal of shares in Rusal.

In the Commercial Court, Sir Anthony Colman permitted amendments which recast the Sibneft interest under Russian law, refused summary judgment and dismissal of the claims, and allowed an amendment alleging an express oral choice of English law for the Rusal arrangements: [2010] EWHC 647 (Comm) and [2010] EWHC 1511 (Comm).

The appellant challenged those rulings. The central issues concerned limitation and amendments, the adequacy of the intimidation plea, act of state and non-justiciability, and whether the Rusal claim could be summarily determined as governed by Russian law.

1. The appeal was allowed only in a narrow respect. The court upheld the deputy judge’s rulings save that permission should not have been granted to plead the alternative quantum meruit restitution claim. That claim depended on additional factual questions about services, benefit and value which went beyond the original pleading.

2. The substantive Sibneft amendments did not add a new cause of action under Limitation Act 1980, section 35, or CPR 17.4(2). A cause of action is the material combination of facts giving rise to a legal right. The pleaded tort remained intimidation: an alleged threat of expropriation, intended coercion to dispose of an interest, actual disposal under coercion, and loss. Recasting the interest from a beneficial interest to a contractual or other interest under Russian law corrected its legal description rather than substituting a different tort.

3. A different loss does not necessarily create a different cause of action. Further or substituted loss may be claimed where it stems from the same alleged breach. The alternative restitutionary claim for the value of the alleged interest arose from substantially the same facts, including the defence on Russian law, and could proceed. The separate claim for remuneration for services could not.

4. The intimidation claim was adequately pleaded. Its essential elements included a threat of unlawful or, for present purposes, arguably illegitimate means; an intention to coerce; actual coercion; and consequential loss. A threat may be implicit. In context, the pleaded allegations sufficiently conveyed that the appellant would use his influence to seek expropriation or continued imprisonment unless the interest was sold to him at an undervalue.

5. The act of state objection failed on the pleadings. The respondent relied on the alleged ORT events to show that they occurred and to explain his response to the later alleged intimidation. He neither sought to invalidate nor alleged the wrongfulness of those Russian-state acts. The court could determine whether the alleged facts occurred. There was also no non-justiciable judicial no-man’s land and no executive indication of diplomatic embarrassment.

6. The Rusal claim was not suitable for summary judgment. Under the Hague Convention framework applied by Recognition of Trust Act 1987, an express or implied choice of governing law was material. Evidence of what was agreed when the alleged trust was created, and of its commercial matrix, made English law at least arguable. The late amendment alleging an express oral choice of English law was therefore allowed as a case-management decision.

• Court of Appeal (Civil Division): allowed the appeal only to refuse the proposed quantum meruit restitution amendment; otherwise upheld the deputy judge’s orders.

• High Court, Commercial Court: Sir Anthony Colman permitted the principal Sibneft amendments and the Rusal oral-choice-of-law amendment, and refused summary judgment and dismissal of the claims: [2010] EWHC 647 (Comm) ; [2010] EWHC 1511 (Comm) .