Fiona Trust & Holding Corporation & 75 Ors v Yuri Privalov & 28 Ors

Permission to appeal should be refused where the proposed appeal has no real prospect of success and there is no other compelling reason for it to be heard. A benefit may constitute a bribe in English law without establishing dishonesty in relation to every later transaction, but dishonesty must still be proved on the case advanced. The applicable law of bribery is determined under sections 11 and 12 of the Private International Law (Miscellaneous Provisions) Act 1995, applying the most significant elements of the events and the factors connecting the tort with another country. Receipt of payments is not consideration for an agreement, and an agreement merely to consider introducing future business is likewise insufficient consideration.

This was a supplemental first-instance judgment following the main judgment of 10 December 2010 in several related commercial actions. The claimants sought permission to appeal findings concerning alleged bribes, dishonesty, applicable law, commission arrangements, contractual claims and fraud. The defendants sought permission to appeal findings concerning commissions and related Part 20 claims. The court also clarified its reasoning on the governing law of bribery and addressed whether benefits provided to Mr Skarga involved dishonesty. The central questions were whether the proposed grounds had a real prospect of success, whether any other compelling reason justified an appeal, and whether the supplementary findings altered the conclusions in the main judgment.

1. The applications for permission to appeal were refused. None of the proposed appeals had a real prospect of success, and there was no other compelling reason for an appeal to be heard.

2. The claimants had not pursued at trial a separate case that the holidays and credit-card benefits were dishonest merely because they created a real possibility that Mr Skarga might feel beholden or incentivised to favour Mr Nikitin. In any event, the evidence did not establish dishonesty on that basis. The benefits continued a pre-existing friendship, were relatively modest, were not shown to have been provided because of Mr Skarga’s position, and were not concealed.

3. The court confirmed that the significant elements of the alleged bribery occurred in Russia. Under section 11 of the Private International Law (Miscellaneous Provisions) Act 1995, Russian law therefore applied under the general rule. If that conclusion were not reached under section 11, section 12 nevertheless supported the application of Russian law, having regard to the parties’ contractual choices and the international character of the schemes.

4. The conclusion that Mr Skarga was liable to account under English law was governed by Regal (Hastings) Ltd v Gulliver, [1967] 2 AC 134, 151E–152C.

5. The court maintained its findings that the commission arrangements involved dishonesty, including the use of backdated or misleading documents. It had not needed to determine the full extent of corruption within the relevant companies. Receipt of payments could not constitute consideration, and an agreement to consider introducing business in the future would not provide consideration.

6. The proposed amendments relying on the Contracts (Rights of Third Parties) Act 1999 could not succeed on the evidence. There was no evidence that Mr Nikitin made the relevant arrangements as agent for Milmont, nor that the statutory requirements were satisfied.

7. The Southbank claimants could not obtain the court’s assistance to benefit from fraudulent arrangements to which Mr Nikitin’s state of mind was attributable.

The judgment was a supplemental first-instance decision following the main judgment of 10 December 2010. Permission to appeal was refused in the Fiona, Intrigue, second Fiona, Part 20 and Southbank proceedings.