Fiona Trust & Holding Corporation & Ors v Skarga & Ors

For a tort whose constituent events occurred in several countries, the general applicable law is that of the country where the most significant element or elements occurred. Their significance is assessed by reference to the intrinsic nature of the English law constituents of the tort.

That law is displaced only where a clear preponderance of the wider connecting factors makes another country’s law substantially more appropriate. A governing-law clause in contracts resulting from an antecedent tort may be relevant, but does not automatically govern the tort. An appellate court should respect the trial judge’s evaluative assessment unless satisfied that it was wrong.

The claimant shipping companies alleged that a Russian director had been bribed by a Russian businessman. The alleged benefits included holidays, credit-card payments and a disputed contribution towards Russian land. The claimants sought compensation and an account of profits arising from later shipping transactions.

Andrew Smith J held that the transactions had not resulted from the bribes and that the claimants had suffered no relevant loss. He applied Russian law to the tort claims and dismissed them. The claimants appealed, contending principally that English law should displace Russian law because most of the later shipping contracts selected English law or jurisdiction.

The central issue was whether sections 11 and 12 of the Private International Law (Miscellaneous Provisions) Act 1998 made Russian or English law applicable to the bribery claims.

1. Appeal dismissed. Russian law governed the bribery claims under section 11 of the Private International Law (Miscellaneous Provisions) Act 1998 and was not displaced by English law under section 12. Rimer and Tomlinson LJJ agreed with Longmore LJ.

2. Sections 11 and 12 require a two-stage process. The court first identifies the countries in which the English law constituents of the tort occurred. Where the events occurred in different countries, the court makes a value judgment about the intrinsic significance of each element to determine the country supplying the general applicable law. The court then compares the wider factors connecting the tort with that country and another country. Displacement requires a clear preponderance showing that the other law is substantially more appropriate.

3. The constituent events of civil bribery included the provision or promise of an undisclosed benefit by a person dealing with the principal to the principal’s agent, with knowledge of the agency. The significant arrangements and promises were made in Russia. Non-disclosure occurred there, and the relevant individuals were Russian. No constituent event occurred in England. Russia therefore supplied the applicable law under section 11.

4. The English governing-law and jurisdiction clauses in later shipping contracts did not make English law substantially more appropriate. A contractual relationship and its chosen law may be relevant under section 12. A resulting contract can be especially important where the tortious representation and the contractual process are closely connected. The present claims, however, concerned a free-standing antecedent tort and did not allege breach of the resulting contracts. English law was also commonly selected for maritime transactions, rather than being shown to have been selected deliberately to avoid Russian law.

5. The trial judge’s assessment under sections 11 and 12 was evaluative and quintessentially for that judge. The Court of Appeal should not reverse it unless satisfied that it was wrong. The judge had considered the contracts’ connections with English law and correctly found no clear preponderance sufficient to displace Russian law.

6. Because Russian law permitted recovery only for loss caused by the bribe, and the unchallenged findings established no such loss or causation, the remaining grounds did not arise. Addressing them would not have been a proportionate use of court time.

• Court of Appeal (Civil Division): The court unanimously dismissed the appeal and affirmed that Russian law governed the bribery claims.
• Commercial Court: Andrew Smith J held that Russian law applied and dismissed the bribery claims because the transactions were not caused by the bribes and no relevant loss had been suffered. No citation for the lower-court judgment is stated.