VIS Trading Co Ltd v Nazarov & Ors

In assessing interest on a US dollar damages award, the court should seek a rate that fairly compensates for the claimant’s loss of use of the money. In the absence of evidence of actual borrowing cost, the relevant benchmark is the rate for a short-term unsecured loan, taking account of the claimant’s creditworthiness.

For international commercial claims, six-month US dollar LIBOR may be a more appropriate benchmark than US prime rate. The court may adopt an uplift that reflects the evidence and circumstances. A procedural pleading error does not prevent an appropriate damages remedy where the breach and its legal consequences were fairly notified and no prejudice was caused.

This was a consequential ruling following the court’s earlier judgment after a trial concerning VIS’s claims against Mr Nazarov, Ansol, Sotsinvestbank and Mr Neverov. The court determined the sums payable, interest, costs, permission to appeal and stay of execution.

The principal issues were whether damages could be awarded to VIS against Ansol although the pleaded claim was framed as one for an agreed sum, which interest benchmark and uplift should apply to US dollar awards, how the costs should be allocated, and whether permission to appeal and a stay should be granted.

1. Damages against Ansol. Ansol was liable for damages for breach of its contract to repay the debt owed to VIS. Although the claim had been pleaded as a claim for an agreed sum and the formal relief did not expressly seek damages, the contract, breach and legal consequence of breach had been pleaded. The omission was a procedural error. It caused no prejudice and did not prevent the court granting the appropriate remedy. The claim form and particulars were to be amended. Judgment was entered against Ansol for US$25,070,064.06. Judgment against Mr Nazarov was entered for US$12,266,522.53.
2. Interest. The purpose of interest was compensation for loss of use of the principal sums. In the absence of proof of actual loss, the appropriate measure was the rate the claimant could reasonably have been expected to pay for a short-term unsecured loan, reflecting its creditworthiness. The court preferred six-month US dollar LIBOR to US prime rate as the benchmark for international commerce. Applying the approach endorsed in Fiona Trust and Holding Corp v Privalov [2011] EWHC 664 (Comm), but allowing for the higher six-month LIBOR baseline, the court awarded 2.25% above six-month US dollar LIBOR.
3. Costs and consequential orders. Mr Nazarov and Ansol were made jointly liable for 90% of VIS’s costs of the claims against them. Ansol alone was liable for the costs of the claims against SIB and Mr Neverov. SIB and Mr Neverov remained liable for costs previously ordered. A payment on account of costs of £550,000 was ordered.
4. Permission to appeal was refused to Mr Nazarov and Ansol because the proposed grounds did not have a realistic prospect of success. Time for filing an appellant’s notice was extended to 21 days after the order. Execution was stayed pending the application for permission to appeal and, if permission were granted, pending determination of the appeal, with liberty to apply.

This was a first-instance consequential ruling following the court’s earlier judgment. No appellate history is stated in the judgment.