PJSC Tatneft v Bogolyubov & Ors

For a general tort claim under Article 1064 of the Russian Civil Code, harm may include economic benefits foregone, including the unpaid value of goods. A pleaded scheme that allegedly diverted payments cannot be dismissed summarily where causation and participation raise factual issues. In deciding whether an amendment adds a new cause of action, English procedural law applies. The court must compare the essential facts of the original and amended claims at a high level of abstraction. An amendment based on the same scheme does not add a new cause merely because it clarifies the route by which payment was owed. Obiter, Rome I and Rome II are enactments for CPR 17.4, allowing amendment after a foreign limitation period where the new claim arises from the same or substantially the same facts.

Tatneft, as assignee of S-K, claimed that the respondents had orchestrated a scheme diverting payments for oil supplied to a Ukrainian refinery. It sought compensation under Article 1064 of the Russian Civil Code.

Picken J, in the Commercial Court, held that two respondents had no serious issue to be tried, that the other two had no real prospect of success against them, that proposed amendments raised a new and time-barred cause of action, that the claim fell outside the 2015 Compensation Agreement, and that a worldwide freezing order should be discharged. The central issues on appeal were the arguability of the tort claim, causation, amendment, limitation, assignment construction and the case against Mr Yaroslavsky.

The court allowed the appeal on Issues 1, 2, 4 and 5. It would also have allowed Issue 3, although that issue was addressed only obiter.

1. Article 1064 claim. The judge had misapprehended the pleaded harm. The alleged harm was S-K’s failure to receive payment for oil, and harm could include economic benefits foregone, such as the benefit of an unpaid debt. The pleading did not depend exclusively on the validity of the 2008 Assignment Agreement. The alleged scheme could have deprived S-K of payment through either the contractual chain or the assignment route. Causation was essentially factual and could not be determined summarily without a clear case. The claim therefore disclosed a serious issue to be tried against the respondents who had not submitted to the jurisdiction and a sufficiently real prospect of success against the others.
2. Amendment and new cause of action. Whether an amendment introduced a new claim was procedural and governed by English procedural law. Rome II did not apply to procedure, and Article 15(h) was concerned with matters such as extinction of obligations and limitation, not the classification of an amendment. The essential facts had to be compared at a high level of abstraction, following Paragon Finance Plc v D B Thakerar & Co [1999] 1 All ER 400 and Smith v Henniker-Major & Co [2002] EWCA Civ 762. The essential factual basis remained the alleged Oil Payment Siphoning Scheme. The amendments therefore did not introduce a new cause of action or a claim inevitably defeated by causation.
3. Alternative amendment power. In its obiter reasoning, the court held that Rome I and Rome II were enactments for CPR 17.4. Their exclusion of procedural matters meant that they did not prohibit amendment. The court could therefore allow a new claim after expiry of a foreign limitation period where it arose from the same or substantially the same facts. The court applied the reasoning in R v Sissen [2001] 1 WLR 902 and Parsons v George [2004] EWCA Civ 912. The amendment would have been allowed, leaving limitation available as a defence.
4. 2015 Compensation Agreement. Clause 1.4 was sufficiently broad to make it arguable that claims against third parties under Article 1064 were transferred. Under Article 431 of the Russian Civil Code, the court would consider literal meaning, the agreement as a whole and, if necessary, the parties’ common intention and surrounding circumstances. The unamended and amended claims both had a real prospect of falling within the assignment.
5. Mr Yaroslavsky. Conflicting Russian-law expert evidence, together with pleaded facts concerning his association with the other respondents, his alleged benefit and the use of Korsan, made it impossible to conclude that the claim against him had no real prospect of success.

• Court of Appeal (Civil Division) — [2017] EWCA Civ 1581, 18 October 2017. Appeal allowed on Issues 1, 2, 4 and 5; the court would have allowed Issue 3 if necessary.
• High Court, Queen’s Bench Division, Commercial Court — Picken J, [2016] EWHC 2816 (Comm), 8 November 2016. Service-out applications succeeded for two respondents, summary judgment succeeded for two respondents, the amendment application was refused, and the worldwide freezing order was discharged.