PJSC Bank v Zhevago

The Chancellor granted a stay of the English proceedings on the grounds of forum non conveniens and sent the dispute to Ukraine as the clearly more appropriate forum. The court applied the Spiliada test and concluded that Ukraine had the closest connections: the alleged loss was suffered in Ukraine, the principal witnesses, documents and regulatory issues (including the role of the National Bank of Ukraine) were Ukraine‑centric, and complex questions of Ukrainian law (notably under the Ukrainian Civil Code Articles 1166, 1190 and 1212 and provisions of the Law on Banks and the DGF law) were in dispute. The court held that service on the first defendant at a United Kingdom address shown on Companies House was valid under section 1140 of the Companies Act 2006. The fifth defendant had not submitted to the jurisdiction by bringing alternative strike‑out relief while also seeking a stay. Although the claimants had a good arguable case on the merits for the purposes of a worldwide freezing order, the stay made the freezing application academic; the court observed that, had it retained jurisdiction, a freezing order would have been granted subject to an unlimited cross‑undertaking in damages.

Background and parties.

• The claimants are PJSC Bank "Finance and Credit" and the Deposit Guarantee Fund of Ukraine (DGF). The principal defendant is a Ukrainian national alleged to have been the ultimate beneficial owner and controller of the Bank; other defendants include English registered entities and a UK resident director.
• The claim alleges four principal schemes by which the Bank's funds were allegedly misappropriated (the Correspondent Bank Scheme, the Note Replacement Scheme, the Clearing Scheme and the Supply Contracts Scheme) and additional claims for related‑party transactions and accrued interest, all pleaded in delict and unjust enrichment under Ukrainian law.

Procedural posture and relief sought.

• The claim form and particulars were issued on 11 February 2021 together with an application for a worldwide freezing injunction (WFO). Defendants applied under CPR Part 11 to challenge English jurisdiction and, separately, the fifth defendant sought a stay or strike‑out of the pleaded case against him.

Issues identified by the court.

1. Whether service on the first defendant under section 1140 Companies Act 2006 was valid.
2. Whether the fifth defendant had submitted to the jurisdiction by bringing alternative applications.
3. The forum conveniens question under Spiliada (whether Ukraine was a clearly more appropriate forum).
4. Whether the claimants established a good arguable case and a real risk of dissipation warranting a WFO, and related questions as to undertakings and cross‑undertakings in damages.
5. Whether the particulars against the fifth defendant disclosed a reasonable cause of action (strike‑out).

Court’s reasoning and conclusions.

• Service: the court followed authorities (including Idemia and earlier first instance decisions) and held that where a director has given a registered residential address within the jurisdiction and it appears on the public register, service at that address is valid under s1140 even if the person is physically abroad at service. The first defendant was properly served at the St James's Street address shown on Companies House.
• Submission to jurisdiction: the court applied the established test (Rein v Stein, Williams & Glyn’s Bank, Rubin) and held the fifth defendant had not made a wholly unequivocal submission by seeking strike‑out while also seeking a stay; ancillary consent language and the totality of conduct showed no waiver.
• Forum non conveniens: applying Spiliada and subsequent authorities, the Chancellor found Ukraine overwhelmingly the appropriate forum. Key factors included that the loss was suffered in Ukraine, the principal witnesses and documents are in Ukraine (many in Ukrainian/Russian), the claims are governed by Ukrainian law (Rome II), there are overlapping related proceedings in Ukraine (including civil claims in criminal investigations), and complex issues of Ukrainian law were raised which are better determined by the local courts. The risk of inconsistent judgments and the benefits of deciding all related litigation in one jurisdiction were emphasised.
• WFO: on the merits the claimants had a good arguable case, and there were factors (use of offshore vehicles, alleged destruction of documents, non‑cooperation with Ukrainian investigators and flight from Ukraine) that supported an arguable real risk of dissipation. However, because the court stayed the proceedings, the WFO was dismissed as academic; the court recorded that, had it retained jurisdiction, it would have granted a WFO subject to an unlimited cross‑undertaking in damages and further discussion of terms.
• Strike‑out: the court treated the fifth defendant’s strike‑out application as academic in light of the stay but indicated that the pleading, taken as alleging Ukrainian delict with presumptions under Ukrainian law, was not plainly vulnerable to strike‑out and, in any event, would have been amendable rather than struck out.

Practical outcome: the court ordered a stay in favour of Ukraine and invited counsel to agree the form of undertakings to be given by the defendants to underpin the stay.

This is a first instance decision. The court granted a stay of the English proceedings on the grounds of forum non conveniens and sent the case to be tried in Ukraine because Ukraine was the clearly more appropriate forum (the claimants' loss was suffered there, witnesses and documents are Ukraine‑centric and complex issues of Ukrainian law arise). Service on the first defendant at the Companies House address was held valid under section 1140 Companies Act 2006. The fifth defendant had not submitted to the jurisdiction by bringing alternative relief. The application for a worldwide freezing injunction was dismissed as academic because of the stay (the court observed it would have granted a WFO if it had retained jurisdiction, subject to an unlimited cross‑undertaking). The fifth defendant’s strike‑out application was likewise academic and would not have succeeded on the pleaded foreign law basis.