The Kingdom of Sweden v Max Emil Serwin & Ors.

Summary judgment may determine claims involving dishonesty, but the court must proceed with considerable caution. The court must consider both the evidence before it and evidence reasonably expected to be available at trial. Where extensive criminal proceedings have already generated substantial contemporaneous evidence, that consideration may support summary determination.

For Rome II purposes, loss may occur when a claimant acquires shares worth less than the amount paid, rather than only when the invested funds are later applied in loss-making transactions. Article 4(3) may apply where the tort is manifestly more closely connected with another country, having regard to all the circumstances, including pre-existing agreements and the location of assets central to the wrongdoing.

The Kingdom of Sweden sought summary judgment against several individual and corporate defendants. Sweden alleged that the defendants participated in frauds involving the misappropriation of Swedish pension funds through the Optimus and Falcon investment funds.

The claims concerning the Optimus phase were governed by Swedish law. Sweden relied on evidence from extensive Swedish criminal proceedings, expert evidence on Swedish and Maltese law, forensic accountancy evidence and valuation evidence.

The central issues were whether the claims could fairly be determined summarily, whether the defendants had committed relevant offences under Swedish law, where loss occurred for the purposes of Rome II, whether Swedish law governed the Falcon claims, and whether the reflective loss rule under Maltese law presented a triable issue.

1. Summary judgment. Claims involving dishonesty are capable of summary determination, but require considerable caution. The court must consider evidence reasonably expected to be available at trial. Here, the extensive criminal proceedings and the volume of contemporaneous documentation materially reduced the prospect of further evidence emerging.
2. Optimus phase. The Swedish Tort Liability Act imposed liability for pure economic loss caused through a criminal offence. Mr Bishop and Mr Deckmark held positions of trust concerning the management of Sweden’s assets. The evidence established beyond realistic argument that they participated in, or promoted, breaches of trust by arranging the purchase of mortgage-backed securities at inflated prices. Mr Ingmanson promoted those breaches of trust. Sweden owned the relevant funds and therefore suffered the direct loss. Mr Bishop and Mr Ingmanson were jointly and severally liable for US$29,529,986. Mr Gergeo’s liability for this phase could not fairly be determined summarily because the pleaded case was fraud, while the evidence and submissions principally advanced an unpleaded case of promoting breaches of trust.
3. Falcon phase and applicable law. The better view was that Sweden suffered loss when it acquired shares in Falcon worth less than the amount paid, rather than only when Falcon applied the funds in losing investments. It was realistically arguable that Swedish law governed the tort claims under Article 4 of Rome II. The same continuing course of conduct, the Swedish target of the scheme, and the Swedish-law co-operation agreement supported a manifestly closer connection with Sweden under Article 4(3). It was also at least arguable that Swedish law governed the fiduciary-duty claims.
4. Reflective loss. Even if Maltese law applied, there was a triable issue whether the reflective loss rule prevented Sweden’s claim. The evidence of any applicable exception was exiguous, while Falcon itself was pursuing claims concerning the alleged misappropriations.
5. Sweden’s application therefore succeeded against Mr Ingmanson and Mr Bishop for the Optimus phase in the sum of US$29,529,986, failed against Mr Gergeo for that phase, and failed against all defendants for the Falcon phase. The worldwide freezing order was continued against Mr Ingmanson and Mr Bishop.

First-instance summary judgment decision. No prior appellate decision is stated.