WWRT Limited v Kostiantyn Valentynovych Zhevago

This is a first-instance judgment on a defendant's challenge to English jurisdiction in proceedings brought by WWRT as assignee of a Ukrainian bank's rights. The court decided three linked questions: (i) whether there was a serious issue to be tried that the first assignment (from the Deposit Guarantee Fund of Ukraine to Horizon) transferred tortious rights; (ii) whether the tort gateway in CPR PD 6B para 3.1(9)(b) applied because of substantial and efficacious acts within the jurisdiction; and (iii) whether England was clearly the more appropriate forum under the Spiliada principles.

Applying Ukrainian contractual interpretation principles (Article 213 of the Civil Code) and Articles 512–514 governing assignment, the judge held there was no serious issue to be tried that the DGF→Horizon assignment transferred tortious claims (Article 1166 claims) as a matter of law or by an automatic operation of law. The court rejected the expert contention that tortious rights automatically transfer with contractual claims.

The court also held WWRT failed to show a good arguable case that the alleged tortious scheme involved substantial and efficacious acts committed in England sufficient to satisfy the tort gateway. Finally, applying Spiliada, the court concluded Ukraine was the natural forum and that the effects of the Russian invasion, and a late unpleaded allegation of bribery, did not establish a cogent real risk of denial of justice in Ukraine. Permission to rely on the belated bribery material was refused.

Background and parties:

• WWRT, an English company, claimed as ultimate assignee of PJSC Finance & Credit Bank. The Bank had been taken into administration and liquidation and the Deposit Guarantee Fund of Ukraine (DGF) assigned certain rights to Horizon, which subsequently assigned to WWRT.
• Defendant, Mr Kostiantyn Zhevago, is a Ukrainian businessman alleged to have directed a scheme causing loss to the Bank. He applied to set aside the order permitting service out and to challenge the English court's jurisdiction.

Nature of the application: An application by the defendant (issued 15 September 2022) seeking (1) declarations/orders that the court has no jurisdiction or, in the alternative, will stay the claim, and (2) that Moulder J’s 20 May 2022 order granting permission for service out and alternative service be set aside.

Issues framed by the court:

• Whether there was a "serious issue to be tried" that the DGF→Horizon assignment transferred tortious causes of action (Article 1166 of the Civil Code of Ukraine).
• Whether WWRT made a good arguable case that the claim fell within the tort gateway (CPR PD 6B para 3.1(9)(b)) by reason of substantial and efficacious acts within England.
• Whether England was the clearly or distinctly appropriate forum under the Spiliada framework, having regard to (inter alia) the war in Ukraine, an allegation of bribery of a senior Ukrainian judge and the enforceability of any Ukrainian judgment.

Court’s reasoning and conclusions:

• On the assignment issue the court applied agreed principles of Ukrainian law (Civil Code Articles 213, 512–514) and construed the DGF→Horizon assignment. The agreement expressly transferred creditor rights "under" specified loan and guarantee agreements and related successors but did not on its terms transfer tort claims against third-party tortfeasors. The judge rejected the expert contention that tortious rights automatically transfer by operation of Ukrainian law even where the contract does not provide for that. The purported supporting Ukrainian decisions did not establish such a general rule.
• Because WWRT could not show it had acquired tortious rights, there was no serious issue to be tried on that threshold question; the defendant therefore succeeded on jurisdictional grounds.
• On the tort gateway, the court applied the "substantial and efficacious acts" test derived from Metall und Rohstoff and applied in Manek. The judge found no good arguable case that any substantial and efficacious acts in furtherance of the alleged Ukrainian fraud were committed in England: available evidence showed the alleged fraud had its centre of gravity in Ukraine, documentary and witness links were Ukrainian, and the defendant’s short, largely business-or-family visits to England did not provide a sufficient evidential basis to infer such acts.
• On forum non conveniens (Spiliada), the court concluded Ukraine was the natural forum: the substantive law is Ukrainian, witnesses and documents are in Ukraine, related proceedings lie there and the costs and practicalities favoured Ukraine. The effects of the Russian invasion did not, on cogent evidence, establish a real risk that justice would not be obtainable in Ukraine by 20 May 2022 (the relevant date), and the court refused permission to rely on the late bribery material (served shortly before the hearing) because it was raised too late and without giving the defendant a fair opportunity to respond.

Procedural/contextual matters: The judgment records prior proceedings (the DGF proceedings: PJSC Bank "Finance and Credit" v Zhevago [2021] EWHC 2522 (Ch), in which jurisdiction had been established but the claim stayed on forum grounds).

The defendant's jurisdiction challenge is allowed. The court set aside the order granting permission to serve out because (1) there is no serious issue to be tried that the DGF→Horizon assignment transferred tortious claims under Ukrainian law, (2) WWRT failed to establish a good arguable case that the tort gateway in CPR PD 6B para 3.1(9)(b) was engaged by substantial and efficacious acts in England, and (3) on Spiliada analysis Ukraine was the natural and appropriate forum. Permission to rely on the late bribery material was refused as unjustifiably late and prejudicial.