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BANKRUPTCY ORDERS. GEORGE TREFILOV - EXCLUSIVE!

Published: ТНЕ GAZETTE
Source: https://www.thegazette.co.uk/notice/2192831

 

 

 

 

 

 

 

 

Source: http://www.bailii.org/ew/cases/EWHC/Comm/2014/1806.html

Claim No: 2014 Folio 33 
Neutral Citation Number: [2014] EWHC 1806 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION 
COMMERCIAL COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 4th June 2014

Before:
Mr C Edelman QC
(Sitting as a Deputy Judge of the High Court)
-------------------
Between :

    OPEN JOINT STOCK COMPANY ALFA-BANK    Claimant
    - and -    
    GEORGY TREFILOV    Defendant
-------------------

-------------------

Hannah Brown (instructed by Chadbourne & Parke (London) LLP) for the Claimant
Sonia Toianey QC and Christopher Bond (instructed by Rosenblatt Solicitors) for the
Defendant

Hearing date: 2nd May 2014
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JUDGMENT 
Mr C Edelman QC:
Introduction

1. In this action, the Claimant claims sums due from the Defendant pursuant to a judgment of the Meschanskiy District Court of the City of Moscow dated 13 October 2008 in respect of the Defendant’s liability for the indebtedness of Limited Liability Company Elekskor (“LLC Elekskor”) which the Claimant alleged was guaranteed to the Claimant by the Defendant under the terms of a guarantee dated 21 April 2008. The judgment was for 371,408,563.97 Roubles, compromising 367,419,000 Roubles for the principal debt, and additional sums for interest and costs. The Claimant has made an application for summary judgment which it falls to me to determine.

2. The Claimant seeks enforcement of the judgment on the basis that it is a final and conclusive judgment of the Russian Court for a debt due from the Defendant and that the Russian Court had jurisdiction over the Defendant on a basis recognised by English rules of conflict of laws.

3. The Defendant resists the application for summary judgment by reference to the manner in which the judgment was obtained and the manner in which the Russian proceedings were conducted. In particular, it is contended that:

(i) There was a violation of natural justice in that the Claimant’s conduct meant that the Defendant did not engage with the Russian proceedings with the result that judgment was entered against him in his absence, without his having had the opportunity either fully to understand the nature of the claim against him or to present his case to the Court;

(ii) The Russian Court did not have before it the facts and documents to make a proper determination of the Defendant’s liability and it is to be inferred that the information before the Court was seriously misleading;

(iii) The judgment was based on a form of guarantee which the Defendant denies was the form of guarantee that he executed, which it is alleged contained two important conditions to his liability which affected the Claimant’s entitlement to judgment;

(iv) There are very serious questions about what the Russian Court was told and why it was given the information that it was and in circumstances where it is alleged that it would not have entered judgment against the Defendant had it been properly informed of all the facts there is a compelling reason for this case to proceed in order for there to be disclosure and the service of evidence.

4. It was not disputed by the Defendant that the judgment against him was a final and conclusive judgment or that the Russian Court had jurisdiction over him and in essence his case was that he had a realistic prospect of successfully contending that the judgment could be impeached on the basis that it was obtained contrary to natural justice and that there was in any event a compelling reason for there to be a trial in that the circumstances in which the judgment was obtained ought to be investigated for the purposes of ascertaining whether the judgment was obtained by fraud.

Evidence

5. For the purposes of this application, both parties submitted witness statements which I have read and considered. The witness statements were as follows:  

(a) Claimant's evidence:

(i) The first and second witness statements of Alexander Korogodov, who is the Chief International Counsel of the Claimant;

(ii) The first witness statement of Andrey Ganin, an employee of the Claimant who currently holds the position of Director of Department for Work with Major Corporate Clients and who in April 2008 held the position of Deputy Head of Department for Support for Department for Work with Network Clients;

(iii) The first and second witness statements of Craig Barrett, a solicitor in the London office of the Claimant’s solicitors, Chadboume & Parke (London) LLP.

(b) The Defendant’s evidence:

(i) The first and second witness statements of the Defendant;

(ii) A statement by Nadezhda Ivanovna Vardzhiyska, who worked at the material time as Head of Department of Corporate Finance and Development of Project Financing for “Holding Marta” which appears to have been the holding company through which the Defendant conducted his business activities. This statement did not include a Statement of Truth.

The Facts

6. When analysed, the witness statements address two factual aspects. The first is the facts surrounding the giving of a guarantee by the Defendant in respect of theliabilities of LLC Elekskor and the second concerns the obtaining of the judgment against the Defendant and what happened in relation to that judgment thereafter.

7. The Defendant’s account of the background to his giving a guarantee to the Claimant is set out in his evidence and is summarised in the Skeleton Argument submitted on his behalf by his Counsel, Sonia Tolaney QC and Christopher Bond. It is unnecessary for me to rehearse that background in detail in this Judgment. What follows therefore is merely a summary of pertinent aspects but I have had regard to the entirety of the Defendant’s evidence.

8. In July 2004, the Defendant, through Marta, had established a joint venture with a German company, REWE Group (“REWE”) to develop and operate supermarkets in Russia, This led to the development of a chain of supermarkets under the brand name “Grossmart” which was operated by LLC Elekskor, a new company ultimately owned by the Defendant, In late 2006, the Defendant decided to withdraw from the joint venture with REWE which involved his putting the Grossmart Supermarket Stores up for sale. Potential buyers were REWE and X5 Retail Group NV (“X5”), a company within the Alfa Group, of which the Claimant formed part.

9. The Claimant provided loan facilities for LLC Elekskor:

(i) A three year Facility Agreement No, 100767 dated 1 November 2006 (“the 2006 Facility Agreement”) with a credit limit of US $15m pursuant to which advances were to be made under individual loan agreements secured by guarantees by two companies in the Marta Group (“the 2006 Loan Guarantors”);

(ii) Three supplemental Loan Agreements numbered 5, 6 and 7 dated 27 July, 2 August and 14 November 2007 for loans pursuant to the 2006 Facility Agreement for a term of twelve months;

(iii) A two year Facility Agreement No. 106198 dated 31 January 2008 under which the Claimant agreed to make available an increased credit facility (“the January 2008 Facility Agreement”);

(iv) A supplemental Loan Agreement dated 31 January 2008 under which the Claimant agreed to advance funds pursuant to the January 2008 Facility Agreement for a term of three months secured by performance guarantees executed by other Marta companies (“the January 2008 Loan Guarantors”) - those guarantees also secured monies due pursuant to the loans made in 2007 and any other monies owed by LLC Elekskor to the Claimant,

10. According to the Defendant, the reason given by the Claimant for restricting the 2008 loan to a three month term was the risk to the solvency of LLC Elekskor that the Claimant perceived there to be associated with the plan by the Marta Group to settle certain public bonds in May 2008. The Defendant asserts that it was orally agreed with the Claimant that if it was satisfied that the bond holders either had been or would be repaid as planned, the term of the January 2008 Loan would be extended.

11. The immediate background to the signing of a personal guarantee by the Defendant was the announcement by REWE on 11 April 2008 that it was no longer interested in buying Grossmart. In the period leading up to that announcement, the Defendant had focussed his efforts on selling the Grossmart chain to REWE and it was therefore necessary for him to re-open negotiations with X5. The Defendant acknowledges in his evidence that REWE’s announcement caused all the banks from which Marta and its group undertakings had borrowed money to become nervous as to the repayment of loans they had made and that the Claimant was no exception.

12. The Defendant’s evidence is that he was told by Mr Tatarchuk of the Claimant that if he wanted the Claimant to extend the term of the January 2008 Loan, the Claimant would require a personal guarantee for all of the loans made by the Claimant to LLC Elekskor and that if he did not agree to sign the personal guarantee, the Claimant would demand repayment of the January 2008 Loan in full when the term expired on 30 April 2008 rather than extending it. The Defendant acknowledges that he had little choice but to agree to provide a guarantee and therefore did provide one. However, he asserts that his agreement to provide a guarantee was subject to two conditions:

(i) That the Claimant could only recover from the Defendant under the guarantee sums which it had not recovered after first having proceeded against the January 2008 Loan Guarantors;

(ii)  If the deal then being negotiated with X5 for the sale of long leases of a number of the properties operated by LLC Elekskor went ahead, the Claimant would accept payments made by X5 through third parties to reduce LLC Elekskor’s debt to the Claimant.

13. The Defendant contends that the form of guarantee that he signed included those two conditions, which Ms Vardzhiyska says that she drafted. The form of guarantee on which the Claimant relies does not include any such conditions.

14. The Defendant says that he is unable to produce a copy of the agreement that he signed. He says that the original that he had was confiscated by the Russian Police in 2008 during a raid on Marta’s offices and that the copy of the guarantee that he had was in a pack of documents which he left in Russia when, so he says, he was forced to leave Russia in 2010 following concerns for his safety and the safety of his family. Ms Vardzhiyska does not produce a copy of the form of guarantee which she says that she drafted and the explanation appears to be that she did not retain the record from the relevant email account.

15. The form of guarantee relied upon by the Claimant for the purposes of the Russian proceedings and this application is only signed by the Defendant on the final page. The Defendant says that he would always sign or initial every page of such a document and that in his experience it is usual practice for both parties to sign or initial every page of a legal document. Ms Vardzhiyska also says that her experience, which includes working with the Claimant and other banks, is that every page of such a document would be signed by both parties and then the document would be sewn and bonded together and sealed by a stamp of the bank, verified with the signature of the official representative of the bank, and she comments that none of those features are present in the form of guarantee produced by the Claimant.

16. The Claimant has been unable to produce the original of the form of guarantee it relies upon but the copy it has produced is a notarised copy. The Claimant’s explanation for the form of the document is that although usually such documents are signed on every page, for important clients like the Defendant, the form of agreement would be stitched and then signed in two counterparts on the final page only. Mr Ganin draws attention to the fact that on the reverse side of the guarantee he glued a note:

“Numbered, stitched and sealed 5 (Five) sheets

Director for Crediting Corporate Clients of Alfa - Bank OJSC”

which was signed and stamped by “N. Yu. Gryaznova”, to which Mr Ganin then added in manuscript “Executed in my presence; passport data verified by A.V. Ganin” and then signed the document.

17. The necessary implication of the Defendant’s case is that the Claimant, in order to advance its claim in the Russian proceedings, must have taken apart the original guarantee which the Defendant signed and substituted for the pages prior to the final page bearing his signature unsigned pages which did not include the two conditions which he said he had agreed with Mr Tatarchuk and had been included in the form of guarantee he signed. The necessary implication of the Defendant’s case must also be that the Claimant advanced its claim in the Russian Courts notwithstanding that it knew that the Defendant must hold a copy of the guarantee signed on each page which included the conditions that the Defendant says were inserted into the document.

18. The Defendant contends that it would make no sense for him to sign a guarantee so shortly before the term of the 2008 Loan was due to expire without imposing such conditions but Mr Korogodov contends that:

(i) The Defendant’s business was at the time on the verge of bankruptcy and the Defendant badly required fresh financing;

(ii) He was in such a weak negotiating position that he would not have been able to persuade the Claimant to accept a guarantee in the terms he now asserts;

(iii) In order to include a provision as to the ranking of security, there would have to be a special decision of the Claimant’s Internal Credit Committee authorising such ranking, which did not happen;

(iv) The inclusion in a guarantee of a reference to a proposed or potential arrangement would never be acceptable because such a vague contractual term would cause the contract to be deemed “non-concluded” under Russian law.

19. On 6 May 2008, the Claimant demanded repayment of sums it had lent to LLC Elekskor. On 16 May 2008, the Claimant sent a letter to the Defendant addressed to “41 9th Parkovaya Street, Apt 31, Moscow” making demand under the guarantee. The address used by the Claimant for the purposes of the demand letter was the address recorded on the last page of the guarantee, which bore the Defendant’s signature, as being his “Registration Address”. Clause 6.3 of the guarantee relied upon by the Claimant provided for all letters, notifications etc. to be sent to the Defendant at that address. A “Registration Address” is the address for a Russian citizen that is registered in his / her passport. The Registration Address specified in the guarantee was the Registration Address recorded in the Defendant’s passport.

20. Mr Korogodov acknowledges that it is not uncommon in Russia for a person no longer to live at his / her registered address but says that such a person, by doing so, undertakes the risk of not providing an actual address for service of documents to his creditors and state authorities. The Defendant asserted in his first witness statement that he had not resided at his Registration Address for many years prior to 2008 and that Alfa-Bank knew this but in response Mr Korogodov drew attention to a guarantee dated 14 December 2007 which the Defendant gave to another bank, Uniastrum, which gave the same address as being both the Defendant’s “Registration Address” and “Actual Address”.

21. The letter dated 16 May 2008 plainly came to the attention of the Defendant because a response to it was sent on his behalf on 26 May 2008. The letter included the following passages:
“... During the recent period of time during multiple meetings and negotiations, conducted in presence of management of the bank (Mr Tatarchuk V.) and Holding Marta (Mr Trefilov G.) we finally came to the agreement, as the result of which we accepted to perform certain obligations. I would not hide that the obligations accepted by Mr Trefilov in the conditions of the absence of liquidity on the market were very difficult to perform and Mr Trefilov had no choice but to subject all his personal assets to security in order to find required financing. Despite all difficulties, Holding Marta performed its part, specifically

• On 21 April 2008 Mr Trefilov gave personal guarantees in relation to repayment of loans of “Elekskor” LLC pursuant all loans granted by Alfa- Bank ...
Your side still did not perform the obligations towards us, specifically the loan agreements between “Elekskor” LLC and OJSC “Alfa-Bank” are still not prolonged.
Moreover, on 06 May 2008, the bank formally demanded from “Elekskor” LLC and on 16 May 2008 from Mr Trefilov the repayment of loans under all agrees with “Elekskor” LLC and Mr Trefilov. We consider such actions to be in breach of our April’s agreements. They contradict all agreements reached between the parties as well as the accepted obligations, and already performed by our side. ...
... we urge the management of OJSC “Alfa-Bank” to perform the agreed obligations:

• To recall the demands of repayment of loans to “Elekskor” LLC and Mr Trefilov.

• To effect the prolongation of current credit lines of “Elekskor” LLC. .."

22. On 4 August 2008, the Claimant filed a claim at the Meschanskiy District Court and on 7 August 2008, that Court initiated proceedings in Civil Case Number 2- 8231/2008 against the Defendant for recovery of the sums due under the guarantee. In his evidence, the Defendant admits having learned of the proceedings against him in September 2008. He says that he learned this from representatives of the Claimant with whom he was dealing in relation to the transfer of leases to X5 and “was certainly surprised to learn that was the case”. However, he says that he decided not to take any action in relation to the proceedings because he was reassured by a high level manager at the Claimant “that any demand of Alfa - Bank against me would fall away after the X5 deal had completed and payments from X5 were received in satisfaction of Elekskor’s obligations to Alfa - Bank”. He says that he did, however, notify the Liquidator of LLC Elekskor of the proceedings and granted a Power of Attorney in favour of Mr E.G. Demchenko to participate in the legal process at the request of the Liquidator of LLC Elekskor. He emphasised that Mr Demchenko is not and was not his attorney but was an attorney representing the Liquidator of LLC Elekskor and participated in the proceedings in order to ensure that LLC Elekskor’s interests were represented.

23. However, firstly LLC Elekskor were not party to the proceedings and secondly in his response to the Defendant’s evidence, Mr Korogodov produced two Powers of Attorney, the first dated 19 June 2008 and the second dated 26 June 2008 - prior to the commencement of proceedings by the Claimant, signed by the Defendant (and giving the same Registration Address as appeared in the guarantee), whereby he personally gave a Power of Attorney to, respectively, Mr Demchenko and Ms Sadovaya and two other lawyers. The Defendant’s explanation for this is that these were two of a number of general Powers of Attorney documents he signed at the time at the request of banks so that their interests could be represented in any subsequent proceedings even if the banks themselves were not a named party. He says that Mr Demchenko was appointed at the request of the Liquidator of LLC Elekskor and Ms Sadovaya was appointed at the request of Uniastrum.

24. The hearing which gave rise to the judgment against the Defendant took place on 13 October 2008. The Defendant says that he was not aware that the hearing was taking place and indeed the hearing was in his absence. However, the Claimant says that he was served with notice of the hearing and relies on a certificate of service of a telegram notifying him of the hearing provided by the Russian Mail Service. I was referred to the Rules of Providing Telegraph Communication Service which apply to the service of telegrams and which stipulate that telegrams such as the one giving notice of the hearing 13 October 2008 must be personally served and that the person serving the telegram must verify the identity of the individual on whom the telegram is being served by reference to an identification document. The Defendant has produced a number of postal service certificates recording that attempts to serve him were unsuccessful but these seem simply to confirm that the Russian Mail Service adopted the correct approach to the service of telegrams. Furthermore, Mr Demchenko signed an acknowledgement of receipt of notification of the 13 October 2008 hearing.

25. Following the hearing on 13 October 2008, the Meschanskiy District Court issued a Resolution in which the reasons for giving judgment against the Defendant were set out and a further Resolution ordering that the Claimant was entitled to recover from the Defendant the sum of 371,408,563.97 Roubles in respect of the principal debt and interest and 20,000 Roubles for payment of state duty.

26. On 21 October 2008 there was a meeting between the Defendant and representatives of the Claimant. A transcript of what was said at that meeting includes the following statements by the Defendant to which my attention was drawn:

“Max [Pershin], I am not prepared to discuss any 30 per cent! Once again, we do have 75 to 25? Will I get anything at all? You have to understand that this will leave my family with nothing. I am giving you everything. I have agreement with Germans for 30 million Euros. Well, why don’t you take it? Why not everything? Take the 30 million Euros as well what about me? You have got me cornered and now you want me to sign something? I will not sign anything. Even if I had to do time - I will not sign. Max, what do you want? You want me to leave the country and not be involved in any decision making anymore? Well, be careful what you wish for. Dealing with these issues will cost you. I daresay you will end up with ... No one will be on the run on the account of one and a half million dollars. Just to reiterate: I am meeting you halfway I have committed myself, do you understand? Now you are saying to me: another 30% on top! What 30%? We agreed to do 90/10! ...

And then what? Your loan is not repaid. I came here to propose how it can be repaid. And all you do is squeeze me and say: “No, you will do it this way because we have leverage”. In relation to the guarantee I came willingly, because he (nodding towards Pershin) and Tatarchuk asked me to sign the guarantee to avoid problems. I basically could just leave and say “Well, guys, I have an unsecured loan of 25 million, but I don’t give a shit, bye!” You see, I started an honest dialogue with you and now you are trying to screw me over. “3 months, no more than 30% ..."."

There is no reference in the transcript to the Claimant having obtained judgment against the Defendant.

27. On 4 December 2008, a Cassation Appeal against the judgment of 13 October 2008 was issued ostensibly by the Defendant. The Cassation Appeal included an application for an extension of time on the grounds that the Defendant only learned about the judgment on 10 November 2008 when his attorney was familiarising himself with the Case File materials. The delay between 10 November 2008 and the date of issue of the appeal was explained on the basis that a mistake was made by a Post Office employee in naming the Court. The Grounds of Appeal did not raise any of the substantive points now relied upon by the Defendant by way of Defence to the Claimant’s action.

28. The Defendant denies that the signature on the Cassation Appeal is his and asserts that he did not submit the appeal and nor did Mr Demchenko. He accepts that it is somewhat strange that someone other than him would have gone to the trouble of filing an appeal but he speculates that whoever filed the appeal pretending to be him did so to avoid the possibility of the Defendant filing a genuine appeal at a later date. The necessary implication from what the Defendant says is that he is suggesting that the Claimant issued an appeal against its own judgment in order to prevent the Defendant from later lodging an appeal.

29. The Claimant served a Response to the Cassation Appeal and, on the Defendant’s hypothesis, this would be the Claimant’s response to an appeal that they themselves had lodged.

30. On 13 February 2009, the Claimant obtained an interim injunction against the Defendant in the Vienna Regional Court for Civil Law Matters restraining him from dealing with shares in certain companies. On 3 March 2009, the Defendant sought to have the injunction against him set aside. The document which he submitted in support of his application:

(a) did not seek to make any challenge to the propriety of the judgment against him, notwithstanding that he admits that he became aware of the existence of the judgment as a result of the claim against him in these proceedings;

(b) repeatedly referred to the form of guarantee on which the Claimant relied without suggesting that the form of guarantee on which the Claimant was relying was not the form of guarantee which he had signed;

(c) asserted that he did not have a permanent place of residence in Austria and that his residence was as specified in the guarantee relied upon by the Claimant;

(d) asserted that the mere fact that he was registered with the police at an address in Vienna did not permit it to be inferred that he had consciously made that address his economic, professional and social centre and that accordingly the address specified in the guarantee relied upon by the Claimant was the address to which any and all notifications regarding the agreement should be sent;

(e) asserted that the address given for the Defendant in the guarantee accorded with the address given for him in the company registers of the companies whose shares were the subject of the injunction;

(f) asserted that the Vienna Court did not have jurisdiction over him as he did not have his permanent residence in Austria but in Moscow;

(g) relied on clause 6.1 of the form of guarantee produced by the Claimant which provided for all issues relating to the guarantee to be submitted to the Meschanskiy District Court;

(h) relied on clause 6.2 to assert that all prior agreements, arrangements, negotiations and correspondence between the parties prior to the execution of the agreement should become null and void as of the execution date of the agreement;

(i) relied on a provision in the guarantee requiring modifications to be in writing;

(j) asserted that jurisdiction did not lie with the Vienna Court or any other Austrian Court but was exclusively with the Meschanskiy District Court “which has already been entrusted with the legal matter in question”;

(k) made allegations about the Alfa Group being “one of the most notorious raiders” which had “for many years been known for its activities in the field of hostile take-overs and unfair business practices” without suggesting any impropriety in relation to the Claimant’s reliance on the form of guarantee which it had produced for the purposes of the Austrian proceedings.

31. In both his and second Witness statements, the Defendant addresses the Austrian proceedings but in neither of the statements does he seek to explain why he did not raise any issue about the form of guarantee on which the Claimant was seeking to rely or as to the judgment that the Claimant had obtained against him in the Meschanskiy District Court or why he placed such heavy reliance on the address that was given for him in the guarantee.

32. The issue of a Cassation Appeal made it possible for an application to be made to stay enforcement of the judgment pending the determination of the appeal and such an application was made on the Defendant’s behalf on 11 March 2009 by Ms Sadovaya. The application for a stay of enforcement referred to and relied upon the issue of the Cassation Appeal and on the fact that the requested extension of time for filing a Cassation Appeal had been granted,

33. The Defendant asserts that he did not instruct Ms Sadovaya to submit this motion and so cannot comment on whether or why she did so. He does not and realistically could not suggest that this was, for some reason, submitted in his name at the instigation of the Claimant.

34. On 17 March 2009, the Defendant submitted his Defence in the Vienna Court proceedings in that Defence. Whilst raising issues as to the accuracy of the translation of the guarantees submitted by the Claimant to the Vienna Court, the Defendant again did not assert that the form of guarantee produced by the Claimant was not the form of guarantee that he signed. His Defence repeated the points that he had made in his response in respect of the interim injunction. Furthermore, whilst again repeating his assertions about the conduct of the Claimant, the Defendant made no reference to its conduct in relation to the guarantee or obtaining the judgment.

35. On 28 May 2009, the Moscow City Court gave its decision on the Cassation Appeal. The appeal was dismissed. Amongst the reasons given for the dismissal of the appeal were the following:

“The court’s conclusions are based on the reviewed materials, are substantiated and correspond to the evidence gathered and to applicable legislation ...

No violation of the norms of substantive or procedural law that would require changes to the judgment have been found in the case.”

36. On 20 July 2009, Ms Sadovaya submitted an application to the Meschanskiy District Court to prevent enforcement of the Claimant’s judgment against a car belonging to the Defendant on the grounds that it had been pledged to Uniastrum Bank. The Defendant contends that he did not instruct Ms Sadovaya to submit that motion and suggests that as she was the lawyer for Uniastrum Bank, she must have filed the motion in order to protect that bank’s interests.

37. On 21 April 2010, enforcement of the Claimant’s judgment was terminated on the grounds that the Court Marshall had established that the Defendant did not own any property or income against which execution could be levied and that all the legitimate actions undertaken in order to find the Defendant’s property or income have had no effect. In particular it was concluded that the Defendant did not reside at the address given in the guarantee and it had proved impossible to locate him or property owned by him in Moscow.

38. On 27 July 2010, the Defendant appeared at a hearing at the Lyublinsky District Court in Moscow pursuant to an Order of the Vienna Court. At that hearing he was represented by Ms Sadovaya but he says that he instructed her simply because she had participated in the process on Uniastrum’s behalf in the past. At that hearing he stated that he resided permanently in Moscow and that since 29 December 2009 he had been registered at 39 Pererva Street, Apt, 70, Moscow.

39. These proceedings were commenced on 13 January 2014. The Claim Form and Particulars of Claim were served on the Defendant on 22 January 2014. The application for summary judgment was issued and served on 18 February 2014. On 15 April 2014, the Defendant’s solicitors served his first witness statement which, for the first time, asserted that the form of guarantee relied upon by the Claimant was not the form of guarantee that he had signed. Thereafter, in addition to serving the further evidence to which I have referred, the Defendant’s solicitors also served a draft Defence.

The Law

(a) Summary Judgment

40. The grounds on which summary judgment can be given are well established. Ms Hannah Brown on behalf of the Claimant invited my attention to JSC VTB Bank v. Skurikhin & Others [2014] EWHC 271 (Comm), a case which also involved the enforcement of a Russian judgment, in which Simon J summarised the relevant principles at [15]. In particular, she emphasised that:

(i) The Court must consider whether the Defendant has a “realistic” as opposed to a “fanciful” prospect of success, with a claim being “fanciful” if it is entirely without substance;

(ii) A “realistic” prospect of success is one that carries some degree of conviction and not one that is merely arguable;

(iii) The Court is not obliged to take everything that a party says in his witness statement at face value and without analysis. In some cases it may be clear that there is no real substance in factual assertions which are made, particularly if they are contradicted by contemporaneous documents. Contemporary activity or lack of activity may similarly cast doubt on the substance of factual assertions.

(See sub-paragraphs (1), (2) and (4) of [15].)

41. On behalf of the Defendant, Ms Tolaney emphasised the following passages:

(i) The Court    must avoid conducting a “mini-trial” without disclosure and oral evidence;

(ii) The Court    should avoid being drawn into an attempt to resolve those conflicts of fact which are normally resolved by a trial process;

(iii) The Court    must take into account not only the evidence actually placed before it on the application for summary judgment, but the evidence    that can reasonably be expected to be available at trial;

(iv) Allegations of fraud may pose particular problems in summary disposal;

(v)    So far as Part 24.2(b) is concerned, there will be a compelling reason for trial where “there are circumstances that ought to be investigated”.

(Sub-paragraphs (3), (5), (6), (7) and (10) of [15].)

42. My attention was also drawn by Ms Tolaney to what Lord Hobhouse had said in Three Rivers District Council v. Bank of England (No. 3) [2001] 2 All ER 513 at [158]:

“The criterion which the Judge has to apply under CPR Pt 24 is not one of probability; it is the absence of reality.”

43. Finally, Ms Tolaney drew my attention to passages in Global Marine Drillships Limited v. Landmark Solicitors LLP & Others [2011] EWHC 2685 (Ch), a decision of Henderson J. In particular, she referred me to the passages from Bleasdale & Carris v. Forster [2011] EWHC 416 (Ch) cited by Henderson J at [21]. These passages primarily elaborated on the principles to which she had drawn my attention as outlined above. The passage cited included a warning that the Court should be alert to the Defendant who seeks to avoid summary judgment by making a case look more complicated or difficult than it really is and the need to guard against “the cocky Claimant” who, having decided to go for summary judgment, confidently presents the factual and legal issues as simpler and easier than they really are and urges the Court to be “efficient” i.e. produce a rapid result in the Claimant’s favour. The passage cited ends up with the warning that the Court should exercise caution in granting summary judgment in cases where there are conflicts of fact on relevant issues which have to be resolved before a judgment is given and a warning to avoid a mini trial on the facts in circumstances where the normal pre-trial procedures have yet to be gone through. The aim is to avoid the risk of producing summary injustice.

(b)    Natural Justice

44. The following passages from Dicey, Morris & Collins on The Conflict of Laws, 15th ed., on the enforcement of foreign judgments were cited to me:

14-163:    “... English Courts never investigate the propriety of the proceedings in the foreign Court, unless they offend against English views of substantial justice. ...” (a quotation from Pemberton v. Hughes [1899] 1 Ch 781, 790, per Lord Lindley)

“In Jacobson v. Frachon (1927) 138 LT 386, Atkin L.J., after referring to the use of the expression “principles of natural justice,” said:
“Those principles seem to me to involve this, first of all that the Court being a Court of competent jurisdiction, has given notice to the litigant that they are about to proceed to determine the rights between him and the other litigants, the other is that having given him that notice, it does afford him an opportunity of substantially presenting his case before the Court.” (at p.392)

14-166:    “... If the Defendant has agreed, or is deemed to agree, a particular method of service (such as service at an address in the foreign country notified to a company of which he is a member) then it is immaterial that he did not receive actual notice. If the Defendant has agreed to submit to the jurisdiction of the foreign Court, and service has been effected in accordance with the foreign law, but actual notice has not been given, then the question will be whether substantial injustice has been caused by the lack of notice, including consideration of whether the Defendant had a remedy in the foreign court ... if the Defendant is resident in the foreign country at the time when the proceedings were commenced, or if he voluntarily appears in the proceedings, it is difficult for him to take the objection that he did not receive sufficient notice, for in such circumstances any notice is sufficient which is in accordance with the law of the foreign country, provided that the foreign procedure does not offend against English views of substantial justice. If the Defendant agrees in advance to submit to the jurisdiction of the foreign court and service is effected in accordance with the method of service to which he has agreed ... he cannot complain if he did not receive actual notice. “It is not contrary to natural justice that a man who has agreed to receive a particular mode of notification of legal proceedings should be bound by a judgment in which that particular mode of notification has been followed, even though he may not have had actual notice of them.””

45. My attention was also drawn to JSC VTB Bank v. Skurikhin [2014] EWHC 271 (Comm) at [33] - [37] which address this topic and in particular to what Simon J said at [88] in relation to the natural justice defence in that case:

“Even on a Part 24 application, an explanation as to why particular defences which are said to have been available were not taken in the foreign proceedings should be both consistent and coherent.”

46. On behalf of the Defendant, I was referred to passages in the decision of the Court of Appeal in Adams v. Cane Industries Plc [1990] 1 Ch 433. In particular, what was emphasised in that case is that the approach to the question whether the procedure of a foreign court did offend against the principles of natural or substantial justice must be a broad one and it would be inappropriate to formulate an exclusive or comprehensive statement of the circumstances in which the English Courts would treat the procedure adopted by a foreign Court in reaching its decision as offending against the principles of natural justice. My attention was also drawn to a passage in the judgment at p.568H-569B which made it clear that a Defendant who can show that a foreign judgment has been obtained by fraud is not obliged to have used any available remedy in the foreign Court with reference to that fraud if he is successfully to impeach that judgment in the English Courts. However, on the question of the availability and pursuit of a remedy in the foreign Court, the judgment of the Court included the following passage, at p.570C-E:

“Since the ultimate question is whether there has been proof of substantial injustice caused by the proceedings, it would, in our opinion, be unrealistic in fact and incorrect in principle to ignore entirely the possibility of the correction of error within the procedure of a foreign Court which itself provides fair procedural rules and a fair opportunity for remedy. The Court must, in our judgment, have regard to the availability of a remedy in deciding whether in the circumstances of any particular case substantial injustice has been proved. However, the relevance of the existence of the remedy and the weight to be attached to it must depend upon factors which include the nature of the procedural defect itself, the point in the proceedings at which it occurred and the knowledge and means of knowledge of the Defendants of the defect and the reasonableness in the circumstances of requiring or expecting that they made use of the remedy in all the particular circumstances,”

(c) Fraud

47. At paragraph 14-124, Dicey, Morris & Collins states as follows:

“Closely parallel to the rule that a foreign judgment is conclusive is the rule that the Defendant must take all available defences in the foreign Court, and that, if he does not do so, he cannot be allowed to plead them afterwards inEngland. But neither of these rules applies if the judgment was obtained by fraud.”

48. In this case, it was not alleged on behalf of the Defendant    that the judgment in question had in fact been obtained by fraud but it was submitted that the question whether the judgment had been obtained by fraud was something which needed to be investigated by disclosure and evidence and that accordingly I ought to refuse the application for summary judgment. However, as Simon J. recorded at [83] in JSC VTB Bank v. Skurikhin, citing Gelley v. Shepherd [2013] EWCA Civ 1172, at [47], it is important to bear in mind that the fraud exception is“a carefully delimited exception and is not to be given an expansive application”.

49. Having said that, the issue which the Defendant seeks to have investigated, namely whether the Claimant created a false version of the guarantee which he had signed, submitted that false document to the Moscow Court and obtained judgment on the basis of it, would, if it had occurred, plainly fall within the fraud exception.

(d) Russian Civil Procedure Code

50. I was referred to translations of various provisions, of which the following appear to me to be pertinent:
(i) Article 67 - Evaluation of Proof:

This provides that a Court cannot deem as proven circumstances evidenced only by a copy of a document or any other written evidence if the original document has been lost or has not been submitted to the Court or if copies of such a document adduced by each party in dispute are not identical to each other and it is impossible to establish the authentic contents of the original document through other evidence;

(ii) Article 118 - Change of Address    During the Proceedings:
Persons involved in a case must notify the Court of any changes in their address during the proceedings and in the absence of such advice, a Court subpoena or any other Court notification will be sent to the last place of residence or place of stay of the addressee known to the Court and will be deemed as served, even if the addressee does not any longer reside or stay at this address;

(iii) Article 338 - Term of Filing a Cassation Appeal
A cassation appeal may be filed within 10 days of the date when the Court issued its judgment in final form;

(iv) Article 367 - Right of Recourse to “Supervisory Instance” Court
Court rulings may be appealed to a Supervisory Instance Court within 6 months of their effective date. (Article 377 makes it clear that this encompasses appeals against Cassation Resolutions.)

(v) Article 392 - Grounds for Reconsideration of Court Decisions
This permits Court decisions to be reconsidered on the grounds of newly- established circumstances which are expressed to include knowingly false testimony of a witness and falsification of evidence.

Submissions

51. The parties’ respective submissions were set out in their Skeleton Arguments and were elaborated in oral submissions. A transcript of the submissions was commissioned by the parties and was provided to me after the hearing. I have taken into account the detailed submissions that the parties have made and the summary in this Judgment is of the most pertinent aspects.

52. In circumstances where the Defendant accepted that the judgment against him is on its face final and conclusive and that he was subject to the jurisdiction of the Moscow Court, the parties’ respective submissions addressed the issues whether:

(i) The conduct of the Russian proceedings was a violation of natural justice rending it contrary to public policy to enforce the judgment;

(ii) Alternatively there is a compelling reason for the case to proceed so that there can be an investigation into whether the judgment was obtained by fraud.

53. In relation to natural justice, Ms Brown’s submissions can be summarised as follows:

(i) In circumstances where the Defendant agreed to the jurisdiction of the Moscow Court and to an address for service, it is immaterial that he did not receive actual notice of the proceedings if documents were served either in accordance with the agreed method of service or in accordance with the Russian Civil Procedure Rules.

(ii) The Defendant’s assertion that he did not    receive any documents delivered to his address and that the Claimant knew this is not credible, in support of which reliance was placed on:

(a) the Defendant having specified his Registration Address as being also his actual address in the guarantee executed in favour of Uniastrum Bank on 14 December 2007;

(b) his use of the same address in the Powers of Attorney which he executed in June 2008;

(c) his reliance in the Austrian proceedings on his Registration Address and on the provisions of the form of guarantee relied upon by the Claimant specifying his Registration Address;

(d) his having received the demand dated 16 May 2008 sent to his Registration Address because a reply to it was sent on his behalf;

(e) the certificate of service on him of notice of the hearing on 13 October 2008.

(iii) The Defendant admits that he was aware of the commencement of the proceedings prior to the hearing on 13 October 2008 and even if he was told that any demand by the Claimant against him would fall away after the X5 deal had completed and payments from X5 were received in satisfaction of LLC Elekskor’s obligations to the Claimant, he does not contend that he was told or that he understood that the proceedings would be withdrawn or stayed and so if he decided to take no action he did so at his own risk.

(iv) The Defendant was personally served with notice of the hearing on 13 October 2008 and his bare denial that he was so served is not credible.

(v) The Defendant granted a Power of Attorney in favour of Mr Demchenko who was therefore authorised to act on behalf of the Defendant in relation to the proceedings and Mr Demchenko signed a receipt acknowledging that he had been notified of the hearing on 13 October 2008 - whether or not Mr Demchenko notified the Defendant of the hearing date is irrelevant but he must have done.

(vi) An appeal against the judgment was issued together with an application to extend time for submitting an appeal and there is no credible explanation for this step having been taken other than it having been done by or on behalf of the Defendant:

(a) it is incredible for the Defendant to suggest that the Claimant issued these applications in order to avoid a genuine appeal at a later date because firstly it would not have prevented the Defendant from pursuing a further appeal against the Cassation Resolution or applying to the Court to reconsider its decision by reference to “newly established circumstances" or pursuing a wholly separate criminal complaint about the Claimant presenting false evidence to the Court and secondly because it was the existence of the Cassation Appeal which enabled an application to be made for a stay of execution of the judgment (that application was made at the same time as the Defendant was challenging the injunction against him in the Austrian Court);

(b) whoever instigated the application for a stay of execution must have been aware of the existence of the Cassation Appeal and only the Defendant could have had an interest in postponing execution against him;

(c) the application for a stay of enforcement which relied upon the existence of the Cassation Appeal was issued on the Defendant’s behalf by a lawyer to whom the Defendant had given a Power of Attorney;

(d) the Defendant gave false evidence about Powers of Attorney in his first witness statement, such evidence being confounded by the documents produced by Mr Korogodov in his second witness statement (the Defendant’s evidence as to the Powers of Attorney contained in his first witness statement was shown by the contents of Mr Korogodov’s second witness statement to be false but I have put that to one side for the purposes of reaching my conclusions).

(vii) The issue of the application to stay enforcement and of the application to release a car from enforcement demonstrate that the Defendant must have been fully aware of what was going on in the Russian proceedings and the Defendant admits that he learned about the judgment against him in early 2009 as a result of the Austrian proceedings, at which time it remained open to him to take various steps to challenge the judgment, including on his case, issuing a Cassation Appeal and applying for an extension of time for doing so together with disavowing the existing Cassation Appeal once it came to his attention.

(viii) Although the Defendant asserts at paragraph 104 of his first witness statement that he would have brought the issues which he raises in that witness statement “to the attention of the Moscow Court” had he been aware of “the need to engage in the Russian Legal Proceedings, or of the hearing of 13 October 2008, or of the judgment against which I could appealed (sic)”, the fact is that he did become aware of the judgment as a result of the steps taken against him by the Claimant in Austria in early 2009 but, on his evidence, he took no such steps - in fact he had already issued a Cassation Appeal and he then also issued an application to stay enforcement;

(ix) There is no consistent and coherent explanation for the Defendant’s failure to have raised in the Moscow Courts, whether before or after judgment was obtained, any of the defences which he now asserts.

54. As regards the Defendant’s suggestion that the issues as to the form of guarantee that the Defendant signed and as to what the Claimant told and put before the Moscow Court give rise to a compelling reason for there to be a trial, Ms Brown submitted that the Defendant’s evidence is implausible in that;

(i) the terms proposed are vague and unworkable;

(ii) the term as to enforcement of the guarantee after enforcement of alternative security would be exceptional and require authorisation from the Claimant’s Internal Credit Committee;

(iii) as regards the alleged term relating to the X5 deal, that deal was not concluded until July 2008 - months after the guarantee was signed;

(iv) the letter dated 26 May 2008 did not assert the existence of or reliance on these specific terms but rather complained that the Claimant had not extended the term of the LLC Elekskor loan agreements;

(v) the Defendant has never produced a version of the guarantee containing the terms for which he contends;

(vi) The Defendant did not raise any issue as to the form of the guarantee until he served his evidence on 15 April 2014-6 years after signing the guarantee;

(vii) The Defendant did not raise these issues in the Cassation Appeal;

(viii) Not only did the Defendant not raise these issues in the Austrian proceedings, he actually placed reliance on the form of guarantee that the Claimant had produced;

She further submitted that in any event there is nothing further that needs to be investigated in order for the Defendant to he able to allege fraud in that the basis on which judgment was given is plain from the reasons given by the Court and from the Court file.

55. On behalf of the Defendant, Ms Tolaney’s essential submission was that on the evidence there were very significant conflicts of fact which could not be resolved by a “mini trial”. She submitted that it simply was not possible for the Claimant to show at this stage that the Defendant had no real prospect of establishing that the Russian proceedings constituted a violation of natural justice and moreover she submitted that the circumstances in which the judgment was obtained and in particular the reasons why the Moscow Court was apparently not provided with the correct information demand investigation and explanation at trial.

56. On the issue of natural justice, Ms Tolaney primarily relied on the Defendant’s evidence in this regard, contending that it gave rise to a realistic prospect of success but the main additional points she made were as follows:

(i) The telegrams that the Russian Postal Service has recorded as not being served on the Defendant bear out the Defendant’s evidence that he was not living at his Registration Address;
(ii) There is no evidence from the Claimant to challenge the Defendant’s assertion that he was assured that the demand under the guarantee would fall away once the X5 deal was completed and payments were received, as in fact happened;
(iii) The fact that neither the Defendant nor anyone acting on his behalf appeared at the hearing on 13 October 2008 corroborates the fact that he was unaware of the proceedings and that the Powers of Attorney that he granted were not relevant to his defence of the proceedings;
(iv) The Austrian proceedings do not assist in consideration of this aspect because the principal issue in the Austrian proceedings was that of jurisdiction, in the documents he submitted the Defendant did not engage to any or any material extent with the merits of the claim against him and the inference I should draw is that the Defendant was focussing on the jurisdiction issue;
(v) There is a triable issue as to who signed the application to appeal and for an extension of time for an appeal.
She accepted however that it would be implausible for the Claimant to have applied for a stay of execution of its own judgment.

57. The main focus of the submissions on behalf of the Defendant, though, was on the merits of the claim under the guarantee and in particular on the Defendant’s case as to the form of guarantee that he signed. An attack was made on the Claimant’s evidence as to why the guarantee was not signed on each page and it was submitted that far from it being implausible that a guarantee would have been signed incorporating the terms which the Defendant says were incorporated, it would make sense for the Defendant to have asked for and for the Claimant to have agreed to the inclusion of these additional terms in circumstances where the Defendant was being asked to provide for a personal guarantee less than 2 weeks before one of LLC Elekskor’s loan facilities was due to expire. It was said that it would also make sense in this context for the Defendant to have been given assurances about the extension of the loan that was about to expire and reliance was placed in this regard on what was said in the letter of 26 May 2008. Ms Tolaney also relies on the paucity of the evidence of the bank to challenge what the Defendant has said about what was discussed and agreed and what actually happened in relation to the X5 deal and the proceeds of that deal.

Analysis

58. I have borne well in mind the need to avoid approaching this application as if I was conducting a mini-trial but I have reached the conclusion without hesitation that this is one of those cases in which it is clear that there is no substance in the factual assertions advanced in the evidence served by the Defendant.

59. The Defendant’s suggestion that documents sent to his Registration Address would not come to his attention is wholly inconsistent with:

(i) His having used that address as his actual as well as his Registration Address in the guarantee in favour of Uniastrum dated 14 December 2007;

(ii) The stipulation of that address and no other address in clause 7 of the guarantee (on the final page of the document, the authenticity of which is not challenged by the Defendant) which would mean that any notices to be sent under the guarantee would be sent to that address;

(iii) His having received the letter of demand dated 16 May 2008 sent to that address;

(iv) The Defendant’s execution of Powers of Attorney using his Registration Address and no other address;
(v) The ability of the Russian Postal Service to serve the telegram giving notice of the hearing of 13 October 2008 in circumstances where the only address available was the Defendant’s Registration Address and the person serving the telegram would have had to verify the identity of the person on whom the telegram was being served;

(vi) The Defendant    having asserted and relied on his Registration Address in support of his challenge to the jurisdiction of the Court in the Austrian proceedings;

(vii) The Defendant    having stated at a hearing on 27 July 2010 that he resided permanently in Moscow and that the address (which was different from his Registration Address) at which he was then living had been his address only since 29 December 2009.

60. The timing of the Defendant’s giving of Powers of Attorney to lawyers strongly indicates that he anticipated that the financial predicament of his businesses would expose him personally to legal action and he admits that he was aware of the issue of proceedings against him by the Claimant under the guarantee, albeit that he says that this was only as a result of being told about it at a meeting in September 2008. He does not claim to have been given any assurances about the proceedings not continuing and in any event it is quite clear that he and Mr Demchenko, the lawyer to whom he had given Power of Attorney, received notification of the hearing on 13 October 2008 at which judgment was given. The Defendant must have received the telegram which was certified as having been served on him and I accept the submission that the documentary evidence of other failed attempts to serve documents on him merely serves to reinforce the reliability of the certification of service in this instance. As for Mr Demchenko, he signed a document acknowledging notification of the hearing date and the authenticity of that document has not been questioned by the Defendant. It is inconceivable that Mr Demchenko did not tell the Defendant of the hearing date. The Defendant’s failure to attend the hearing or to be represented at it must therefore have been as a result of a conscious decision on his part not to attend or be represented at the hearing.

61. The Defendant’s assertion that he was unaware of the appeal against the judgment, of the application to stay enforcement of the judgment and of the application to release his car from execution is preposterous. The suggestion that someone else must have issued these applications in their own interests defies belief. The Defendant’s attempt to attribute to the Claimant the issue of the appeal so that it could fail and undermine his rights of appeal makes no sense whatsoever. Firstly, it was the issue of the appeal which gave the opportunity for an application for stay of enforcement of the judgment to be made and that cannot have been in the Claimant’s interests. Secondly, on the materials presented to me it is quite clear that the presentation and dismissal of the appeal would not in any way have impeded the Defendant from challenging the judgment - a further appeal against the Cassation Resolution would have been available, he could have made an application for reconsideration of the judgment against him on the grounds of newly-established circumstances and he could have instigated the commencement of a criminal investigation into the Claimant’s conduct, as Ms Tolaney informed me the Defendant is about to do.

62. As for the application for a stay of enforcement of the judgment, neither the Defendant nor Ms Tolaney was able to come up with any theory as to why such an application should have been made other than at the instigation of the Defendant and the timing of the application ties in with the Defendant’s attempts to resist the Claimant’s attempts to enforce the judgment against him through the Austrian Courts. The application for a stay of enforcement referred to the Cassation Appeal and the application was therefore made with knowledge of and indeed on the basis of the existence of that appeal. The fact that there was a further application to protect the Defendant’s car from execution of the judgment obtained by the Claimant merely serves to reinforce the conclusion that he must have known what was going on.

63. At the heart of the Defendant’s defence, though, is his case as to the terms of the guarantee he signed. It is not surprising to me that the Claimant has not risen to the bait of the Defendant’s assertions about various conversations that took place because if the Claimant had done so this would, I am sure, have been relied upon as indicating that there was a real issue to be tried. The reality in this case is that 6 years after he signed a guarantee and only when serving evidence in response to the Claimant’s application for summary judgment, has the Defendant asserted for the first time that the form of guarantee relied upon by the Claimant was not the form of guarantee that he signed. Having carefully borne in mind that this is a summary judgment application, I am nonetheless driven to reject this assertion by the Defendant as being fanciful for the following reasons:

(i) The terms would have been extraordinary terms for the Claimant to have agreed to include in the guarantee for the reasons given in Mr Korogodov’s evidence;

(ii) If such terms had been agreed, I would have expected there to be explicit reliance on them in the letter dated 26 May 2008 responding to the demand under the guarantee dated 16 May 2008;

(iii) I would have expected the Defendant to defend the proceedings instituted against him by the Claimant, relying on the terms of the guarantee that he signed;

(iv) The Defendant’s failure to challenge the form of guarantee relied upon by the Claimant for the purposes of the Austrian proceedings and his reliance on that version of the guarantee in support of his challenge to the jurisdiction of the Austrian Courts is inexplicable if he had signed some other form of the guarantee;

(v) Although Ms Tolaney speculated in her submissions as to why the Defendant had adopted the stance he did adopt in the Austrian proceedings and seeks to suggest that the Defendant did not really address the merits of the Claimant’s claim against him, the Defendant does not himself in his evidence proffer any explanation and I am not surprised that he does not do so because it is impossible to think of any rational explanation for his not having raised the point if, indeed, he had signed a different form of guarantee;

(vi) If it is true that he did not realise that the Claimant had obtained a judgment against him until early 2009 in the context of the Austrian proceedings, it is inexplicable if he did sign a different form of guarantee that he did not take steps in Russia to raise his case that the judgment against him had been obtained on a false basis;

(vii) It is inexplicable that at no stage has the Defendant ever produced a version of the guarantee, whether signed or otherwise, containing the terms which he says were included in the guarantee.

64. I would also add that it telling that Ms Tolaney did not feel able to assert a positive case that the judgment was obtained by fraud. She attempted to suggest that there could be an innocent explanation for the Claimant presenting the wrong form of guarantee to the Moscow Courts and that there was therefore a compelling reason for this action to go to trial so that the matter could be investigated but that seems to me to be a wholly unreal approach. The basis on which the Moscow Court proceeded is apparent and Ms Tolaney did not seek to suggest that the Court proceeded other than on the basis of the form of guarantee upon which the Claimant later relied in the Austrian proceedings and also relies in these proceedings. If, as the Defendant contends, that form of guarantee is a falsely concocted document which was created by the Claimant from the genuine document signed by the Defendant, there cannot realistically be any explanation other than that the Claimant obtained the judgment by fraud. Any further investigation by way of disclosure and/or evidence could not therefore be for the purposes of investigating whether the Defendant was in a position to advance such a defence but only for the purposes of establishing whether or not such a defence should succeed. It therefore seems to me that the question is whether the Defendant has a defence based on the obtaining of the judgment by fraud which has any realistic prospect of success. I well understand the reasons why Ms Tolaney has not felt able to assert a positive defence of fraud on the Defendant’s behalf but her attempt to sidestep this difficulty by suggesting that there is nonetheless a compelling reason for this case to proceed cannot in my judgement be sustained. In any event, I do not consider that there is anything in this case that merits further investigation.

65. There are issues on the evidence as to what was discussed between the Defendant and representatives of the Claimant during the course of 2008 which may or may not have given rise to defences to the Claimant’s claim under the guarantee in the proceedings in the Moscow Court and it is impossible and would be inappropriate on an application for summary judgment for me to reach any conclusions about the content of those conversations. However, if they did give rise to any defences to a claim under the guarantee, those defences ought to have been advanced in the proceedings which gave rise to the judgment and in circumstances where I am quite satisfied that the Defendant had notice of the proceedings and of the hearing which gave rise to the judgment and had the opportunity to appeal the judgment of which he in fact availed himself, on the authorities it is not open to the Defendant now to raise any such any potential defences by way of defence to the application for summary judgment.

66. For the reasons given above, I reject the Defendant’s contention that it would be contrary to natural justice for me to give summary judgment for the enforcement of the judgment obtained against him in Russia and I do not consider that there is any compelling reasons for me to allow this case to proceed.

Quantum

67. There is one final point that was advanced by Ms Tolaney in her submissions and that is as to the amount of the Claimant’s claim. The evidence includes a certification of the balance currently outstanding in respect of the guarantee given by the Defendant but Ms Tolaney raises the possibility that insufficient credit may have been given for the proceeds paid by X5. I have, however, rejected the Defendant’s case that there was a special agreement incorporated into the guarantee for the application of the proceeds of the X5 deal to the reduction of sums due from him under the guarantee and the fact that he has sought to assert such a special agreement is of itself indicative of there having to be such a special agreement in order for the Claimant to have to apply the X5 proceeds in that way. The fact that the proceeds of the X5 deal would not be going directly to LLC Elekskor is explained in paragraph 60 of the Defendant’s first witness statement and the agreement he asserts is that the monies received by other corporate entities would be transferred internally by the Claimant and used to settle LLC Elekskor’s debts. I have rejected the Defendant’s contention that such a term was included in the form of guarantee that he signed and given that the X5 deal was concluded in July 2008, if he had any defence to a claim under the guarantee based on anything that was said in his discussions with the Claimant about the application of the X5 proceeds, that defence should have been advanced in the Moscow proceedings. It is not therefore open to the Defendant to challenge the judgment on the basis that the Claimant has not but ought to have internally transferred balances from other entities to the credit of LLC Elekskor (although I fail in any event to understand how the Claimant could do so without the entities who received the money being party such an arrangement). Unsurprisingly, there is nothing in the evidence to suggest that the Claimant has in fact internally transferred money in this way and on the contrary there is evidence from the Claimant as to the sum that remains outstanding for the purposes of the guarantee. There is no reason why the Claimant should not have judgment for that sum.

68. The Claimant recognises that there is a triable issue as to whether or not it is entitled to claim the contractual interest provided for in the guarantee but seeks instead judgment for the principal sum and interest pursuant to the statutory powers of the Court and does not intend to pursue the claim for contractual interest.

Conclusion

69. In the circumstances, the Claimant is entitled to judgment for 368,270,686.83 Roubles together with statutory interest thereon, for which purpose it seems to me to be appropriate to use the Russian Federation Central Bank rate from the date on which the judgment became effective following the unsuccessful Cassation Appeal (29 May 2009) to the date on which judgment is given and I will give judgment for the appropriate amount of interest in the Order that I make.

http://www.bailii.org/ew/cases/EWHC/Comm/2014/1806.html

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