Deripaska v Cherney

The underlying dispute in this case is whether, as Mr Cherney alleges, he and Mr Deripaska made an agreement in March 2001 for the sale by Mr Cherney to Mr Deripaska of an interest in Rusal, a Russian aluminium company. Mr Deripaska disputes the claim. His case is that Mr Cherney was not a legitimate businessman, that Mr Deripaska did not enter into any legitimate business partnership with him as Mr Cherney alleges or at all, that Mr Cherney had no shares or other interest in the aluminium business Mr Deripaska built (or any other business of his); and consequently that Mr Cherney had no interest to sell to Mr Deripaska. Rather, he says, Mr Cherney was (together with his alleged criminal associates, Anton Malevsky and Sergey Popov) a representative of Russian organised crime groups (“OCGs”) which imposed a criminal extortion/protection racket (or “krysha” in Russian) on Mr Deripaska, forcing him to pay large amounts of protection money (or “dolya” in Russian) and infiltrating his business over a number of years. Mr Deripaska’s contention is that the alleged agreement of March 2001 was only an agreement of the terms by which the krysha was to be brought to an end.

In support of this defence, Mr Deripaska intends to call evidence (in addition to his own evidence) from certain witnesses about the existence, membership and activities of various OCGs, including OCGs operating in the remote Siberian regions of Sayanogorsk and Krasnoyarsk as well as Moscow and involved in a whole range of criminal conduct, including murder, racketeering and extortion (including the extraction of dolya from krysha victims). Two of the particular OCGs which originate from Moscow and feature centrally in the proceedings are the Ismailovskaya OCG and the Podolskaya OCG, with which Mr Deripaska alleges that Mr Cherney had a particularly close relationship; and of which Mr Malevsky and Mr Popov were respective leaders at the relevant time.

The case has attracted considerable publicity both here and in Russia; and will no doubt continue to do so as the trial progresses. The broad nature of the dispute and the rival positions of the parties are in the public domain. It is also the case that the names of the witnesses with whom we are concerned have been uploaded to the internet and appeared for a few days on a Russian website. That information is still available by means of search engines.

Against that background Mr Deripaska applied to the court for what have been called witness protection orders. The principal protection sought was that the evidence of the witnesses in question should be given either wholly or partly in private. The application was heard by Andrew Smith J, who is the trial judge, and who has handled all case management since November 2011. The trial in fact began on 9 July and was due to resume on 27 September 2012.

The witnesses concerned have been designated by capital letters only. The judge acceded to the request for witness protection measures in relation to witness K; and directed that two sentences of the witness statement of witness F be redacted. He deferred ruling on witness D. But as regards witnesses A, B, C, E, F, G, H, I, J and L, he refused the application (with one limited exception in the case of witness F). He has since ruled on witness D and acceded to the request for witness protection measures in his case. The names of all the witnesses are known to Mr Cherney and his legal team.

With the permission of Longmore LJ Mr Deripaska appeals. At the conclusion of the hearing we announced that the appeal would be dismissed. These are my reasons for agreeing to that course.

The application before the judge was put on two bases. First it was said that a refusal to order witness protection measures would infringe each of the witnesses’ right to life guaranteed by article 2 of the European Convention on Human Rights (“ECHR”). Second, it was said that witness protection measures were necessary in the interests of justice and that therefore the usual principle of open justice should be departed from. The second way in which the case was put turns on the powers of the court under CPR Part 39.2, the relevant parts of which provide:

“(1)

The general rule is that a hearing is to be in public.

(3)

A hearing, or any part of it, may be in private if –

…

(g)

the court considers this to be necessary, in the interests of justice.

(4)

The court may order that the identity of any party or witness must not be disclosed if it considers non-disclosure necessary in order to protect the interests of that party or witness.”

In relation to article 2 the judge directed himself that Mr Deripaska would have to demonstrate a real and immediate risk to the witnesses’ lives, that is to say, that they faced "a real risk that [was] objectively verified and an immediate risk that [was] present and continuing", and that the risk would be materially increased. That criterion was one "that is not and should not be readily satisfied: in other words, the threshold is high". This self-direction is not criticised. The judge also held (§ 24) that if article 2 would be infringed then he should order witness protection measures: it would not then be a question of balancing different factors.

The evidence in support of the witnesses’ expressed fears was given in paragraph 11 of Ms Susan Prevezer QC’s seventh witness statement. She said:

“Each of the Witnesses referred to above has expressed, either to me or to members of the Defendant’s legal team, genuine concerns about reprisals by the OCGs who have been identified in their evidence and/or whose activities are referred to (directly or indirectly). In particular they have expressed concerns about giving evidence in these proceedings in the event that such evidence is made public and would be amenable for dissemination in Russia. Their concerns, as expressed, are that their evidence would be or may be regarded by these OCGs as damaging or potentially damaging to them; that these OCGs are still active in Russia and that, as a consequence, they or their relatives may be the target of reprisals if their identity and the evidence they give is made public.”

She went on to say in paragraph 14 that the witnesses “feel extremely nervous about giving evidence in public” and concluded in paragraph 16:

“I should make it clear that, to date, none of the Witnesses has stated that he or she will not give evidence unless allowed to do so in private. However, it is possible that this position may change, particularly if there is comprehensive reporting of the proceedings in the Russian media. The present position however is that they have all expressed a firm preference for giving their evidence in private, and there must be a risk that if they are required to give their evidence in open court, they will feel constrained in doing so, and in consequence, the Court may receive less complete evidence than if their oral testimony were taken in private.”

This evidence is at a high level of generality. None of the witnesses has given direct evidence. It is also notable that none of the witnesses has spoken of a fear of being killed.

The judge’s conclusion on the facts was that the evidence of the activities of OCGs was not directed specifically to the position of the twelve witnesses or to matters that are specific to these proceedings. He also held that there was no specific evidence, or reason to think, that any of the twelve witnesses had in fact been the subject of any threats or pressure not to give evidence. He held therefore that article 2 of the ECHR would not be infringed. In my judgment there is no real evidential foundation that even if witnesses might be subject to reprisals, those reprisals would take the form of death. They do not even express a subjective fear of death. I do not consider that the arguments presented on this appeal demonstrated that there was a real and immediate risk, objectively verified, to the lives of any of the witnesses in question. Mr Choo Choy QC, appearing for Mr Deripaska, submitted at one stage that there was no need to identify the precise form that any reprisals might take. That may be so when considering the court’s general powers under the CPR; but to the extent that the application relied on a potential breach of article 2 that submission is wrong, as I think Mr Choo Choy himself accepted. The judge was also undoubtedly right to say that for the purposes of article 2 it is important to consider whether (and if so how far and in what ways) any risk or danger would be reduced by witness protection orders. Mr Choo Choy’s submission that this consideration was irrelevant is also wrong. That being so it was a factor that the judge was entitled to take into account in arriving at his overall conclusion.

In my judgment there is no substance in criticism of the judge’s conclusion on article 2 of the ECHR.

In considering whether witness protection measures were necessary in the interests of justice, the judge took as his starting point the general principle that justice must be done in public. Any application to depart from the principle should be allowed only if and to the extent that justice strictly requires. This is not a question of the court’s discretion: it is a question whether the necessity for a derogation from the general principle has been established. In considering whether the necessity for a derogation has been established it is appropriate to take into account the extent of the interference with the general rule that is involved. If the restriction relates only to the identity of a witness or a party this is less objectionable than a restriction which involves proceedings being conducted in whole or in part behind closed doors. The judge also directed himself that a witness who has no interest in the proceedings has the strongest claim to be protected by the court if he or she will be prejudiced by publicity, since the courts depend on their co-operation. Again neither party criticises the judge’s self-direction. Since neither side criticises the judge’s formulation of the legal principles, there is no need for this court to engage in jurisprudential analysis.

Even so, at this stage there are a number of points that must be made. First, the judge expressly said that, as with any trial management decision of this kind, changed circumstances might justify reconsideration of his order, and to that extent his decision was necessarily provisional. Thus Ms Prevezer’s point that the position might change is accommodated by the judge’s decision. He was therefore entitled to base his decision on the current position as presented to him. Second, in considering whether a derogation from the principle of open justice was necessary the judge had to balance a number of competing factors. Mr Choo Choy referred us to AMM v HXW [2010] EWHC 2457 (QB) in which Tugendhat J considered the nature of the exercise in deciding whether an anonymity order should be made. He rightly said that the question is not one of discretion; either such an order is necessary or it is not. If it is, then the judge must make one. If it is not then he must not. But in deciding whether such an order is necessary the judge must weigh different factors; and the ultimate conclusion on a question like that is one on which different people may come to different conclusions on the same facts, without any of them being wrong. This is clear from Tugendhat J’s citation from the judgment of Sedley LJ in Interbrew SA v Financial Times Ltd [2002] EWCA Civ 274, [2002] 2 Lloyd’s Rep 229 (§ 58).

In Aldi Stores Ltd v WSP Group plc [2008] 1 WLR 748 Thomas LJ said that:

“The types of case where a judge has to balance factors are very varied and the judgments of the courts as to the tests to be applied are expressed in different terms. An appellate court will be reluctant to interfere with the decision of the judge in the judgment he reaches by the balance of the factors; it will generally only interfere where the judge has taken into account immaterial factors, omitted to take account of material factors, erred in principle or come to a conclusion that was impermissible or not open to him.”

Since Mr Choo Choy does not criticise the judge’s self-direction his appeal faces a steep uphill struggle. He says, however, that the judge must correctly identify the factors that require to be balanced. If the judge misunderstood the facts, or drew the wrong inferences from proven or uncontroversial facts, then this court can and must correct him. I accept that; but it is still incumbent on an appellant to satisfy us that the judge was wrong; not merely that there were different inferences that could have been drawn from the evidence. Third, the very fact that this case has attracted (and will no doubt continue to attract) considerable publicity both here and abroad is itself a powerful pointer towards the public interest in the conduct of the whole trial being public. Fourth, the judge’s decision in this case does, in my judgment, fall within the general area of case management. In his report on Civil Litigation Costs Jackson LJ said:

“I do regard it as vital that the Court of Appeal supports first instance judges who make robust but fair case management decisions.”

I agree.

The first point taken by Mr Choo Choy is that the judge attached no real weight or insufficient weight to the evidence that OCGs are still active in Russia. There are a number of answers to this. First, questions of weight are matters for the person to whom the task of balancing the various factors is given: in this case the judge. Second, the judge undoubtedly took into account the evidence that OCGs still operate in Russia. His whole discussion was an evaluation of whether the evidence of the activities of OCGs in Russia justified the witness protection measures sought. Third, the judge did not reject the value of the evidence wholesale. On the contrary he distinguished between those witnesses who gave very generalised evidence about the activities of OCGs and a witness (witness K) who was a former gang member whom he thought would be in more danger, and in respect of whom he did order witness protection measures. When he came to rule on witness D he accepted that witness protection measures were necessary in his case too. This of itself shows a careful evaluation of the significance of the evidence. I reject Mr Choo Choy’s submission that the judge regarded this evidence as irrelevant.

Fourth, the question for the judge was not whether OCGs were still active in Russia: he accepted that they were. The question for him was whether there was a risk of reprisals against these particular witnesses arising out of their evidence. There was evidence before the judge that there had been interference with and reprisals taken against witnesses in criminal proceedings against members or alleged members of OCGs. The judge said that that was not “directly comparable” with this case. Mr Choo Choy criticised the judge’s statement; but in my judgment he was self-evidently right. In the case of a criminal investigation the OCG member is the direct target. In this case he is not. As Mr Onslow QC, appearing for Mr Cherney, pointed out the instances of reprisals in criminal cases given in the evidence appear to be reprisals against members or former members of OCGs, or against those who have themselves been guilty of criminal activities, or against eyewitnesses to particular crimes. That is another point of distinction from our case. Moreover, the events of which the witnesses speak in our case mostly took place nearly twenty years ago. In addition much of what the witnesses speak of is either in the public domain or has already been reported to the authorities. For example witness A on more than one occasion says that the events he describes were notorious at the time; that they had been the subject of endless newspaper articles; had been reported on TV; and, moreover, that he himself had reported the activities in question to the appropriate authorities. Mr Choo Choy said that despite all this the giving of the evidence might cause the appropriate authorities to re-open investigations, or to interrogate the witnesses to see what else they might be able to say. The principal problem with this submission is that there is no evidence at all to support it. It is simply speculation.

The second main point taken by Mr Choo Choy is that the judge was wrong to take into account the fact that the witnesses had not said that they would decline to give evidence in the absence of witness protection measures. I do not begin to see how the willingness of a witness to give evidence in the absence of witness protection measures can be said to be irrelevant. Mr Choo Choy’s subsidiary point under this head is that the witnesses’ fears may grow as the time for giving evidence approaches; and that they might change their minds about giving evidence. He may be right about that. But in the first place that is also speculation without evidential support; and in the second place the judge made it quite clear that his decision was provisional only, and that changed circumstances might justify reconsideration of his order. Mr Choo Choy’s third point is that if the witnesses are genuinely fearful about giving evidence there is a risk that their evidence may not be full and frank. There is again no evidential foundation for this submission. This too is speculation. The judge was right to say that there was no specific reason to suppose that the witnesses would not give full and frank evidence; all the more so since their evidence in chief will be by written witness statement that will go before the judge.

Mr Choo Choy next says that the judge was wrong to discount the nature of the evidence of the witnesses. He went on to say that the evidence, particularly that of witness A, is extensive and detailed. It is specific both as to crimes, names and periods concerned. But as I have said much of the evidence is already in the public domain. The application did not adequately distinguish between what was in the public domain and what was not. I agree with Mr Onslow that since it was Mr Deripaska’s case that a derogation from the principle of open justice was necessary, it was for him or his legal team (and not for Mr Cherney) to identify what parts of the evidence really were new revelations. In addition the judge was fully alive to the nature of the evidence that the witnesses are to give. In the case of witnesses B and C, for instance, he thought that it was unrealistic to suppose that the information in their statements would add anything significant to what the authorities already know. In the case of witness L he said that she says nothing that could be of interest in any investigations by the Russian authorities. In relation to witnesses E, F, G, H, I and J he pointed out that only two of these witnesses give any direct evidence of contact with any OCG member. The evidence is for the most part general and indirect. In the case of witness A the judge acknowledged that the evidence was more detailed (although much of it was second hand); but that there were some instances of direct evidence to be given. Having considered the case of witness A the judge concluded that there was not sufficient evidence to justify orders under CPR Part 39.2.

In paragraphs 51 and 52 of his judgment the judge continued:

“51 There is another consideration that applies to all the witnesses but is particularly significant in the case of witness A. As in the In re Officer L case, what is important on these applications is not simply whether a witness faces a risk or danger because he or she is to give evidence in these proceedings, but whether (and if so how far and in what ways) any risk or danger would be reduced by witness protection orders. The witness statements of the twelve witnesses have been served, and therefore their identities are already known to Mr Cherney and also, as Ms Prevezer realistically acknowledges, very probably to Mr Popov, who is to give evidence for Mr Cherney. But the order of 20 January 2012 is designed to minimise the risk that the statements will be used for anything other than the proper purposes of the litigation. More significantly, the names of most of those who are to give evidence in these proceedings (for either Mr Cherney or Mr Deripaska) have already been published. On 9 April 2012 there appeared on the Russian legal news website "pravo.ru" an article, referring to this litigation as a new 'Case of the Year'", identified witnesses, including all twelve to whom these applications relate. According to Mr Beazley the article was removed from the website after "something like" two or three days, but it can still be found through internet search engines. Mr Deripaska believes that Mr Cherney or his associates were responsible for this information appearing on the website, but this is denied by Mr Cherney and there is no evidence that he was so responsible: the advisers of Mr Cherney and Mr Deripaska co-operated to have it removed. However that may be, any criminal or other person interested in what evidence is to be given at trial can probably find out either because of this publication or in some other way.

The judge was plainly right to consider whether (and if so how far and in what ways) any risk or danger would be reduced by witness protection orders. His conclusion on the facts is unimpeachable.

In my judgment the judge’s weighing of the various considerations on the basis of the way that the case was put to him cannot be faulted.

Mr Choo Choy had a last point on the evidence. He said that the judge was wrong to consider the witnesses one by one; he should have considered the corpus of evidence as a whole. OCGs, he said, would not be astute to differentiate between the nature and quality of the evidence given by the various witnesses. If witness protection measures were justified as regards some witnesses (as the judge accepted) then they should have been extended to all of them. There are two reasons why I reject this submission. First, there is no evidential foundation to support it. Second, it was not the way in which the case was presented to the judge.

The final point is that the judge should have decided that the witnesses should give evidence in public but anonymously. This does not appear to have been the principal way that the application was put to the judge, although it did feature as an alternative in the draft order. The judge mentioned it in passing in paragraph 23 of his judgment. In the case of witness A, however, Mr Choo Choy accepted that anonymity was unlikely to be of any value unless the evidence was given in private. There is sufficient identifying detail in his witness statement to enable anyone who is interested to find out who he is. It seems to me that the same would apply to the other witnesses too. Moreover, if the witness statements were to be redacted so as to remove all identifying detail the result would be a distorted trial and would give rise to the practical problems that the judge identified in paragraph 22 of his judgment.

In my judgment the inferences drawn by the judge were inferences that he was entitled to draw. It has not been shown that his inferences were wrong, even though other judges might have drawn different inferences. Nor has it been shown that he took into account irrelevant factors or failed to take relevant factors into account. His balancing exercise was one that he conducted in accordance with the law; and it is not plainly wrong.

These were the reasons that led me to agree to the dismissal of the appeal.

I agree. There is nothing I wish to add except to make clear that I join with my Lord in endorsing what Jackson LJ said in his report.

I also agree.