Pacific International Sports Clubs Ltd v Soccer Marketing International Ltd & Ors

As any lover of football knows, Dynamo Kiev is one of Europe’s most celebrated clubs. Unfortunately, it is also the subject of a bitter dispute. The dispute is over who controls a valuable stake in the club’s shareholding. The disputants are Konstantin Grigorishin, who acts through Pacific International Sports Clubs Ltd (“Pacific”) which Mr Grigorishin owns and controls and which is the claimant, and the second defendant, Igor Surkis (“Mr Surkis”). Mr Grigorishin and Mr Surkis are prominent figures in Ukraine. They are also substantial businessmen. So also are Mr Surkis’s brother Gregory and the third defendant, Valentyn Zgursky.

Pacific’s claim is that by reason of steps taken by Mr Surkis, with others, during the period 2001 to 2008 involving share transfers, a rights issue and other actions, its shareholding in Dynamo Kiev’s football club (“Dynamo”) was diluted from an 18% to a 1.8% stake and, subsequently, extinguished altogether. It claims that these actions were carried out deliberately with the intention of causing it injury, so giving rise to a claim for damages under Ukrainian law (“the conspiracy claim”). It also claims that as a result of these events Mr Surkis, Mr Zgursky and Mr Zgursky’s son, the tenth defendant (“Mr Zgursky junior”), were unjustly enriched at its expense, so giving rise to a restitutionary claim under Ukrainian law. The conspiracy claim lies against all of the defendants. The unjust enrichment claim lies against Mr Surkis and the Zgurskys alone.

The effective question which I have to decide is whether these claims should be permitted to proceed in this country. The defendants, or those of them who are represented before me, submit that for various reasons the claims should not proceed in this country; Pacific, by contrast, submits that they should.

Pacific, which was incorporated in accordance with the laws of Mauritius, issued its claim in these proceedings on 13 June 2008. Apart from Mr Surkis, Mr Zgursky and Mr Zgursky junior, all of the other defendants are companies. With the exception of the first defendant, Soccer Marketing International Ltd (“SMI”) which was incorporated in this country, all of the corporate defendants are BVI companies. None of the defendants, other than SMI, has any connection with this jurisdiction. Nor does Pacific or Mr Grigorishin. Nor, needless to say, does Dynamo, the shares in which are the subject of the dispute. Dynamo was incorporated under the laws of Ukraine and, as might be expected, its business is located in that country. The fact that it plays some of its matches abroad does not alter that fact. Nor do any of the events which have given rise to Pacific’s claim have any connection with this jurisdiction. They have all occurred in Ukraine. It is common ground that the claims are governed by Ukrainian law.

The only connection with this jurisdiction is the fact that SMI was incorporated here. Insofar as it has carried on business it has done so in Ukraine or at any rate outside the jurisdiction of the English court. Indeed, its only relevance to the claims that Pacific brings has been as the vehicle which held 400 or so shares in Dynamo between December 2001 and September 2004. On 18 December 2007 it was dissolved as a result of which it ceased altogether to exist. It was restored to the Register of Companies on 1 August 2008, some weeks after the claim had been issued. The restoration was on Pacific’s application and was for the purpose of these proceedings. So far as is known it has no assets although I was told by Mr John Brisby QC, who with Mr Tom Gentleman has appeared for Pacific, that if Pacific is successful in obtaining judgment against SMI it is intended that SMI be put into liquidation so that its liquidator can pursue claims, founded on the judgment, against others, principally as I understand it, against Mr Surkis against whom in any event the main claims lie. SMI has at all material times been a company controlled by Mr Surkis.

Mr Ali Malek QC, who with Mr Cyril Kinsky has appeared for SMI, Mr Surkis and the other corporate defendants, submits that it cannot be seriously disputed - indeed it is not disputed - that applying the tests set out in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 (“Spiliada”) to which I shall come later the natural forum for the resolution of the dispute is Ukraine.

SMI was served with these proceedings at its registered office on 9 October 2008. There is no question but that Pacific has a right to pursue its claim - confined to the conspiracy claim - against SMI in this jurisdiction. It is Pacific’s contention that, as a result of the decision of the European Court of Justice in Owusu v Jackson, Case C-281/02 [2005] QB 801 (“Owusu”), Pacific has no choice if it wishes to pursue any action against SMI but to pursue that claim in this jurisdiction. SMI, by contrast, asks the court under CPR 11 to decline jurisdiction because there are related proceedings pending in Ukraine; alternatively, it seeks under CPR 3.4 to have the particulars of claim struck out on the grounds that they disclose no reasonable grounds for bringing the conspiracy claim (as I have mentioned, the only claim brought against it by Pacific), alternatively summary judgment under CPR 24 on the ground that the claim has no reasonable prospect of success. It also contends that the claim is time-barred and is an abuse of process. SMI also seeks a stay of the proceedings on case management grounds.

Mr Surkis was served with the proceedings on 25 November 2008 when he happened to be in this country during a short trip to London to watch Dynamo Kiev play in a Champions League match. He applies under CPR 11 to have the proceedings against him stayed on the basis of forum non conveniens, alternatively seeks to have the conspiracy claim against him struck out under CPR 3.4 as disclosing no reasonable grounds for being brought, alternatively applies under CPR 24 for that claim and the unjust enrichment claim to be summarily dismissed as having no reasonable prospect of success. He also contends that those claims are time-barred and an abuse of process.

On 20 October 2008 an order was made (“the permission order”) giving Pacific permission to serve these proceedings out the jurisdiction on all of the defendants other than SMI (given its incorporation in this country there was no need for such permission in the case of SMI). In the event the permission was not needed in the case of Mr Surkis when he was served with the proceedings on his visit to this country the following month. The fourth to ninth defendants, the BVI companies, were duly served at their registered office (they share the same address) in the BVI in accordance with the permission order. Like SMI these companies are Surkis-controlled. They apply for the permission order to be set aside on the basis that there is no reasonable cause of action against them, alternatively on the basis that Pacific has not established the necessary CPR 6 “gateway” as it is described, alternatively on forum non conveniens grounds.

Neither of the Zgurskys has been served and accordingly the court is not seized of any proceedings against them.

The matters come before me on an application dated 14 January 2009 which the defendants, other than the two Zgurskys, have made seeking, on the various grounds that I have summarised, that the claims against them should either be struck out or dismissed or stayed.

I propose to start by setting out the underlying facts and the issues to which they give rise.

The relationship between Mr Grigorishin and the two Surkis brothers (Igor and Gregory) goes back to 1998. At about that time, in circumstances which are a matter of dispute and which for present purposes probably do not matter, Mr Grigorishin entered into various asset-sharing deals with the two Surkis brothers. These deals resulted in Pacific acquiring, by January 2000, a 20% shareholding in Dynamo consisting of 200 out of Dynamo’s issued share capital of 1000 shares. By March 2001 this was reduced to 180 shares - and thus to an 18% shareholding - as a result of a gift of twenty shares to President Kuchma, the then President of Ukraine.

Mr Surkis has owned (and continues to own) a large number of shares in Dynamo. At one time 400 shares were held in the name of Newport Management Ltd (“Newport”), a BVI company controlled by Mr Surkis. That represented a 40% stake in Dynamo. A further 230 shares were held by Slavutich, a company also controlled by Mr Surkis, and a further 90 shares were held by the eighth defendant. There is a question whether Newport’s holding was 410 (rather than 400) shares and Slavutich’s holding was 220 (rather than 230) shares. Whether it is the one or the other does not matter. The remaining 100 shares were held by Athletic Sports Society Dynamo (“ASS Dynamo”) which, as I understand it, is and has at all material times existed independently of either Mr Grigorishin or Mr Surkis (and their respective associates).

In December 2001 Newport transferred its holding (whether 400 or 410 shares) to SMI. At that time Dynamo’s charter (the equivalent of a UK registered company’s articles of association) contained pre-emption provisions in favour of other shareholders in the event of a proposed transfer of shares by an existing shareholder. Pacific says that it was unaware until August 2004 that there had been any transfer of shares by Newport to SMI and unaware until January 2009, when served with the first witness statement of Mr Yuri Romazanov (a director of the Ukrainian law firm which acts for Dynamo) in the course of these proceedings, that the transfer had occurred in December 2001. Pacific says that until discovering in January 2009 that the transfer had taken place in December 2001, it had been given to understand that the transfer took place in or after June 2002 following the alteration of Dynamo’s articles at a general meeting of shareholders on 14 June 2002. The fact that the transfer had occurred in December 2001 is, Pacific says, significant in view of subsequent changes in the law concerning the efficacy of share pre-emption provisions. It follows from the fact that, as it says, it was ignorant until August 2004 of the transfer in December 2001 that it was not given notice of the proposed transfer and therefore not given the opportunity to exercise its pre-emption rights under the relevant clause in Dynamo’s charter. Pacific claims that if it had been given notice it would have exercised its pre-emption rights and acquired the shares in accordance with its rights under the article. It further contends that if this had happened it would have acquired a stake in Dynamo sufficient to prevent the amendments to Dynamo’s charter and the issue of further shares of which it later (and in these proceedings) complains and which, it says, have led to the reduction and, ultimately, extinguishment of its shareholding.

A general meeting of Dynamo’s shareholders took place on 14 June 2002. The shareholders resolved at that meeting to remove the share pre-emption provisions from Dynamo’s charter. Pacific complains that it was not given notice of the meeting and says that if it had been it would have attended and voted against the resolution. It says that if it had been given notice of the proposed transfer of shares by Newport to SMI in December 2001 and had exercised its pre-emption rights in respect of those shares, and it says that it would have done, it would have been in a position to block, and would have blocked, the alterations to Dynamo’s charter resolved upon at the 14 June 2002 meeting.

In November 2003 (or thereabouts) Mr Surkis and Mr Zgursky purchased the 230 (or, as the case may be, 220) shares then owned by Slavutich. On 29 December 2003 Mr Zgursky purchased 90 (or, as the case may be, 100) of the shares held by SMI. Pacific complains that, but for the unlawful amendment of Dynamo’s charter at the general meeting on 14 June 2002, it would have been entitled to exercise its pre-emption rights in respect of those transfers and would have exercised them so as to acquire the shares so transferred.

On 17 August 2004 Mr Zgursky transferred one of his shares in Dynamo to each of fourth, fifth, sixth, seventh and ninth defendants, representing five shares transferred in all. Pacific makes the same complaint about these transfers as it does about the transfers of December 2003. In addition, it relies on the fact that from 1 January 2004 it had a statutory pre-emption right to acquire them under the new Commercial Code of Ukraine. It also complains that it received no notice of the proposed August 2004 transfers. Mr Romazanov maintains, however, that transfer pre-emption notices were sent out on that occasion.

Two days later, on 19 August 2004, a general meeting of Dynamo’s shareholders took place at which a resolution was passed to increase Dynamo’s share capital and offer them to existing shareholders by way of a rights issue. Pacific was present at the meeting. It voted against the resolution but was outvoted. It complains that if (as it would have done under the pre-emption provisions) it had acquired the shares which had previously been transferred (without prior notice to it), it would not have been outvoted and would have been able to block the issue of the new shares. It further complains that the terms of the rights issue were deliberately designed to ensure that it was unable to subscribe for them. It complains that the whole exercise was a sham aimed only at diluting its interest in Dynamo from 18% to 0.18% (or thereabouts). It complains that this was not a genuine capital raising exercise but, instead, was a deliberate attempt to dilute Pacific’s holding or to ensure that, if it did participate, it would be the only person paying cash for the newly issued shares. It complains that dilutions of this sort are a commonly used technique in Ukraine for getting rid of (or diluting to insignificance) unwanted shareholders. Mr Grigorishin says that at the time of the issue he had real concerns that this might be the case and that if Pacific were to subscribe cash for the new share issue there might be further attempts at dilution at a later stage and accordingly had reservations about participating. Pacific maintains therefore that these concerns were well founded. It alleges that the issue was structured in a way calculated to prevent it from participating. It alleges that none of the companies that did participate - the only exception being ASS Dynamo which also took up a small shareholding - appear to have subscribed cash for the new shares; it alleges that the BVI defendants, all of which took up substantial shareholdings in purported exercise of the rights issue, paid for them by means of an exchange of unspecified “proprietary rights”. It alleges that the exchange of these rights was not legally permissible at that time as payment for taking up a share issue. Pacific further alleges that Dynamo’s charter was amended, at the meeting on 31 August, to permit payments for shares using property or foreign currency. It alleges that this was after the last date for payment of any subscription monies due in respect of the new shares issued pursuant to the resolution passed on 19 August, namely 30 August, so that it was not open to any shareholder participating in the 19 August issue to rely on the subsequent amendments to the charter to justify payment for the shares by means of the exchange of property rights.

In September 2004 SMI and the BVI defendants sold the remainder of their shares in Dynamo to Mr Surkis and Mr Zgursky. Pacific accepts that transfer pre-emption notices in respect of the proposed disposals were sent but complains that they did not reach its Moscow address until long after the notices were dated. The notices, which invited a response “within 5 days”, were sent by ordinary mail on 22 September 2004 which, Pacific claims, was a manifestly insufficient period given, not least, the method of posting. It says that in the ordinary course of posting the notices would not have arrived until the end of the five-day period. In the event, Pacific says, the notices only reached it on 21 October 2004 which was long after expiry of the five-day period. On receipt of the notices Pacific notified Dynamo that it wished to buy the shares being transferred. But by then the transfers had long since taken place and been processed; Pacific was told that it was too late. Pacific alleges that the very short period of notice and the method employed for giving the notices were chosen with the intention of injuring it by disabling it from timeously exercising its pre-emption rights. The shares so transferred included the shares acquired by those companies as a result of the rights issue so that by 30 August 2004 their collective stake in Dynamo exceeded 90%. Pacific complains that although Mr Surkis and Mr Zgursky chose not to participate in the rights issue, notwithstanding that both were shareholders at the relevant time, nevertheless they ended up with 99% of the shares in Dynamo very shortly afterwards and, it alleges, they did so on very favourable terms.

The next episode of which Pacific complains concerns what has been referred to as “the Obolonsky Court proceedings”. In May 2005, Mr Zgursky junior, who had become a shareholder in Dynamo on 10 November 2004 (and not before), initiated a claim in the Obolonsky District Court of Kiev against Pacific, Slavutich and a company called Registr (a limited liability company incorporated in Ukraine and licensed as a registry to hold documents on behalf of Dynamo relating to its shares and transactions concerned with its shares). By his claim Mr Zgursky junior sought a declaration that Pacific was not a shareholder in Dynamo and an order requiring Registr to cancel Pacific’s shareholding, by then reduced to a 0.18% stake, on the ground that, in breach of Dynamo’s charter, no pre-emption notices had been given to other shareholders in Dynamo at the time that Pacific acquired its shares in 2000. Pacific alleges that the claim was extraordinary because the other shareholders had in fact been notified of the intended transfer prior to Pacific’s acquisition of the shares and, what is more, had given their consent (not least as minutes signed by Mr Zgursky, Mr Zgursky junior’s father no less, showed), and also because Mr Zgursky junior had no standing to bring the claim since it related to events which had occurred more than four years before he had acquired his own shareholding in Dynamo.

It is not in dispute that on 8 September 2005 the claim was upheld at first instance and an order made which had the effect of cancelling Pacific’s shares in Dynamo. The order was opposed by Pacific which was represented before the court but was not opposed by the other defendants. Pacific appealed, first to the Ukrainian Court of Appeal and subsequently to the Supreme Court of Ukraine. Each appeal failed. It was only on a second appeal to the Supreme Court that, on 26 October 2006, Mr Zgursky junior’s claim was dismissed and the order made by the District Court set aside. In the meantime, however, Pacific had been deprived of any ability to enforce its rights as a shareholder.

This might not have mattered but for the fact that at a general meeting of Dynamo which took place in early September 2005 (I understand shortly after the making of the Obolonsky District Court order) Mr Surkis, Mr Zgursky and Mr Zgursky junior (by then the holder of 860 shares in Dynamo) resolved to transform Dynamo from a closed joint stock company (a “CJSC”) into an open joint stock company (an “OJSC”). Although a shareholder in a former CJSC is entitled to exchange his shares in that company for an equivalent percentage of shares in the OJSC into which the company has been converted, Pacific was unable to do so in the case of Dynamo because, by then, the order of the Obolonsky District Court had been made declaring that it had no shareholding entitlement in Dynamo. By the time, at the second hearing before the Ukraine Supreme Court, the order of the Obolonsky District Court was set aside, it was too late for Pacific to acquire a substitute shareholding.

Pacific alleges that the spurious claim brought by Mr Zgursky junior in the Obolonsky District Court and the conversion of Dynamo from a CJSC into an OJSC were undertaken and orchestrated with the deliberate intention of depriving Pacific of its remaining shareholding. It refers to the fact that, according to Mr Romazanov, the aim of Dynamo’s conversion into an OJSC was to “broaden the pool of shareholders and equity investment” in Dynamo. Pacific contrasts that statement with the fact that the overwhelming majority of shares in the company continued thereafter to be held by Mr Surkis and Mr Zgursky and that, only two and a half years later, in March 2008 Dynamo was reorganised once again, this time as a limited liability company (“LLC”). The expert evidence before the court is to the effect that, while there are no limits on the number of shareholders who can hold shares in either an OJSC or CJSC, no more than ten shareholders can hold shares in an LLC. Pacific alleges that this second reorganisation is inconsistent with any alleged wish to broaden the pool of shareholders. Pacific points to these matters as indicating that the defendant’s actions were directed at injuring Pacific’s rights since there would appear to have been no good reason for the transformation of Dynamo from a CJSC into an OJSC and later into an LLC. It says that such reorganisations are often used in Ukraine as a tactic in what are described as “corporate raiding schemes” aimed at taking corporate control of a company.

In support of its allegation that these steps were taken with the purpose of depriving it of its shareholding, Pacific points to the fact that on 3 February 2006, Mr Zgursky applied to the Pechersky District Court against Dynamo (of whose supervisory board he was then the president) and the State Commission on Securities and the Stock Market or “SCSSM” (the Ukrainian Securities Authority) requiring them to take all necessary steps to bring the conversion of Dynamo from a CJSC into an OJSC into effect by an order annulling the certificate of registration of Dynamo as a CJSC company and calling for the issue of a certificate of Dynamo’s registration as a OJSC company. Pacific points to the fact that the Pechersky District Court granted the order sought on the very day that the application for it was made and to the fact that on the following day, 4 February 2006, the SCSSM complied with the order. I shall have occasion to return to that court process in connection with a letter written at the time to the SCSSM by the former President of Ukraine, Leonid Kravchuk, who was then still a member of Parliament and a close associate of the Surkis brothers. The letter urged the SCSSM to register the conversion.

The net effect of all of these matters is that Pacific’s stake in Dynamo was, despite its opposition to the various steps taken, reduced from 18% (a stake possessing, it claims, a very substantial value), to nothing with no compensation to reflect the loss of its rights.

The first question is whether it is even open to the BVI defendants (which dispute the making of the permission order allowing for service on them out of the jurisdiction) to challenge the court’s assumption of jurisdiction over them. Pacific has maintained that they are precluded from doing so because they have submitted to the jurisdiction. (SMI and Mr Surkis were served within the jurisdiction so the point does not arise in relation to them.)

Pacific’s contention turns on the fact that, in addition to challenging the court’s assumption of jurisdiction over them, the BVI defendants submit that Pacific has no reasonable cause of action against them or, if it has, that the action fails on limitation and abuse of process grounds.

There is no substance in this contention by Pacific. If conduct on the part of a defendant is to amount to a submission to jurisdiction that conduct must be unequivocal in nature. See SMAY Investments Ltd v Sachdev and ors (Practice Note) [2003] EWHC 474, [2003] 1 WLR 1973 at [41]. There is no such unequivocal conduct in this case. The defendants, including in particular the BVI defendants, have made it clear that the assumption of jurisdiction over them by this court is challenged. Their contentions on other matters are without prejudice to this challenge. That is sufficient to preserve their right to challenge jurisdiction.

The next question which I propose to consider is whether, assuming that there is otherwise a good claim by Pacific against the defendants and that the claim in not to be dismissed on limitation or abuse of process grounds, the claim should not, on grounds of forum non conveniens, be tried in England. The contention that it should not is asserted by all of the defendants represented before me by Mr Malek and Mr Kinsky. Pacific contends that it should.

There was no dispute over the applicable principles which are to be found in the speech of Lord Goff in the Spiliada [1987] 1AC 460 at 476 to 478 and 480 to 481. They were, so far as material, adequately summarised in the skeleton argument of Mr Malek and Mr Kinsky. The principles are these. First, in a stay case the court already has jurisdiction and the issue is why the court should not exercise that jurisdiction. In addressing that issue, the court must first consider whether there is a forum outside England which is the appropriate forum. If there is, the court will ordinarily grant a stay unless there are circumstances by reason of which justice requires that a stay should nevertheless not be granted. The burden of proving that there is a forum outside England which is the appropriate forum rests on the defendant. In a stay case, if the court is satisfied that the prima facie appropriate forum is outside England, the burden shifts to the claimant to show that there are special circumstances by reason of which justice requires that a stay should nevertheless not be granted. Second, and by contrast, in a case involving service out of the jurisdiction the issue is why the court should take jurisdiction at all. In addressing that issue, the court must consider whether England is the appropriate forum (“the first stage”). If it is, the court will normally grant permission to serve out of the jurisdiction unless there are circumstances by reason of which justice requires that service out of the jurisdiction should nevertheless be refused (“the second stage”). In short, the court takes jurisdiction over the case because England is the appropriate forum. The burden of proving that England is the appropriate forum rests on the claimant. In a service out case, if the court is satisfied that the prima facie appropriate forum is England, however, the burden shifts to the defendant to show that there are special circumstances by reason of which justice requires that service out should nevertheless be refused.

At page 481 of Spiliada Lord Goff referred to the burden of proof in a case involving service out of the jurisdiction as “quite simply the obverse of that applicable where a stay is sought of proceedings started in this country as of right”. In Connelly v RTZ Corporation plc [1998] AC 854 at 871-872, referring back to what had been said in Spiliada, Lord Goff put the matter thus:

Third, allegations as to why the appropriate forum should be displaced must amount to an allegation that that forum is or will be unavailable for the trial of the claim. This must be clearly demonstrated against an objective standard and supported by positive and cogent evidence. In the Abidin Daver [1984] 1AC 398 at 411 Lord Diplock said in reference to this point:

Applying those principles to the present dispute, the position is as follows. As the BVI defendants challenge the grant of permission to serve out of the jurisdiction on them it is for Pacific, having sought and obtained permission to do so, to satisfy the court that England is the proper place in which to bring the claim. See CPR 6.37(3). By contrast, having been duly served with the claim within the jurisdiction, the burden is on SMI and Mr Surkis who apply to stay the claim on forum non conveniens grounds, to satisfy the court that England is not an appropriate in which to bring the claim. All of this was common ground between the parties. The fact that the burden of proof on this issue is different according to whether it is a defendant duly served within the jurisdiction who is seeking a stay or it is the claimant who, having served out with the court’s permission, is having to satisfy the court on a challenge to the grant of permission that England is the proper place in which to bring the claim does not present any practical difficulties in the present case: the BVI defendants are, on any view, part players in this dispute; the essential contest, as I have explained, is between Pacific and Mr Surkis (and to a lesser extent Mr Zgursky except that he has not yet been served). The effective burden therefore is on Mr Surkis to persuade me that, although duly served within the jurisdiction, this country is not a proper place to try Pacific’s claims.

It is the contention, advanced by Pacific, that justice will not be obtained in Ukraine even if Ukraine is otherwise the appropriate forum for the resolution of its claims. I consider that to be the principal issue which I am called upon to deal with on this application and which I have found to be the least straightforward to decide. I propose to deal with it next. I begin my consideration of the matter by reminding myself of what must be shown.

The standard of evidence needed to establish the unavailability of the appropriate forum if that forum is overseas - the cogent evidence to which Lord Diplock, and later Lord Goff, referred - must be such as to demonstrate that the forum in question is or will be unavailable, not merely that it may be unavailable. In Connelly v RTZ Corporation plc (at 872) Lord Goff said, in relation to such applications:

A good example of the appropriate forum - if it is the overseas forum - being unavailable is where there is such a state of anarchy in that country that there is no functioning court system. Another, pertinent to the matters on which Pacific relies in these proceedings, is where allegations are made of political interference with the administration of justice or of judicial impropriety. But allegations alone of political interference or a judicial impropriety will not suffice. In Dornoch Ltd v Mauritius Union Assurance Co Ltd [2006] EWHC 1887 (Comm); [2006] Lloyd’s Rep IR 127 Aikens J stated at [97]:

The court should not therefore reject another forum as inappropriate on the basis of subjective and unsubstantiated assertions, particularly assertions by the claimant himself.

In Cherney v Deripaska [2008] EWHC 1530 (Comm); [2009] 1 AER (Comm) 333 where an issue was whether a fair trial was possible in Russia, Christopher Clarke J said this (at [237-239])

By contrast in Yugraneft v Abramovich & ors [2008] EWHC 2613 (Comm) Christopher Clarke J found that a fair trial in Russia (the appropriate forum for the resolution of the dispute under the first stage of Spiliada) would be possible. At paragraphs 492-497 he said this:

These cases illustrate the need to examine most clearly the matters relied upon as demonstrating that a fair trial in what is otherwise the appropriate forum for the resolution of the dispute will not be possible. Nor does it follow that because claimant A cannot obtain a fair trial in a particular country, claimant B will not be able to do so in that same country. The question is peculiarly fact-sensitive. Thus in Cherney v Deripaska where, as I have mentioned, the decision was that a fair trial in Russia of Mr Cherney’s claims would not be possible, Christopher Clarke J said this (at [247-248]):

Mr Brisby submitted that, notwithstanding that the events complained of “overwhelmingly” took place in Ukraine with the result that, all else being equal, Ukraine is where the claims should be tried, it would be wrong to stay these proceedings against Mr Surkis or, in the case of the BVI defendants, set aside the permission order thereby ending any claim at all against those defendants in this jurisdiction for essentially two reasons. The first is that, by reason of the decision of the ECJ in Owusu, a trial of Pacific’s claim against SMI must be heard in this jurisdiction: this court, he submitted, has no power to decline jurisdiction as against that company. On that basis, he submitted, if the permission order were to be set aside and I were to accept that the claim against Mr Surkis, notwithstanding that he has been served within this jurisdiction, ought, all else being equal, to be tried in Ukraine, there would have to be two trials: one in this country against SMI and the other in Ukraine against Mr Surkis and, if they can be brought before the Ukrainian court, the BVI companies. Separate trials of the same issues risk inconsistent decisions and duplication of costs. Such a prospect is, he submitted, to be avoided if at all possible. It can be avoided, he submitted, by declining to stay the proceedings against Mr Surkis and by refusing to set aside the permission order.

The second reason raises the second stage of the two-stage approach dismissed in Spiliada, namely that, as it was put, Pacific stands no prospect of a fair hearing in Ukraine. Mr Brisby relied for this on three matters: (1), and by way of general background, the well documented deficiencies in the Ukrainian legal system as a result of which the courts there are susceptible to political pressure and to pressure from influential individuals, (2) the fact that Mr Grigorishin and, by extension, corporate entities controlled by him face particular difficulties in Ukraine as a result both of his poor relations with the current Ukrainian government and of the pressure that the Surkis brothers and the Zgurskys, and their respective associates, are able to bring to bear in Ukraine and (3) the history of Pacific’s proceedings in Ukraine in the present dispute.

I propose to deal first with the second of those reasons, the submission that Pacific will not obtain a fair hearing in Ukraine. I will come later to the decision in Owusu and its impact on the questions of jurisdiction that arise.

As to the first of the three matters relied upon by Pacific, well documented deficiencies in the Ukrainian legal system, Mr Brisby drew my attention to several recent reports by respected international bodies highlighting the existence of corruption among members of the Ukrainian judiciary. He referred to an annual survey of corruption perceptions published in 2008 by Transparency International (an organisation which describes itself as “the global civil society organisation leading the fight against corruption” and is based, I understand, in Berlin) in which Ukraine ranks 134 out of 180 countries surveyed. I was referred also to a policy paper published in October 2007 by the Atlantic Council of the United States noting that “widespread corruption plagues the judicial system in Ukraine” and that it stretches “from bribery in the process of appointing judges to corrupt rulings”. It refers in particular to ‘raiding’, namely “the seizure of property by private interests made possible by corrupt court rulings”. The report refers also to an acceptance within Ukrainian government and political circles that “corruption is severe in the country’s judicial system”. It refers to the intimidation of judges who are on that account susceptible to bribery and corruption, to many poorly trained and corrupt members of the legal profession, to the haphazard state of Ukrainian laws enabling cases to be “resolved in different ways by choosing ‘convenient’ articles from applicable laws” and to the malign effect on the judiciary and thus to their susceptibility to corrupt influences, of so-called councils of judges and bodies of judicial self governance which enable government officials and others to influence lower court decisions. Another report, published in 2006 by Sigma (a joint initiative of the OECD and EU), comments on the “flawed” system of Ukrainian law, involving poorly and “over-drafted” or simply inconsistent laws which provide scope for “arbitrary decision-making” and other judicial deficiencies.

Mr Brisby laid particular emphasis on a number of extracts from the 2006 report of USAID (the United States Agency for International Development) entitled “Corruption Assessment: Ukraine”. In that report the comment is made that “corruption in Ukraine still remains one of the top problems threatening economic growth and democratic development. It refers also to widespread administrative corruption. In a section headed “judicial sector” it comments that “the judicial system usually scores as one [of] the most highly corrupted institutions in public opinion surveys in Ukraine” and that “as currently configured its operation falls short of necessary independence from the Executive branch of government, it suffers from excessive discretion on the part of judges and court administrators, it lacks sufficient internal controls to effectively reduce abusive power, and it is not as transparent in its procedures and decisions as it ought to be”. The report then refers to steps and programmes taken to improve matters. In a section headed “corruption vulnerabilities” it refers to how the “principal components of the judicial sector” are vulnerable to corruption. It refers to judicial selection and how, given the way that it operates, “the result …is a judiciary that is paid by favouritism, nepotism, and political influence”. In a section on judicial discipline it observes that there is “minimal monitoring and oversight of judicial conduct” and that “judges are likely to believe that they can act with impunity”. On court procedures and administration it refers to “interference in judicial decision-making by the executive and parliamentary branches, higher level judges and business people”. It also comments on an absence of transparency in proceedings. A later part of the report states that “Ukraine can be categorised as a closed insider economy - a country strongly influenced by elite cartels. Top political and business figures collude behind a façade of political competition and colonize both the state apparatus and sections of the economy”. It comments that “the system still operates largely in a collusive and opaque fashion, and with an apparent disregard for the public good”.

Mr Brisby submitted that the Surkis brothers and their associates fit the description of such elite cartels.

He also drew my attention to a Presidential Decree issued in September 2006 and entitled “On Concept for Corruption Overcoming in Ukraine ‘On the Way to Integrity’” in which the President of Ukraine admitted that:

Finally, on this topic, Mr Brisby drew my attention to comments in the report of the defendants' own expert on the Ukrainian court system, Professor Valentyn Shcherbyna of Kiev University. The professor accepts that the system is not perfect, that there is what he refers to as “legal imperfections” and that over the years there have been “numerous allegations of corruption of individual judges…some …well-founded” and how these problems have been addressed over recent years with substantial improvements. Of particular interest, said Mr Brisby, was the following comment by Professor Shcherbyna:

Coming next to the particular difficulties faced by Mr Grigorishin personally - the second of the three matters upon which Pacific relied - the evidence highlights the fact that Mr Grigorishin was banned from entering Ukraine on 16 December 2008 when travelling from his home in Russia. No reason was given at the time for the imposition of the ban. In his witness statement Mr Grigorishin stated that this had never happened before not least when, although not a Ukrainian citizen (he is a Russian citizen), he was born in Ukraine, spends a lot of his time in Ukraine where he has homes and the majority of his business interests and where his mother resides. He mentioned also that his wife is from Ukraine. Mr Grigorishin went on to state that he was later given to understand that the reason for the entry ban was connected with “state safety in the field of energy” and, in particular, his allegedly illegal activities connected with the organisation of a number of “seizures of strategically important state-owned enterprises in the field of energy”. Mr Grigorishin then stated that he believed that the reason for the ban was his poor relations with the President of Ukraine and the fact that he had “clashed with the personal interests of members of [the President’s] family”. He mentioned that shortly before the entry ban was imposed he gave an interview to a newspaper (which later published the interview) in which, as he put it, “I expressed views that were uncomplimentary” to the President. He also referred to a belief (uncorroborated, however, by anything concrete) that the Surkis brothers had lobbied presidential officials for the entry ban. The ban, it was pointed out, was imposed just three weeks after service of these proceedings on Mr Surkis.

It appears that a few days after the entry ban was imposed Mr Grigorishin challenged in the District Administrative Court of Kiev the making of the entry ban but found that the court declined to entertain the case on account of the fact that his power of attorney in favour of the lawyer acting for him had not been correctly attested. His belief, however, was that “the President’s administration, or possibly the security services, exercised their influence over the court to scupper my claim on the basis of an empty technicality”.

A further application was made before the same court on 23 March 2009 to have the entry ban set aside. On this occasion he was represented by a lawyer “who could only attend the hearing on the basis that she undertook not to divulge what had transpired” during it. The application was successful. The entry ban was set aside as an abuse of executive power on the ground that there was no evidence to suggest that he had posed any threat to Ukrainian national security.

Mr Grigorishin is not optimistic that he has heard the last of the matter. In paragraph 48 of his witness statement he stated that:

Up to the time of the hearing before me there had been no appeal against Mr Grigorishin’s successful challenge to the entry ban. Nor was there any evidence to suggest that a fresh ban was imminent.

The third of the three matters to which Mr Brisby referred is the history of Pacific’s attempts to enforce its rights in relation to the Dynamo shares in proceedings which it has brought in the Ukrainian courts.

The first of those proceedings is what the parties referred to as the 2004 pre-emption claim. This was a claim launched in February 2005 in the Pechersky District Court in which Pacific complained that it had not been offered the chance to purchase the Dynamo shares sold by the BVI defendants to Mr Surkis and Mr Zgursky in October 2004. The claim was brought against Mr Surkis, Mr Zgursky, the BVI defendants and SMI (in other words all of the present defendants except Mr Zgursky junior). Pacific was initially successful in its claim when, on 21 February 2005, Judge Otrosh granted orders freezing the shares in question and requiring disclosure by Dynamo’s registrar.

Mrs Ganna Korotka, who acts as lawyer to Mr Grigorishin and his companies including Pacific, explained in a witness statement that just under three weeks after Judge Otrosh had made her order three members of the Ukrainian Parliament wrote to the Chairman of the Supreme Council of Justice requesting that Judge Otrosh be removed on grounds of bias in relation to Pacific’s claim. They alleged that her ruling was “accompanied with gross and conscious violation of the provisions of the substantive and procedural laws”. The MPs in question were ex-President Kravchuk, Mr V Zayets and Mr A Pysarenko all of whom, Pacific believes, were members of the political party funded by the Surkis brothers and of which Gregory Surkis had at one time been deputy chairman. The letter asserted that Judge Otrosh should not have heard the claim, that her bias was confirmed when she awarded Pacific an order freezing 98% of Dynamo’s share capital when, according to the letter, it held only 0.1% (whereas, Mrs Korotka explained, the freezing order related to all of the shares transferred in breach of Pacific’s pre-emption rights) and alleged that Judge Otrosh’s actions prejudiced not only the interests of Dynamo’s shareholders but also “the State because in this case the control over the ‘symbol’ of Ukraine and Ukrainian football is at stake”. It concluded by alleging that Judge Otrosh had broken her judicial oath. It proposed that she be removed from office.

Mrs Korotka went on to explain that the letter had the desired effect in that, after an appeal, the case did not return before Judge Otrosh. But the judge was not sacked or demoted or anything of that kind. Instead, it appears that she was promoted to be President of the Pechersky District Court. At all events, the matter came before a different judge, Judge Kuzmenko.

Mr Brisby pointed to the fact that Mr Surkis has made no mention in his evidence of this episode, while Mr Romazanov has done no more than state that:

Mr Brisby submitted that Mr Romazanov was ignoring the clear effect of the letter from the three MPs. The letter, he pointed out, was an express request to remove a judge from office made not, it is true, by the Surkis brothers themselves but by three highly influential political associates who, he submitted, can only have been acting at the instigation of the Surkis brothers since the three MPs had no obvious interest in the matter. He submitted that this was a clear example of powerful political associates or, using the terminology of the USAID report, members of “elite cartels” applying improper pressure on the judicial authorities for private benefit.

That is not quite the end of the story. Mrs Korotka explained that Pacific took part in several court hearings and filed numerous applications, including a routine request for a preliminary case management hearing (which she described as obligatory under Ukrainian court procedure) and an application to call Mr Surkis and Mr Zgursky for oral examination. She explained that it is normal practice for the courts to accede to such requests but, nevertheless, Judge Kuzmenko dismissed all of Pacific’s applications at oral hearings. She went on to explain that Judge Kuzmenko also refused to grant Pacific an injunction to restrain SCSSM from registering the conversion of the shares in the CJSC which Pacific was claiming, thus rendering pointless further prosecution of the claim. She stated that she believed that Judge Kuzmenko was well aware of this consequence when refusing to grant the injunction. The result was that on 14 March 2006 Pacific applied for and was granted an order that the claim be “left without consideration”. An attempt by Pacific in January 2007 to revive the claim failed on account of the fact that, following a change in Ukrainian procedural rules effective from 1 January 2007, all such claims had to be brought in the commercial courts, not in the ordinary civil courts such as the Pechersky District Court.

Another complaint concerns the intervention of ex-President Kravchuk in the proceedings launched by Mr Zgursky on 3 February 2006 in the Pechersky District Court. I have already referred to this. These were proceedings against Dynamo and SCSSM to enforce the conversion of Dynamo from a CJSC into an OJSC. On the very day that the court application was made, the ex-President wrote to the SCSSM encouraging it register the conversion forthwith. The letter described Pacific as an “offshore company controlled by the Russian oligarch Konstiantyn Grigorishin”, and that Pacific had been a shareholder “since summer 2004 having only 0.1% of shares”. It complained that Pacific was acting “for selfish motives” intending to “destabilise” the football club. It drew SCSSM’s attention to the order obtained by Mr Zgursky in the Obolonsky Court proceedings and urged the SCSSM to carry out Dynamo’s registration as an OJSC in order to implement the “intentions of its shareholders to fix legally the status of a truly people’s team for ‘Dynamo’ Kyiv”. It added an emotional tone to its appeal by reminding SCSSM that “among the shareholders there are respected and honourable people in Ukraine and abroad - present and former club footballers and coaches, who over the years gained the fame of the Soviet and Ukrainian sport, strengthening authority of a young Ukrainian state on the international arena…”

Mr Brisby commented that these appeals sound “rather hollow” in the light of Dynamo’s subsequent further conversion into an LLC with a maximum of ten shareholders.

Although the letter was addressed to SCSSM, a defendant to the application, and not to the court, the application went unopposed and the court made the order sought on the very day that the application was launched. In Mrs Korotka’s view this was “another example of a collusive claim … no doubt in an attempt to prevent Pacific from enforcing its rights”.

Pacific questioned what motive ex-President Kravchuk could have for intervening in the matter if not to exercise his influence in favour of the Surkis brothers. Mr Brisby pointed to the episode as another example of pressure being brought to bear, on this occasion directed to a state body, the SCSSM, in a matter where that body should have remained neutral. He submitted that the SCSSM should have sought at the very least to look into the matter rather than, as would appear to have happened, offer no opposition of any kind. He observed that, although this matter is raised in the evidence of Mrs Korotka, it is not addressed in Mr Romazanov’s reply evidence. Nor is it mentioned in the evidence of Mr Surkis.

Mr Brisby described the Obolonsky Court proceedings launched by Mr Zgursky junior in July 2005 and described in more detail at paragraphs 21 and 22 above as a “preposterous course of events”. In her evidence Mrs Korotka described the order made in the District Court (and upheld on appeal until the matter returned for the second time to the Supreme Court) declaring Pacific’s purchase in January 2000 of its shares in Dynamo as invalid on the ground, quite contrary to the facts, that it had not complied with the applicable share pre-emption requirements, as one that “flew in the face of logic and of a number of Supreme Court decisions which made it clear that the court’s first task in such cases was to investigate the locus standi of the claimant, and whether the matters complained of had caused any infringement of his rights…” She expressed the view that “it should have been obvious to any court considering the claim that it was hopeless given that Mr … Zgursky [junior] had not become a shareholder in the company until many years after the events complained of, with the result that none of his rights had been violated”. She regarded the fact that Mr Zgursky junior succeeded before the District Court as “strong evidence that the judge in the case was subject to untoward influence”. She also noted that the court did not hold the claim to be statute-barred under the normal three year limitation period even though over five years had passed since the date when Pacific had acquired its shares; instead, she noted, the court held that the limitation period only began to run from the time that Zgursky junior acquired his shares in Dynamo in November 2004. She noted also that two of the defendants in the proceedings, Registr and Slavutich, were under the control of Mr Surkis and that Mr Zgursky junior was one of his close associates.

Mr Brisby submitted that this episode conveys the strong impression that the court there was bending over backwards to accede to a meritless claim and that, by the time the decision was successfully appealed, the matter had become academic from Pacific’s standpoint as by then it had been permanently deprived of its shareholding on Dynamo’s conversion into an OJSC. In Mrs Korotka’s personal view, the reason why the Supreme Court had a change of heart at the second hearing before it was because, by the time of that further hearing, Dynamo’s reorganisation as an OJSC had proceeded and that, in the circumstances, “it would no longer have mattered to the Surkises whether Pacific won or lost its appeal, so I believe that they may not have bothered to apply pressure on the court with a view to influencing the result”.

Other proceedings concerned with their dispute which Pacific either initiated or in which it was a party or sought to intervene in the Ukrainian courts were mentioned in the evidence: by the defendants as showing that Pacific has made frequent and uncomplaining use of the Ukrainian courts to ventilate its grievances, by Pacific to illustrate the deficiencies in the Ukrainian system. It is convenient to mention those proceedings at this point.

They included a claim brought by Pacific in the Commercial Court of Kiev in August 2004 challenging the validity of Dynamo’s June 2002 general meeting. It appears that by an order dated 2 December 2004 the claim was “left without consideration” because Pacific failed to attend two consecutive hearings. The effect of such an order is that it is open to the claimant at any time to revive the claim subject, however, to the risk that the claim may be dismissed by reason of the time that has elapsed since it was “left without consideration”.

Mrs Korotka’s explanation for Pacific’s failure to progress the claim was that there had been confusion over whether the lawyers Pacific had appointed to represent it had the necessary authority and that there had also been a mix-up over the date of the adjourned hearing of the claim. The fact is, however, that Pacific has not sought to reactivate the claim.

The same fate befell a claim initiated by Pacific in the same District Court, this time concerned with the validity of the resolution passed at Dynamo’s general meeting held on 19 August 2004 to increase its authorised share capital.

In May 2005 Kernelia Investments Ltd launched a claim in the Brovarsky Interdistrict Court against Pacific and all of the defendants to the current proceedings except Mr Zgursky junior. Mr Romazanov alleges, and Pacific has not denied, that Kernelia was controlled by Mr Grigorishin and that in bringing the claim Kernelia was acting in concert with Pacific (the first defendant to the claim) since the claim was for an order that Pacific should receive the various shares in Dynamo which, in the current proceedings, Pacific alleges that it (Pacific) should have received. Kernelia claimed to be entitled to this relief as a result of an investment agreement it had made with Pacific in March 2004 under which it would invest funds in Pacific. Pacific warranted that it would have 98% of Dynamo’s share capital. Kernelia therefore sought an order that Mr Surkis and Mr Zgursky, two of the other defendants to the proceedings, should transfer sufficient shares to Pacific to enable Pacific to make 90% of Dynamo’s share capital available to Kernelia.

It appears that in August and September 2005 Kernelia was successful in obtaining interim injunctive relief preventing Mr Surkis and Mr Zgursky from disposing of their shares in Dynamo and preventing a general meeting of Dynamo from resolving upon Dynamo’s reorganisation into an OJSC. However, on appeal in February 2006 the orders were set aside. Later, in May 2006, the Interdistrict Court ordered that the claim be “left without consideration”. This, it seems, was owing to Kernelia’s failure to appear. Kernelia later unsuccessfully appealed that order but has since taken no steps to resurrect its claim. Mrs Korotka’s response to this was that “since Pacific was not the claimant in that action I do not see how the fact that the claim was left without consideration can be held against Pacific”. But she does not contradict Mr Romazanov’s version that Kernelia was controlled by Mr Grigorishin.

In January 2006 Pacific launched a claim against Dynamo in the Kiev Commercial Court seeking a declaration that the resolutions passed at Dynamo’s general meeting in September 2005 concerned with its reorganisation as an OJSC were invalid. It sought an order preventing Dynamo from acting on the resolutions. Pacific relied on the interim relief that it had obtained in the Brovarsky Interdistrict Court in August and September the previous year. Initially Pacific was successful. In April 2007, however, the claim was dismissed by the same court. An appeal to the Kiev Commercial Appeal Court was dismissed in October 2007. Mrs Korotka explained Pacific’s lack of success in that action as a consequence of proceedings brought in other courts in which contrary rulings had been obtained on which Dynamo was able successfully to rely. “These orders” she stated “vividly illustrate the potential for directly contradictory orders from different courts, a well recognised defect of the Ukrainian court system.” She goes on to state her belief that the proceedings launched in the other courts had been started by interests sympathetic to the Surkis brothers “to provide a contradictory ruling that would allow the [Dynamo general] meeting to go ahead despite the orders of the Brovarsky Court”.

In November 2006 Pacific launched yet another claim in the Kiev Commercial Court. On this occasion the defendant was SCSSM. The relief which Pacific was claiming was a declaration that the registration of new shares issued as a result of the conversion of Dynamo into an OJSC was void. SCSSM opposed the claim. Initially Pacific was successful in that it obtained an interim order prohibiting dealings with the shares. Dynamo was joined. In December 2006 the Kiev Commercial Court of Appeal discharged the earlier order. In February 2007 the Commercial Court dismissed the claim for reasons which Mrs Korotka claimed were irrelevant to the basis of the claim. In April 2007, however, Pacific unsuccessfully appealed the Commercial Court’s decision. Pacific then appealed to the Supreme Court of Ukraine which, on 15 April 2008, dismissed the appeal. Mrs Korotka complained that the Supreme Court’s decision “contains no substantive reasoning of any kind”. She continued:

In September 2007 Pacific launched another claim against Dynamo in the Kiev Commercial Court, this time for a declaration that Dynamo’s general meeting held on 7 June 2007 and the resolutions passed at that meeting, to convert Dynamo from an OJSC to a LLC, were invalid. The court dismissed the claim on the basis that Pacific, which had never held more than 18% of the shares in Dynamo, could not on its own have prevented the other shareholders from obtaining the requisite 75% majority. Mrs Korotka criticised the decision for failing to “address the fact that, but for the defendants’ repeated breaches of Pacific's pre-emption rights, Pacific would have been in a position to block the necessary 75% resolution”. The fact is, however, that Pacific did not appeal the decision.

By contrast to those proceedings, all of which were either dismissed or in some cases “left without consideration”, Mrs Korotka pointed to the claim launched by Mr Surkis and Mr Zgursky in May 2005 in the Goloseevsky District Court. Registr (the company registrar) and SCSSM were the defendants. Mr Surkis and Mr Zgursky sought an order requiring Registr to register their acquisition the previous September of shares in Dynamo and issue the appropriate share certificates. In July 2005 the District Court granted that relief. In August 2005 Pacific sought, unsuccessfully, to intervene in the action claming that the share acquisition by Mr Surkis and Mr Zgursky had been in breach of its pre-emption rights. The reason given by the District Court for not allowing Pacific to intervene was, it seems, Pacific’s lack of the necessary locus to intervene. Pacific unsuccessfully appealed that decision, initially before the Kiev Court of Appeal and, subsequently, to the Supreme Court of Ukraine.

Mrs Korotka’s comment on that claim was that, as an entity controlled by Mr Surkis (and sharing an office with Mr Romazanov’s firm), Registr was hardly likely to resist the claim. She referred to the conflicting order then in force in the Pechersky District Court preventing Registr from issuing the relevant share certificates and added:

Summarising, Mr Brisby accepted that, in approaching Pacific’s criticisms of the Ukrainian judicial system, the English court has to tread warily on grounds of judicial comity. He submitted nevertheless that the English court should not turn a blind eye to the deficiencies in the Ukrainian judicial system which were acknowledged to exist, even by the President of Ukraine. The fact that efforts were being made to improve the system was not assisted by pretending in the present dispute that all was well. He submitted that the evidence overwhelmingly indicated that all was not well. He emphasised that Pacific’s complaints were not about defects in Ukrainian substantive law or procedure but about the way that the courts in Ukraine went about their judicial function: the essential complaint was that the judges there are subject to improper influence. There was, he submitted, a very strong likelihood that the Ukrainian courts would be subject to improper influence in their disposal of the claims which Pacific sought to advance in the current proceedings. Its attempts in Ukraine to pursue those claims, or aspects of them, had all thus far been thwarted as a result, he submitted, of improper influences on the courts there.

Mr Malek accepted that, as acknowledged by the President of Ukraine, there were indeed problems in the Ukrainian judicial system but submitted that on the critical question whether Pacific would obtain substantial justice if it pursued its claims in Ukraine the English court should proceed on the working assumption, as judicial comity required, that a foreign legal system would seek to do justice and that, as the jurisprudence on the subject showed, it was only where there was before the court objective and cogent evidence that this would not be so in the case of Pacific’s claims that the English court should entertain the complaint. Generalised statements of complaints of interference in judicial proceedings were not enough. Nor, he said, was unspecific evidence of corruption in the system: the evidence, if it was to be relevant, must be directed to corruption or improper influence involving Mr Surkis since the complaint was that it is he (and his brother) and, through them, their associates or sympathisers who were manipulating the system by bribing or otherwise improperly influencing the Ukrainian courts to do their bidding. He submitted that there was no evidence that either of the Surkis brothers or either Mr Zgursky or Mr Zgursky junior or their associates had attempted to exercise any illegitimate influence over the judges before whom Pacific’s claims in Ukraine had come. Nor had any allegations of corruption of a judge been raised on appeal.

Mr Malek submitted that the international reports to which Mr Brisby referred did not advance Pacific’s complaints. He was dismissive of the report from Transparency International listing Ukraine at number 134 in the corruption league, as being based on nothing more substantial that an opinion poll. He criticised the USAID report’s criticisms as either out of date (being directed very largely to the position as it previously was) or, with its reference to the influence wielded by so-called “elite cartels”, immaterial since they did not indicate that such cartels were able to “fix” trials by improper means.

He submitted that there was no evidence to indicate that Mr Surkis or his brother, or associates acting on his or their behalf, had exerted an improper influence on any of the Ukrainian courts in which Pacific had sought to ventilate its claims concerning the disputed Dynamo shares. Criticisms based on “collusive” proceedings or contradictory judgments were beside the point. Moreover, complaints of “collusive” proceedings came ill from Pacific and/or Mr Grigorishin who had not hesitated to resort to such tactics when it suited them. This was evident from the Kernelia claim. Complaints of contradictory judgments were only material, Mr Malek submitted, if they persuaded this court that a fair trial of Pacific’s claims in Ukraine is not possible; they did not begin to justify that conclusion. In any event, the complaints of inconsistency were all or mostly concerned with interlocutory orders.

Those comments aside it was not enough he said, as Spiliada showed, to criticise the quality of the decision-making process of the foreign system, or the inadequacies of its procedures or methods. As Lord Goff had pointed out in Connelly (at 872G), generally speaking a claimant had to take the overseas forum as he finds it.

Mr Malek went on to submit that, so far from the Ukrainian system consistently failing to do substantial justice to Pacific’s or Mr Grigorishin’s interests, it was noteworthy that where there had been a real difficulty over a Ukrainian court’s decision or over some executive action, for example, the entry ban, Pacific or Mr Grigorishin (as the case might be) had been able ultimately to vindicate its/his rights. Thus, the Obolonsky Court proceedings were ultimately decided in Pacific’s favour in that the entry ban was successfully challenged and the ban lifted.

Indeed, so far from demonstrating that the Ukrainian judicial system is corrupt or subject to improper pressure from organs of the Ukrainian state, the entry ban episode demonstrated the independence of the system. Notwithstanding Mr Grigorishin’s publicised hostility to the President and a past clash with members of the President’s family over the control of local energy interests, the Kiev Administrative Court had displayed its independence of the state.

It was also to be noted, he said, that according to Mr Romazanov’s second witness statement, companies under Mr Grigorishin’s control had brought numerous claims in the Ukrainian courts and could point to a considerable measure of success in those claims; it was believed that more than half of the claims had succeeded. (Mr Brisby, I should say, complained that, given the lateness of Mr Romazanov’s second witness statement, Pacific was in no position to challenge what was said about the number of claims that Grigorishin-controlled companies had brought. He submitted that, given the extent of those corporate interests in Ukraine, it would not be surprising if there had been many claims brought in the Ukrainian courts and submitted that, in any event, the question was not whether Mr Grigorishin’s companies can pursue a customer for a straightforward debt but whether, where Pacific makes high-profile claims against Mr Surkis and Mr Zgursky, especially in respect of shares of a company such a Dynamo, there is any real prospect of Pacific receiving substantial justice before the Ukrainian courts.)

Mr Malek also pointed out that, where it has suited him to do so, Mr Grigorishin has not been slow to resort to the Ukrainian courts and, what is more, to point to the fairness of the Ukrainian court system. He referred to an affidavit sworn by a Mr Victor Bulimov (a director of Pacific) in support of an application made by Pacific to the Eastern Caribbean Supreme Court for discovery and freezing order relief against the BVI companies in support of Pacific’s claims brought in Ukraine against the BVI defendants, SMI and, later, Mr Surkis and Mr Zgursky and others (the 2004 pre-emption claim) arising out of the loss of its shares in Dynamo. In that affidavit Mr Bulimov stated that:

Mr Brisby submitted that, so far from assisting the defendants, Mr Bulimov’s affidavit reinforced the complaints that Pacific now makes. He explained that in April 2005 Pacific indeed entertained the hope that the dark days of Ukraine’s past had gone only to discover subsequently that that hope was dashed by subsequent events as indicated by the various matters to which Pacific’s evidence on this issue in the current proceedings was directed.

Mr Malek submitted that, if that was so, Pacific’s disappointed hopes had not inhibited it from commencing fresh proceedings in Ukraine as recently as 23 January 2009. It had done so despite the fact that the claim form in the present proceedings in this country had been issued in June 2008 and notwithstanding what was said about the Ukrainian system in the current proceedings. The proceedings, which are in the Kiev Economic Court and are brought against Pacific’s former auditor and the SCSSM, arise out of Dynamos’ change to an OJSC. In the action Pacific complains of deficiencies in an audit report. It also challenges the validity of a certificate given in connection with the issue of Dynamo’s share in the OJSC. It appears, however, that on 18 February the Kiev Court stayed the claim on the ground that it should not have been brought before that court. The decision was appealed but I was not told what the outcome was of the appeal.

Mr Malek also drew my attention to the fact that, apart from taking proceedings in Ukraine when it apparently suited it, Pacific was not even submitting in the current proceedings that the choice it faced was a claim against the defendants in this jurisdiction or no claim at all. Thus, in Pacific’s evidence in support of its application to serve out (which resulted in the making of the permission order), Mr Peter Clough of Osborne Clarke, the solicitors acting for Pacific, made clear that Pacific’s claims in the current proceedings are “without prejudice and subject to any relief that may hereafter be sought or obtained by Pacific in proceedings in Ukraine”, a reservation which is reflected in paragraph 3 of the prayer for relief. Mr Malek submitted that this shows that Pacific is careful not to exclude the possibility of proceedings in Ukraine if it thinks it appropriate to bring them. This, he submitted, is hardly consistent with a plea that justice for Pacific is not possible in Ukraine.

What conclusions should I draw from the blizzard of proceedings that have been brought in Ukraine in connection with the Dynamo share dispute brought by Pacific? And what of the other evidence connected with the inadequacies of the Ukrainian judicial system and the suggestions of political and other interference with the system? Do they constitute the cogent evidence which is needed to justify a finding that Pacific will be denied justice in Ukraine if it is compelled to litigate its claims in the courts of that country so that, even if Ukraine is otherwise the appropriate forum for the resolution of its claims, I should permit the proceedings which Pacific has brought in this jurisdiction to proceed to trial?

I have come to the conclusion, I confess not without considerable hesitation, that they do not. The evidence leaves me with the strong impression that Pacific (or Mr Grigorishin) is happy to resort to the Ukrainian courts where it suits it (or him) to do so. It is quite true that the repeated inability of Pacific to get its claim off the ground, coupled with the apparently perverse conclusions reached by some at least of the courts there until ultimately corrected in the Supreme Court (at any rate in the case of the Obolonsky Court proceedings), raise grave doubts about the impartiality and honesty of the courts in Ukraine, not least when faced with a claim of the nature brought by Pacific concerned with shares in, and ultimately control of it, such a high-profile football club where powerful interests are at stake.

But I am not persuaded that the evidence relied upon to demonstrate that Pacific will be denied justice in Ukraine in its dispute with Mr Surkis quite crosses the threshold of cogency that the jurisprudence requires. I am the more willing to reach that conclusion by three further considerations.

The first is that the dispute has absolutely no connection at all with this country. As I have mentioned, it is simply that SMI, a company without assets and which had been struck off the register and whose role in the dispute, that of holding 400 or so shares in Dynamo, ceased almost four years before these proceedings were launched, was incorporated in this country that provides the link. It is that and the fortuitous fact that Mr Surkis happened to be on a flying visit to this country to watch Dynamo play in a match when Pacific was able to serve him that has grounded this court’s jurisdiction. To claim jurisdiction over a foreign defendant with no connection with this country (as is the case with the BVI defendants) as a result of granting permission to serve the claim form on that defendant out of the jurisdiction was described by Lord Diplock in Amin Rasheed Shipping Corporation v Kuwait Insurance Co [1984] AC 50 at 65 as “an exorbitant jurisdiction” and one which the authorities have consistently shown must be exercised with extreme caution and only in exceptional circumstances. In the Spiliada Lord Goff pointed out (at page 477) that “if, in any case, the connection of the defendant with the English forum is a fragile one (for example, if he is served with proceedings during a short visit to this country), it should be all the easier for him to prove that there is another clearly more appropriate forum for the trial overseas”. In Connelly (at 873) Lord Goff described the assumption of jurisdiction in such circumstances as “extravagant”. Those observations apply with particular force to the circumstances of this case.

The second is that, subject to the question whether Pacific will be denied justice in Ukraine, Ukraine is not only the more appropriate forum for the trial, it is the only other appropriate forum for it. No other jurisdiction has been suggested.

The third point, which reinforces the second, is that, as counsels’ submissions on the strikeout and summary judgment applications made only too clear, Pacific’s claim in conspiracy, which is the only claim made against SMI and the BVI defendants, and to a lesser extent its unjust enrichment claim (against Mr Surkis) give rise to acutely difficult issues of Ukrainian law. They are issues on which the Ukrainian legal experts hold sharply differing views. Thus the conspiracy claim is founded on article 13 of the Ukrainian Civil Code. That article was new to the Civil Code and only came into force on 1 January 2004. It has been the subject of scant if any judicial analysis in the Ukrainian courts. Its relevance to the conspiracy claim, that is whether it provides any legal foundation for the claim at all and, even if it does, whether its infringement gives rise to a claim in damages, are matters of acute conflict. So also is the correct approach, as a matter of Ukrainian law, to the question of limitation: in precisely what circumstances will Ukrainian law allow a claim to be litigated notwithstanding the passage of three years - the material limitation period - following the occurrence of the event which gives rise to the clam before the claim was brought. There are very differing views expressed by the Ukrainian legal experts on the circumstances in which a Ukrainian court will exercise its discretion to allow claims to be brought notwithstanding the expiry of the limitation period.

If the claim is litigated in this country, the English court will be required to pronounce on these very difficult matters. I refer briefly to these later. The sensitivities are obvious. This is emphatically not the sort of claim where it is the underlying facts which are in dispute and where the law is clear. On the contrary, so far as I can judge, the underlying facts are either very largely undisputed or capable of relatively easy resolution. It is the applicable law which creates the main problem. To add to the difficulties that would be faced by an English court if the trial is to be conducted here is that all, or practically all, of the participants (whether witnesses of fact or experts on Ukrainian law) will be Ukrainian speakers. All of the material documents, and certainly the vast majority of them, are in Ukrainian.

In short, the nature of dispute, the identity of the persons whose evidence will be material, the sensitivities involved (control of Ukraine's most celebrated football club) and the very difficult legal issues that will have to be decided point overwhelmingly to Ukraine as the appropriate and indeed only natural forum fort the trial.

Subject therefore to the difficulties raised by the decision in Owusu - I am of the view that, notwithstanding the undoubted problems highlighted by the evidence over the independence of the Ukrainian court system and the problems that Pacific has thus far encountered in pursuing its claims over the Dynamo shares, the correct decision for this court to make is (1) to stay the proceedings against SMI and Mr Surkis and (2) to set aside the permission order and, with it, the service of the claim on the BVI defendants.

In Owusu the claimant brought an action in damages for personal injuries arising out of an accident which he had suffered while on holiday in Jamaica. He was domiciled in the United Kingdom as was the first defendant from whom he had hired his Jamaican holiday villa. He also brought an action against two other defendants, both of which were Jamaican companies of which one owned the beach where the accident took place and the other had licences in connection with its use. The Jamaican defendants invited the English court to decline jurisdiction on forum non conveniens grounds. The question was whether, despite the connecting factors with Jamaica, Article 2 of the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968 (as amended) (“the Brussels Convention”) required the English court to assume jurisdiction against the Jamaican defendants as well as against the first defendant. There was a reference to the ECJ by the Court of Appeal for a preliminary ruling on whether, where the case before a court of a Brussels Convention contracting state (in that case, the United Kingdom) had connecting factors with a non-contracting state (in that case, Jamaica) but none with any other contracting state, the court could exercise a discretionary power, available under its national law (in that case, the doctrine of forum non conveniens), to decline jurisdiction in favour of the courts of the non-contracting state. Article 2 provides that:

The ECJ held (at [41]) that “application of the forum non conveniens doctrine, which allows the court seised a wide discretion as regards the question whether a foreign court would be a more appropriate forum for the trial of an action, is liable to undermine the predictability of the rules of jurisdiction laid down by the Brussels Convention, in particular that of Article 2, and consequently to undermine the principle of legal certainty, which is the basis of the Convention”; and, accordingly, (at [46]) that “…the Brussels Convention precludes a court of a contracting state from declining the jurisdiction conferred on it by Article 2 of that Convention on the ground that a court of a non-contracting state would be a more appropriate forum for the trial of the action, even if the jurisdiction of no other contracting state is in issue or the proceedings have no connecting factors to any other contracting state”.

It followed therefore that the English court could not decline jurisdiction in that case in favour of the courts of Jamaica.

The ECJ declined, on grounds that the question was hypothetical, to reply to a further question for which the Court of Appeal had sought a preliminary ruling, namely whether if, as the ECJ had ruled, the application of the forum non conveniens doctrine was precluded by the Brussels Convention, its application was ruled out in all circumstances or only in some. The point, according to [48], was concerned with “cases involving identical or related proceedings before a court of a non-contracting state…”

The Brussels Convention has since been replaced by Council Regulation (EC) № 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (“the Judgments Regulation”).

Mr Brisby submitted that as SMI was for Judgments Regulation purposes a defendant domiciled in a contracting state, namely the United Kingdom, this court had, on the authority of Owusu, no power to decline jurisdiction on forum non conveniens grounds. It was irrelevant, he submitted, that the events complained of in the proceedings took place overwhelmingly in Ukraine or that, on forum non conveniens grounds, Ukraine was the appropriate jurisdiction for the trial. He submitted that because Owusu requires the claim against SMI to be tried in this country - and as Pacific has every intention of pursuing that claim - the only way to avoid the risk of inconsistent decisions and duplication of costs if Pacific should otherwise be obliged on forum non conveniens grounds to pursue its claims against Mr Surkis and the others in Ukraine, is for this court to refuse to stay the proceedings against Mr Surkis on forum non conveniens grounds and permit the claims as a whole to proceed to trial in this jurisdiction.

Mr Malek, faced with Owusu, submitted that if article 2 is to apply even where the competing jurisdiction is that of a non-Member State, then the same must be true by analogy in the case of exceptions to article 2. He submitted that if that were not so an English court might find itself required to try a claim notwithstanding that it would have a discretion not to do so under article 28 where, for example, there was a “related” action already pending in a non-Member State. Article 28 provides that “where related actions are pending in the courts of different Member States, any court other than the court first seised may stay its proceedings …”. He drew my attention to textbooks arguing for such an approach - the so-called “reflexive application” of other articles of the Judgments Regulation - in particular, Dicey, Morris and Collins on The Conflict of Laws (14^th Edition) at 12-021 to 12-022.

He submitted that Pacific had launched several actions in Ukraine, none of which has been finally determined, raising issues critical to the instant claim and that such proceedings are, for this purpose, “related actions”. They are (1) the 2002 General Meeting claim in which the validity of the amendments of Dynamo’s articles so as to remove the share-pre-emption provisions, resolved upon at its general meeting held on 14 June 2002 is in issue, (2) the 2004 General Meeting claim in which the validity of the resolution passed at the general meeting of Dynamo held on 19 August 2004 to raise further capital by a rights issue is in issue, (3) the 2004 pre-emption claim in which the validity of the transfer of shares to Mr Surkis and Mr Zgursky in October 2004 is in issue and (4) the Kernelia claim in which the question whether Pacific’s pre-emption rights were breached on each occasion of a transfer of shares was made without notice to Pacific is in issue.

Mr Brisby submitted that even if it was permissible to apply articles 27 or 28 “reflexively” in the way that Mr Malek submitted, there was no pending or related action in Ukraine within the meaning of those articles. To be within either of them the action in question must, he submitted, be on foot and awaiting decision. He submitted that that was clear from the terms of those articles. He submitted that none of the Ukrainian actions relied upon is awaiting determination. On the contrary, all have been “left without consideration”. He referred in this connection to the evidence of the defendants’ own expert, Dr Olexander Martinenko who said of an action ordered to be “left without consideration” that:

In my judgment, there are no Ukrainian proceedings on foot, or none to which my attention was drawn, that could qualify as coming within the either article 27 or article 28. The discretion given by those articles to stay the later action does not therefore arise even if, in this controversial area of law, it is correct to apply those articles reflexively where the other earlier proceedings are not in a Member State.

Mr Malek referred to those other actions as “related actions” for the purposes of article 28. He did not suggest, but the same would be true if it were to be suggested, that those other actions qualified as pending actions within the meaning of article 27.

It follows therefore that neither the doctrine of forum non conveniens nor the application “reflexively” of articles of the Judgments Regulation provides grounds for staying the pursuit by Pacific in this jurisdiction of its claims against SMI. Does this mean that, given Pacific’s wish to pursue its claims against SMI in this jurisdiction, this court should allow Pacific to continue to pursue its claims against the other defendants in this jurisdiction notwithstanding that, as against those other defendants, application of the doctrine of forum non conveniens, unaffected in the case of those other defendants by the impact of the Judgments Regulation, indicates that Pacific’s claims against those others should be pursued in the Ukraine?

I am not persuaded that it does. According to the particulars of claim in this action, SMI is, like the BVI defendants, a relatively minor player in the dispute: it was no more than the means whereby Mr Surkis held and was able to take control of Dynamo. The principal dispute is undoubtedly between Pacific on the one hand and Mr Surkis and Mr Zgursky on the other. To allow the fact that the doctrine of forum non conveniens cannot be applied to SMI to dictate where the dispute as a whole must be tried would be, in my view, to allow the tail to wag the dog. In particular, I see no reason why, given my conclusions in relation to the application of the doctrine of forum non conveniens to the other defendants, I should not stay the action against Mr Surkis and set aside the permission order, and with it the service of the claim form on the BVI defendants, leaving it to Pacific to pursue its dispute with those persons (and SMI if it wishes) in the courts of Ukraine. In this regard, it is just worth noting that one of the matters urged by Mr Brisby in support of Pacific’s contention that the Ukrainian law of limitation did not operate to bar Pacific’s claims and that there could be no question of any abuse of process to prevent Pacific from suing, is that until April 2008 Pacific’s concern had been to establish and recover its shareholding in Dynamo rather than obtain compensation for the loss of that shareholding. By April 2008, however, with the dismissal by the Ukrainian Supreme Court of Pacific’s appeal against the dismissal by the lower courts of its challenge to the conversion of Dynamo into an OJSC, Pacific, I was told, has abandoned any attempt to obtain the shares. Instead, and since that date, its concern has been to pursue a claim for compensation for the loss of those shares. As Mr Brisby explained, a claim for compensation is something that Pacific has thus far not sought in the Ukrainian courts. The claim, as I have mentioned, will rely on article 13 of the Ukrainian Civil Code. If successful, the claim will not impact directly on Dynamo or its shareholding; it does not seek to undo any resolution passed at any general meeting of Dynamo’s shareholders. It is not therefore as if Pacific is being left to pursue in Ukraine claims which it has repeatedly raised but which, for one reason or another, have never effectively come to trial.

I accept that requiring Pacific to pursue its claim to compensation in Ukraine while leaving it open to pursue its conspiracy claim against SMI in this jurisdiction is far from satisfactory and, if the claim against SMI is pursued, may risk inconsistent decisions and the unnecessary incurring of costs.

This brings into play a further submission by Mr Malek which was an invitation to the court to exercise its case management powers by ordering a temporary stay of Pacific’s claim against SMI. The jurisdiction to do so is undoubted. It is unaffected by the Judgments Regulation and is not founded on grounds relevant to forum non conveniens. See, for example, Dicey, Morris and Collins on The Conflict of Laws, (14^th Edition) at paragraph 12-0006. Guidance on the exercise of the jurisdiction is to be found in Reichhold Norway ASA v Goldman Sachs International [2000] 1WLR 173. Lord Bingham CJ stated (at 186C) that “stays are only granted in cases of this kind in rare and compelling circumstances”.

Since Pacific has not yet commenced proceedings in Ukraine claiming the relief which it seeks in the proceedings issued by it in this jurisdiction, I consider that it is premature to grant a stay of its claim against SMI on case management grounds. If Pacific commences and pursues equivalent proceedings in Ukraine and if there is no reason to think that those proceedings will not proceed to a fair trial on their merits, there will be a strong case for a stay of the claim against SMI in this jurisdiction on ordinary case management grounds. If, on the other hand, Pacific encounters problems, not of its own making and unconcerned with the merits of the dispute, in pursuing its claims in the Ukraine courts then it may be appropriate to reconsider the stay which I am willing to grant, on forum non conveniens grounds, in respect of the claims here against Mr Surkis and, if one has been granted in the meantime, reconsider any stay that has been ordered on case management grounds against SMI.

There was a wholesale challenge, conducted largely by Mr Kinsky, to the sufficiency of the particulars of claim, even in their amended form. It was submitted that they did not disclose a cause of action in damages for conspiracy or for restitutionary relief and that, even if they otherwise did, they are liable to be defeated because they are brought outside the permissible limitation period of three years and there are no grounds for extending that period.

Whether there are any actionable claims and, if there are, whether they are vulnerable to a limitation defence are matters of Ukrainian law. It was conceded on Pacific’s side that there is no precise Ukrainian equivalent to the English law tort of conspiracy, which his how that part of Pacific’s claim had been initially pleaded, but it was contended that the facts pleaded constituted a breach of article 13 (concerned with abuse of civil rights) of the Ukrainian Civil Code and that by amending the particulars of claim to allege infringement of article 13 and also to rely on articles 16 and 1190 of the Civil Code (the former as giving rise to a remedy in damages for breach of article 13 and the latter concerned with joint and several liability) the pleading sufficiently particularised a claim actionable in Ukrainian law. The claim against Mr Surkis and Mr Zgursky alleging unjust enrichment relies, by amendment, on articles 1212 to 1215 of the Civil Code. Amendment of the particulars of claim was sought to make clear that there was reliance on those provisions in relation to that claim.

Professor Anatoly Dovgert, a professor from the Kiev National University with a distinguished academic record in the field of law, including private international law and comparative legal studies, on whom Pacific relies and who, as it happens, was involved in the drafting and discussion of what became articles 13 and 1212 to 1215 of the new Civil Code, was of the strong opinion that the case as pleaded did give rise to actionable claims under those articles and that they justified the relief claimed. Another expert witness on whom Pacific relies, Mr Olexander Martinenko, senior partner at CMS Cameron McKenna’s Kiev office (and a lawyer who has practised law in Ukraine for many years), analysed the claims so far as they asserted breaches of Pacific’s pre-emption rights to shares in Dynamo and the effect on those rights of Ukrainian statute law (there being an issue as to whether those rights were effective in law prior to 1 January 2004). He also examined questions concerned with the internal management of a Ukrainian company, including increases in share capital, as well as various procedural issues. Included among the latter was the question of limitation in Ukrainian law and in particular whether Pacific’s claims were vulnerable to a defence relying on limitation (the material provisions being those contained in article 267 of the Civil Code). He was of the view that on the facts pleaded the courts of Ukraine would recognise that the claims should not be dismissed on limitation grounds. He described the concept of “good excuse” (which enables a claim to be pursued notwithstanding expiry of the limitation period) as “extremely broad” and one which “allows the court a wide discretion to arrive at a just result”.

By contrast, the defendants have adduced in evidence the expert opinion of Mr Sergiy Onischenko, who has practised law at the Kiev Bar since 2000 and specialises in corporate law, including securities, mergers and acquisitions as well as what he describes as “economic crime and fraud”. He was of the view, for reasons outlined at some length in his witness statement, that the claims as pleaded (this was before the particulars of claim were amended to rely on specific articles of the Ukrainian Civil Code) would fail in law and, in any event, would be dismissed on limitation grounds, there being, in his view, no good excuse shown for the fact that the claims were brought outside the limitation period. Another expert relied on by the defendants, Mr Vladimir Sayenko, who specialises in comparative law, mergers and acquisitions, securities and competition law, took issue with many of the expressions of opinion contained in Mr Martinenko’s evidence, particular on the question of limitation. His view was that the conspiracy and unjust enrichment claims could have been brought very much earlier than they were and that there were no good reasons why they were not. In short, he saw no good excuse for the failure to bring them earlier. He also took issue with Professor Dovgert’s opinion as to the availability of a claim based on an infringement of article 13. The dispute focused on the scope of article 13: is it possible to establish an abuse of rights in reliance on unlawful and not merely lawful actions, and can abuse be established where the exercise of rights relied upon concerns actions authorised by specific legislative provision?

Since I have concluded that Ukraine is the appropriate forum for the trial of Pacific’s claims, subject only to the special position of SMI as a result of the decision in Owusu (but subject to the court’s case management powers should it be appropriate at some later stage to exercise them), no useful purpose will be served if I were to take up time discussing these controversial issues and whether therefore, on my view of Ukrainian law, Pacific’s claims are well founded. Nor, if they otherwise are well founded is it useful to go on to decide whether they are liable to be defeated by application of Ukrainian limitation law. The determination of these questions will be for the Ukrainian courts to decide. What I think about them would, I expect, be of little value not least because, on my understanding of the debate between the Ukrainian experts, the jurisprudence involved is either very much in its infancy (as in the case of article 13) or else is very dependent upon the exercise of judicial discretion (as in the case of limitation).

Suffice it to say that if it had been necessary for me to express a view on these issues, I would not have dismissed the claims as disclosing in Ukrainian law no reasonable cause of action and would not have found that they were vulnerable to successful challenge on limitation grounds. On the limitation question I would have needed to be satisfied that, even assuming that the three year limitation period had expired, no excuse put forward for not having commenced the claim before expiry of the period could amount in Ukrainian law to a good excuse so as to justify non-application of the period. To a significant extent this raised questions of just what knowledge Pacific did have from time to time relevant to the breaches of its rights that it alleges. In this regard, there were issues, incapable of resolution simply on a reading of witness statements, over just what knowledge Pacific did have about the existence of its claims, let alone over what view a Ukrainian court would take, given the breadth of its discretion in the matter, as to the adequacy of the excuses put forward. In particular, I would have been reluctant to strike the claims out without first having the benefit of much fuller argument on the underlying issues of Ukrainian law and without having the views of the experts on Ukrainian law subjected to much closer analysis assisted by cross-examination. I hope I will be forgiven, therefore, if I say no more on these matters notwithstanding the very careful submissions on them by both Mr Kinsky and Mr Brisby.

I can deal equally shortly with the abuse of process point. The contention was founded on the rule in Henderson v Henderson (1843) 3 Hare 100 as explained in Johnson v Gore Wood & Co (a firm) [2002] 2AC 1. It proceeded on the basis that abuse of process, being procedural in nature, is a matter for this court as the lex fori. On that footing, the defendants contended that Pacific’s claims should be struck out as an abuse of process on account of the fact that in February 2005 Pacific sued SMI, the BVI defendants and, later, Mr Surkis and Mr Zgursky in the Pechersky District Court (the 2004 pre-emption claim) complaining that its pre-emption rights had been breached by SMI’s sale of its shares to Mr Surkis and Mr Zgursky in October 2004. (The claim is set out in more detail in paragraphs 56 to 61 above.) It was contended that, although in March 2006 Pacific asked the Pechersky District Court to leave the claim without consideration and later (in January 2007) attempted unsuccessfully to revive the claim, no reason had been identified to explain why Pacific could not have revived the proceedings in the correct court and why it could not have brought its article 13 claim, if it has one, in those proceedings as well.

For the same reasons as those concerned with the cause of action and limitations arguments, it is not necessary for me to deal with this contention. I would only add that if it had been necessary to decide the point I would not have thought it appropriate, applying the broad merits-based approach to which Clarke LJ referred in Dexter v Vlieland-Boddy [2003] EWCA Civ 14 (at [49]), to strike out the proceedings in this jurisdiction as an abuse of process. The 2004 pre-emption claim in the Pechersky District Court never went to trial. Instead, it was left without consideration. Indeed, Pacific was not permitted to revive it in that court. Moreover, the present claim is directed to the recovery of compensation and not, as was sought in the 2004 pre-emption claim, the establishment and recovery of its shareholding entitlement in Dynamo. Pacific could, I think, be forgiven for not going down the compensation path at that earlier stage.

Another matter which militates against the existence of any abuse of process in the bringing of the present claim is that Pacific alleges - and, although there is an issue about this, there is no reason to think that there is no basis at all to the allegation - that it had no knowledge until January 2009 that the transfer by Newport to SMI of 400 (alternatively 410) shares in Dynamo had taken place in December 2001, allegedly in breach of its pre-emption rights, and not simply sometime on or about 14 June 2002. What is certainly clear is that until January 2009 Pacific’s claim had proceeded on the basis that the transfer had occurred in June 2002 after Dynamo’s articles had been altered to remove the share pre-emption provisions with the consequence that its challenge had been to the lawfulness of the change of articles rather that to any earlier breach of its pre-emption rights. The discovery (as it alleges) so recently of the earlier transfer puts a rather different complexion on the nature of Pacific’s claims.

There remain two other matters, raised on behalf of the BVI defendants, to which I should refer.

The first was that because permission to serve out was obtained on the basis (alone) of a claim against them in conspiracy and because Pacific has since conceded that no such cause of action exists in Ukrainian law, the court should, without more, set aside the permission order and thus set aside service out of the jurisdiction on the BVI defendants in reliance upon that order. The fact that Pacific seeks to amend its particulars of claim to allege reliance on article 13 of the Ukrainian Civil Code cannot “rescue” the order made. It is well established, said Mr Malek, that a claimant will not be allowed to rely upon an alternative cause of action to support an order for service out even if the alternative cause of action relies upon the same facts pleaded in the particulars of claim on the strength of which permission to serve out was obtained. He referred me to Metall und Rohstoff AG v Donaldson Lufkin & Jenrette Inc [1990] 1QB 391 at 436-7; Grupo Torras v Al-Sabah [1995] 1 Lloyd’s Rep 374 at 392 and ABCI v Banque Franco-Tunisienne & ors [2003] 2 Lloyd’s Rep 146 at [20] to [21].

Mr Brisby submitted that, provided there is a good cause of action against the BVI defendants (which he submitted that there is - under article 13), the court should, having regard to the overriding objective, allow the permission order to stand rather than set it aside and require Pacific to start all over again against the BVI defendants. He submitted that the authorities to which Mr Malek referred were decided on the law and practice prior to the introduction of the Civil Procedure Rules and that, with the introduction of those rules, the court was entitled to look at the matter more flexibly. He went on to submit that, in any event, article 13 did not in truth introduce a new cause of action: it merely pleaded the existing claim “more fully”. Alternatively, his fall-back position, if all else failed, was that the court should set aside the permission order (and the service out on the BVI defendants pursuant to that order) but give leave to serve out on the basis of the claim as now sought to be pleaded (relying on article 13), while dispensing with re-service on the BVI defendants in the BVI, directing instead service on their solicitors in this jurisdiction pursuant to the court’s power under CPR 6.15.

Since I am setting aside service out of the jurisdiction on the BVI defendants on forum non conveniens grounds in any event, I do not need to decide these points. I am nevertheless of the view (a) that the claim founded on article 13 is a cause of action different from the claim in conspiracy: amendment of the particulars of claim to allege article 13 is not merely the fleshing-out of a previously pleaded cause of action, and (b) that the introduction of the Civil Procedure Rules with their emphasis on the overriding objective has not altered the strictness with which the court views the need for the claim form to spell out precisely what the cause of action is for which permission to serve out is sought. See, in this regard, ED & F Man Sugar Ltd v Lendoudis [2007] EWHC 2268 (Comm); [2008] 1 AER 952 at [17] to [28]. It follows that I would on this separate ground have set aside the permission order, and the service out on the BVI defendants in reliance upon it. Nor would I have considered it appropriate to adopt Mr Brisby’s fall-back suggestion.

As to the “gateway” requirements, the argument here turned on the application of paragraph 3.1(3) of CPR 6 Practice Direction B, in particular the requirement that, assuming that paragraph 3.1(3)(a) is satisfied (ie assuming, contrary to the defendants’ submissions on cause of action, limitation and abuse of process, there are real issues to be tried as between Pacific as claimant and SMI and Mr Surkis as persons who have been served otherwise than in reliance on paragraph 3.1 - they were served within the jurisdiction - and that, contrary to their submissions on forum non conveniens and case management, it is reasonable to try those issues in this jurisdiction), the BVI defendants are “necessary or proper” parties to the claims. This is because paragraph 3.1(3)(b) requires that it must be shown that a person to be served out of the jurisdiction is “a necessary or proper party” to the claim being brought against the defendant who, like SMI and Mr Surkis, has been served otherwise than in reliance on the paragraph. Mr Malek submitted that the BVI defendants were not necessary or proper parties either to the claim being brought against SMI or to the claim being brought against Mr Surkis. Mr Brisby submitted that they were.

As with the other matters concerned under this and the previous heading it is not necessary for me to decide whether Mr Malek’s submission is correct. I will nevertheless state my conclusion. The case law establishes that the claim brought against the original defendant (ie the defendant who has been served otherwise than in reliance on paragraph 3.1) - in the present case, against SMI and Mr Surkis - must be a serious claim, not one which is used simply as a device to found jurisdiction to serve the person or persons outside the jurisdiction, here the BVI defendants. See the commentary set out at Note 6.37.28 in Volume 1 of the current (2009) White Book. I find it difficult, despite Mr Brisby’s protestations to the contrary, to avoid the conclusion that the claim against SMI is relied upon as just such a device. Indeed, I consider that this is fairly obviously its purpose. As noted earlier (see paragraph 5), SMI ceased to have any relevant role in this dispute after September 2004 following the transfer the remainder of its holding of shares in Dynamo to Mr Surkis and Mr Zgursky; it was struck off on 18 December 2007 and was restored to the register for the purpose of the present claim on 1 August 2008. So far as is known, it has no presently realisable assets.

The same cannot be said of the claim against Mr Surkis. On the contrary, he is almost certainly Pacific’s principal target. He is, by all accounts, an exceedingly wealthy person. As I understand it, if Pacific establishes its causes of action it will be principally against him that it will look for recompense. I must assume, since I do not recall having seen any evidence to the contrary, that the BVI defendants have some worth. Otherwise it is difficult to see why Pacific should have gone to such trouble to serve them. If Pacific’s claims in this jurisdiction against Mr Surkis are to proceed, then I would accept that the BVI defendants are proper parties to those claims. They were the means by which the shares in Dynamo came to be held by Mr Surkis and Mr Zgursky. On the other hand, if, as I have concluded, Pacific’s claims against Mr Surkis in this jurisdiction should not, on forum non conveniens grounds, be permitted to proceed but should be stayed, then it is difficult to see how, even if they were otherwise proper parties to Pacific’s claim against Mr Surkis, it can be a justified exercise of the discretion conferred by CPR 6.36 to give Pacific permission to serve out of the jurisdiction and thus to bring the BVI defendants before his court.

I would therefore on these additional grounds have set aside the permission order and thus the service out on the BVI defendants in reliance upon that order.

I stay the claim against Mr Surkis. I set aside the permission order and the service out of the jurisdiction of the claim form on the BVI defendants.