Ruslan Urusbievich Bestolov v Siman Viktorovich Povarenkin

This is a debt claim for US$7,535,147 between two Russian businessmen, Mr Bestolov (the claimant) and Mr Povarenkin (the defendant). The claim was properly brought in this jurisdiction because (as it was held when jurisdiction was challenged) Mr Povarenkin was domiciled here when proceedings were commenced.

Mr Bestolov also says that the contract under which his claim arises is governed by English law. It is common ground that it is governed by Russian law unless there was a sufficiently demonstrated choice of English law for the purpose of Article 3(1) of the Rome Convention. That there was a choice of English law was doubted in the judgment on the jurisdiction challenge ([2017] EWHC 1968 (Comm) at [79]-[81]), but that was neither a final determination nor even necessary to the jurisdiction decision.

The only real issue is whether Mr Bestolov’s claim is time barred. The Claim Form was issued in February 2017, just over 4½ years after the cause of action accrued, but the primary limitation period under Russian law is 3 years rather than the 6 years that applies under English law. If Russian law applies, then Mr Bestolov contends that the debt was acknowledged in and after September or October 2014, giving him a fresh 3-year period so that his claim was timely after all.

For the reasons set out below, I have concluded, on the trial of the claim, that the debt is governed by English law, as Mr Bestolov contends, and also that it was acknowledged by Mr Povarenkin at a meeting with Mr Bestolov, attended by others, in September or October 2014. Either conclusion is sufficient to mean there is no good time bar defence.

The trial was much longer, and ranged over far wider territory, than would have been required to deal with the alleged time bar, however, because Mr Povarenkin responded to the proceedings by raising for the first time, 10 years after the fact, a wholesale defence to the claim (and a related counterclaim) extending to allegations of deceit against Mr Bestolov. The factual case upon which that defence (and counterclaim) depends is entirely implausible and on the evidence at trial I reject it and have concluded that Mr Povarenkin’s pursuit of it was largely dishonest.

Mr Bestolov is a mining engineer by original education, training and experience, with a distinguished Soviet-era working career as such, who has been an entrepreneur in the mining and construction sectors in post-Soviet times. After qualifying in 1968, Mr Bestolov initially worked as a mining engineer in the Ural region of Russia until late 1972, when he relocated to the Sakha Republic of Russia (‘Yakutia’) to take up employment with Yakutzoloto, then the second largest gold producer in the USSR.

Yakutia is a massive territory in eastern Russia, bordering the Laptev and East Siberian Seas to the north, Krasnoyarsk Krai to the west and Khabarovsk Krai to the east (which in turn borders to its east the Sea of Okhotsk that lies to the north of Japan). It makes up half of the Far Eastern Federal District of Russia and represents the largest sub-national government area in the world at just under 3.1 million square kilometres (almost 1.2 million square miles). If it was a separate sovereign State, it would be the 8^th largest country in the world, c.10% larger than Argentina and c.94% the size of India. But its population is only c.1 million. It has significant reserves of oil, gas, coal, diamonds, gold, silver, tin and antimony.

By 1977, Mr Bestolov had progressed to become Yakutzoloto’s chief mining engineer, involved as such at a senior level in the design, construction, plant and equipment specification, and operation, of Yakutzoloto’s mines. He held that post until 1986. He acquired a detailed working knowledge of the main mine fields and mining operations in Yakutia. His work for Yakutzoloto made Mr Bestolov one of the main professional contributors to the development of the mining industry in Yakutia, for which he received regional and national honours.

Mr Bestolov’s work for Yakutzoloto took him on numerous occasions to, and he acquired a good professional knowledge of, the gold-antimony mines of Yakutia including the Sarlyakh-Surma and Zvezda mines that feature in this case.

Mr Bestolov relocated to Moscow to work for GlavAlmazZoloto (‘GAZ’) from April 1986. GAZ was a Soviet institution in charge of the gold mining and diamond mining industries for the entire USSR, reporting to the Soviet Ministry of Non-ferrous Metallurgy. As head of the Equipment Department, Mr Bestolov had direct responsibility for around 100 employees and reported personally to the Director of GAZ who held ministerial rank within the Cabinet of the USSR. He was responsible for the supply and installation of all equipment for gold and diamond mines in the USSR, whether in production or under construction, from diggers and drilling rigs to industrial buildings and processing plants, from excavators and bulldozers to conveyers, crushing mills and chemical or mechanical enrichment plants.

When the USSR collapsed, Mr Bestolov founded OJSC Almazzolotokomplekt (‘AZK’) in 1991, becoming, as he remains today, its CEO. The other founding shareholders had all worked with Mr Bestolov at GAZ. His initial stake was c.40%; but when others later left the business, he regularly bought out their shareholdings and today owns 86% of AZK’s shares. AZK’s principal business is, and has always been, the supply of equipment and fuel to gold, diamond and other mining businesses in Russia and, in particular, in Yakutia. Mr Bestolov therefore continued to enjoy regular contact with mining businesses in Yakutia and to possess a good working knowledge of the technical and financial positions of those businesses.

Mr Bestolov has thus since 1991 been a Moscow-based businessman but with substantial business and a strong business profile in, and regular contact with, the Yakutian mining sector. His work has continued to take him to Yakutia 6-10 times a year, spending 3-5 business days there on any visit. He has been an unpaid advisor to three Yakutian Presidents and to the Russian Ministry of Energy. There was no evidence that Mr Bestolov has ever himself sought political office; but he had good connections with the Yakutian authorities.

Through a 90% subsidiary operating in Angola, AZK also developed its own mining operations. By 2013, Mr Bestolov told me, the AZK group employed c.7,500 people in all.

Mr Bestolov came to regard mine ownership in Yakutia as an attractive venture for the further expansion of his business interests; but he did not have sufficient cash funds spare for any substantial investment. This was before he first met Mr Povarenkin, which I find was in the spring of 2007. His witness statement evidence in chief said that this pre-Povarenkin consideration of investing was in “about 2005”, but in cross-examination, on reflection, he said he thought it was late 2006 or the beginning of 2007, as it was not (he said) as much as two years before he met Mr Povarenkin. The precise timing does not matter; and I accept his evidence that he was interested in mine ownership in Yakutia, and had given some initial consideration to such investment, before he first met Mr Povarenkin.

Mr Povarenkin studied science, graduating with a chemistry degree from Omsk State University in 1992. His business career has been entirely one of finance and investment. After a first substantial job as deputy chief accountant at OAO Omskshina, a tyre plant undergoing privatisation, Mr Povarenkin in 1993 joined OAO AB Incombank, initially as manager of its Omsk branch, later relocating to Incombank’s Moscow head office. There he worked as a senior vice president for the bank’s business investment division with responsibility for its industrial business investments.

When Incombank collapsed in 1998, Mr Povarenkin worked as deputy chairman of National Reserve Bank, then as executive chairman of Russian Industrial Bank, both in Moscow, before taking the leap into private equity investment directly as entrepreneur in 2000. As 25% minority partner, he formed Industrial Investors Group (‘IIG’) with Mr Sergei Generalov. His 25% equity contribution was lent to him by Mr Generalov on an interest-free basis. Mr Generalov was thus both the 75% majority partner and the individual with ready funds to invest. Mr Povarenkin was appointed and acted as Managing Partner of IIG.

In a description I was not given reason to doubt, Mr Povarenkin said in his witness statement evidence in chief that IIG went on to become “one of Russia’s largest investment companies with interests in shipping, agriculture, spirits and biotechnologies”. In due course, Mr Generalov and Mr Povarenkin decided to separate IIG’s interests and continue in business independently of each other. Unsurprisingly (this many years later) I was not given a precise or detailed time line, but in my judgment the probability is that this split was at least in the offing by the time Mr Povarenkin met and agreed to go into business with Mr Bestolov, as I describe below. The split of IIG interests left mining and metallurgical assets under Mr Povarenkin’s ownership and control, and from December 2007 he organised those assets under a GeoProMining (‘GPM’) group structure, the (Cypriot) holding company being GeoProMining Investment (CYP) Ltd. Mr Generalov took with him IIG’s main investment, the FESCO transportation group.

The GPM group today employs c.2,000 people in total and its principal assets include the GPM (gold) and Agarak (copper-molybdenum) mining businesses in Armenia and the Sarylakh-Surma and Zvezda mining businesses in Yakutia, the latter having been acquired, together with licence rights for the Verkhne-Menkeche field in Yakutia, during the period of Mr Povarenkin’s association with Mr Bestolov.

In 2007, Mr Povarenkin was interested in the possibility of investing in further mining businesses as an expansion of his holdings. IIG’s mining investments were recent, so he was not yet an experienced investor in the mining sector at all, let alone in Yakutia in particular, but Mr Povarenkin identified Yakutia as a region that might present interesting investment opportunities in that sector. He was thus a Moscow-based financier and entrepreneur with available investment funds, but no relevant business experience, profile or contacts in Yakutia. He had been to Yakutsk, but 3-4 times only and back in 1996-1997, during his employment as a Senior V-P of Incombank, to visit its branch there.

With that introduction to the principal parties, it is no great surprise to find that there came to be a meeting of minds between Messrs Bestolov and Povarenkin that they should do business together in Yakutia. Some aspects of how that came about are contentious. But the basic events were these:

I do not accept a submission by Mr Head QC for Mr Povarenkin that because Mr Bestolov’s direct experience of running or designing mining operations in Yakutia pre-dated AZK he was not well qualified to direct such operations, if he and Mr Povarenkin jointly pursued opportunities to invest in mines or mining rights in Yakutia in and after June 2007. He was vastly better qualified in that regard than Mr Povarenkin, who had come to mining at all (as investor) only recently and had no relevant experience of or in Yakutia. If one imagined the Board of a joint venture company as a vehicle for mining investments in Yakutia, Mr Povarenkin was naturally CEO, Mr Bestolov was naturally Mining Director or Operations Director.

The full terms of the Agreement (in translation) are set out in the Appendix to this judgment. There were rival translations at trial. Neither was said to be linguistically impermissible or inaccurate. I have used the translation obtained by Mr Bestolov’s solicitors, except where on a point of difference the rival translation obtained by Mr Povarenkin’s solicitors seemed to me better to represent the sense of the words as used in their context by these parties. For the parties’ convenience only, where for that reason I have used in the Appendix the translation obtained by Mr Povarenkin’s solicitors, I have shown that by using italics.

Of the many projects of mutual interest or possible interest identified in the Agreement, only two came to any sort of fruition: the “Zvezda-Sarlyakh-Santychan” complex of enterprises referred to in clause 9 and identified there as the first priority target; and the “Verxnee-Menkeche” area licence rights referred to alongside other possible targets in clause 10. As regards the former, in 2007 they comprised two separate businesses, ‘Sarylakh-Surma’ and ‘Zvezda’ as they were generally referred to at trial. Both were owned as to 60% by OOO Poisk, a business owned and run by Mr Andrei Kazdobin, who gave evidence at trial via video link, called as a witness by Mr Povarenkin. In both cases, the remaining 40% was owned ultimately by the Yakutian government, although the public ownership vehicle differed between the two.

No joint venture holding company, as called for by the Agreement, was ever incorporated and all those acquisitions (Sarylakh-Surma, Zvezda and Verkhne-Menkeche) were made, directly or indirectly, by GPM.

Whatever involvement Mr Bestolov had, if any, which is contentious, in the identification of Sarylakh-Surma, Zvezda or Verkhne-Menkeche as investment targets and/or their pursuit to acquisition:

Two supplementary agreements were signed. They contain no reference at all to governing law, but they are plainly addenda to the Agreement, intended to vary it and ultimately, between them, to terminate it. The first supplementary agreement (‘Addendum 1’) is dated 26 April 2012 and was signed on or about that date; the second (‘Addendum 2’) is dated 20 December 2012 and was signed on or about that date by Mr Bestolov and counter-signed by Mr Povarenkin on 15 March 2013. It was common ground as regards governing law that, however this is best analysed and although the Rome Convention applies to the Agreement but the Rome I Regulation applies to the Addenda, I should treat the Addenda as having the same governing law as the Agreement. The result is that if there was a sufficiently demonstrated choice that under the Rome Convention the Agreement was governed by English law, then the Addenda should be taken to be governed by English law also, otherwise the Agreement and both Addenda are all governed by Russian law.

As with the Agreement itself, each Addendum is in Russian, and as between Mr Bestolov and Mr Povarenkin each was drawn up by the latter and found to be acceptable, so therefore agreed, by the former. On Mr Povarenkin’s side of things, however, he had his lawyers (as he put it, by which I understood him to be referring to (the office of) GPM’s then legal director, Mr Vitaliy Yablokov) take care of the drafting rather than do it himself as he had done with the Agreement.

Addendum 1 provided by clause 3 (in translation) that the parties thereby “agreed to settle all their rights and obligations under [the Agreement] on the terms set forth”. Clause 4 recorded total investment costs in Sarylakh-Surma and Zvezda as of 1 March 2012, all incurred by ‘Partner 1’ (i.e. all incurred on Mr Povarenkin’s side) of US$39,843,790, an agreed valuation for that investment of US$80,000,000, and an agreement that under the Agreement ‘Partner 2’ (i.e. Mr Bestolov’s side) was entitled to 25% of the difference.

Clause 4.3, upon which Mr Bestolov founds his claim, then provided as follows:

Clause 5 of Addendum 1 provided that there was to be a separate agreement by 1 June 2012 for ‘Partner 2’ to purchase 25% of the Verkhne-Menkeche project, as acquired by GPM, at cost (as incurred by ‘Partner 1’, agreed to be US$16,895,600 as of 1 March 2012), and that the parties would “participate jointly (proportionately to their shares in the project) in the further development” of that project.

Clause 6 of Addendum 1 provided that except for the parties’ rights and obligations in relation to Verkhne-Menkeche, to be regulated by a separate agreement as per clause 5:

In the event, Addendum 2, the further agreement to deal with the Verkhne-Menkeche project, did not provide for Mr Bestolov’s side to pay for the 25% share at cost incurred, with continued joint participation thereafter, but rather completed the parties’ separation of their interests. Thus, by clause 4 the parties agreed that “in fulfilment of the obligations of Partner 1 as provided in [clause] 5 of [Addendum 1], Partner 1 undertakes to pay to Partner 2 the sum of USD 1,500,000 … within 90 days from the signing of [Addendum 2] …”; by clause 5, it was agreed that after full payment under clause 4, the obligations of ‘Partner 1’ under clause 5 of Addendum 1 would be considered completely discharged; and by clause 6, the parties agreed that all rights and obligations on both sides under clause 5 of Addendum 1 would be discharged by full payment under clause 4.

In early June 2013, Mr Povarenkin caused a payment of US$3 million to be made to Mr Bestolov’s nominated payee (a company of his called Diageo), appropriated by the payment instruction as to US$1.5 million to the sum due under Addendum 2 and as to US$1.5 million towards the sum due under Addendum 1. Hence the amount I stated at the outset for Mr Bestolov’s claim herein, being his claim to the balance due under Addendum 1, US$7,535,147. No part of that balance has been paid. (There was a pleaded claim for damages for late payment of the US$1.5 million that was paid under Addendum 1; but in closing Mr D’Cruz for Mr Bestolov said that he did not pursue any damages claim, only an award of interest under s.35A of the Senior Courts Act 1981 on the principal claim.)

In August 2014, GPM completed an important transaction with Sberbank Capital LLC, under which it obtained funding of US$77 million in return for a 25.64% equity stake. This funding transaction included terms that could entitle Sberbank Capital to increase its stake, ultimately even so that it became a controlling stake, depending on GPM’s ongoing financial performance. In the course of negotiating that transaction with Sberbank Capital, Mr Povarenkin disclosed the debt to Mr Bestolov to Sberbank Capital as an undisputed, personal liability of Mr Povarenkin’s as per the terms of the Agreement and Addenda.

The Sberbank Capital funding transaction was newsworthy and Mr Bestolov saw a press report of it. He therefore got in touch with Mr Povarenkin in September 2014 to chase for payment of the outstanding Addendum 1 balance. Mr Povarenkin spent some days avoiding Mr Bestolov’s calls, but when they did eventually speak he told Mr Bestolov that he did not have the funds to pay. There was no suggestion the debt was not due. That led to an internal exchange at GPM between Mr Povarenkin and Mr Oleg Belyaev, his CFO, as to whether Mr Povarenkin could give Mr Bestolov a shareholding in GPM (directly or indirectly) instead of cash to pay the debt (if, that is to say, Mr Bestolov would be willing for the debt to be settled in that way). In that exchange, as when disclosing the liability to Sberbank Capital, Mr Povarenkin plainly accepted that the debt was due and was exploring only how, if at all, he might settle (i.e. discharge) it, if Mr Bestolov would agree, since he did not have the cash to do so.

That then led to a meeting in late September or October 2014 attended by Mr Bestolov, Mr Povarenkin, Mr Khudoliy and Mr Vladimir Lelyukh, Deputy CEO of Sberbank Capital (although not acting in that capacity at this meeting), to whom Mr Povarenkin had disclosed the liability to Mr Bestolov as referred to above in the context of negotiating the US$77 million financing. It is contentious whether what Mr Povarenkin said at that meeting involved an acknowledgment of the debt, but on any view the upshot was the possibility of a transfer of shares in Geiser Asset Holdings Ltd (‘Geiser’), which owned c.50% of GPM, rather than the payment of cash (‘the Geiser proposal’).

Ms Ekaterina Galasheva, a transactional lawyer, was head of legal at Sberbank Capital until early 2014 and continued to act for it on a freelance basis after she left, but only on the GPM transaction, to see it through to its conclusion, so that is until August 2014. I introduce her now to note that I accept her evidence, and that of Mr Bestolov and Mr Lelyukh, that she did not attend the meeting referred to in the previous paragraph at which the Geiser proposal was put forward. I reject Mr Povarenkin’s evidence, to the contrary, that Ms Galasheva was at that meeting. She became involved only afterwards, in November or December 2014, after first draft transaction documents by which the Geiser proposal might be put into effect, if agreed, were sent to Mr Bestolov, and he needed help and advice in order to respond. Mr Lelyukh recommended Ms Galasheva to Mr Bestolov for that and Ms Galasheva got involved, on that basis, to assist Mr Bestolov.

The Geiser proposal was pursued over a period of some months until a final meeting in July 2015. Aspects of what was said on that occasion are, again, contentious; but on any view, I find, Mr Povarenkin stated then that he would not pay the Addendum 1 balance. On Mr Bestolov’s case, this was the first time anything was ever said that might indicate that Mr Povarenkin did not accept his liability to pay that balance, and even then no reason was given. On Mr Povarenkin’s case, this was a culmination and repetition of previously expressed concerns as to the identity of Mr Bestolov’s unnamed ‘partner’ and as to whether Mr Bestolov had over the years done anything of what, on Mr Povarenkin’s case, he had been promised that Mr Bestolov would do and was doing for Mr Povarenkin in Yakutia.

There was no dispute that will be material to the outcome as to the principles to be applied to determine whether Mr Bestolov is correct that the Agreement was governed by English law by the choice of the parties. Article 3(1) of the Rome Convention establishes for the Agreement the principle that a contract is governed by the law chosen by the parties, but only if their choice is “expressed or demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case”. That is intended to be a uniform rule of the Rome Convention, so that it will have uniform interpretation and application in all Contracting States: see Article 18. That, and the reference to “the circumstances of the case”, may mean consideration of circumstances that “range more widely in certain respects than the considerations ordinarily applicable to the implication of a term into a written agreement”: Aeolian Shipping SA v ISS Machinery Services Ltd [2001] EWCA Civ 1162 at [16].

The circumstances to be considered may include post-contractual events. The furthest this has been taken in any case to which I was referred was in FR Lurssen Weft GmbH & Co KG v Halle [2009] EWHC 2608 (Comm). There, an express choice of English law in a contract was taken into account in concluding that a choice of law was sufficiently demonstrated in respect of a related contract concluded a few months earlier, where both contracts were in turn related to an original contract containing an express choice of English law concluded a year or so earlier still.

The test is objective. It requires that, assessing objectively the terms of the contract and the circumstances of the case, there appears to be a real choice of law for the contract in question, even if not expressly stated as such in the contract, and not merely a choice of law that the parties would or might well have made if choosing but where in truth there was no real intention to choose. As Blair J put it in British Arab Commercial Bank v Bank of Communications [2011] EWHC 281 (Comm) at [29]: “The fundamental question is whether in the absence of an express choice, there was nevertheless a real choice.”

In his witness statement evidence in chief, Mr Bestolov claimed to recall an express discussion about English law in his meetings with Mr Povarenkin that culminated in the signing of the Agreement. Mr Povarenkin, he said, told him that he thought it important to incorporate the proposed joint venture company under English law, formalise their agreements in the statutory documents of that company and have a shareholders’ agreement for it, and that “English law was more sophisticated and more developed and, therefore, more suitable for our proposed partnership”.

That last comment aside, this many years later I regard it as unrealistic to suppose that a detailed recollection of exactly what was said might be reliable. In particular, clause 2 of the Agreement (upon which the argument for a choice of English law on any view principally depends) says several things the gist of which seems strikingly similar to Mr Bestolov’s description of what he remembers discussing. The idea that he might reliably have a recollection of something said, along the lines of what is in clause 2 but adding materially to it, rather than a reasonably constructed ‘memory’ that what we see in clause 2 is (must be) what was discussed, is, I think, far-fetched. That is not intended as a criticism of Mr Bestolov. He may well perceive this as recollection not reconstruction.

The final comment I quoted in paragraph ‎42 above is different in kind, however. It is not so much a (claimed) recollection of what was said that then found its way into clause 2 as a written record, but an apparent memory of a discussion of why clause 2 is there at all. It was common cause on the evidence that whatever reference was made between them was initiated by Mr Povarenkin and that neither of them had previously contracted to any extent on the basis of English law. According to Mr Povarenkin’s evidence, clause 2, and the references in it to English law, was not taken from or modelled on his agreement with Mr Generalov. That agreement, he said, stated, and no more, just that there was to be a joint venture company (which is what became clause 1 of the Agreement). As to why he included what he included about English law, his evidence was that it was the trend at the time, so it seemed a trendy feature to include. He also said, in an unguarded initial answer when it was put directly to him that he made the comment I quoted in paragraph ‎42 above, that “I say that international legislation, you know, more protected than Russian legislation, you know. It was just common [sic., general] discussion because it was a trend in time – at that period of time, you know. But we never discuss it in details, never.”

I therefore regard it as entirely plausible, indeed more likely than not, that there will have been some discussion such as they both appear to remember. I also regard it as highly implausible that any such discussion would have been, or would have been only, about the desirability of using something international (non-Russian) rather than specifically about using English law, the then loi du jour and the law in fact referred to in clause 2. To the extent that Mr Povarenkin, in other answers, maintained or appeared to maintain the line that nothing at all was discussed, or certainly that English law specifically was not discussed, rather he came up with clause 2 all on his own when drafting the Agreement and Mr Bestolov simply signed without more ado, I reject that evidence. In my judgment, that was, like much of Mr Povarenkin’s evidence on contentious matters, a contrived attempt to explain away what he perceived to be a difficulty for the case he was pursuing at trial.

Whether this extra colour, as regards what was probably said between them about English law, is in fact a difficulty for Mr Povarenkin’s case, is a matter for argument and a judgment by the court. That in turn may depend on how far precisely any finding of fact about it actually goes. As to that, on the evidence I regard it as more probable than not, and so I find, that ‘why English law?’ did come up in their discussions and that Mr Povarenkin gave an explanation to the effect that it was more sophisticated, more developed and more suitable. In the end, though, that just begs the question, ‘more suitable for what?’.

Mr Bestolov’s witness statement says it was “more suitable for our proposed partnership”. But that witness statement also says that Mr Bestolov does not understand what clause 2 means, or why it is there, if that is not what it (clause 2) means; and I accept that that is Mr Bestolov’s thinking. Mr Bestolov first gave a detailed account of what he believes was discussed in May 2017, in a witness statement resisting Mr Povarenkin’s jurisdiction challenge, i.e. 10 years after the fact. I could not sensibly find that Mr Povarenkin said anything that would stand as his answer to the question ‘more sensible for what?’ that was sufficiently specific or concrete as to convey a wider ambit for the choice of English law than one might otherwise get from clause 2.

At the other extreme (chronologically), Mr D’Cruz argued that I should take into account, and be influenced in favour of finding that a choice of English law for the Agreement had been sufficiently demonstrated by, the fact that various draft agreements, none concluded, relating to the Agreement or the joint venture projects thereunder, contained express choices of English law. In no case was there evidence of explicit, specific discussion, let alone agreement, of the proposed choice of law in question. So the furthest Mr D’Cruz could in truth take the point on the facts in each instance, although in some of his submissions he articulated the argument in a way that sought to go further, is that an express clause choosing English law was included in a draft contract and was not the subject of specific discussion before, for reasons ex hypothesi unconnected to that clause, the possibility of concluding the contract in question fell away.

In my judgment, those points therefore do not assist. The proposed choices of law were never in fact agreed, because the contracts in which they would have appeared if concluded were never agreed. It is possible to envisage that if they had been concluded, the choice of law clause might have been included without debate. But the truth is one simply does not know. If either side had given the clause specific attention at the last minute and objected or proposed something different, (a) it could not have been said that they were somehow already bound to it in relation to the particular transaction then being discussed and (b) the reasonableness of a notional response, ‘but I thought we had chosen English law for our relationship generally’ (or similar), would stand or fall on what had been actually agreed, not merely proposed but not agreed, previously – anything else would be bootstraps.

I therefore do not take up time going through Mr D’Cruz’s various individual examples one by one, save:

Mr D’Cruz accepted, as I have already indicated, that it is ‘choice or bust’ as regards the argument that the Agreement is governed by English law. In my judgment, as I have now explained, it is ‘clause 2 or bust’ as regards whether there was a relevant and sufficient choice. On that, the case comes down to how far (if at all) clause 2 goes beyond recording an agreement that there was to be a joint venture holding company incorporated in England. That without more does not demonstrate a choice of English law to govern the contract that contains that agreement.

Clause 2 does go further than that, however. The second sentence and the final sentence are to the effect that all agreements reached between Messrs Bestolov and Povarenkin were to be written into the incorporation documents of the proposed joint venture company, for which they had chosen English law as the governing law, and their joint venture relationship was to be conducted only through that company. Read as a whole, therefore, clauses 1 and 2 of the Agreement say much more than that there will be an English asset-holding company. They equate the joint venture relationship, established initially by the Agreement, with the company to be created under and governed by English law. They provide that their joint venture agreement itself, in a further and final form, is to be written into the English law documentation to be used in setting up the joint venture company. In my judgment, that clearly evinces – in the language of Article 3(1) of the Rome Convention, it demonstrates with reasonable certainty – a choice that English law should govern the relationship established by the Agreement.

That choice is not articulated, in terms, as a choice of law for the Agreement (i.e. for that document itself). In my judgment, however, that does not create any real ambiguity over whether the expressed choice of law extends to the Agreement. Rather, viewed objectively, that seems to me just a by-product of the fact that the drafting focus of clauses 1 and 2 is so much the embodiment of the joint venture relationship in the company-to-be. The possible question might perhaps have arisen whether therefore the Agreement was intended to be only a non-binding statement of intent. No such point has ever been taken, however, and it has been common ground throughout that the Agreement was a binding contract when concluded. The choice of law issue, therefore, is whether Mr Bestolov and Mr Povarenkin by clause 2 of the Agreement expressed or demonstrated with reasonable certainty a choice of English law to govern the relationship established between them by the Agreement (that being, in fact, a binding contractual relationship there and then). In my judgment, the answer is that they did.

The Agreement, therefore, was and is governed by English law pursuant to Article 3(1) of the Rome Convention. I have recorded already that it was then common ground that Addendum 1, under which Mr Bestolov’s claim arises, and for that matter Addendum 2, were and are also governed by English law.

No defence to Mr Bestolov’s claim arises out of the terms of Addendum 1 or the Agreement. Paragraphs ‎28, ‎29 and ‎33 above set out what the claim is and how, on the face of things, it is well-founded under clause 4.3 of Addendum 1. It is simply for the debt due under clause 4.3, less the part-payment of US$1.5 million made in 2013. No breach of any term of Addendum 1 or of the Agreement is alleged against Mr Bestolov.

However, building upon suggestions made for the first time in March 2017, in a witness statement in support of his jurisdiction challenge, Mr Povarenkin alleges that Mr Bestolov made untrue statements to him during their discussions leading to the Agreement giving rise to either actionable misrepresentations (indeed, a claim for deceit) or promissory obligations not set out in the Agreement when it was drawn up and signed but nonetheless binding on Mr Bestolov as part, it is said, of an overall bargain concluded at that time. It is said for good measure that materially all of these statements or promises were repeated so as to induce Mr Povarenkin in due course to conclude Addendum 1, and then again for Addendum 2.

By one or other of various routes, Mr Povarenkin says in consequence both that he does not have to pay Mr Bestolov the balance prima facie outstanding under clause 4.3 of Addendum 1 and that he is entitled to be repaid the US$3 million paid in 2013, or to damages in like amount.

The statements and/or promises alleged are to the following material effect, namely that:

Those allegations, and the defence and counterclaim building on them, were very implausible. To start with, there is no hint of any such statements or promises in the Agreement, though on Mr Povarenkin’s case they were of the essence. In fact, Mr Povarenkin was seeking by them to transform the nature of the bargain from that set out in the Agreement. His case was not – although it was presented as if it was – one of a written agreement failing to record every element of what had been agreed; it was that this was not two entrepreneurs agreeing to go into business together, but an engagement by him of Mr Bestolov (and, critically, his unnamed ‘partner’) to provide ‘lobbying and promotional services’. If that were the truth of it, the content of the Agreement as drawn up by Mr Povarenkin would have been radically different. It is no answer to suggest – as Mr Povarenkin did in evidence and so Mr Head QC did in argument – that lobbying and promotional services were not mentioned in the Agreement because Mr Bestolov was not willing to refer to his partner. I deal in the detail below with whether Mr Bestolov was ever unwilling to, or refused to, name his partner; but the point at this stage is that had that been the case, as Mr Povarenkin asserted, it would have reinforced the need to make sure that what the Agreement was really about, on Mr Povarenkin’s case, was mentioned even if the partner was not to be named.

Mr Povarenkin fashioned the Agreement from the contract he had had with Mr Generalov because what he had agreed with Mr Bestolov was similar in nature to what Mr Generalov had agreed with him for the purposes of what became IIG. It is nothing to that point that Mr Povarenkin is not a lawyer and did not use a lawyer for the drafting. I am quite confident he would have seen the bargain he now says he struck with Mr Bestolov as utterly dissimilar to the deal he had with Mr Generalov and entirely unsuitable to be written up based on the written contract used for that deal.

On Mr Bestolov’s case, it makes sense that such matters of respective backgrounds, skills and experience as may have been discussed leading him and Mr Povarenkin to decide to go into business together, would not be set out in the Agreement. By contrast, Mr Povarenkin’s case makes no sense as it says this was in truth a services contract yet the Agreement made no attempt to describe or define the services, nor even hinted that that is what it was. This may perhaps only be a particular of the previous point, but it is worth stating since a particular submission by Mr Head QC was that the absence of provisions setting out what, in practice, Mr Bestolov would do pursuant to the Agreement was somehow a problem for his (Mr Bestolov’s) case. To the contrary, it is a severe oddity about Mr Povarenkin’s case. It is notable that to articulate the submission required Mr Head to mischaracterise Mr Bestolov’s case. Thus, it was said to lack commercial credibility that Mr Povarenkin should have agreed “to give [Mr Bestolov] and/or his partner a valuable share of a business worth millions of dollars in return for limited practical services”. But it was not Mr Bestolov’s case that he was a service provider; it was Mr Povarenkin’s case that Mr Bestolov was (merely) a service provider. Mr Head’s submission was at best just circular, and if not that then actually harmful to Mr Povarenkin’s case.

That is also why it is understandable, rather than odd or suspicious, on Mr Bestolov’s case, that there has been imprecision and inconsistency over time in descriptions he has given as to how he had envisaged his role developing, practically speaking; and it is why Mr Bestolov’s case does not involve (as Mr Head QC contended) acceptance that anything intended to be binding was agreed that was not set down in writing in the Agreement. Again, any lack of precision over what Mr Bestolov (or his partner) would or might do in practice, and the absence of reference to that in the Agreement, is a problem for Mr Povarenkin’s case, not for Mr Bestolov’s case.

It is extraordinary on Mr Povarenkin’s case (but entirely to be expected on Mr Bestolov’s) that there is nothing in any document until March 2017 (Mr Povarenkin’s witness statement challenging jurisdiction) to suggest that Mr Povarenkin was at all interested in or concerned about the identity of Mr Bestolov’s ‘partner’, let alone any hint that he was failing or unwilling to pay what he owed under Addendum 1 from the second half of 2012 because of some such concern.

It is bizarre that on instructions from Mr Povarenkin lawyers would draft, and Mr Povarenkin would be happy to sign, Addenda terminating the relationship with Mr Bestolov (subject to payment of the debts thereby created in favour of Mr Bestolov) and stating that (subject to those debts) all obligations were considered fully performed and discharged, if in reality the ‘engagement’ of Mr Bestolov to provide ‘services’ was to continue (as Mr Povarenkin claimed in an effort to make his case consistent).

It is most odd that no witness is in a position to corroborate the core claims, if true, as to what Mr Povarenkin was told or promised by Mr Bestolov. As I mention when dealing with the detail below, a line was taken in Mr Khudoliy’s and Mr Povarenkin’s witness statement evidence in chief that might have made Mr Khudoliy a corroborating witness, but it did not survive scrutiny at trial. Aside from Mr Khudoliy, it would defy belief to suppose that the truth of the case might be as Mr Povarenkin would have it and nothing of the sort was ever said to Mr Belyaev or to Mr Yablokov or his successor at GPM, Mr Roman Buntin; yet if they could honestly have assisted Mr Povarenkin as witnesses I am sure I would have had evidence at least from Messrs Belyaev and Buntin, both of whom still work for Mr Povarenkin at GPM.

Taking the statements alleged by Mr Povarenkin in turn (using the numbering in paragraph ‎58 above), in the light of those difficulties and my findings on the evidence set out below I have concluded that:

Before turning in more detail to the facts, I dwell a little on the notion that the real or important meeting of minds here was over ‘lobbying and promotional services’, to be secured via the unnamed ‘partner’ because he was inside government. Mr Head QC made clear in argument that he advanced no suggestion that what had been agreed, on Mr Povarenkin’s case, amounted to anything corrupt or improper. But it does not require a fertile or over-sensitive mind to suppose that that might be what Mr Povarenkin’s pleading and written evidence insinuated. For example, Mr Povarenkin’s witness statement evidence in chief in support of the second alleged representation was that Mr Bestolov said “he had many well-positioned contacts, including within the Yakutian Government. Those contacts included a close connection with at least one senior and influential member of the Yakutian Government. He referred to this person as his partner but said that he was unable to name him (and I, understanding the position, did not ask Mr Bestolov to name him)”; and it was apparent to me from observing Mr Bestolov during cross-examination that whether or not a case of something improper was being pursued by counsel, he (Mr Bestolov) not unreasonably understood that that is what Mr Povarenkin had suggested.

So whilst there was an anger and defensiveness to Mr Bestolov in cross-examination, not only is demeanour a poor guide to truthfulness or reliability, but his touchiness was understandable in the light of what he perceived that Mr Povarenkin was saying about him. Even allowing for that, there were aspects of Mr Bestolov’s evidence that were unsatisfactory. But they were on matters peripheral to the main issues and were nothing like as significant as the many and various implausibilities, contradictions and, I regret to say, bare-faced lies in Mr Povarenkin’s testimony. The problems with Mr Bestolov’s evidence, such as they were, did not cause me to reject his basic, credible account, supported as it is by the documentary evidence, that what he and Mr Povarenkin agreed is accurately set out in the Agreement they signed, they did not in the event pursue or develop business jointly in Yakutia on the ambitious scale envisaged by the Agreement, in due course they agreed terms upon which to go their separate ways, Mr Povarenkin buying Mr Bestolov out, as set out in the Addenda, and as a result this was always (or should have been) a simple debt-collection exercise over an undisputed and undisputable debt.

In what follows, I do not attempt to deal with every factual aspect of the matter explored at trial, but describe the main stages in the narrative and indicate my findings on the primary points of dispute.

As I have said already, Mr Povarenkin came to Mr Bestolov, having already identified him as potentially a good business partner for the pursuit and development of mining interests in Yakutia. Their discussions included the identification of a range of mining businesses or assets that it would or might be worth pursuing together. Mr Bestolov thought he recalled Sarylakh-Surma, Zvezda and Verkhne-Menkeche being proposed as the initial priority targets, but that does not sit with their respective descriptions in the Agreement as drawn up, which singles out Sarylakh-Surma/Zvezda (clause 9) as the first target and lists Verkhne-Menkeche as one among many other potential targets (see clauses 10 to 13). I think it likely Mr Bestolov has conflated the later pursuit only of Verkhne-Menkeche, after the successful acquisition of Sarylakh-Surma and Zvezda, with an identification of it in his initial meetings as a first priority target alongside those two.

As regards Sarylakh-Surma and Zvezda, Mr Bestolov’s evidence was that he identified those as first stage targets. He said he commissioned via the Yakutian state committee on geology and natural resources management, for his meetings with Mr Povarenkin, a report from Sakhageoinform, a state-owned enterprise under the supervision of that committee. The report provided information in a series of tables that, I find, would be a useful starting point for any discussion of possible acquisition targets between businessmen looking to invest in the Yakutian mining sector. As produced by Mr Bestolov on disclosure, that report came with a single summary page Mr Bestolov said he had prepared for and used in his discussions with Mr Povarenkin.

That summary page, in the copy produced by Mr Bestolov, has handwritten additions that in his witness statement evidence in chief Mr Bestolov claimed to remember being made personally by Mr Povarenkin. I find he is wrong about that, and this was one of the unsatisfactory elements of Mr Bestolov’s evidence. The handwriting in question, it emerged at trial, is that of Mr Dmitry Khan, who worked for Mr Povarenkin at IIG, then GPM, for about a year from June 2007. The fact it is on Mr Bestolov’s copy of the document indicates, and I find, that the document came back to Mr Bestolov from Mr Povarenkin at some point having been considered and worked on by Mr Khan. That will have been after the Agreement was signed and in my judgment explains why Mr Bestolov has (as I believe he does have) a recollection that the handwriting came to him from Mr Povarenkin.

In his witness statement evidence in chief Mr Bestolov elevated that to a statement that he was ‘sure’ it was Mr Povarenkin’s handwriting because (a) it was not his (Mr Bestolov’s) handwriting, (b) he recalled Mr Povarenkin making notes on the documents Mr Bestolov had produced in their initial meetings in 2007 and (c) he could not think whose handwriting it might be if not Mr Povarenkin’s. I believe Mr Bestolov was being truthful in relation to (a), (b) and (c) (which, as regards (b), means just that he believed, when signing the statement in question in April 2019, that he had a recollection to that effect from April-June 2007). I have no reason to doubt the accuracy of (a) and (c); but (b) was to my mind shown to be unreliable, Mr Bestolov having confused himself with a recollection of a quite different document from much later in the chronology. Though the way this point was dealt with in the relevant witness statement (which was a reply statement rather than Mr Bestolov’s primary statement for trial) was unsatisfactory, therefore, I do not accept it showed Mr Bestolov to be untruthful, or otherwise unreliable, in saying that he obtained the Sakhageoinform material and prepared the summary sheet for, and went through them with Mr Povarenkin at, one or more of their initial meetings in 2007.

Returning, having mentioned him, to Mr Khan, he was that most dangerous of witnesses, professing certain confidence in the accuracy of what he said were detailed recollections as to the dates (or at least months), places and people of events from 12 years ago, but whose claimed recollections were shown to be unreliable on a number of important matters. He claimed to have undertaken substantial work towards what became the Sarylakh-Surma and Zvezda acquisitions before June 2007 – moonlighting for Mr Povarenkin, as it would have been at the time. I did not find that claim credible, being both inherently highly implausible and unsupported by any contemporaneous document. As to that latter, Mr Khan not only said in cross-examination that the handwriting on Mr Bestolov’s summary page was his (Mr Khan’s) – which is how that fact emerged only at trial – but also claimed that the document itself was his work and, although he did not say he had a specific recollection, that he probably obtained from Sakhageoinform the supporting material on which it was based. This had not been suggested at any stage by or on behalf of Mr Povarenkin. If true, it should, and in my judgment would, have been part of Mr Khan’s evidence in chief, so obviously important was the document in question to the case, and I would expect to find some corroboration for it in contemporaneous material. In my judgment, this was not truthful evidence from Mr Khan whose oral evidence was, I felt, carefully tailored to promote Mr Povarenkin’s cause and was not evidence I could trust.

No doubt Mr Khan will have been involved, after joining IIG in June 2007, the Agreement having been signed, in pursuing Sarylakh-Surma and Zvezda as acquisitions, including in the due diligence trip to the sites that lasted a working week or so in July 2007 that Mr Povarenkin and others described. But I reject the idea that Mr Khan was working on these projects before or at the time of Mr Bestolov’s initial meetings with Mr Povarenkin leading to the signing of the Agreement.

Mr Khudoliy also gave evidence in support of Mr Povarenkin’s case. Like Mr Khan, Mr Khudoliy began working for Mr Povarenkin after the Agreement had been concluded between Mr Povarenkin and Mr Bestolov. In his case, Mr Khudoliy was employed full time as CEO of Yakutugol until October 2007 and joined GPM in January 2008. He left Yakutugol after its successful sale by way of privatisation for c.US$2.5 billion. Yakutugol was a large coal mining business in Yakutia. Mr Khudoliy and Mr Povarenkin both said that they had met by the time the Agreement was concluded; and that Mr Khudoliy was the person Mr Povarenkin had in mind to be his ‘partner’ under the Agreement, if he did come to work for Mr Povarenkin in due course at GPM. Even if that was the case, I do not accept that Mr Khudoliy had any substantial involvement in the identification, selection or acquisition of Sarylakh-Surma and Zvezda prior to joining GPM, save that he may have visited the mines at GPM’s expense in December 2007 while considering Mr Povarenkin’s offer to become his CEO rather than only after accepting the offer and starting work at GPM in January 2008. I did not find credible his suggestion that he was in frequent contact with Mr Povarenkin, or doing preparatory work for him, whilst still at Yakutugol. As with Mr Khan’s evidence, provided to try to support Mr Povarenkin in his claim to distance Mr Bestolov from having influenced at all the initial decision to target Sarylakh-Surma/Zvezda for acquisition, it is not plausible that Mr Khudoliy might have had this moonlighting role at all, a fortiori that neither he nor Mr Povarenkin can produce a single document or email to prove it.

There was also a mis-match between Mr Khudoliy’s and Mr Povarenkin’s evidence about the ‘lobbying and promotional services’ that, on Mr Povarenkin’s case, were the subject of specific representations and promises by Mr Bestolov that were central to the Agreement. Both Mr Khudoliy and Mr Povarenkin gave witness statement evidence in chief to the effect that they had discussed those representations and promises, as allegedly made by Mr Bestolov. Mr Khudoliy was not at any of the relevant meetings, so he was not a first-hand witness as regards what had been said. This evidence in chief of his and Mr Povarenkin’s, therefore, was intended as corroboration generally, and rebuttal of the inevitable charge of recent invention in particular, in respect of Mr Povarenkin’s primary evidence of what Mr Bestolov had said. Mr Khudoliy under cross-examination kept to the line jointly taken in the witness statements, but when Mr Povarenkin gave his evidence he appeared to me to have forgotten it. Instead, he denied discussing this aspect of the matter with Mr Khudoliy at all and, explaining that denial in evidence that had a ring of truth about it (unlike a lot of his evidence), Mr Povarenkin explained how he regarded Mr Khudoliy and Mr Bestolov as completely different types: Mr Khudoliy was a good general manager for a mining business; Mr Bestolov was an entrepreneur. Whilst I believed and accept that evidence, and so find that Mr Khudoliy was indeed not told anything about Mr Bestolov representing or promising anything about lobbying or promotional services, this aspect of the trial reinforces my conclusion that neither Mr Khudoliy nor Mr Povarenkin was a witness whose evidence I could in general trust.

Mr Povarenkin also gave untruthful evidence in relation to the identification of Sarylakh-Surma/Zvezda as the first priority. The gist of the Agreement in that regard (see clause 9, being of course in Mr Povarenkin’s words, agreed by Mr Bestolov) was that Messrs Povarenkin and Bestolov jointly planned to value the businesses and negotiate with the owners to acquire them by 1 October 2007, and also to acquire the Yakutian government minority interest if it were available to buy. Consistent with that, Mr Kazdobin’s evidence was that he was approached to meet Mr Povarenkin, having previously never met or even heard of him, and that meeting was in June 2007. A due diligence exercise and detailed negotiations for the acquisition then followed, including the week-long visit by Mr Povarenkin and his team in July 2007 I mentioned above.

However, Mr Povarenkin’s witness statement evidence in chief told a very different story, namely that: through business dealings unconnected to Mr Bestolov, he met Mr Kazdobin, who told him about Poisk’s and the Yakutian government’s ownership interests in Sarylakh-Surma/Zvezda; he decided to pursue a possible acquisition based on discussions with Mr Kazdobin, assisted by Mr Khan, all prior to ever meeting Mr Bestolov. He pointed out that, or so he suggested, both Mr Kazdobin and Mr Khan had given witness statements confirming his account. He was right that Mr Khan’s statement tended to support his story; but I do not regard Mr Khan as a reliable witness. He was right that Mr Kazdobin’s statement appeared perhaps to support his story because it said that Mr Kazdobin could not recall exactly when he first met Mr Povarenkin but it was “at the end of 2006 or the beginning of 2007”. However, I find, Mr Kazdobin’s recollection is both different and more precise than that, and to my mind his evidence at trial reliably located his first meeting with Mr Povarenkin as being after Mr Bestolov had signed the Agreement. I did not believe Mr Povarenkin’s witness statement story about when and how he came into contact with Mr Kazdobin was truthful and I reject it.

Mr Povarenkin also gave fanciful evidence that he had seen first-hand during visits to Yakutian government buildings, prior to first meeting him, that Mr Bestolov was doing a significant amount of business in the Yakutian government and seemed able to meet important people and receive favourable treatment there. This was presented with colour and detail in Mr Povarenkin’s witness statement evidence in chief as something of a repeat occurrence, on one occasion including even some conversation between them about a construction project near to a government building. In cross-examination it became instead a single occasion in late 2006 or early 2007 when, according to Mr Povarenkin, he was visiting the main Yakutian government building and sitting in a large waiting area for a pre-arranged meeting and saw a man he did not know and had never met moving from room to room as if gaining ready access to important people without necessarily having a prior appointment, whom he instantly and reliably recognised as having been Mr Bestolov when he later met him, and yet of which he then said nothing to Mr Bestolov. I did not believe a word of it and, I regret to say, it is my firm conclusion that Mr Povarenkin had made up what was in his witness statement and was making things up as he went along when tested on it in cross-examination.

Mr Povarenkin gave witness statement evidence in chief of specific statements by Mr Bestolov about himself and his ‘partner’ that might, if true, have supported the pleaded representations I set out in paragraph ‎58 above. With one exception, namely that he adhered to the claim that Mr Bestolov described or identified his ‘partner’, without naming him, as being a senior figure in the Yakutian government, cross-examination demonstrated that Mr Povarenkin could not truthfully make any of those pleaded claims. Mr Head QC criticised the cross-examination, arguing that it may have appeared to Mr Povarenkin that the essence of his claims was not being challenged but rather Mr D’Cruz was only quibbling over the details. I am satisfied that there is nothing in that criticism, and that Mr Povarenkin (a) well realised that his account was being challenged, root and branch, and (b) was given, and took, ample opportunity to explain in his own words and generally what, if anything, he was really claiming he could remember Mr Bestolov saying on the various topics covered by the alleged representations.

In that regard, the reality is, in my judgment, that Mr Povarenkin has no recollection of Mr Bestolov saying anything more than that he (Bestolov) had the experience, reputation and contacts to be a good business partner, to be helpful in all areas if the two of them decided to develop business together in the Yakutian mining sector. That was already his reputation, conveyed to Mr Povarenkin by others and leading him to make contact with Mr Bestolov as a possible business partner for Yakutia in the first place. To the extent it was factual, it has not been shown to be untrue (in fact, it was probably true). To the extent it conveyed Mr Bestolov’s view, I have no doubt it was his view, held on reasonable grounds.

In relation to that, further, I am satisfied that Mr Povarenkin’s interest was in Mr Bestolov, not in his unnamed ‘partner’, just as Mr Bestolov’s interest was in Mr Povarenkin, not in his ‘partner’. I do not believe either of them was surprised, concerned or interested, beyond the basic fact, that the other said that for his part there was someone with whom they would be sharing their interest. I quoted, in paragraph ‎67 above, Mr Povarenkin’s witness statement evidence in chief about not asking Mr Bestolov to name his ‘partner’, by which Mr Povarenkin appeared to be suggesting he had turned a blind eye to what he thought might be a corrupt or improper connection. It was apparent to me that in cross-examination: Mr Povarenkin realised that was a difficulty for him, because he wanted to disown any such insinuation but could not then explain why he would not be interested to know the name of the allegedly all-important ‘partner’, acquiring whose support, via Mr Bestolov, was what he was claiming the Agreement was all about; he therefore changed his evidence from not having asked Mr Bestolov to name his ‘partner’, understanding that that would be awkward, to asking him to name him, Mr Bestolov refusing to do so, and Mr Povarenkin not pressing the request.

As well as being another very unsatisfactory part of Mr Povarenkin’s evidence on the key issues, this also underlined the basic implausibility of his case, to the point that it defies belief, that the Agreement was centrally or materially about gaining access via Mr Bestolov to some ‘big fish’ in government, yet it says nothing of the kind; that the Agreement was, in substance, an engagement of Mr Bestolov (and his ‘partner’) as ‘lobbying and promotion’ service providers, yet it appears to be a simple co-venturing arrangement between entrepreneurial business principals; and that Mr Povarenkin was at all times profoundly interested in the identity of the ‘partner’, yet there is nothing in any document of any kind, whether internal to Mr Povarenkin/GPM or otherwise, prior to Mr Povarenkin’s first witness statement to challenge jurisdiction in March 2017, to evidence that interest.

To the extent that Mr Povarenkin maintained it, I reject his evidence, and I reject the claim, that Mr Bestolov ever said his unnamed ‘partner’ was a senior figure in the Yakutian government. I am not persuaded that Mr Bestolov said anything at all about having a partner beyond that basic fact. There was no refusal to name partners; their identities were not being kept secret in any active sense; rather, their identities were unimportant on both sides and the question simply did not arise. That is why, exactly as Mr Bestolov said in evidence, naming the partners was just not necessary.

I found neither side’s evidence fully satisfying as to who the respective ‘partners’ actually were.

On Mr Povarenkin’s side, I am prepared to proceed on the basis that his ‘partner’ was, or at all events became, Mr Khudoliy, not least because there was no serious challenge to that proposition by Mr D’Cruz. But even that is not an entirely simple matter. I have not rejected the notion that Mr Khudoliy and Mr Povarenkin were in touch by the time the Agreement was signed, and I do not find implausible the idea that Mr Povarenkin may have had in mind to include him as his ‘partner’ under the Agreement if in due course he did join GPM, strictly as an adjunct to doing so. But it was uncertain until December 2007 whether Mr Khudoliy would do so.

Mr Povarenkin’s case was that Mr Khudoliy was not named as his ‘partner’ in the Agreement because he was then still at Yakutugol, but there would have been nothing untoward about identifying him as the intended interested party on Mr Povarenkin’s side, assuming he did join GPM as Mr Povarenkin was hoping he might once he finished at Yakutugol.

Mr Bestolov, for his part, said his ‘partner’ was Mr Mikhail Kharlamov, a colleague from his GAZ days who joined him at AZK when it was founded. Mr Kharlamov was until very recently still at AZK, but has now retired, and gave evidence for Mr Bestolov at trial. In case it would be required to allow Mr Bestolov to sue for and recover the full amount of the balance owed to ‘Partner 2’ under Addendum 1, Mr Kharlamov has assigned any rights of his to Mr Bestolov. Except for a self-serving logic founded upon Mr Povarenkin’s assertions that Mr Bestolov positively refused to say who his ‘partner’ was (as opposed to merely not naming him), there was no significant basis for doubting Mr Bestolov’s and Mr Kharlamov’s evidence, which was to the effect that they had each over the years pursued some business interests not through AZK and when either did so he shared the results with the other, and that the arrangement was informal and based on trust (just like Mr Povarenkin’s was with Mr Khudoliy). Mr Head QC sought to make something of the fact that Mr Kharlamov had met Mr Povarenkin a few times yet the fact that he was the ‘partner’ on Mr Bestolov’s side was not mentioned, but I did not find that surprising or odd. Mr Kharlamov was a sleeping partner, not expected or required to be involved in the investments pursued under the Agreement.

His and Mr Bestolov’s evidence was that through one of Mr Bestolov’s companies, US$500,000 was paid to a Swiss bank account of Mr Kharlamov’s wife’s as Mr Kharlamov’s share of the June 2013 US$3,000,000 part-payment under the Agreement and Addenda. Their evidence about that was not very satisfactory. There was reasonable documentary evidence (eventually – it came in dribs and drabs) sufficient to satisfy me that US$500,000 was indeed paid as they described, but only in December 2013. Mr Bestolov’s case had been that he paid Mr Kharlamov his share immediately (in cross-examination, this became payment promptly upon Mr Kharlamov providing payee and bank details some months later). I agree with Mr Head QC that if the question were whether the documentary evidence did enough to establish the asserted link between the US$500,000 paid in December 2013, on the one hand, and the Agreement/Addenda and the June payment of US$3,000,000, on the other, the answer would be not really; and that it might be thought (although I cannot be certain about this) that it would be more readily possible to prove the link by contemporaneous documents if the link existed. It is also true that Mr Bestolov struggled to explain – and his and Mr Kharlamov’s evidence was not consistent as to – a reference to a November 2013 loan agreement in the payment records for the US$500,000. (Absent any other evidence about it, my inference from the document and the circumstances would have been that it probably referred to a loan agreement put in place between Mr Bestolov and the company through which he effected the payment, since the company’s payment was discharging a personal liability. But no such loan agreement was produced, and Mr Bestolov did not give that as the explanation.)

On the other hand: the documents, such as they are, do not actually undermine the basic account, rather they fail to give a full picture or answer all the questions one might have; the US$500,000 payment pre-dates by 19 months the first indication that Mr Povarenkin might dispute his liability under Addendum 1; and the case now put that Mr Kharlamov never was Mr Bestolov’s ‘partner’ accuses him of conspiring with Mr Bestolov to give the court a false story about the US$500,000 so as to pretend that Mr Kharlamov was the ‘partner’, and my clear assessment of them both, having seen them, is that they have done no such thing.

Other points argued by Mr Head QC were also unrealistic, for example that I should reject as untrue the evidence that Mr Kharlamov was Mr Bestolov’s unnamed partner because the arrangement was so informal and ad hoc, and because it seemed Mr Kharlamov’s share was as little as one sixth (of Mr Bestolov’s), whilst accepting as true the evidence that Mr Khudoliy was Mr Povarenkin’s unnamed partner although the arrangement was equally informal and ad hoc, and though his share was only one tenth (of Mr Povarenkin’s). On the evidence taken as a whole, I accept and find that Mr Kharlamov was Mr Bestolov’s unnamed partner throughout.

After the Agreement was concluded, starting with the initial meeting with Mr Kazdobin to which I have referred already, Mr Povarenkin took charge of pursuing, negotiating and completing the acquisition of Poisk’s 60% interest in Sarylakh-Surma/Zvezda. For that, he used a team headed by Mr Khan that did not include Mr Bestolov; and the acquisition was in fact effected through GPM rather than a joint Bestolov-Povarenkin vehicle. I accept Mr Bestolov’s evidence that he had envisaged Mr Povarenkin would take responsibility for setting up the joint venture company called for by the Agreement, and he was not entirely happy this was not done, but he trusted Mr Povarenkin and did not challenge him about his use of GPM for the acquisition. I do not accept, as Mr Povarenkin argued, that it is unrealistic to suppose that the acquisition of Poisk’s interest was completed when it was if the whole exercise began only with the signing of the Agreement and then a first meeting between Mr Povarenkin and Mr Kazdobin. The circumstances were favourable, with a keen seller and keen buyer, and (as confirmed most explicitly by the evidence of Mr Makarov, whom I mention further below), (a) Mr Povarenkin quickly put together a substantial team (including Mr Makarov himself, Mr Khan and several others), whose work commenced in June 2007, and (b) comprehensive due diligence was not carried out since the parties had agreed to execute the deal as expeditiously as possible and Poisk were very transparent and helpful with the GPM team.

GPM’s purchase of Sarylakh-Surma and Zvezda was fully completed by the acquisition of the publicly owned 40% shares in February and March 2008 respectively. Mr Bestolov did play an indirect role in that. There was material opposition in the Yakutian parliament to the selling of those publicly owned shares. It was the Yakutian government’s policy to secure a sale, but that was blocked by the parliamentary deputies by a vote at the parliamentary session in October 2007. There was a possible ambiguity in the documentary evidence I had of that, but I accept the evidence of Mr Egor Zhirkov about it, who was called as a witness by Mr Bestolov. Mr Zhirkov was CEO of Sarylakh-Surma until October 2007 and of Zvezda until March 2008 and confirmed that the October 2007 parliamentary vote meant the sale of the 40% interest in Zvezda was not then approved. As Mr Zhirkov explained, and as such documentary evidence as the parties were able to find confirmed, that decision was reversed in December 2007.

The parliamentary record also confirmed the evidence of both Mr Zhirkov and Mr Bestolov that a significant reason for the adverse vote in October 2007 was an accurate perception on the part of parliamentarians that Mr Zhirkov was against the sale. I do not accept Mr Khan’s evidence, unheralded in his witness statement, that Mr Zhirkov’s opposition was just a negotiating tactic to try to secure a larger pay-off as he was not being kept on for the longer term with GPM in control. There was no evidence of any such attempt; Mr Zhirkov told me that he was paid what his contract entitled him to, he had never sought anything different and there was no negotiation at all, and in my judgment there is no reason to doubt him as to that.

Mr Bestolov and Mr Zhirkov both explained in their evidence that Mr Zhirkov was persuaded by Mr Bestolov to withdraw his opposition, facilitating the reversal of the parliamentary opposition. There is nothing in the documentary record such as I was shown to confirm or contradict that account; but it does fit well with that record, including the fact that whereas at the October meeting parliamentarians opposed to selling the Zvezda interest were demanding to hear directly from Mr Zhirkov, that did not happen in the event. Mr Zhirkov’s evidence was that he conveyed his change of heart to “the official persons”, including the late Mr Viktor Efimov, who in 2007-2008 was the responsible minister in the Yakutian government. The cross-examination on this misinterpreted it as a suggestion that Mr Zhirkov persuaded Mr Efimov to support the sale, which would not have made much sense since the government policy of which Mr Efimov had carriage was to sell. In my judgment, Mr Zhirkov’s account withstood challenge and I accept it.

There was something of a side-issue in relation to the acquisition of Sarylakh-Surma/Zvezda over whether, prior to GPM coming in (and indeed as a reason why at all events Poisk was a keen seller), the mines were in such severe financial difficulty that by the summer of 2007 they were not working (and not paying staff) because of cashflow problems. Mr Efimov asserted as much when speaking in parliament in favour of selling in October 2007. In their evidence to me, Mr Zhirkov and Mr Bestolov were adamant that was not the case. I also had witness statement evidence from Mr Pavel Makarov that was taken as agreed since he was not required to attend for cross-examination. He (like Mr Khan) was part of the acquisition team put together by Mr Povarenkin (and his evidence confirms my conclusion that the acquisition effort began in June 2007, not earlier). On the immediate point, his statement does not say that things were as bad as Mr Efimov claimed, only that the financial condition of the businesses was unstable such that urgent funding was needed. Nor did Mr Kazdobin say in his evidence that the mines had stopped operating or failed to pay wages.

If it mattered, therefore, I could not find, upon the basis of Mr Efimov’s disputed assertions, that things were quite as bad as he claimed. But to my mind this was all very peripheral. The issue, itself somewhat peripheral, was not how bad the finances of the businesses were before GPM took control, but whether Mr Bestolov had a material influence, via Mr Zhirkov, in ensuring that the Yakutian government’s 40% stake in Zvezda was available to purchase. By the autumn of 2007 when that was being debated in parliament, Poisk’s majority stake had already been bought by GPM, securing the future of the business. My finding, on the evidence taken as a whole, is that Mr Bestolov did intervene as he and Mr Zhirkov described and that probably did materially influence events so as to ensure the availability of the 40% share in Zvezda to be acquired in early 2008. If Mr Bestolov or Mr Zhirkov could be shown to be wrong about whether the mines had actually downed tools for a time over the summer of 2007, that would not mean they were not telling me the truth about the point that (peripherally) matters for the claim now before me; and in my judgment they were telling me the truth about that.

A further somewhat peripheral issue arose over Mr Bestolov’s involvement, as he described it, in dealing with a question that arose at some point after the Sarylakh-Surma/Zvezda acquisition concerning certain buildings at one of the sites, specifically it seems as to the impact of ownership rights that may have been vested in a company other than the company acquired by GPM. Mr Bestolov said his recollection was that he both spoke to and met with Mr Kazdobin, several times, as part of resolving that uncertainty. Mr Kazdobin’s witness statement denied that had happened; but my assessment, following cross-examination, is that he is not in a position to say it did not happen, only that he does not remember it. No explanation emerged as to how Mr Bestolov might know of the issue at all, unless it be because he became involved as he described; and I have no difficulty with the notion that if he did, it was more likely to have been memorable for him this many years later than for Mr Kazdobin. I accept Mr Bestolov’s evidence about this small further involvement.

All that is not to say that Mr Bestolov’s evidence was entirely satisfactory. It was demonstrated through cross-examination that his witness statement overstated matters in two respects as regards his involvement:

There was evidence from a number of witnesses, including Mr Vladimir Rassokhin whose statement like that of Mr Makarov was not challenged by Mr Bestolov, as to the slightly complex mechanics (as they ended up being) of acquiring the Verkhne-Menkeche licence rights through an auction process when GPM’s initial bid could not be pursued because of technical deficiencies. Mr Bestolov was not involved (and did not claim to have been involved) in that final stage of the acquisition.

However, Mr Bestolov was involved in the prior visit to Verkhne-Menkeche in August 2008, to present and discuss his and Mr Povarenkin’s ideas for the development of the site if acquired. Mr Bestolov’s evidence, which I accept, was that he was personally responsible for setting up the visit and for ensuring the involvement of senior figures, including the then President of Yakutia. I also accept his evidence, supported by the photographs and the minutes of the discussion, that he was there as Mr Povarenkin’s partner in business in relation to the possible acquisition.

Mr Head QC noted that the minutes record Mr Bestolov as being of AZK, Mr Povarenkin and others (e.g. Mr Khudoliy) as of GPM, but so they were (since no separate Povarenkin-Bestolov vehicle existed), and that does not undermine the conclusion that Mr Bestolov was there only because of and pursuant to the Agreement. Mr Head, reflecting Mr Povarenkin’s evidence, then sought to portray this not as the meeting it plainly was, a business development meeting to present and discuss Messrs Povarenkin and Bestolov’s interest in taking on the Verkhne-Menkeche field as an investment, but as some regional business conference that Mr Bestolov and Mr Povarenkin happened both to attend. In an attempt to support that notion, Mr Povarenkin gave what was, in my judgment, concocted evidence that it was mere coincidence that Mr Bestolov was at his side, at the heart of the acquisition team, for the key meeting.

I accept Mr Bestolov’s account, consistent as it is with the Addenda, that they came about when in late 2011 Mr Povarenkin suggested buying out Mr Bestolov’s share of the co-venture projects. This was a little after, under clause 6 of the Agreement, Mr Bestolov ought to have either required Mr Povarenkin to buy him out or paid his 25% of the funding put in by Mr Povarenkin by repaying the credit extended to him pursuant to that clause.

Mr Povarenkin said the catalyst for him was preparatory work in 2011, up to September, towards a possible IPO to raise funding for GPM, as a result of which he wished to buy Mr Bestolov out so that there could be no possible question of any claim to GPM’s assets. That may also be true, or at least I was not shown any reason to suppose it untrue and it was not, I think, the subject of any real challenge in cross-examination.

Mr Bestolov accepted, without requiring any audit, detailed figures for the funding put in that Mr Povarenkin provided. Mr Povarenkin’s calculations provided the very precise figure recorded in Addendum 1 of US$39,843,790. Mr Povarenkin proposed a valuation of the projects at US$80,000,000, with calculations to justify it, which Mr Bestolov “eventually agreed to” (as he put it in his witness statement evidence in chief). Despite some initial confusion in cross-examination when Mr Bestolov said this had been too high in his view, to my mind it was clear that Mr Bestolov recalled thinking that this was, if anything, a low valuation, but ultimately did not press the point and hence the turn of phrase in his statement. He remembered teasing Mr Povarenkin at the over-preciseness of the resulting calculation, down to the last dollar, of what Mr Povarenkin should pay as his 90% share of Mr Bestolov’s net ‘equity’ on the basis of those figures, i.e. US$9,035,147.

By this time, as Mr Bestolov accepted in cross-examination (which was a shift from his statement), Mr Bestolov knew that Mr Povarenkin was treating Mr Khudoliy as his (Povarenkin’s) ‘partner’ under the Agreement. Mr Bestolov said he came to realise that at some point after Mr Khudoliy joined GPM in 2008, and certainly by early 2011 (the date of one particular document shown to him on this point). But I reject as invention Mr Povarenkin’s evidence that there was around Addendum 1 (or at any time after the Agreement was concluded) discussion about the identity of Mr Bestolov’s ‘partner’, or (in particular) any request of Mr Bestolov for his name or refusal by Mr Bestolov to give the name. As generally, it defies belief to suppose that Mr Povarenkin had the concerns he now claims to have had about the identity of Mr Bestolov’s partner and, as he tells it, Mr Bestolov’s reluctance to name him, yet not a single word of that appears in any document until Mr Povarenkin’s witness statement on the jurisdiction challenge in March 2017. Further and more specifically here, Mr Povarenkin extended his claim and evidence to suggest that Mr Bestolov made renewed or repeated promises that he and his ‘partner’ (whom he was simultaneously so refusing to name that Mr Povarenkin was becoming suspicious of his existence) would continue to provide ‘lobbying and promotional services’ as agreed after concluding Addendum 1. That is an obvious nonsense. Addendum 1 effected, in general, a termination of the business relationship, save only for Verkhne-Menkeche for which a further Addendum was to be put in place; and it provided expressly that except only for that further Addendum, and payment to Mr Bestolov under Addendum 1, all obligations on either side were considered fully discharged.

There is little to add in relation to Addendum 2, subject to one point. In general the document speaks for itself, crystallising the remaining open aspect of the co-venturing agreement into a debt of US$1,500,000 owed by ‘Partner 1’ to ‘Partner 2’, which was paid. That completed the termination of the relationship and resulting discharge of rights and obligations, except only for the payment due under clause 4.3 of Addendum 1. I again reject as fiction Mr Povarenkin’s claims that there was (another) discussion of or refusal to identify Mr Bestolov’s ‘partner’, and (a further) renewal or repetition of promises to work for Mr Povarenkin to lobby etc. for his businesses thereafter.

The one further point to deal with concerns an email dated 15 December 2012 from Mr Povarenkin to Mr Belyaev, in which Mr Povarenkin talked of starting to make payments to Mr Bestolov by the end of January (presumably, 2013), and the need to work out the mechanics since any money would be “paid from West to West and you’ll need a formal basis for payment”. That I take to be a reference to the fact that (as with Mr Bestolov’s payment to Mrs Kharlamova, dealt with above) payment would be ‘offshore’ and not from Mr Povarenkin’s personal accounts. The email went on, however, to say that “we already know it won’t work out with the papers we’ve already signed, as it’s a bribe pure and simple and he (Bestolov) would never pass KYC in the bank and we might end up killing our reputation” and that “it’s crucial that we don’t end up being suspected of money laundering”.

That might be thought, taken at face value, to be evidence for a case that the Bestolov-Povarenkin arrangement was corrupt, and so is another piece of evidence rendering it reasonable that Mr Bestolov thought that was the case he was facing. But as I have made clear already, that was not Mr Povarenkin’s case. His explanation for the comment, in his witness statement evidence in chief, contained two elements: that he was concerned about how a payment to Mr Bestolov might look to banks where “he did not appear to have contributed anything to our relationship”; and that he was only envisaging “a nuisance payment … to put a stop to his constant requests for money and ensure that [GPM]’s business in Yakutia was not disrupted”. Neither of those elements withstands analysis.

The first element Mr Povarenkin elaborated by claiming to have had a concern that banks processing any payment “would want to understand why the payment was being made and see proper documentation to support it”. But there was no difficulty about that – the Agreement and Addendum 1 (at the date of this email), also Addendum 2 in due course once it was signed, did more than enough to demonstrate, explain or justify, if required, why Mr Povarenkin had to make a large payment to Mr Bestolov. As I noted above, if payment was going to be ‘offshore’ between a nominee corporate payor and a nominee corporate payee, that would need further explanation, justification and (it may be) documentation. But that is a different point entirely.

There may nonetheless be a small grain of truth underneath that first element of Mr Povarenkin’s explanation, even if his suggested conclusion is nonsense, namely that banks might be concerned about a debt to Mr Bestolov being paid. The possible underlying grain of truth is that Mr Povarenkin may have had a view, after the fact, that in practical terms Mr Bestolov had not been as big a part of the Yakutian projects as they had both envisaged initially. Even that is a subtle point, since in my judgment the reality was not one of Mr Bestolov not having contributed (as Mr Povarenkin tried to have it) but one of Mr Povarenkin cutting Mr Bestolov out (in terms of practical involvement) and not delivering on the grander vision for Yakutia they had talked about in 2007 (and that is certainly how, it was clear from his evidence, Mr Bestolov saw it). A failure in and after 2009 to pursue or deliver on a grander business vision of 2007 and early 2008 is not so surprising, given the global financial crisis of and since late 2008. The point for this judgment is that I am confident it was not through any failure on Mr Bestolov’s part to deliver on anything he had stated he could or would deliver that his and Mr Povarenkin’s intended Yakutian joint venturing had not developed into anything more than it had. Mr Povarenkin’s point in any event misses entirely that Mr Bestolov had contributed c.US$10 million to the projects that were pursued and had contracted to contribute 25% of any further joint investment pursuant to the Agreement, had there been any, until that was overtaken by Addendum 1. The fact that Mr Bestolov’s contribution was on credit from Mr Povarenkin until June 2011 is neither here nor there.

The second element of Mr Povarenkin’s explanation either has no substance or is more sinister. Taken at face value, it is the latter, suggesting a view that Mr Bestolov was demanding ‘protection money’ for not causing trouble. Yet that was no part of Mr Povarenkin’s case, whether as put to Mr Bestolov or pursued in any other way by Mr Head QC. Furthermore, in my judgment on the evidence, in particular the respective cross-examinations, it did not cross Mr Bestolov’s mind to seek to cause trouble for GPM in Yakutia, or that he might be able to do so anyway; Mr Povarenkin had no reason, whether from Mr Bestolov or otherwise, to think that Mr Bestolov might intend to cause trouble; and indeed Mr Povarenkin never actually had that thought.

It is not necessary to find a full explanation for every piece of evidence in a case; and rarely is there a neat, complete jigsaw with every piece fitting. Mr Povarenkin’s email of 15 December 2012 is a sufficient oddity that I do not find it surprising that it was subjected to forensic scrutiny prior to trial to look for evidence of inauthenticity. None was found and I proceed on the basis that it was sent. But then it is not evidence supporting the case Mr Povarenkin has pursued, instead it is evidence, if anything, for a case of corrupt purposes that he has eschewed and, on its own terms, unsatisfactory evidence as to that anyway. It does not deflect me from my conclusions, on the evidence as a whole, that Mr Bestolov’s case about the Agreement and Addenda is correct and Mr Povarenkin’s defence (time bar aside) is one of recent invention when finally sued so that pleas for time because of cashflow problems would no longer get him anywhere. (For completeness, I should say that if, though Mr Povarenkin eschewed any case of corruption, there were substantial evidence for such a case, public policy considerations might be engaged as to whether the case should be judged solely on the points pursued by the parties; but that is not the position here.)

Pausing, then, in June 2013, after the payment of US$3,000,000 arranged by Mr Povarenkin to the payee company nominated by Mr Bestolov, allocated in the payment instruction to be full payment under Addendum 2 and part-payment under Addendum 1, there was nothing more to their dealings than a simple, undisputed liability of Mr Povarenkin to pay the outstanding balance of US$7,535,147 that was by then almost a year overdue.

Mr Bestolov chased Mr Povarenkin from time to time thereafter, by telephone, for payment of that outstanding balance. Mr Povarenkin would either be (or claim to be) unavailable, so that Mr Bestolov did not get to speak to him, or, when they did speak, he would cite shortage of cash as the (only) reason for not having paid. I reject Mr Povarenkin’s evidence that he ever gave any other reason. In particular, in my judgment Mr Povarenkin was not telling the truth when claiming that he (repeatedly) demanded to know who Mr Bestolov’s partner was and/or that until he was told he would make no further payments. It is not credible that that could have been the case without leaving a single trace in any document. In fact, if Mr Povarenkin had had the concerns he now professes to have had about Mr Bestolov’s partner and whether Mr Bestolov had shared the US$3 million with him, I am entirely confident he (Povarenkin) would have articulated those concerns in writing and demanded a response. (In theory, I could see that might not be so if the truth in all of this were one of corrupt purposes, to which perhaps Mr Povarenkin might not want to be thought to be alluding in writing; but again that was neither party’s case and is not a serious possibility on the evidence as a whole.)

From late 2013, Mr Povarenkin, with others working for him at GPM, was in negotiation with Sberbank Capital for the capital funding injection that ultimately closed in August 2014 I mentioned in paragraph 34 above. Mr Lelyukh was involved as was Ms Galasheva, who reported to him. In the course of those negotiations, Mr Lelyukh learned from Mr Povarenkin of his debt to Mr Bestolov. Mr Lelyukh gave what I judge to be a truthful and accurate account of how that came about, corroborated by correspondence he produced that Mr Povarenkin did not disclose in the proceedings. Mr Povarenkin lied about this part of the story, in my judgment, because Mr Lelyukh’s true account of events sits so uncomfortably with the defence of Mr Bestolov’s claim Mr Povarenkin had decided to attempt. Forensically consistently, Mr Head QC (no doubt on instructions) was forced to accuse Mr Lelyukh of being a liar, motivated by a personal financial stake in the outcome of Mr Bestolov’s claim. Except for the circular logic that having such a motivation would explain why Mr Lelyukh might lie, if he was lying, there was no basis for that accusation, Mr Lelyukh denied it, and I reject it.

As Mr Lelyukh recalled matters, Mr Povarenkin personally disclosed to him, in the context of the GPM-Sberbank Capital negotiations, information about a debt of US$7.5 million owed to Mr Bestolov under a partnership agreement between them. Mr Povarenkin did not provide underlying documentation, but as part of his due diligence on behalf of Sberbank Capital, Mr Lelyukh sought out Mr Bestolov and met him a number of times to ensure he understood the nature of the disclosed liability. Contrary to a particular submission by Mr Head QC, it was not strange for Mr Lelyukh to check matters at some length with Mr Bestolov directly. Mr Bestolov gave him copies of the Agreement and Addenda, and confirmed that US$3 million had been paid. It is not difficult to see, since the Agreement envisaged 75:25 ownership of assets that had in fact been acquired by GPM, why Mr Lelyukh would value reassurance from Mr Bestolov as well that the outstanding US$7.5 million was regarded as a personal debt and not a liability of GPM’s. I say ‘as well’ because I accept Mr Lelyukh’s evidence that having followed matters up as he did, in his later discussions with Mr Povarenkin as the negotiation of the funding deal progressed, he (Povarenkin) confirmed that this was his personal debt (not a liability of GPM’s) and assured Mr Lelyukh that he would pay it.

The correspondence Mr Lelyukh provided showed that:

I infer, as indicated by Mr Belyaev’s message, that he (Belyaev) knew of and was involved in the making on Mr Povarenkin’s behalf of the US$3 million payment (the date referred to was the date of the relevant payment instruction) and that he and Mr Povarenkin had at that time discussed that Mr Povarenkin would pay the balance as and when a sale of GPM assets released cash for him to do so. I am confident that if that were not so, or if more generally Mr Povarenkin did not in his internal dealings with Mr Belyaev accept and acknowledge his liability to Mr Bestolov as indicated by this correspondence, there would have been evidence at trial from Mr Belyaev.