This is the Claimant’s (Sweden’s) application for summary judgment on its claims against the First to Third, Sixth, Seventh, Ninth, Tenth, Twelfth and Thirteenth Defendants (the SJ Respondents). Sweden claims that the SJ Respondents were parties to a substantial fraud which resulted in the misappropriation of in excess of €115m from the pension saving accounts of some 46,222 Swedish pension savers.

The SJ Respondents comprise:

In the run-up to the hearing, Sweden reached settlements with:

Lewison J’s summary of the principles which are to be applied when the court is asked summarily to determine a claim in EasyAir Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch), [15] is well-known and it is not necessary to set it out.

There are two features of the present application which merit further consideration.

These proceedings were commenced in early 2020, and at the outset I granted a Worldwide Freezing Order (the WFO) against each of the First Defendant (Mr Ingmanson), the Second Defendant (Mr Bishop) and the Third Defendant (Mr Gergeo).

In April 2020, the Swedish Court convicted Mr Ingmanson and Mr Bishop in relation to offences said to arise from their involvement with Optimus (see [21(i)] below). In October 2022, those convictions were upheld on appeal. In March 2021, the Swedish Court convicted Mr Ingmanson and Mr Gergeo in relation to their involvement with the Falcon phase (see [21(ii)] below), as well as fining the Twelfth and Thirteenth Defendants. It was common ground that those convictions have no evidential status before me, albeit the evidence available to the Swedish Court can be placed before me for my assessment (Rogers v Hoyle [2015] QB 265, [32]-[57]).

None of the SJ Respondents filed an acknowledgment of service or a defence. However, Sweden sought permission from the court to obtain summary judgment on the merits rather than entering judgment in default. Permission was granted by Calver J on 26 November 2021.

Sweden’s application, and the bulk of its evidence in support of the application, was served in July 2021. The evidence before the court comprises:

The bundles for the hearing comprise thirteen double-sided bundles (excluding authorities).

Mr Bishop filed two skeleton arguments (both of which cross-referred to the pagination in the hearing bundles) and sent a letter to the court. He also made oral submissions at the hearing. Mr Gergeo also made oral submissions at the hearing, although he did not file any documents. None of the other SJ Respondents filed any documents.

Mr Ingmanson, Mr Bishop and Mr Gergeo are all serving sentences of imprisonment. Mr Bishop and Mr Gergeo participated in the hearing via a video link from prison. Their incarceration has undoubtedly curtailed their ability to review the material served for this application.

Mr Bishop argued that the summary judgment application against him cannot fairly be determined, and should be dismissed. He says that he has only had 12 hours to study Sweden’s documents since 4 November 2021, and is not permitted to retain notes in his cell. On Mr Bishop’s account, as at 19 August 2022, he had only been allowed to review the case materials on the following occasions:

However, it would appear that Mr Bishop has had further access to the documents since the 6 January 2022 because his skeleton arguments filed for this hearing included hearing bundle references. While Mr Bishop stated in correspondence that he had been denied access to documents following requests made on 8 April, 16 May and 1 August 2022, the Swedish prison authorities stated that Mr Bishop had made a request for access to the documents on 8 April and that he was permitted access to the documents on 16 May. They also said that there was no record of any requests by Mr Bishop on 16 May and 1 August. Further, they stated that Mr Bishop had been offered the opportunity to inspect documents on 11 August 2022, but had not taken it up. An official from the Swedish prison service stated on 25 August 2022:

It is clear from the two skeleton arguments filed for this hearing that Mr Bishop has had access to the summary judgment materials which were before Mr Justice Calver in November 2021 for the purposes of Sweden’s application for permission to seek summary judgment, and to the bundles for this hearing (to which specific reference was made, using the page references in those bundles). However, it became apparent during the first day of this hearing that Mr Bishop only had access to the former set of bundles at that point, not the further hearing bundles served in September 2022. That was remedied during the second day of the hearing, in the course of which Mr Bishop read and elaborated on a written submission which had referred to the hearing bundles. The key documents in this application were in the first set of bundles produced in November 2021, and which were available to Mr Bishop.

Nonetheless, I accept that Mr Bishop’s ability to prepare for this application has been far from ideal, and that this is something which needs to be kept very much in mind when determining what weight can be placed on the evidence and on Mr Bishop’s failure to respond to the same. I am satisfied that this is also likely to be the case for Mr Ingmanson. However, Mr Bishop and Mr Ingmanson have been aware of the nature of the allegations made against them in relation to Optimus since 2020, as these featured at the criminal trial at which they were represented by lawyers and had a full opportunity to defend themselves. The documents from that trial were made available by the prosecution to the Defendants and their legal team. That is also the case for Mr Ingmanson (but not Mr Bishop) so far as the criminal trial relating to the Falcon phase is concerned.

The position of Mr Gergeo is the converse of that of Mr Bishop. Mr Gergeo was not charged by the Swedish prosecutor with any criminal offences arising from the Optimus phase, and he did not participate in that trial. However, he was charged with offences arising from the Falcon phase, and participated in the criminal trial concerned with the Falcon phase.

Mr Gergeo also argued that he had not had a fair opportunity to participate in the hearing, because he had not received all of the documents in Swedish, and had not had an opportunity to consult with his Swedish lawyer. The position with regard to Mr Gergeo is as follows:

I am satisfied that Mr Bishop, Mr Ingmanson and Mr Gergeo were able to answer the key themes of the case advanced against them. However, they were (or in Mr Ingmanson’s case would have been) at a disadvantage in dealing with issues of detail. I have kept this firmly in mind.

The Swedish pension system has various types of pension provision, including a compulsory premium pension (PPM), in which a percentage of a pension saver’s earnings is put into an account, which is invested in investment funds selected by the pension saver from an online platform that the Swedish Pension Authority (SPA) maintains. Each pension saver has a PPM account. Among the investments which might be made were investments in so-called UCITS funds where these had been approved by the Swedish Financial Supervisory Authority (SFSA). UCITS funds are those meeting the requirements of the Undertakings for Collective Investment in Transferable Securities Directive 209/65/EC.

A company that wished to participate in the PPM was required to
enter into a cooperation agreement with the SPA. This case arises from two UCITS funds which were listed on the PPM online platform:

The events concerning these two separate funds have been described in the evidence as the Optimus phase and the Falcon phase. I shall adopt the same descriptions in this judgment.

In this section, I set out those findings which I am satisfied Sweden will establish at trial, and which there is no realistic prospect of Sweden not establishing. The findings reflect the evidence which I have seen, and in particular the contemporaneous documents. In some cases, the facts are not substantially in dispute, and I have therefore not elaborated on the findings. Where the factual assertions are more controversial, I explain my reasons for concluding that the facts are clearly beyond the scope for realistic dispute.

On 17 June 2012, a company owned by Mr Bishop, ABSIG LLC (ABSIG), entered into a share transfer agreement to acquire Optimus Fonder, which transfer was approved by the SFSA on 16 November 2012. 50% of ABSIG was held by Mr Bishop personally, and the other 50% by ABS LLC, a company which Mr Bishop owned.

On 18 July 2012, ABSIG and Mr Bishop signed an exclusivity agreement with the Seventh Defendant (SVC (UK)). Under that exclusivity agreement, SVC (UK) was to solicit investors for various “financial products and mortgage backed securities” identified by ABSIG, in return for the payment of commission. SVC (UK) is sometimes referred to in the contemporary documents as “Solid”. SVC (UK) is a company which was owned 50-50 by Mr Ingmanson and Mr Gergeo until 7 October 2015, when Mr Ingmanson transferred his shares to Mr Gergeo. Mr Ingmanson and Mr Gergeo were both directors of SVC (UK), until 7 October 2015 in the case of Mr Ingmanson and 6 October 2017 in the case of Mr Gergeo.

Sweden alleges that between 2012 and 2013, the First to Third Defendants procured the purchase by Optimus using pension funds of mortgage-backed securities (MBSs) at inflated prices from companies owned by some or all of them.

It is clear that from 10 August 2012, Optimus purchased 9 MBSs directly from ABS Investment Group LLC (ABS), which is a corporate affiliate of ABSIG and is a company owned by Mr Bishop.

So far as these transactions were concerned:

From 14 February 2013, Optimus purchased 8 MBSs directly from SVC (UK), (rather than directly from ABS). However, SVC (UK) first purchased those MBSs from ABS, albeit on terms whereby SVC (UK) made no payment to ABS until it had been paid by Optimus.

On the evidence, it is clear beyond any realistic scope for argument that ABS sold the MBSs to Optimus, or SVC (UK) for on-sale to Optimus, at substantially more than it had paid to acquire them, as did SVC (UK) when it was the selling party. It is also indisputable that the prices paid by Optimus were determined by Mr Bishop and Mr Ingmanson as part of an arrangement intended to allow them and companies associated with them to make large profits from these sales. Contemporaneous documents relating to these transactions included the following:

The analysis in the Grant Thornton Report shows the following information:

The profits made by ABS and SVC (UK) are striking, both in aggregate and on individual MBS transactions (e.g., SAIL in which over $15m of profit was made at Optimus’ expense over the period from 16 to 27 July 2013).

Mr Bishop’s close involvement in fixing the price at which Optimus would acquire these MBS products, and the profits which ABS and SVC (UK) would make, is clear from the documents I have referred to in the preceding paragraphs.

There are numerous documents involving Mr Ingmanson which refer to the need (and steps being taken) to increase the size of funds under Optimus’ management, in order to increase the absolute value of the 10% of the funds under management which could be used to acquire MBSs or similar products:

Optimus Fonder was required to provide daily valuations of its investments to the SPA. These were originally provided by ABS itself, However, by a letter dated 15 November 2012, Optimus entered into what appeared to be an agreement with an American valuation agent, Hayden Consulting LLC (Hayden) to provide those valuations (as per Hayden’s letter of 15 November 2012). That letter bears what appears to be the signature of a Mr Thomas Epperson for Hayden and Mr Deckmark for Optimus. Mr Thomas Epperson claims to be the founder of Hayden.

However:

Sweden’s case that the First and Second Defendants were involved in a scheme which involved selling MBSs to Optimus Fonder at inflated prices, so that they could profit through companies they owned at Sweden’s expense, is also supported by the following:

There was no challenge to Sweden’s assertion that the law applicable to its claims so far as they concerned the Optimus phase was Swedish law. Whether that issue is approached by reference to Article 4(1) or 4(3) of Regulation (EC) 864/2007 (Rome II), I am satisfied that Swedish law is the applicable law.

The undisputed evidence of Swedish law, supported by the clear terms of the statute in question, is that a claim for damages arises under the Tort Liability Act (TLA). Pursuant to Chapter 2, §2 of the TLA, a person who causes:

It is also clear from the Swedish law evidence, and the terms of the Swedish Penal Code, that the following criminal offences exist under Swedish law.

First, the offences of fraud and gross fraud under Chapter 9 §1 and §3 of the Swedish Penal Code, which is committed when a person, by deception, induces someone into an action or omission that involves gain for the perpetrator or loss for the person deceived. The offence of gross fraud is committed when the fraud is of a particularly dangerous nature or involves a considerable value.

Second, the offences of breach of trust and gross breach of trust under Chapter 9 §5. This applies to a person who, on account of a position of trust, is given the task of managing a financial matter on behalf of someone else, and who abuses their position of trust and thereby causes a loss for their principal. Where the principal suffers a considerable or exceptionally painful loss, the offence of gross breach of trust is committed.

Third, Chapter 23 §4 provides that the offences created by the Swedish Penal Code are committed not only by the principal offender, but “anyone who promoted it by advice or deed”.

Mr Bishop suggested that Sweden’s claims relating to the Optimus phase were barred by the doctrine of res judicata, merger, cause of action estoppel or the allied doctrine in Henderson v Henderson. Mr Bishop relied in this regard on the fact that the same facts had formed the basis of the criminal prosecutions against him. However:

Mr Bishop’s written and oral submissions scarcely engaged with the events of the Optimus phase. Instead, they concentrated on the Falcon phase, or on procedural or technical answers to the claims. Mr Bishop’s failure to offer any explanation of the rather striking events relating to Optimus’ acquisition of MBSs is telling. I am satisfied that the reason that no explanation was given was that none could be given.

I am satisfied that there is no arguable defence to Sweden’s claim that Mr Bishop committed an offence of breach of trust, and indeed gross breach of trust, and that he also promoted breach of trust and gross breach of trust by Mr Deckmark.

Mr Bishop was a board member of Optimus Fonder, and in that capacity held a position of trust in relation to the management of the Optimus Fund which was owned by Sweden. Mr Bishop clearly abused that position of trust by participating in the scheme I have set out above to commit it to buy MBS products from entities owned or controlled by himself or Mr Ingmanson at inflated prices, thereby causing loss to Sweden (in the form of the over-payment).

It is equally clear and undeniable that Mr Deckmark was also guilty of the offence of breach of trust, and indeed gross breach of trust. As the managing director of Optimus Fonder, he too held a position of trust in relation to the management of Sweden’s assets. He abused that trust by participating in the MBS scheme to make a profit by over-charging Optimus for those assets, obtaining a share of the profit made.

I would note that my conclusion, on the undisputable facts, that Mr Bishop and Mr Deckmark held positions of trust for the purposes of the Swedish Penal Code was also the conclusion reached by the Stockholm City Court in its Judgment of 17 April 2020, which conclusion was affirmed by the Svea Court of Appeals in its decision on 22 October 2020.

It is clear beyond any realistic scope for argument that Mr Bishop is guilty of the offence of promoting Mr Deckmark’s breach of trust, by agreeing to pay Mr Deckmark some part of the over-charge and organising that payment.

It is clear beyond any realistic scope for argument that Mr Ingmanson was guilty of the offence of promoting the breaches of trust by Mr Bishop and Mr Deckmark to which I have referred. He was clearly the prime mover in the scheme to strip funds from Optimus by over-charging it for the MBS transactions he asked Mr Bishop to source.

The position with regard to Mr Gergeo is more complex. The only criminal offence which Sweden alleges in these proceedings that Mr Gergeo committed is the offence of fraud. However, that requires Mr Gergeo to have deceived Sweden and thereby induced Sweden to act in a way which causes loss to Sweden or gain to Mr Gergeo. The pleaded case is that:

However, as Sweden accepted, it has not pleaded any statements or behaviour by Mr Gergeo, or to which he was a party, which had induced Sweden to act in a particular way, nor was its evidence presented in this way. The thrust of Sweden’s case at the hearing was that Mr Gergeo had promoted the breaches of trust by Mr Bishop and Mr Deckmark. However, Mr Eschwege accepted that no such case had been pleaded against Mr Gergeo.

As a litigant in person, I would have been reluctant to allow Sweden to introduce such a case at the hearing (and no attempt was made to do so). In any event, there are further reasons why I would have been unwilling to permit Sweden to change its case in the context of this application:

It is clear that causing Sweden to overpay for the MBS transactions directly caused Sweden pure economic loss, in the form of the reduction of the funds which belonged to Sweden. However, one point taken by Mr Bishop is that any direct loss was suffered by the SPA and not Sweden.

The issue of whether Sweden or the SPA had title to the funds claimed and had suffered the loss alleged is one of Swedish law. I was referred to the expert evidence of Per Sundin and Mattias Anjou of Hammarskiöld on this issue. The effect of that evidence is as follows:

That opinion is supported by the decision of the Svea Court of Appeal in the Optimus case, which ordered Mr Ingmanson, Mr Bishop and Mr Deckmark to make payments to the Swedish state, not the SPA. It is also supported by the terms of the co-operation agreements entered into with both Optimus and Falcon, which describe the agreement as one between “the Swedish Government through The Swedish Pension Agency” and the relevant fund.

Given Sweden’s ownership of the funds in Optimus, which is clearly established by the Swedish law expert evidence before me, I am satisfied that there is nothing in Mr Bishop’s submission that the overpayments did not constitute direct loss and damage to Sweden under Swedish law.

On the unchallenged expert evidence in the Grant Thornton Report, the MBS transactions caused Optimus (and hence Sweden) a net loss of $33,690,889, comprising losses of $34,580,756, and a profit on two MBS transactions ($134,463 on CMLTI and $755,404 on CWL). However, the profit made by ABS and SVC (UK) on those transactions (and hence the amount of the over-payment) was the lower figure of US$29,529,986.

I can see scope for argument as to which of these is the correct figure. However, I am satisfied that Mr Bishop and Mr Ingmanson have no realistic defence to the lowest of those figures of $29,529,986, and that Mr Bishop and Mr Ingmanson are each liable to Sweden in that amount, on a joint and several basis.

From 26 July 2013, reports appeared in the Swedish press which accused Strategi Placeirng, a company linked to Mr Ingmanson, of fraud, in connection with the transfer of pension funds to Optimus.

By September 2013, Mr Ingmanson was involved in plans to establish a new UCITS investment vehicle in Malta, Falcon, which was to be registered on the PPM platform.

On 18 September 2013, Mr Ingmanson sent an email about the Falcon fund into which Mr Gergeo was copied stating “here are the funds which we set up in Malta and which we will include in PPM, ASAP”.

In an email of 27 September 2013, Mr Ingmanson informed Mr Bishop:

The plan from the outset was for Falcon to target Swedish pension funds, as noted in an email from Mr Camilleri to Mr Ingmanson of 9 October 2013.

Falcon was incorporated and authorised by the Maltese Financial Services Authority (MFSA) as a UCITS fund on 22 November 2013. It established three funds:

Falcon appointed Calamatta Cuschieri Investment Management Limited (Calamatta) as investment manager, Bank of Valletta (BOV) as custodian and Valletta Fund Services (VFS) as fund administrator. The Custody Agreement between Falcon and BOV and the Administration Agreement between Falcon, VFS and Calamatta were both dated 27 December 2013. Falcon issued its prospectus on the same date.

It is necessary to say something about the nature of the investment in Falcon:

On 10 January 2014, Calamatta applied to enrol the three Falcon funds with the Swedish PPM. On 28 April 2014, “the Swedish Government, through the Swedish Pensions Agency” entered into a Co-operation Agreement with Falcon. The terms of the Co-operation Agreement included the following:

On 17 July 2014, Falcon’s funds were registered on the PPM platform.

With effect from August 2014, the SPA invested some €365m in the Falcon funds.

On 21 November 2014, Optimus Fonder applied to the SFSA to merge its funds with the Falcon Balanced Fund. On 26 January 2015, the SFSA gave its consent to the cross-border merger.

Sweden’s summary judgment claim in relation to the Falcon phase requires the court to be satisfied to the summary judgment standard that its claims in delict and for breach of fiduciary duty relating to the Falcon phase are governed by Maltese law and not Swedish law. For this purpose, it is necessary to consider the claims in delict and for breach of fiduciary duty separately.

So far as the claims in delict are concerned, the applicable law is determined by Article 4 of Rome II. This provides:

Mr Eschwege (who shared the submissions with Mr Casey KC and dealt with the topic of applicable law) argued that Article 4(1) applied here, and that the damage was suffered in Malta when funds held in Falcon were applied to the various classes of loss-making investments. He argues that it was only at that point that the loss to Sweden became irreversible, and it is only when there is an irreversible asset transfer from the claimant as a result of the defendant’s wrongful act that loss is suffered for Article 4(1) purposes. Mr Eschwege relied in this regard on the decisions of Mr Justice Marcus Smith in MX1 Ltd v Farahzad [2018] 1 WLR 5553 and Mr Justice Andrew Smith in Hillside (New Media) Ltd v Baasland [2010] 2 CLC 986. In MX1, entering into an agreement under which £100,000 was payable in England was held to amount to an irreversible loss. In Hillside, Andrew Smith J held that money transferred by a gambler to, in effect, a credit account with a gambling facility was not lost unless and until applied from the account in losing transactions.

Hillside was a case in which Mr Baasland had transferred funds to Hillside, which were replaced by a chose in action with Hillside which Mr Baasland could seek repayment of at will. If, as seems likely, those transfers to Hillside were made from a bank account, then what happened was that a chose in action which Mr Baasland had in a particular amount with one or more banks was replaced by a chose in action which Mr Baasland had in the same amount with the gaming company’s bank. One can well see why there is no loss in this case by the fact of that transfer alone (any more than there is a loss when cash is paid into a bank account in the claimant’s control).

In this case, however, the transfer of Sweden’s funds to Falcon was by way of a transaction under which it acquired shares in the Falcon funds and their attendant rights in return for the payments made. The loss which Sweden will suffer arises from the fact that those shares are worth less than the amount paid for them. I am satisfied that the better view is that acquiring those shares did involve a loss to Sweden. I note that in Raiffeisen Zentral Bank Osterreich AG v Tranos [2001] ILPr 9, [15], Longmore J observed:

In this case, I am not persuaded to the summary judgment standard that irreversible loss was not suffered until the funds were applied by Falcon in losing investments. The application of the test of reversibility, when dependent on setting aside a sale contract, appears to me to raise very different issues to those which arise when liquidating the chose in action represented by a positive bank balance, and in any event, given the matters in [68] above, I am far from satisfied that reversing the share acquisition was quite as straightforward as Mr Eschwege’s submissions assumed. Applying the statement in Dicey, Morris & Collins on The Conflict of Laws (16^th) [35-027] to which Mr Eschwege referred me – “in misappropriation cases … it seems appropriate to locate damage at the place where an asset … is taken from the control of the claimant or another person with whom the claimant has a relationship” – it is strongly arguable that this happened when Sweden’s funds became subject to the control of Falcon and the powers of its directors or those operating behind the scenes.

Further, so far as Mr Gergeo, Mr Őkten and the Twelfth and Thirteenth Defendants are concerned, Sweden’s case would appear (at least arguably) to fall within Article 4(2), with both Sweden and the relevant Defendant having their habitual residence in Sweden at the relevant time:

That leaves the further issue that, even if Sweden had been right about the place of loss for the purposes of Article 4(1) of Rome II, this was a case in which that general rule was displaced by the “exception” in Article 4(3). There are convenient summaries of the approach to be taken in determining whether Article 4(3) is engaged from Mr Justice Bryan in Lakatamia v Su [2021] EWHC 1907 (Comm), [859] and Mr Justice Picken in Avonwick Holdings Limited v Azitio Holdings Limited [2020] EWHC 1844 (Comm), [156] and [175]. From the summaries in those authorities, I have had particular regard to the following:

The essence of Sweden’s case is that the SJ Respondents were parties to an ongoing and continuing course of conduct intended to misappropriate Swedish pension funds. It is alleged that the establishment of Falcon was, in essence, a mechanism for implementing a dishonest scheme, when things became too hot in Sweden (and, in the context of its argument as to the effect of Maltese law, Sweden places particular emphasis on what is said to be mechanistic role of Falcon). Falcon was established to target Swedish pension funds, and was party to a Swedish law agreement in respect of those funds with Sweden.

Further, on Sweden’s case the same continuing course of conduct aimed at perpetrating misappropriation of the same assets gives rise to claims under two different systems of law. I accept that Article 4 of Rome II is not overtly hostile to the idea that where the same wrongful act causes damage in two different countries, two different systems of law may well be engaged. In MXI Ltd v. Farahzad, [44], Marcus Smith J stated:

Mr Eschwege also referred me to Dicey, Morris & Collins, [35-028]:

In this regard, it may be appropriate (at least as a matter of emphasis) to distinguish between torts which have horizontal multi-jurisdictional effects, and those which have vertical multi-jurisdictional effects. The publication of a libellous tweet which is read and causes loss in a number of jurisdictions, or the use of confidential information to sell infringing products in a variety of countries, may present a rather stronger case for a “Mosaikbetrachtung” of applicable laws than a case such as the present, in which the defendants began causing loss to the claimant in one country, but adjusted their modus operandi so as to continue causing loss of essentially the same kind to the same claimant in another country.

The combined effect of the matters in [78] to [84] above is that I am satisfied that it is realistically arguable that Swedish law governs the tort claims arising from the Falcon phase as well (and indeed I regard that contention as having the better of the argument).

So far as the breach of fiduciary duty claims are concerned, as Mr Eschwege rightly submitted, this is a complex topic. He points me to the following summary in Dicey, Morris & Collins [36-069]-[36-070]:

Many of the individuals against whom claims relating to the Falcon phase are brought had already had at least some involvement in the Optimus phase. That is certainly true of the First and Second Defendants, with Mr Bishop already being a fiduciary in respect of assets transferred from Optimus to Falcon, and Mr Ingmanson being closely involved in the investments made by Optimus. SVC (UK), in which Mr Gergeo had a 50% interest and of which he was a director, was also closely involved in the Optimus phase, albeit there is a dispute as to what involvement Mr Gergeo had personally. Further, the corporate Defendants against whom claims are brought in relation to the Falcon phase are alleged to have been controlled by one of those three individuals. All of those companies are alleged to be parties to a joint enterprise with the individual Defendants from the outset of the Falcon phase, rather than simply parties to particular investment decisions made at a later point in time.

So far as Falcon itself is concerned, it owed contractual obligations to Sweden which were governed by Swedish law (in the form of the Co-operation Agreement). To my mind, that agreement – by which Falcon becomes eligible to receive PPM funds – is far more closely connected to Sweden’s claims than the subscription agreement. It is the Co-operation Agreement which Sweden terminated when the “balloon went up”, and the Co-operation Agreement to which Sweden’s Maltese law experts attach significance when explaining why fiduciary duties are owed by Falcon. Further, as explained below, Sweden is keen to pitch its claims relating to the Falcon phase not as those of a shareholder, but as those of an investor in respect of its own funds. Sweden submitted that its claims against the SJ Respondents were effectively as accessories to breaches of Falcon’s fiduciary duties. That all lends support for the view that Swedish law applies.

Further, Mr Eschwege submitted that the most persuasive analysis was one which treated the equitable claims as engaging Article 4 of Rome II. I have already given the reasons for concluding that the better view is that Article 4 leads to the application of Swedish law.

I am satisfied, therefore, that it is at least arguable that the claims for breach of fiduciary duty are also governed by Swedish law, and, on the facts of this case, I would not regard the contention that the tort and fiduciary claims were subject to different applicable laws as particularly satisfactory. In both cases, the gravamen of Sweden’s complaint is that duties owed to it in respect of funds emanating from it were breached, leading to the loss of those funds. The case is not about duties owed to Falcon, but about duties arising from the management of Sweden’s funds, which the SJ Respondents are accused of having targeted through Falcon.

My conclusion on the applicable law issue is sufficient to defeat Sweden’s summary judgment case so far as it concerns the Falcon phase. However, I would in any event have found that there was a triable issue as to whether the no reflective loss rule precluded a claim by Sweden under Maltese law. That issue arises from the fact that Sweden acquired shares in the Falcon fund, the value of which has been diminished by the misappropriation or mis-investment of assets from those funds, but Falcon itself appears to have and is currently asserting claims against some of the alleged wrongdoers in relation to those same misappropriations.

Sweden’s evidence of Maltese law on this issue was provided by Dr David Zammit and Dr Kurt Xerri. The relevant section of their report provides as follows:

Stepping back, the following points are apparent:

Further, Sweden’s solicitors obtained evidence at an earlier stage of the proceedings from ZammitPace, the Maltese law firm acting for KPMG in the proceedings commenced by Falcon in Malta. In a report of 20 February 2020, addressing possible lis alibi pendens arguments, ZammitPace advised:

It is not easy to reconcile the application of the exception to the reflective loss put forward by Dr Zammit and Dr Xerri, with the fact that Falcon itself, and not Sweden, is the “real party” under Maltese law for the purpose of pursuing claims arising from the investments made in the Falcon phase.

For this reason, also, therefore, I am not persuaded that Sweden’s claims in these proceedings relating to the Falcon phase have been made out to the summary judgment standard.

For these reasons, Sweden’s application for summary judgment:

I am satisfied that the WFO should be continued post-judgment against Mr Ingmanson and Mr Bishop in respect of the liability I have found. The matters which persuaded me to grant the WFO on 28 February 2020, as set out in the judgment reported at [2020] EWHC 486 (Comm), continue to apply, save that Sweden has now established its case against Mr Ingmanson and Mr Bishop in respect of the Optimus phase.

I would like to conclude by expressing my profound thanks to the Swedish prison authorities for making it possible to hold this hearing.