One of the defendants in an alleged €2 billion conspiracy-to-defraud action involving sanctioned Russian oligarch Dmitry Mazepin, who allegedly controls a Dublin-registered company, has failed in its challenge to a decision that the Irish courts have jurisdiction to hear the case.
Mr Justice Denis McDonald, who heads the Commercial Court, ruled JSC Khimaktninvest (Kai), which says it is a separate and independent legal person to the other defendants, dismissed Kai’s application to set aside an earlier order allowing the firm to be joined as a defendant.
Kai was joined early last year in the case which was brought in 2016 by four Caribbean-registered firms alleging conspiracy to defraud them of their shares in Russian ammonia-producing company Togliattiazot (ToAZ).
The claim relates to what are known as “raider attacks” in which a so-called corporate raider acquires a minority shareholding in a target company before taking allegedly illegal steps to ultimately wrest control of it.
The four plaintiff companies – Trafalgar Developments, Instantania Holdings, Kamara and Bairiki Inc – have sued EU-sanctioned Russian billionaire Mr Mazepin; another Russian ammonia producer called United Chemical Company Uralchem (UCCU), which Mr Mazepin controls; UCCU itself; and a number of other companies and individuals.
These other companies/individuals are either controlled by Mr Mazepin or acted in concert with him to damage the plaintiffs’ interests, it is alleged.
Among those other companies is Eurotoaz, a Dublin-registered firm, also allegedly controlled by Mr Mazepin. Eurotoaz was allegedly engaged in a campaign of vexatious and false litigation in Russia to deprive the plaintiff companies of their shareholding in ToAZ.
It is claimed they were all part of a conspiracy to defraud the plaintiffs through illegal and corrupt actions. The claims are denied.
The High Court previously rejected a challenge by the Mazepin/UCCU defendants to the jurisdiction of the Irish courts to deal with the case. An appeal is pending on that decision.
In arguments seeking to have Kai taken out of the case, the firm said, among other things, the plaintiffs were engaged in “forum shopping” and trying to relitigate underlying matters that the plaintiffs had already unsuccessfully litigated in Russia.
The plaintiffs argued the court had already dealt with the jurisdictional issue in relation to the other defendants and there was no merit in allowing this new jurisdictional challenge. The claim before the Irish court does not involve the relitigation of any of the issues heard in Russia, it was also argued.
In a decision dismissing the Kai challenge, Mr Justice McDonald said he applied the principles previously applied by the High Court in establishing the jurisdictional issue.
Given those previous findings that the plaintiffs had demonstrated a good arguable case for the alleged conspiracy, it followed that the plaintiffs had established a good arguable case that the acquisition of the shares by Kai represented the culmination of the alleged scheme of conspiracy, the purpose of which is to expropriate the plaintiffs’ shares in ToAZ, he said.
Any determination of the truth or falsity of the claims could only be made at a full trial at which the witnesses on both sides would be cross-examined and all relevant documents would be before the court following discovery, he said.
It was previously observed that the vast majority of the factors in play in these proceedings point in the direction of Russia as the appropriate forum especially as most of the events occurred in Russia, most witnesses are likely to be Russian and documents will be in Russian, he said.
Nevertheless, he said the countervailing factors previously identified by the High Court seemed to still carry significant weight in favour of Irish jurisdiction in so far as the claim against Kai is concerned.
These include the fragmentation of the conspiracy claim in the event that the case against Kai cannot be made in the same set of proceedings as the claim against all of the remaining alleged conspirators.
However, the judge did not accept that the issue of fragmentation now weighs against Ireland as the appropriate forum.
The fact that Kai is now the holder of the shares in ToAZ seemed to the judge to be a particularly strong factor that weighs in favour of Ireland as the appropriate forum.
The judge also concluded that the plaintiffs had established a good arguable basis for their case that, in their capacity as trust managers, they continue to have the right to pursue each of the claims made in these proceedings.
