Search

Editors

Harry Cassin Publisher and Editor

Andy Spalding Senior Editor

Jessica Tillipman Senior Editor

Richard L. Cassin Editor at Large

Elizabeth K. Spahn Editor Emeritus 

Cody Worthington Contributing Editor

Julie DiMauro Contributing Editor

Thomas Fox Contributing Editor

Marc Alain Bohn Contributing Editor

Bill Waite Contributing Editor

Shruti J. Shah Contributing Editor

Russell A. Stamets Contributing Editor

Richard Bistrong Contributing Editor 

Eric Carlson Contributing Editor

Bill Steinman Contributing Editor

Aarti Maharaj Contributing Editor


FCPA Blog Daily News

« Management can own honesty or deceit. So pick one | Main | Uber: Grease payments and charitable giving gone wrong? »
Tuesday
Apr162019

Practice Alert: UK court accepts jurisdiction in hotly-contested Russian dispute

A UK court recently concluded that even when there's ample evidence demonstrating connections to another state, UK courts may nonetheless affirm their own jurisdiction, if there are at least some connections providing a basis to do so.

On March 27, 2019, the High Court of England & Wales rendered a decision addressing such a case in Tugushev v Orlov (2019), which involves a “bitter battle” between two Russian fishing magnates, Alexander Tugushev and Vitaly Orlov, in connection with the $1.5 billion business known as “The Norebo Group.”

In the underlying case, Tugushev alleges he owns a one-third interest in The Norebo Group as a result of participating in its founding with Orlov, but is the victim of a complex conspiracy to misappropriate or deny such interest perpetrated by Orlov.

Initially, on July 23, 2018, Tugushev successfully obtained a without notice order freezing $350 million of Orlov’s assets worldwide, and permission to serve the order on Orlov outside of the England. In doing so, Tugushev argued that the court had jurisdiction because Orlov was domiciled in England.

However, having learned of the worldwide freezing order, and while incurring legal costs of $5.2 million, Orlov strongly challenged whether the court had jurisdiction over Tugushev’s claims at all. In short, Orlov’s position was that he is not domiciled in England but instead in Russia, and that the dispute is otherwise “almost entirely Russian,” involving Russian individuals and relating to Russian companies operating under Russian law.

According to the court, while the jurisdiction dispute generated a “depressingly vast amount of material” and “clearly left no stone unturned,” the evidence was sufficient for Tugushev to successfully resist Orlov’s challenge and demonstrate a “good arguable case” that Orlov was domiciled in England and, in turn, that the court had jurisdiction to hear Tugushev’s claims.

While the court found that Orlov spends the majority of his time in Russia, it nonetheless concluded that England is a “settled and usual place of abode” for Orlov on the basis of evidence that, among other things, Orlov owns two flats in England, had recently made significant payments in respect of the properties (although had spent just 56 days in England in 2017, and 25.5 days in England up to the July 23, 2018 freeze order).

This approach is conceptually consistent with that adopted by a Canadian court in Wide v Toronto-Dominion Bank (2012), where it was concluded that “there would seem to be no a priori reason why any plaintiff should not be allowed to sue in the jurisdiction seen as most favorable to advancing its claim, assuming of course that the locale chosen has a recognized basis in accordance with accepted normative principles of law for assuming jurisdiction over the claim.”

More recently, Canadian courts have confirmed their willingness to assert jurisdiction in novel circumstances, including to issue injunctions with worldwide effect (Google LLC v Equustek Solutions Inc (2017)) and freezing orders even where the defendant has no assets in the jurisdiction (SFC Litigation Trust v Chan (2017)).

Going forward, the approach taken to jurisdiction by the English and Canadian courts may drive claimants towards those jurisdictions where there are adequate connections and advantages to having their disputes heard by those courts. It remains to be seen whether other jurisdictions will adopt such a claimant-friendly approach to jurisdiction choices, and the extent to which novel grounds to disputes such choices may arise in the future.

_____

Lincoln Caylor, pictured above right, is a litigator at Bennett Jones LLP in Toronto and focuses on on cross-border financial crime disputes. He is recognized by peers and clients as the top asset-recovery lawyer in Canada. He is co-founder of The International Academy of Financial Crime Litigators.

Nathan Shaheen, above left, is a litigator at Bennett Jones LLP in Toronto and focuses on on cross-border financial crime disputes.