26/03/2013

Fiona Trust & Holding Corporation & Ors v Dimitry Skarga & Ors, Yuri Nikitin & Ors

The Court of Appeal has dismissed Sovcomflot’s appeal in the long-running Fiona Trust litigation. The Court upheld Mr Justice Smith’s decision that the bribery claims against Dimitry Skarga (the former Director-General of Sovcomflot) were governed by Russian law and not, as the appellants alleged, by English law. As such, all of the claims failed, because the alleged bribery of Mr Skarga did not cause Sovcomflot’s subsidiaries to enter into any of the impugned transactions and those transactions did not cause them any loss.In addressing the conflicts of laws questions, the Court considered sections 11 and 12 of the Private International Law (Miscellaneous Provisions) Act 1995 (“PILA”). The Court held that the correct approach to those sections was set out in the ten principles identified in VTB Capital plc v Nutritek International Corp and others [2013] UKSC 5. The keystone of the Appellants’ argument was that even if the general rule required the application of Russian law, it should be displaced by English law under section 12 of PILA, because contracts entered into after the alleged bribery (and unconnected with it) contained choices of English law. The Court rejected that submission and held that there was no clear preponderance of factors pointing to English law which was sufficient to displace Russian law.

 

Susannah Jones acted for the First Respondent (instructed by Stephenson Harwood)