Stephen Rubin QC and James McClelland appeared for Russian entrepreneur, Mr Konstanin Malofeev, in successfully challenging the jurisdiction of the English courts to hear a $350 million claim and in discharging a $200 million worldwide freezing order: VTB Capital Plc -v- Nutritek International Corp & Ors [2011] EWHC 3107 (Ch).

The Claimant Bank (VTB Capital Plc) claimed that it had been deceived into entering a corporate finance loan facility with a Russian company, RAP.

It brought tort claims against Mr Malofeev and others in deceit and conspiracy and sought to ‘pierce the corporate veil’ of RAP so as to hold Mr Malofeev personally liable under the loan contract. In support of this latter argument the Claimant relied upon the recent decision of Antonio Gramsci Shipping Corp v Stepanovs [2011] EWHC 333 (Comm).

The Court heard 6 days of oral argument, further to which:

(1)   Mr Justice Arnold gave a landmark ruling on the law applicable to piercing the corporate veil, holding that Antonio Gramsci had been wrongly decided and that the Mr Malofeev could not be held liable under the loan contract.

(2)   The Court declined jurisdiction in relation to the claims in tort accepting the Defendants’ submissions that the natural forum was Russia.

(3)   The Court concluded that, even if there was jurisdiction, the worldwide freezing order should be set aside (and not re-imposed) because there was no sufficient risk of dissipation of Mr Malofeev’s assets and additionally because the Claimant had been guilty of material non-disclosures when obtaining the order ex parte.

The case is now the subject of an appeal.

Stephen Rubin QC and James McClelland were instructed by Justin Michaelson of SJ Berwin LLP.