The Supreme Court has handed down judgment in a case of great importance concerning international fraud litigation. By a majority decision (3:2) the Supreme Court upheld the decisions of Mr Justice Arnold and the Court of Appeal to decline jurisdiction over a $350 million fraud claim brought by VTB Capital Plc against Russian entrepreneur, Mr Konstantin Malofeev. Stephen Rubin QC and James McClelland appeared for Malofeev, the successful party.
VTB 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.
The majority of the Supreme Court (Lords Neuberger, Mance and Wilson):
(1) Declined jurisdiction in relation to VTB’s claims in deceit and conspiracy, rejecting its submission that where a there was a presumption that the place where a tort was committed was the natural or appropriate forum.
(2) Conducted a comprehensive survey of the authorities on “piercing the corporate veil” and held that VTB could not use this doctrine so as to make Mr Malofeev liable under contracts entered into by companies said to be under his control.
(3) Held that a USD 200 million freezing order should be discharged.
Lords Clarke and Reed dissented.
Stephen Rubin QC and James McClelland together with Mark Hapgood QC appeared for the main defendant, Mr Malofeev. The were instructed by Justin Michaelson, previously of SJ Berwin LLP, now of Fried, Frank, Harris, Shriver & Jacobson (London) LLP.
Mark Howard QC, Paul McGrath QC, Iain Pester and Tony Singla appeared for VTB.
Michael Lazarus and Christopher Burdin appeared for the second defendant.
