Boris Berezovsky was recently successful in having a £15m claim brought against him by the state-owned Russian airline, Aeroflot, dismissed by Mr Justice Floyd, who gave summary judgment in Berezovsky’s favour on 30 October ( EWHC 3017 (Ch)). Addleshaw Goddard acted for Berezovsky.
Floyd J’s judgment is of particular interest because, as a general rule, an English court will enforce a judgment of a foreign court of competent jurisdiction without examination. This matter was found to be an exception to the general rule because of the breach of the finality principle. Floyd J stated: ‘In my judgment the decision to reopen the judgment as to the amount of damages payable was a plain breach of the finality principle.’ He concluded: ‘Enforcement of the judgments would breach the finality principle. I will grant summary judgment dismissing the action accordingly.’
The relevant events date back to the mid-1990s when Berezovsky was an influential businessman in Russia. Berezovsky left Russia in 2000 and was subsequently granted political asylum in the UK. In 2007, however, Berezovsky was convicted by a Russian court in absentia of conspiring with a close associate in allegedly embezzling money from Aeroflot through a series of transactions involving a Swiss company called Andava. Berezovsky was sentenced to six-and-a-half years in prison and ordered to pay damages to Aeroflot of about £4.7m under what was known as the second Savelovsky judgment.
On 5 February 2010, the Russian public prosecutor applied to the federal examining magistrate in Lausanne, Switzerland, for mutual assistance in the recovery of assets alleged to be associated with the fraud. Monies in numerous frozen Swiss accounts were subsequently released to Aeroflot on 7 July 2010 following the grant of the Russian prosecutor’s requests. The transfer of these sums resulted in a recovery by Aeroflot of over 52 million Swiss francs and $700,000, over seven times the existing judgment debt.
Subsequently, in 2011, Aeroflot sought a further judgment in Russia to adjust the damages payable from the original judgment sum of £4.7m to £47m, under the contention that the Russian civil code allowed account to be taken of inflation in the cost of living. The claim attached a schedule containing levels of annual inflation published by the Moscow city statistics department which showed between 100% and 200% inflation each year. The sizeable adjustment for inflation was sought despite the substantial recovery Aeroflot had already made from Switzerland, and indeed Russia.
Floyd J referred to the fact that ‘from August 2010, Aeroflot was in possession of funds well in excess of the judgments it had obtained in Russia. Notwithstanding the successful recovery of these sums, Aeroflot continued to pursue Mr Berezovsky’s assets in Russia in purported execution of the second Savelovsky judgment’ by recouping $4m held by Berezovsky in a Moscow bank account in December 2010 and attaching Berezovsky’s real estate in Russia. In its claim in the English court, Aeroflot sought to claim the balance of the adjusted judgment debt against the funds already recovered; about £10.8m plus interest of more than £4m.
In his judgment, Floyd J noted that the adjustment by the Russian court for the rouble devaluation was a ‘legal novelty’. He said: ‘The Golovinsky court granted the claim for indexation between 1996 and 29 November 2007 in full, without deduction of the sum already awarded by the second Savelovsky judgment, and collected in full by Aeroflot.’ George Leggatt QC, for Berezovsky, made submissions that the Russian courts did not have jurisdiction over Berezovsky and that, in any event, the judgment obtained from the Golovinsky court in 2011 should not be enforced against Berezovsky because it would breach the principle of finality, a rule of English public policy.
Floyd J accepted Leggatt’s submissions that the Russian courts did not have jurisdiction over Berezovsky, who had been absent from Russia for over a decade. His principal focus, however, was on Leggatt’s submissions relating to finality which he summarised as: ‘The Savelovsky court had already, in a final judgment given in 2007, determined the amount of compensation due to Aeroflot from Mr Berezovsky for the fraud of which Aeroflot complained… The judgment entered into force, was final, and the judgment debt had subsequently been recovered. In the subsequent proceedings in the Golovinsky court, commenced several years after the second Savelovsky judgment had become final, the court was asked, by a state-owned entity, to find that the loss suffered was 10 times greater. No new facts or circumstances were advanced or considered by the court.’
Floyd J agreed with Leggatt’s submissions that the 2011 judgment of the Russian courts rendered Berezovsky twice vexed with the same litigation, in circumstances where there was no suggestion of any new facts subsequently coming to light and, accordingly, gave judgment dismissing Aeroflot’s claim on the ground that the principle of finality had been breached.
Garbhan Shanks is Addleshaw Goddard managing associate and was assisted with this article by Natasha Winter