Tension over costs continues to grow in the London legal battle between two Russian fishing tycoons, after a judge declined to make an interim costs order.
On Friday, the High Court refused to continue a worldwide freezing order against billionaire businessman Vitaly Orlov, in the latest development in Tugushev v Orlov & Others.
Orlov runs Norebo, an international business which supplies fish to the likes of McDonalds, Tesco and Birds Eye. Fellow businessman Alexander Tugushev alleges that Orlov, along with two other defendants, conspired to remove him from the company.
For Orlov, barrister Christopher Pymont QC of Maitland Chambers said costs relating to the discharged freezing order amounted to at least £3.2m. If Orlov were to recover 70% of these costs, taking into account money owed to Tugushev, he would receive a minimum of £1.87m.
Pymont suggested an interim payment of £936,500 to ensure ’there is very little prospect of over-payment in Mr Orlov’s favour’.
However, the Honourable Mrs Justice Carr refused the order, stating that she could not safely ascertain what reasonable costs would be. Costs which related to multiple elements of the litigation posed a particular problem.
Carr J also decided that costs should be assessed on a standard basis, as opposed to an indemnity basis.
For Tugushev, Richard Slade QC of Brick Court Chambers said: ‘The scale of these costs is huge and the amount of time spent by Mr Orlov’s lawyers is enormous…It is likely there is a degree of duplication between what the legal representatives are doing.’
Slade added that there is ‘extreme disproportion’ between Orlov’s costs and those of his client, stating that Orlov was charging ‘two or three times as much’. He argued the fact that Norebo is covering Orlov’s legal fees meant there is ‘no question of economy in how expensive his lawyers should be’.
Pymont replied that Carr J was ‘not being told anything about the full scale of costs being thrown at this case by the claimant’.
Tugushev is being funded by anonymous third parties. According to Orlov’s solicitors, Macfarlanes, those funders will now have to pay a significant proportion of Orlov’s costs in discharging the freezing order ‘or face being revealed’.
A spokesperson for Tugushev said: 'Mr Tugushev is pleased with the judge’s decision both that Mr Orlov should not be entitled to his costs of these applications on an indemnity basis, and that Mr Orlov should not be entitled to any payment at this stage, despite Mr Orlov’s strong objections during the hearing.
'Mr Orlov will be required to pay Mr Tugushev’s costs associated with his failed jurisdiction challenge. As a result of that judgment, the claims against Mr Orlov will proceed in England in any event. The costs that each party have incurred in the applications they have succeeded on will be assessed and determined following the substantive trial in these proceedings.'