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“The team was recently visible advising on a number of pharmaceutical cases. Sources agree that the team is “moving in the right direction” and are particularly impressed by its work in the pharmaceutical sector”.


International Litigation: asset-recovery strategies


Source: The UJBL

Unstable and high-rate tax legislation in Ukraine remains the main reason for the high interest shown by Ukrainian businesses to use offshore schemes (as well as structures in the “attractive” jurisdictions that are not formally offshore). Moreover, an offshore structure means a foreign owner, and that is why it is also protected by international law. No wonder, the Ukrainian companies are increasingly seeking effective proceedings in the courts of foreign jurisdictions, including English ones.

On 10 December Ilyashev & Partners and their colleagues from Hogan Lovells hosted a joint seminar entitled “International Litigation: Asset-Recovery Strategies in England, Switzerland, Cyprus and BVI”. The seminar dealt with the ways of bringing Ukrainian and Ukraine-related disputes to English courts — a topical issue for late.

Roman Marchenko, senior partner of Ilyashev & Partners attorneys at law, introduced the event and made a brief review of the most resonant processes involving Ukrainian parties considered by English courts. In particular, he highlighted some key points of concern for Ukrainian parties in English courts: disclosure of information and documents to the extent far exceeding the ordinary scope of disclosure in Ukrainian courts; legal costs, including significant attorneys’ fees, may be imposed on the losing party; the court may require the claimant to provide security for costs, covering the amount which may be awarded to respondent in case the claim fails. If the security is not provided, the claim may be dismissed. The speaker touched upon the topic of recognition of a foreign judgment and its performance on the territory of Ukraine. The case of the recognition and enforcement is subject to the jurisdiction of the court at the location of the debtor. However, if the debtor has no location in Ukraine, and his whereabouts are unknown, the case is considered by the court at the location of the debtor’s property. The main problems concerning the recognition and enforcement of a foreign judgment on the location of the debtor’s property in Ukraine, connected with the detection of such property, proving its existence and accessories debtor.

Cary Cochberg, partner of Hogan Lovells, gave an overview of the key points when deciding where to litigate and touched upon the topic of jurisdiction of English courts: when can you litigate in London. According to a Law Society survey of international companies, which asked in what cities they principally conduct litigation — London received 30% and so became an international litigation hub.

Since March 2009, international litigants in the Commercial Court have increased by 30%; 62% of litigants in the Commercial Court in the past five years are based outside England and Wales; 8% of Commercial Court cases between 2009 and 2012 involved a party based in the CIS. Characterizing the high value cases Mr. Cochberg stressed: BTA Bank v. Ablyazov (> USD 6 billion); Berezovsky v. Abramovich (> USD 5.5 billion); Chemey v. Deripaska (> USD 2.5 billion); Ferrexpo Poltava; Merchant International v. Naftogaz; Victor Pinchuk v. Gennady Bogoliubov and Igor Kolomoisky; Fiona Trust (Sovcomflot) v. Privalov (> USD 850 million); VTB Capital pic v. Nutritek (> USD 200 million). Describing the factors in deciding where to litigate, the speaker attracted the audience’s attention to the following questions: where are the assets, where is the defendant, how long will it take for the judgment to be obtained, how much will the litigation cost, will the hearings be public or private, is interim relief available, etc.

In his presentation covering interim measures in the English Courts, Richard Lewis, lawyer of Hogan Lovells, analyzed the arsenal of security measures of English courts, which can be enforced in England and Wales and beyond. In particular he outlined practical techniques for tracing and recovering assets including the points that information is crucial, what can the English court do to help, if there is a good enough case as to apparent wrong doing (freezing injunctions, disclosure orders, search orders, orders for cross- examination, passport orders, receivership orders, committal to prison) and explained the point as to how this works in practice.

By way of example, Mr. Lewis discussed the USD 6 billion BTA Bank v. Mukhtar Ablyazov case in which both companies hosting the seminar were retained by the plaintiff, which demonstrated that English courts have enough power both to use a wide range of interim measures — from freezing injunctions and disclosure orders to search warrants and receivership orders and to enforce them on threat of imprisonment for all those who try to act in contempt of court. Indeed, Mukhtar Ablyazov himself, currently arrested and in jail in France as a defendant, was sentenced to 22 months in prison for contempt of court.

In his turn, Michael Roberts, partner of Hogan Lovells, spoke on unlocking offshore jurisdictions and touched upon the issue of enforcement of judgments in the European Union and the likely practical consequences of interim measures of English courts in Switzerland, Latvia, Cyprus and BVI, features of these jurisdictions, as well as the current situation in Cyprus and the legal remedies available to investors in Cypriot banks.

Summing up the results of the discussion, Mr. Marchenko hoped that once an order issued by a Ukrainian court proves sufficient to search the registered office of an offshore company in Cyprus or have the Registrar of Companies in the BVI disclose information about beneficial owners, this will mean the end of Ukrainian litigation in English courts. At the present time such a system works in London and not in Kiev.

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