Hefin Rees QC instructed by Lennox Paton (BVI) appeared before the Privy Council in a case where the judgment was handed down yesterday.
The dispute arises from an alleged international bribery scheme where two senior Russian executives of Eurochem, one of the world’s largest manufacturer of fertilizer, had allegedly received secret commission payments of US$45m incurring loss of profits to Eurochem of US$135m. There were five secret commission schemes with different distributors and the bribes were alleged to have been paid to bank accounts in Cyprus and Singapore.
Eurochem brought a claim in the BVI against 16 Defendants, of whom 9 were companies registered in the BVI. The other non-BVI defendants were domiciled in Singapore, Switzerland, and Panama.
An application was made to stay the BVI proceedings on the basis that Russia was a more convenient forum. Wallbank J dismissed these applications, but the Eastern Caribbean Court of Appeal reversed that decision and found Russia to be the more convenient forum.
The Privy Council considered arguments as to what weight was to be placed on the place of incorporation of companies in applying the legal test in The Spiliada and cases which follow it, in particular VTB Capital plc v Nutritek International Corp. The Privy Council found that the first instance judge had placed too much importance to incorporation in the BVI, as whilst this was a connecting factor it was not a strong one as there was no evidence that the BVI companies had conducted any activities in the BVI.
The Privy Council did not agree with the Eastern Caribbean Court of Appeal’s findings that the governing law could be ascertained by applying the exception to the double actionability rule because there was no factual material on which to ascertain the law with which each of the torts had their most real and closest connection.
The Board concluded that under Russian law there was no effective equivalent to tracing remedies. Given the nature of the proceedings, it was held that tracing remedies are a crucial part of the claims in the proceedings and that practical justice might well not be done if the claims had to be brought in a jurisdiction such as Russia which did not have equivalent remedies. Accordingly, the Board found that the more convenient forum was the BVI and restored the first instance decision of Wallbank J.
The judgment can be found here.