BLP wins as CoA looks to Russian law in key matrimonial case

Berwin Leighton Paisner (BLP) has successfully fought off a attempt by a Russian businessman and former politician to use English law in a dispute over the ownership of a London property with his ex-wife.

In the Court of Appeal (CoA) earlier this week Lords Justice Lloyd and Patten and Lady Justice Black handed down a judgment in favour of BLP’s clients, a trust and investment vehicle established by Olga Slutsker, in a multi-million pound dispute brought by her former husband Vladimir.

In 2000 the Slutskers bought a £6m property in the Boltons, Kensington, and spent at least £1.5m improving it.

The house was bought in the name of an investment company, Haron Investments, which was originally a nominee for Olga Slutsker.

Mrs Slutsker caused Haron to hold the beneficial interest in the property upon trust for the benefit of her, her husband and their children, through a trust company established in the Cayman Islands. Macfarlanes represented Olga Slutsker on the purchase of the house and the establishment of the trust.

When the Slutskers divorced in 2009 the trustee exercised a discretionary power to exclude Vladimir Slutsker as a beneficiary owner of the trust. He has brought claims in the Cayman Islands challenging this, while seeking to assert a half right in the property under English law.

The claim was dismissed last year by Mr Justice Underhill and the CoA agreed with his interpretation of the application of the law and the facts of the case.

In the leading judgment Lloyd LJ said that the matrimonial law of Russia, as the jurisdiction where the couple married and divorced, took precedent over English law. “The application of Russian law as that of the matrimonial domicile, under English conflict of law rules, has to be carried through to all stages of the relevant history,” he said, discussing the chain of events which saw the property ownership transferred to the trust.

“It is not correct to pause at the first stage and then to consider how, if it had had to, an English court would have given effect to the rights then existing as determined in accordance with Russian law. […] I therefore agree with the judge that the validity and effect of Mrs Slutsker’s dealings with anything that was joint family property under the Russian regime must be determined by reference to Russian law, without adding requirements which apply as a matter of English domestic law.,” Lloyd LJ added.

Under Russian law, Vladimir Slutsker’s claim was also time-barred, Lloyd LJ said, rejecting the appeal.

The CoA did not give leave to appeal to the Supreme Court. The claimant is considering a further appeal.

BLP private client partner Rupert Ticehurst said the case was important due to the numbers of wealthy couples from outside the UK now acquiring property in the country.

“This sort of issue has never been resolved before where you have foreign individuals who are subject to a foreign matrimonial regime acquiring assets in the UK and the courts having to decide the ownership of this assets,” Ticehurst said. “This is probably not going to be the only dispute of this nature. For future disputes between Russian couples this will be relevant but it will be equally relevant to anybody who comes from a Napoleonic legal system.”

For the claimant/appellant Vladimir Iosifovich Slutsker

XXIV Old Buildings’ David Brownbill QC and Adam Cloherty, instructed by Taylor Wessing partner Steven Kempster

For the defendants/respondents Haron Investments and Summit Trustees (Cayman)

3 Stone Buildings’ Gilead Cooper QC and Richard Wilson, instructed by Berwin Leighton Paisner partner Rupert Ticehurst and associate Jessica Henson