Hogan Lovells secures Court of Appeal victory in ‘Putin’s banker’ case

Hogan Lovells and Erskine Chambers have secured a Court of Appeal (CoA) judgment requiring Russian tycoon Sergei Pugachev to disclose information about discretionary trusts established in New Zealand, setting a precedent in cases involving freezing orders.

The CoA ruled that Pugachev, who once had close ties to Russian president Vladimir Putin, must disclose information about details of the assets held within the New Zealand trusts as well as copies of the trust deeds.

The appeal was brought by Hogan Lovells client, the Deposit Insurance Agency (DIA), which is the liquidator of Pugachev’s former bank Mezhprombank. The bank collapsed in 2010 with a deficit of more than $2bn.

The DIA is alleging that prior to the bank’s collapse Pugachev carried out a scheme designed to extract money for the benefit of himself and companies under his control, and has filed lawsuits in Russia and England in an effort to recoup the money.

Pugachev disclosed his interest in the trusts last year, as part of an asset disclosure following a worldwide freezing order granted in July. However he did not give details of the terms of the trusts.

The DIA then applied for a disclosure order, which was granted. The trustees brought in Farrer & Co partner Jeremy Gordon to challenge the order but it was upheld by Mr Justice David Richards in October.

Today’s judgment saw the CoA deal with three appeals on various issues from both sides. Pugachev and the trustees appealed against the disclosure order. Meanwhile the DIA appealed an order made by Mrs Justice Rose in September that the continuation of the freezing order should be conditional on the provision of a cross-undertaking which was unlimited in amount and that it should be fortified by a payment of $25m.

The CoA decided in favour of the DIA over disclosure of information, dismissing the appeals brought by Pugachev and the trustees. 

The DIA lost its appeal against the unlimited cross-undertaking, meaning that Rose J’s order stands. However it did win its appeal against the $25m payment to fortify the cross-undertaking. 

Hogan Lovells partner Michael Roberts led the team for the DIA, instructing Erskine Chambers’ Stephen Smith QC and Ben Griffiths.

Fried Frank Harris Shriver & Jacobson partner Justin Michaelson represented Pugachev, instructing XXIV Old Buildings’ Francis Tregear QC and Fountain Court Chambers’ Alexander Milner. Michaelson was brought in last year, replacing Stephenson Harwood partner John Fordham (30 September 2014) as Pugachev attempted to have the freezing order lifted. In December Mr Justice Mann declined the application (19 December 2014).

The legal line-up:

For the claimants/appellants, JSC Mezhdurarodniy Promyshlenniy Bank & Anr

Erskine Chambers’ Stephen Smith QC and Ben Griffiths, instructed by Hogan Lovells partners Michael Roberts and Alexei Dudko and of counsel Rebecca Wales

For the defendant/appellant, Sergei Viktorovich Pugachev

XXIV Old Buildings’ Francis Tregear QC and Fountain Court Chambers’ Alexander Milner, instructed by Fried Frank Harris Shriver & Jacobson partner Justin Michaelson

For the appellants, Kea Trust Company Ltd & Ors

Serle Court Chambers’ Jonathan Adkin QC, instructed by Farrer & Co partner Jeremy Gordon