Russian Retribution

Chelsea FC owner Roman Abramovich is to be called as a witness in one of the biggest trials of 2011 after Mr Justice Colman today ruled that he must answer allegations that he used coercive tactics against former business partner Boris Berezovsky.

It will come as a blow for Abramovich’s legal team – led by Skadden Arps Meagher & Flom partner Paul Mitchard QC – which had argued that the court should dismiss the claim on grounds that it had little chance of success at full trial.

By contrast Addleshaw Goddard partner Mark Hastings, who began representing Berezovsky in October 2008 after the oligarch parted company with Cadwalader Wickersham & Taft, will temporarily bask in glory as he moves to become one of the firm’s biggest fee -earning litigators.

Those glory days will be short lived, however. Hastings will need to get back to work if Berezovsky’s case is to be ready for a 10-week trial in October 2011.

The case will explore allegations that Abramovich pressurised and coerced  Berezovsky into selling his 21.5 per cent of Russian oil company Sibneft at a significantly reduced price. Berezovsky claims that the deal culminated with him sitting on losses of £3bn.

Abramovich’s lawyers furiously refuted the allegations in court

At the outset of a three-week strike-out hearing that began in July Brick Courts’ Andrew Popplewell QC, acting for Abramovich, told Mr Justice Colman: “This is a case that cries out for a summary judgment or strikeout.”

Berezovksy’s lawyers, he said, had failed to produce credible evidence that there was a case for Abramovich to answer.

When the court reconvened during the Michaelmas term Mitchard brought Fountain Court’s Michael Brindle QC on board because Popplewell was engaged on another case.

In their skeleton argument Berezovsky lawyers argued that Abramovich’s strike out application was absurd. “The suggestion that the court should conclude that Mr Berezovsky’s claim has no realistic prospect of success on the basis of inferences from (putative) undisclosed documents is frankly absurd, and is another clear indication of the misguided nature of Mr Abramovich’s application.”

In his judgment today, however, Colman J agreed: “I am satisfied that it is impossible to say that this claim has no real prospect of success…

“Weak as some of BB’s [Boris Berezovsky] case certainly appears the complexity and multiplicity of issues makes this exactly the kind of claim which is unsuitable for applications under CPR3.4.”

The complexity of the issues mean that the strike-out hearing alone was listed for 15 days – although it was originally expected to last five days.

“A three-week strike out hearing in the commercial court is almost unprecedented,” one source says.

In his judgment Colman J criticised both sides for racking up court costs: “The length of time needed for this application was dramatically underestimated in the first place and the documentation and witness statement evidence was extremely voluminous.

“The number of authorities referred to in the course of the argument was immense. The overall effect has been to delay considerably the progress of proceedings to involve the parties in massive cost bills to take up many expensive hours of court time and judicial time.”

Exactly how much will become clear in May, when Berezovsky will apply for indemnity costs, but it is thought to be at least £1m for each side for the strike-out hearing alone.

The full trial has been listed to run over the 12-week Michaelmas term of  next year. Brindle is expected to appear for Abramovich in that hearing. Exactly how much Berezovsky will claim in compensation is yet to be quantified but it will run to billions of dollars.

The chance of a settlement before then is unlikely.

Both sides will be gearing up for a high stake court clash and, crucially, both sides have substantial resources to fund such a battle.