Two heads are better than one

The judge in charge of the Commercial Court, Mrs Justice Gloster, has set a new precedent in the High Court by sitting alongside Mr Justice Mann of the Chancery Court and jointly giving directions in the £2bn legal battle between Russian oligarchs Boris Berezovsky and Roman Abramovich.

Roman Abramovich
Roman Abramovich

The two Russian oligarchs have gone to war through London’s High Court over the former’s claim that Abramovich coerced him  into selling his 21.5 per cent share in Russian oil company Sibneft at a significantly reduced price.

According to Berezovsky the pair had teamed up with Georgia’s richest man Arkadi “Badri” Patarkatsishvili in the 1990s to buy Sibneft. They agreed that Abramovich would own half of the business while Berezovsky and Patarkatsishvili would share the other half, with Abramovich holding their shares in trust.

Abramovich disputes this and argues that in fact any payment to Berezovksy, his former mentor, was in recognition of his “political assistance and protection” during the creation of Sibneft. He denies that Berezovsky or Patarkatsishvili ever had an interest in Sibneft.

Abramovich’s lawyer, Skadden Arps Slate Meagher & Flom partner Paul Mitchard QC, has already failed to have the claim struck out and it is scheduled to be heard in October 2011 (31 March 2010).

According to reports, Patarkatsishvili had agreed to testify as a witness for Berezovsky in his case against Abramovich but died unexpectedly in 2008. Berezovsky’s legal worries instantly intensified when it became clear that there would be a row over Patarkatsishvili’s assets. The latter had left his friend with nothing and Berezovsky claimed he was owed half of everything.

The facts surrounding the fight over Patarkatsishvili’s assets have been tightly guarded with gagging orders issued to prevent press coverage. Nevertheless, the directions issued by judges Gloster and Mann at the case management hearing reveal that the case is closely intertwined with another Berezovsky action, which is focused on Patarkatsishvili’s assets.

The two-day hearing was the first occasion on which a Commercial Court judge and a Chancery judge have sat together at first instance, but three sets of proceedings going through the Chancery Court are being case managed together.

At issue here was whether certain aspects of the two separate hearings should be heard together.

In giving a joint judgment, the justices held: “The cases before us present a pattern of serious, heavy and very complex litigation. There are some clear areas of overlap and some less clear areas.

“As Mr Rabinowitz [Berezovsky’s counsel Laurence Rabinowitz QC of One Essex Court] acknowledged, there’s no single perfect, obviously right solution. All one can do is find the answer which is least bad.”

According to the ruling the overlapping issues centre on events that happened at London’s exclusive Dorchester Hotel in March 2000. Centrally it concerns a meeting where, Berezovsky claims, he, Patarkatsishvili, Abramovich and another oligarch – Oleg Derepaska – agreed to pool their assets with Abramovich agreeing to hold Berezovsky’s and Patarkatsishvili’s shares for them.

The outcome of Berezovsky’s case against Abramovich will have an impact on the value of Patarkatsishvili’s assets and therefore direct consequences on the amount Berezovsky will attempt to claim from Patarkatsishvili’s estate.

As such the judges at the July case management hearing agreed that certain aspects of the two cases should be heard together, stating that it “seems appropriate to save costs, save court resources and make sure at least some points are tried only once”.

The outcome will bind parties in the Chancery Division case, but that will not be heard until Berezovsky’s claim against Abramovich has been settled. The court stated that this may well be revised if Abramovich is successful in his appeal to have Berezovsky’s claim thrown out.

The battle of the Russian oligarch is turning into an epic tale with London’s leading judges being forced to find innovative ways to play the referee.