Stati v. Kazakhstan (I)

1. An order permitting [Terra Raf] to rely on expert evidence of foreign law (Kazakh law) pursuant to CPR 35 for the purposes of this application; and

2. An order under CPR 11.1(1) and CPR 11.1(6):

a. Declaring that the Court;

i. has no jurisdiction to try the claim against [Terra Raf]; or, in the alternative,

ii. should not exercise any jurisdiction which it may have; and

b. That the Claim Form dated 17 July 2020 in so far as it relates to [Terra Raf] and service of the same on [Terra Raf] are hereby set aside; and/or

c. That the proceedings as against [Terra Raf] be stayed.

3. In the strict alternative to (2) above:

a. An order that the claimants' Claim Form and/or Particulars of Claim be struck out pursuant to CPR 3.4(2) on the basis that:

i. the aforementioned statements of case disclose no reasonable grounds for bringing the claim; or, in the alternative,

ii. the aforementioned statements of case are an abuse of the court's process or otherwise likely to obstruct the just disposal of the proceedings.

b. Alternatively, an order that the Court strike out the claimants' Claim Form and/or Particulars of Claim pursuant to CPR 3.3.

c. In the further alternative, that the proceedings be stayed pursuant to CPR 3.1(2)f).

4. Costs

1. under CPR Part 11:

(i) Setting aside service of the Claim Form and accompanying Particulars of Claim on the Second, Third and Fourth Defendants at the offices of Messrs Triay & Triay on the 4 December 2020 and generally;

(ii) Setting aside the order dated 27 November 2020, inter alia granting permission to serve the claim form and particulars of claim on the Second, Third and Fourth Defendants outside of the jurisdiction and by an alternative method and at an alternative place by delivering them to the offices of Messrs Triay & Triay;

(iii) Declaring that the Supreme Court of Gibraltar has no jurisdiction to try the claims brought against either the Second and/or Third and/or Fourth Defendants under CPR 11(1)(a), or alternatively that the Supreme Court of Gibraltar should not exercise any jurisdiction which it may have under CPR 11(1)(b); or, in the alternative,

(iv) Further, staying the proceedings under CPR 11(6)(d) and/or CPR 3.1(2)(f) either generally and/or in favour of proceedings in Moldova and/or British Virgin Islands.

2. under CPR 35.4: permitting the Applicants to rely on expert evidence of foreign law by Sergei Vataev an expert in Kazakh Law and a witness statement of Grigore Pisica of Ascom Group S.A on Moldovan Law for the purposes of this application.

For the claimants

Mr Sagidolla Baimurat ("Mr Baimurat"), of the Bolashak Consulting Group ("Bolashak")

Professor Iskander Zhanaidarov ("Prof Zhanaidarov"), Chief Research Fellow at the Caspian University's Private Law Research Institute in Almaty, Kazakhstan, on Kazakh law

Mr Kevin O' Gorman ("Mr O'Gorman"), of Norton Rose Fulbright US LLP on New York law.

Mr Vladimir Iurkovski ("Mr Iurkovski"), of Schoenherr, Moldova on Moldovan law

For Terra Raf

Professor Peter Maggs ("Prof Maggs"), Research Professor of Law, University of Illinois, USA, on Kazakh law

For the Statis and Tristan

Mr Sergei Vataev ("Mr Vataev"), Kazakh Advocate on Kazakh law

Mr Grigore Pisica ("Mr Pisica"), Head of the Legal Department of Ascom on Moldovan law

Claimants

Mr Philip Maitland Carrington ("Mr Carrington"), an English solicitor whose firm, Herbert Smith Freehills LLP, has represented Kazakhstan in proceedings related to the enforcement of the award for a number of years.

Mr Arman Nurlanovich Akhmetkaliyev ("Mr Akhmetkaliyev"), the Head of the State Revenue Authority ("the SRA") of the City of Aktau in Kazakhstan.

Defendants

Mr Egishe Dzhazoyan ("Mr Dzhazoyan"), an English solicitor whose firm King & Spalding International LLP has acted for the Stati parties in the international litigation.

Mr Eduard Calancea ("Mr Calancea"), the former Chief Economist of Ascom.

CPR 3.4

3.4(2) The court may strike out a statement of case if it appears to the court:

(a) that the statement of case discloses no reasonable grounds for bringing or defending the claim; [or]

(b) that the statement of case is an abuse of the court's process or is otherwise likely to obstruct the just disposal of the proceedings;

CPR 11

11(1) A defendant who wishes to –

(a) dispute the court's jurisdiction to try the claim; or

(b) argue that the court should not exercise its jurisdiction

may apply to the court for an order declaring that it has no such jurisdiction or should not exercise any jurisdiction which it may have.

11(6) An order containing a declaration that the court has no jurisdiction or will not exercise its jurisdiction may also make further provision including:

(a) setting aside the claim form;

(b) setting aside service of the claim form;

(c) discharging any order made before the claim was commenced or before the claim form was served; and

(d) staying the proceedings.

i. That the proceedings are an abuse of process because they amount to a collateral attack on the ECT award.

ii. That the proceedings are an abuse of process because they are being funded, directed and controlled by the ROK and this amounts to champerty or champertous maintenance.

iii. That TNG's bankruptcy proceedings in the ROK are a sham and consequently it is said that the proceedings here amount to an abuse of the court's process and/or the claimants do not have standing or reasonable grounds to bring their claim.

iv. That TNG's bankruptcy proceedings in the ROK are time barred under Kazakh law.

v. That the fraud allegations advanced are barred by issue estoppel and res judicata (in so far as the Perkwood Payments claim and the New Notes claim are concerned).

vi. That the claims are time barred by reference both to Kazakh law and Gibraltar law.

vii. That the claimants do not satisfy the double actionability rule by which they have to show that the claims are actionable under both Gibraltar law and Kazakh law. It is said that there is no real prospect of success for the claims under Kazakh law and that in any event the claims are time barred under that law.

viii. That there are no reasonable grounds for bringing the claims on the merits.

ix. That the claimants breached their duty of full and frank disclosure in their without notice application for service on the Statis and Tristan. Specifically, that the claimants breached their duty of fair presentation of the case.

i. That for the reasons set out by Terra Raf, the court does not have jurisdiction to deal with the claims against Terra Raf as anchor defendant. It follows that there is no jurisdiction as against the Statis and Tristan either, as this is reliant on jurisdiction being grounded on Terra Raf in the first place.

ii. That there is no good arguable case that the Statis and/or Tristan are necessary and/or proper parties to the claims against Terra Raf and therefore the conditions set out in CPR Practice Direction 6B para 3.1 are not met.

iii. That the claims do not have any or any sufficient connection to Gibraltar and therefore Gibraltar cannot be the proper place to try these.

iv. That the claimants breached their duty of full and frank disclosure in their without notice application.

English courts have no jurisdiction to entertain an action:

(1) for the enforcement, either directly or indirectly, of a penal, revenue or other public law of a foreign State; or

(2) founded upon an act of state.

"My Lords, I will admit that I was greatly surprised to hear it suggested that the courts of this country would and should entertain a suit by a foreign State to recover a tax. For at any time since I have had any acquaintance with the law I should have said as Rowlatt J. said in the King of the Hellenes v. Brostron: 'It is perfectly elementary that a foreign government cannot come here - nor will the courts of other countries allow our Government to go there - and sue a person found in that jurisdiction for taxes levied and which he is declared to be liable to in the country to which he belongs.' That was in 1923."

"Those cases on penalties would seem to establish that it is not the form of the action or the nature of the plaintiff that must be considered, but the substance of the right sought to be enforced; and that if the enforcement of such right would even indirectly involve the execution of the penal law of another State, then the claim must be refused. I cannot see why the same rule should not prevail where it appears that the enforcement of the right claimed would indirectly involve the execution of the revenue law of another State, and serve a revenue demand. There seems to me to be a reasonably close parallel between the position of the Banco de Vizcaya and the present plaintiff. In each case it is sought to enforce a personal right, but as that right is being enforced at the instigation of a foreign authority, and would indirectly serve claims of that foreign authority of such a nature as are not enforceable in the courts of this country, relief cannot be given."

At page 529, the learned judge continued:

"If I am right in attributing such importance to the principle, then it is clear that its enforcement must not depend merely on the form in which the claim is made. It is not a question whether the plaintiff is a foreign State or the representative of a foreign State or its revenue authority. In every case the substance of the claim must be scrutinized, and if it then appears that it is really a suit brought for the purpose of collecting the debts of a foreign revenue it must be rejected. Mr. Wilson has pressed upon me the difficulty of deciding such a question of fact and has replied on 'ratio ruentis acervi.' For the purpose of this case it is sufficient to say that when it appears to the court that the whole object of the suit is to collect tax for a foreign revenue, and that this will be the sole result of a decision in favour of the plaintiff, then a court is entitled to reject the claim by refusing jurisdiction."

The appeal from Kingsmill Moore J's decision is contained in the same report. There, Maguire CJ said at page 533:

"I agree that if the payment of a revenue claim was only incidental and there had been other claims to be met, it would be difficult for our courts to refuse to lend assistance to bring assets of the company under the control of the liquidator."

(The relevance of this quote is of course that the claimants say that the tax claims are not the only claims in TNG's liquidation.)

"…where the liquidator, as nominee for a foreign state, in substance is seeking a remedy designed to give extraterritorial effect to foreign revenue law. In my judgment, such claims plainly fall within the compass of revenue matters as that expression would be understood by all member states for the purposes of article 1 of the Convention."

"126. The critical starting point for the purposes of Ground 1 of this appeal is to focus on the scope of Dicey Rule 3. What it renders inadmissible (whether under the narrower revenue rule or the wider sovereign powers rule) is an action, that is a claim, to enforce directly or indirectly a foreign revenue, penal or other public law. In its narrower form, the revenue rule, what it prohibits is enforcement of a direct or indirect claim for tax which is due but unpaid, as is clear from the speeches of the House of Lords in Government of India [1955] AC 491 and from the passages from the speech of Lord Mackay in Williams & Humbert [1986] AC 368 …

127. It is also clear from a number of authorities that, in determining whether a claim is inadmissible by virtue of Dicey Rule 3, the court must examine the substance of the claim to see whether it is really a claim to recover foreign revenue…"

i. The court should decline jurisdiction to hear a case which is brought by a foreign government for the recovery of tax due in that foreign state.

ii. It is not the form of the action or the nature of the claimant that matters, it is the substance of the right sought to be enforced that must be examined.

iii. If the recovery of taxes by the foreign state is only a part of a wider claim, then the courts should not decline jurisdiction to hear the case.

"Having regard to the questions before this House in Government of India v. Taylor I consider that it cannot be said that any approval was given by the House to the decision in the Buchanan case except to the extent that it held that there is a rule of law which precludes a state from suing in another state for taxes due under the law of the first state. No countenance was given in Government of India v. Taylor, in Rossano's case [1963] 2 Q.B. 352 nor in Brokaw v. Seatrain U.K. Ltd. [1971] 2 Q.B. 476 to the suggestion that an action in this country could be properly described as the indirect enforcement of a penal or revenue law in another country when no claim under that law remained unsatisfied. The existence of such unsatisfied claim to the satisfaction of which the proceeds of the action will be applied appears to me to be an essential feature of the principle enunciated in the Buchanan case for refusing to allow the action to succeed."

"Assuming that the present claim is a civil matter within article 1 and, therefore, that under article 2 there is jurisdiction to bring it in England against the defendant as someone domiciled here, the plaintiffs submit that rule 3 of Dicey & Morris cannot properly be invoked so that the court immediately then declines to exercise its jurisdiction: such an application of rule 3 of Dicey & Morris would clearly "impair the effectiveness of the Convention".

Mr. Ivory, for the defendant, submits the contrary. He argues that rule 3 of Dicey & Morris is not concerned with the appropriate place for the trial of this action. There is, he submits, really no difference between striking out the claim under rule 3 of Dicey & Morris and striking it out because on some other ground it is bound to fail, for example, for lack of merit or under the Limitation Act 1980.

On this issue it seems to me that the plaintiffs' argument is plainly right. The necessary corollary of rule 3 of Dicey & Morris is that any such claim as this can only properly be brought in the tax authority's own courts. Were the Convention to apply, rule 3 would seem to me not merely to impair its effectiveness but indeed substantially to derogate from it."

"It must follow that either so far as those defendants are concerned the revenue rule applies, or the claim involves the exercise or assertion of a sovereign right. Whilst the test for the application of Dicey Rule 3 may not be identical to that for determining what is a revenue etc matter for Article 1(1) of the Brussels Recast Regulation , it can be seen that its application leads to the same answer. If Dicey Rule 3 applies (as SKAT has to accept it does in relation to the claim against ED&F Man) then by the same reasoning, the basis for the claim by SKAT against those defendants is either a right which arises from an exercise of public powers or a legal relationship characterised by an exercise of public powers, from which it necessarily follows that the claim is a revenue matter outside the Brussels Recast Regulation."

"Must [Article 1] be interpreted as meaning that its scope extends to cover a case in which the authorities of a member state bring a claim for damages against undertakings and natural persons resident in another member state on the basis of an allegation— made pursuant to the national law of the first member state—of a tortious conspiracy to defraud consisting in involvement in the withholding of VAT due to the first member state?"

In deciding that the Brussels I Regulation applied to the English Revenue's claims, the court said the following:

"37. So far as the legal basis of the commissioners' claim is concerned, their action against Sunico is based not on United Kingdom VAT law, but on Sunico's alleged involvement in a conspiracy to defraud, which comes under the law of tort of that member state….

39. As the commission and the United Kingdom Government have observed, in the context of that legal relationship, the commissioners do not exercise any exceptional powers by comparison with the rules applicable to relationships between persons governed by private law…

40. It follows that the legal relationship between the commissioners and Sunico is not a legal relationship based on public law, in this instance tax law, involving the exercise of powers of a public authority.

44. In the light of the foregoing, the answer to the question referred for a preliminary ruling must be that the concept of "civil and commercial matters" within the meaning of article 1(1) of Regulation No 44/2001 must be interpreted as meaning that it covers an action whereby a public authority of one member state claims, as against natural and legal persons resident in another member state, damages for loss caused by a tortious conspiracy to commit VAT fraud in the first member state."

"9. For the purpose of determining an issue about jurisdiction, the traditional test has been whether the claimant had 'the better of the argument' on the facts going to jurisdiction…. It is common ground that the test must be satisfied on the evidence relating to the position as at the date when the proceedings were commenced."

"44. The parties did not dispute the proposition that an application to set aside permission to serve out of the jurisdiction falls to be determined by reference to the position at the time permission is granted, not by reference to circumstances at the time that the application to set aside is heard: see per Hoffmann J (as he then was) in ICS Technologies Ltd and another v Guerin and others [1992] 2 Lloyds Rep 430 at 434–435."

"Mr. Crystal said I should look at the position today. An application under R.S.C., O. 12, r. 8 is a rehearing of the application to the Master and the exercise of a fresh discretion. It should therefore take into account whatever has since happened. I do not agree. The application is under R.S.C., O. 12, r. 8(1)(c) to discharge the Master's order giving leave to serve out. The question is therefore whether that order was rightly made at the time it was made. Of course the Court can receive evidence which was not before the Master and subsequent events may throw light upon what should have been relevant considerations at the time. But I do not think that leave which was rightly given should be discharged simply because circumstances have changed. That would mean that different answers could be given depending upon how long it took before the application came on to be heard. The position is quite different when the application is for a stay on the grounds of forum non conveniens. In such a case, the appropriate time to consider the matter is the date of the hearing."

"154. In our judgment, there are positive reasons of policy why a claim by a state to recover antiquities which form part of its national heritage and which otherwise complies with the requirements of private international law should not be shut out by the general principle invoked by Barakat. Conversely, in our judgment it is certainly contrary to public policy for such claims to be shut out. A degree of flexibility in dealing with claims to enforce public law has been recommended by the Institut de droit international (in particular where it is justified by reason of the subject matter of the claim and the needs of international co-operation or the interests of the states concerned…"

I agree with Mr Ramsden that clearly the court's focus in Government of Iran v Barakat was on the particular sensitivity surrounding antiquities removed from their country of origin. It seems to me that no such sensitivity exits with regards to the policy behind the Revenue Rule.

"Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State."

This of course is not an absolute mandatory rule. There are exceptions set out in the regulation, for example as to employment contracts, consumer contracts, insurance contracts and others. (Indeed it does not apply to revenue matters.) However, aside from the revenue matters already discussed, none of the express exceptions in the regulation are said to apply to the claims brought by the claimants against Terra Raf and so, ostensibly, Terra Raf is to be sued here. The claimants' position is indeed that Terra Raf has to be sued in Gibraltar. They had no other choice.

"29. On that factual basis, I am satisfied, to the extent that the point is acte clair, that the EU principle of abuse of law does not avail the defendants. The starting point is the need to recognise that, following Owusu v Jackson [2005] QB 801, what is now article 4(1) lays down the primary rule regulating the jurisdiction of each member state to entertain claims against persons domiciled in that state. The Recast Brussels Regulation itself (like its predecessors) contains a number of express provisions which derogate from that primary rule. As exceptions to it, they are all to be narrowly construed. If, therefore, the Recast Brussels Regulation also contains (as it probably does) an implied exception from the otherwise automatic and mandatory effect of article 4, based upon abuse of EU law, then that is also an exception which is to be narrowly construed."

After referring to a number of authorities dealing with abuse of EU law in the context of article 6(1) of the Brussels I Regulation (in connected cases a person may be sued in a member state where another defendant is domiciled), Lord Briggs said the following at paragraphs 35 and 36:

"35. Those decisions of the Court of Justice show that, even before the Freeport case [2008] QB 634, there was an established line of authority which limited the use of the abuse of EU law principle as a means of circumventing article 6 (now article 8) to cases where the ability to sue a defendant otherwise than in the member state of its domicile was the sole purpose of the joinder of the anchor defendant. Even though there appears to be no authority directly upon abuse of EU law in relation to article 4 itself (or its predecessors), the need to construe any express or implied derogation from article 4 restrictively would appear to make the position a fortiori in relation to article 4, as indeed the judge himself held.

36. But the matter does not stop there. Such jurisprudence as there is about abuse of EU law in relation to jurisdiction suggests that the abuse of law doctrine is limited to the collusive invocation of one EU principle so as improperly to subvert another. In the present case the position is quite different. The complaint is that article 4 is being used as a means of circumventing or misusing the English national regime for the identification of its international jurisdiction over persons not domiciled in any member state: i e the forum conveniens jurisprudence and, specifically, the necessary or proper party gateway." [My emphasis.]

"40. Two consequences flow from that analysis. The first is that, leaving aside those cases where the claimant has no genuine intention to seek a remedy against the anchor defendant, the fact that article 4 fetters and paralyses the English forum conveniens jurisprudence in this way in a necessary or proper party case cannot itself be said to be an abuse of EU law, in a context where those difficulties were expressly recognised by the Court of Justice when providing that forum conveniens arguments could not be used by way of derogation from what is now article 4 . The second is that to allow those very real concerns to serve as the basis for an assertion of abuse of EU law would be to erect a forum conveniens argument as the basis for a derogation from article 4 , which is the very thing that the Court of Justice held in Owusu v Jackson to be impermissible."

"….if the question is asked, is a claimant with a sustainable claim against an anchor defendant, which it intends to pursue to judgment in proceedings to which a foreign defendant is joined as a co-defendant, entitled to rely on article 6(1) even though the claimant's sole object in issuing the proceedings against the anchor defendant is to sue the foreign defendant in the same proceedings, we consider that the question should be answered affirmatively."

In reaching their conclusion their Lordships gave some examples of where an argument on abuse might succeed:

"108. Fifth, we regard the CJEU's decision in Cartel Damage as rejecting a general sole object test but subjecting reliance on article 6(1) to the principle of abuse of law in cases of artificial fulfilment of the close connection condition. In general, all rights under EU law are subject to this principle and there is no reason to exclude article 6(1). It is noteworthy that the example given by the Court is a collusive arrangement between the claimant and the anchor defendant to conceal a settlement of the claim until the proceedings have been issued and served on the foreign defendants. As earlier mentioned, other examples might be naming a fictitious person as the anchor defendant (Freeport) and commencing proceedings against an anchor defendant knowing that it was an inadmissible claim (Reisch Montage)."

"The abuse of process which the instant case exemplifies is the initiation of proceedings in a court of justice for the purpose of mounting a collateral attack upon a final decision against the intending plaintiff which has been made by another court of competent jurisdiction in previous proceedings in which the intending plaintiff had a full opportunity of contesting the decision in the court by which it was made."

(The first decision there had been taken by the criminal courts during the course of a trial for multiple murders in the Birmingham pub bombings by members of the IRA. One of the defendants had then attempted to sue the police for assault. The criminal courts had considered and dismissed the evidence of any assaults in a voir dire on the admissibility of the defendants' confessions.)

"13. At its most simple, the issue can be expressed as follows: whether it is an abuse of the Court's process for A to claim in legal proceedings against C, on a basis which has been decided against A in arbitration proceedings between A and B?"

At paragraph 48, he set out the principles that he derived from a consideration of the authorities which had been referred to him:

"48. The following themes emerge from these cases that are relevant to the present appeal.

(1) In cases where there is no res judicata or issue estoppel, the power to strike out a claim for abuse of process is founded on two interests: the private interest of a party not to be vexed twice for the same reason and the public interest of the state in not having issues repeatedly litigated … These interests reflect unfairness to a party on the one hand, and the risk of the administration of public justice being brought into disrepute on the other...

(2) An abuse may occur where it is sought to bring new proceedings in relation to issues that have been decided in prior proceedings. However, there is no prima facie assumption that such proceedings amount to an abuse … and the court's power is only used where justice and public policy demand it...

(3) To determine whether proceedings are abusive the Court must engage in a close 'merits based' analysis of the facts. This will take into account the private and public interests involved, and will focus on the crucial question: whether in all the circumstances a party is abusing or misusing the court's process...

(4) In carrying out this analysis, it will be necessary to have in mind that: (a) the fact that the parties may not have been the same in the two proceedings is not dispositive, since the circumstances may be such as to bring the case within 'the spirit of the rules', see Lord Hoffmann in the Arthur Hall case; thus (b) it may be an abuse of process, where the parties in the later civil proceedings were neither parties nor their privies in the earlier proceedings, if it would be manifestly unfair to a party in the later proceedings that the same issues should be relitigated, see Sir Andrew Morritt V-C in the Bairstow case; or, as Lord Hobhouse put it in the Arthur Hall case, if there is an element of vexation in the use of litigation for an improper purpose.

(5) It will be a rare case where the litigation of an issue which has not previously been decided between the same parties or their privies will amount to an abuse of process…"

He then concluded:

"67. In my view Teare J correctly stated the law in [50] of his judgment in the present case. There is no 'hard edged' rule that a prior arbitration award cannot found an argument that subsequent litigation is an abuse of process. The Court is concerned with an abuse of its own process; and there are abundant references in the authorities to the dangers of setting limits and fixing categories of circumstances in which the court has a duty to act so as to prevent an abuse of process.

68. I agree with Reyes J's observation in the Parakou case that, although a Court will be cautious in circumstances where the strike out application is founded on a prior arbitration award, that caution should not inhibit the duty to act in appropriate circumstances. I would also add my agreement with Teare J's observation at [50] of his judgment that it will probably be a rare case, and perhaps a very rare case, where court proceedings against a non-party to an arbitration can be said to be an abuse of process."

"… it is clear that an attempt to re-litigate in another action issues which have been fully investigated and decided in a former action may constitute an abuse of process, quite apart from any question of res judicata or issue estoppel on the ground that the parties or their privies are the same. It would be wrong to attempt to categorise the situations in which such a conclusion would be appropriate."

"The circumstances in the present case are very different. This appeal is not put forward on the basis that there was material non-disclosure on the application without notice for the enforcement order. The claimants had the benefit of an award which was valid under its curial law and which they were entitled to seek to enforce in other countries, including England. The State's allegations of fraud were insufficient to invalidate the award. The most that those allegations provided were a defence to enforcement as a matter of English public policy. They are therefore incapable of establishing that the original application was a fraud on the English court. …In the present case, where the Swedish court has ruled that the State's allegations do not invalidate the award, enforcement in Sweden is clearly not a fraud on the court, and it is difficult to see how it could nonetheless be so in England."

"Overwhelming evidence shows that Kazakhstan struggles at every level to keep its word [to promote the rule of law]. Domestically, clear-cut laws for achieving justice, fighting corruption, and promoting freedoms and human rights are continuously challenged by the realities of life in the Republic, plagued by corruption, suppression of free speech and arbitrary law enforcement.

The country's internal approach to rule of law is also being "exported". Our report found too many cases in which Kazakhstan's Ministry of Justice ignores court rulings overseas which have not fallen in the country's favour, even when proceedings are final and non-appealable. The Ministry not recognising or obstructing important international frameworks, including the New York Convention and Energy Charter Treaty, stands at odds with its founding decree, which includes the responsibility for "ensuring the implementation of terms and conditions of international treaties" and "support[ing] the rule of law in the work of state bodies, organizations, officials and citizens."

"[The ROK] has been a respondent in more cases than any other Central Asian state. Further, the cases filed against Kazakhstan are significantly larger than those filed against other Central Asian states, mainly because these disputes arose from investments in its rich oil and gas sector.

An analysis of some of these cases is instructive in the assessment of how Kazakhstan has treated and treats investors and their investment, how it responds to the arbitral jurisdiction and decisions it has consented to and how it has sought to avoid the consequences of contrary decisions. The "Tristan" case discussed below is of particular significance not only because of the size and importance of the award but also because of what it reveals about Kazakhstan's conduct. It shows that Kazakhstan uses attritional tactics to undermine an investment in an effort to acquire its assets for itself or for the enrichment of individuals within the political elite of the country. It deploys multi-jurisdictional efforts to overturn a final, binding arbitration award. It undertakes protracted and spurious efforts to avoid payment of the award and overturn conservatory orders made in respect of its assets abroad."

"4.1 Does the evidence cited in the report substantiate the allegation that Kazakhstan does not abide by – and actively seeks to frustrate – arbitration awards that are made against it in investment disputes?

4.2 Is it correct that the Minister of Justice (Marat Beketayev) is responsible for issuing misleading press releases?"

On the first issue, they conclude as follows:

"5.4 The Report fails to substantiate the serious allegation that it makes, i.e. that Kazakhstan does not abide by arbitration awards and seeks to frustrate them. Although the Report claims to have identified multiple cases where this has occurred, in truth only one case is cited that even arguably supports this allegation (i.e. the Stati Case), and even there important details are omitted in a way that renders the Report's conclusions unreliable."

The "important details" said to have been left out of the 9 Bedford Row report was the finding by Knowles J in the English High Court that the ROK had made out a prima facie case of fraud and that the Statis had then discontinued their action to avoid the risk of an adverse finding. Further, that they had only been allowed to discontinue on the entering of an undertaking not to pursue any enforcement of the ECT award in England.

On the second issue, Mr Malek concludes:

"6. As to the second question, the press releases cited in the Report are not misleading, and the Report's criticisms of those press releases are misconceived. The Report's conclusion on this point is manifestly wrong. This is an extremely serious allegation which should never have been made."

"47. On the question whether it is reasonable to try the claim against Terra Raf, the claimants say that a claim for US $35m is a substantial claim. Undoubtedly, that is so. The latest balance sheet for Terra Raf signed by the Statis and dated the 31 March 2020 (filed at Companies House in Gibraltar on the 10 June 2020) shows assets of £88m. It also shows that it has liabilities of £88m. There is, however, no information as to what those assets or liabilities may be. Mr Leech submitted that for the purposes of this application the court is entitled to proceed on the basis that there are substantial assets. I agree. Until we have further information as to the nature of the liabilities, Terra Raf appears to have substantial assets from which to meet any judgment. It is also said that if the award becomes enforceable then any judgment in this claim can be enforced against Terra Raf's right to the award. It seems to me that it is certainly reasonable for the claim against Terra Raf to be tried."

"53. The jurisdiction of the English courts in civil matters is invoked for the purpose, and only for the purpose, of obtaining relief in the form of orders of the court, including where appropriate declarations. It is not the function of our courts to hear cases which have no relevant result. The purpose of the claimants in the present proceedings was only to enforce the award. That purpose has ceased. The purpose of the fraud case raised by the State was limited to defeating the claimants' attempt to enforce the award in this jurisdiction.... As the judge recognised, the purpose of continuing the proceedings is not to give a ruling on English public policy, but to make findings of fact. But, those findings of fact lead to no relevant relief that can be given by the English court. Where there is no possibility of enforcement in this jurisdiction, no purpose is served by making declarations that enforcement would be contrary to English public policy – save as a peg for findings of fact about the alleged fraud."

"As I understand from Mr Anatolie Stati, Terra Raf's long-term assets on the latest balance sheet represent the value of its nominal equity stake in TNG, as well as certain receivables owed to Terra Raf by an affiliated entity called Hayden Intervest Ltd and another entity, Montvale Invest Ltd, which was historically affiliated with the Stati Parties, prior to it being placed in liquidation. As for Terra Raf's liabilities, I am told by Mr Anatolie Stati that these represent various receivables owed by Terra Raf to its international legal advisors in connection with the ECT Award enforcement proceedings as well as a receivable owed by Terra Raf to Tristan Oil Ltd (the Fourth Defendant)."

Although I accept that this is not a matter to be decided at this stage and that I have not been addressed as to accounting practices, I would simply observe that that the balance sheet for 2018 sets out Terra Raf's total assets as £77,370,538 and its total liabilities at precisely the same figure. It would seem odd for this to be the case when the assets are said to represent a nominal stake in TNG and amounts owed by debtors and the liabilities are said to be legal fees owed by Terra Raf. The position is similar for the balance sheets for 2019 and 2020.

"We write to put you on notice that the First Defendant will be relying on the legal argument that the admitted control, direction and/or funding of the Claimants and the present proceedings in Gibraltar by the Republic of Kazakhstan … amounts to champerty or champertous maintenance, and accordingly an abuse of the court's process against which the First Defendant has sought and is entitled to seek relief pursuant to CPR 3.4(2)(b). This reflects the First Defendant's application notice dated 19 January 2021."

(At the hearing, Mr Ramsden accepted that there had been no actual express admission that the ROK was directing or controlling these proceedings.)

"An order that the claimants' Claim Form and Particulars of Claim be struck out pursuant to CPR 3.4(2) on the basis that: … (ii) the aforementioned statements of case are an abuse of the court's process or otherwise likely to obstruct the just disposal of the proceedings."

Strictly, Mr Morgan is right in that it is the statements of case that are said to amount to an abuse of the court's process. Mr Ramsden countered by saying that the pleading point was simply wrong. That all strike out applications have as their target the statements of case and the striking out of the statements of case is what the application notice is asking the court to do. I agree with Mr Ramsden and note that the provisions of CPR 3.4(2)(b) only refer to striking out statements of case. You do not strike out the 'proceedings', although that of course is the effect of striking out a claim form.

"Without ROK's support it is unlikely that TNG and the Bankruptcy Manager would be able to bring these proceedings. ROK's support, via its Ministry of Justice, extends first, to the provision of information, assistance and sharing of professional advisors (including but not limited to Bolashak, my firm, Hassans, PwC and NRF), and secondly to providing the funding to enable them to bring these proceedings."

"There can therefore be no doubt, on the basis of the above evidence alone, that Bolashak and the MoJ are closely interlinked. However, Bolashak's proper role and involvement in these proceedings and its links to the Claimants and the Kazakh government have not been disclosed, let alone explained, by the Claimants."

"The Claimants' connection to Bolashak is evident and has been since the Claim Form was issued. The Claim Form gives the Claimants' address as care of Bolashak in Kazakhstan. As I explained in Carrington 1 (paragraphs 4 and paragraphs 123 to 126), the Claimants are bringing these proceedings with the considerable financial and practical assistance of ROK. I explained that this included the sharing of professional advisors. Finally, I also exhibited to Carrington 1 the minutes of TNG's creditors committee meeting on 9 July 2020, which approved the conclusion of the legal services agreement with Bolashak."

"44. In my view there was cogent evidence of a risk in the circumstances of this particular case, having regard to the position of Mr Cherney, the position of Mr Deripaska and taking account of the Mirepco documents, that Mr Cherney would not get a fair trial in Russia of a dispute between him and Mr Deripaska over shares in Rusal. I emphasise this particular case because it would be quite wrong for it to be suggested that the English court is saying that a fair trial cannot be obtained in Russia in all normal cases. This is not a normal case and it has particular features from which the judge was entitled to reach the conclusion he did."

"Subject to the Insolvency Regulation, the authority of a liquidator appointed under the law of the place of incorporation is recognized in England."

"19… In the Board's opinion, the principle of modified universalism is part of the common law, but it is necessary to bear in mind, first, that it is subject to local law and local public policy and, secondly, that the court can only ever act within the limits of its own statutory and common law powers.

25. In the Board's opinion, there is a power at common law to assist a foreign court of insolvency jurisdiction by ordering the production of information in oral or documentary form which is necessary for the administration of a foreign winding up… Fourth, the power is subject to the limitation in In re African Farms Ltd [1906] TS 373 and in HIH [2008] 1 WLR 852 and Rubin [2013] 1 AC 236, that such an order must be consistent with the substantive law and public policy of the assisting court, in this case that of Bermuda."

"6. Despite the absence of statutory provision, some degree of international co-operation in corporate insolvency had been achieved by judicial practice. This was based upon what English judges have for many years regarded as a general principle of private international law, namely that bankruptcy (whether personal or corporate) should be unitary and universal. There should be a unitary bankruptcy proceeding in the court of the bankrupt's domicile which receives worldwide recognition and it should apply universally to all the bankrupt's assets.

7 This was very much a principle rather than a rule. It is heavily qualified by exceptions on pragmatic grounds; elsewhere I have described it as an aspiration: see Cambridge Gas Transportation Corpn v Official Committee of Unsecured Creditors of Navigator Holdings plc [2007] 1 AC 508 , 517, para 17. Professor Jay Westbrook, a distinguished American writer on international insolvency has called it a principle of 'modified universalism': see also Fletcher , Insolvency in Private International Law , 2nd ed (2005), pp 15–17. Full universalism can be attained only by international treaty. Nevertheless, even in its modified and pragmatic form, the principle is a potent one."

And at paragraph 30 Lord Hoffmann continued:

"30. ... The primary rule of private international law which seems to me applicable to this case is the principle of (modified) universalism, which has been the golden thread running through English cross-border insolvency law since the 18th century. That principle requires that English courts should, so far as is consistent with justice and UK public policy, co-operate with the courts in the country of the principal liquidation to ensure that all the company's assets are distributed to its creditors under a single system of distribution…"

"While Respondent's explanations and justifications regarding some specific actions it has taken affecting Claimants' investments may perhaps at least be arguable, even if not convincing to the Tribunal, (1) the picture of them seen cumulatively in context to each other and (2) the difference of treatment of Claimants' investments before and after the Order of the President of the Republic on 14/16 October 2008, permit only the conclusion that Respondent's conduct after the President's Order was a string of measures of coordinated harassment by various institutions of Respondent and has to be considered as a breach of the obligation to treat investors fairly and equitably, as required by Art. 10(1) ECT."

"A writ of execution was received for proceedings by the Aktau Territorial Department of the Court Bailiffs against [TNG] for the recovery of the amount of USD 45,896,577.69 for the benefit of the company Arkham S.A.

At the present time, the debtor [TNG] is not undertaking any production activity and all of its property and other assets by the decision of the Government of the Republic of Kazakhstan had been transferred into trust management of JSC NOC KazMunaiGas, i.e., the LLP is insolvent."

"19. I understand that the Defendants allege that the above tax liabilities have been paid by TNG. This is not correct. None of the above tax liabilities have been paid. The circumstances to which the Defendants are referring …all relate to payments of tax that were made by TNG prior July 2010. … The tax arrears which form the basis of Aktau SRA's bankruptcy petition are the taxes and payments declared by TNG itself through its own tax return declarations and calculations of advance payments. All of these tax arrears, with the exception of corporate income tax, had become due only in 2010 and 2011 …

20. I also understand that the Defendants allege that the basis of Aktau SRA's bankruptcy petition is [the 2009 Notice]. This is not correct. Indeed, the 2009 Notice was mentioned by the tax authorities in TNG's bankruptcy petition. This was done to show the court the retrospective (historical) nature of the existing tax relationship between TNG and the tax authorities. As a competent tax authority, we had a certain history of tax claims vis-a-vis TNG, which we wanted to demonstrate to the court. The amount of tax arrears claimed in the bankruptcy petition by the Aktau SRA does not include the tax claims under the 2009 Notice. In any event, the tax arrears under the 2009 Notice have been paid either by TNG itself or through payment orders …"

"60.3 … my understanding is that, contrary to Mr Akhmetkaliyev's assertion that the 2009 Notice is mentioned in the Bankruptcy Petition as a "historical fact" to provide some background, in fact the 2009 Notice constituted key evidence submitted by Mr Akhmetkaliyev to demonstrate compliance with mandatory pre- trial debt recovery steps regarding TNG's alleged debt, appears to match the understanding of the Kazakh court. Indeed, the court Decision dated 27 September 2019 expressly links the 19 January 2009 tax debt (i.e., the same seven types of debt listed in the Bankruptcy Petition) with the 2009 Notice: "It was established during the court [hearing] that [TNG] has tax liabilities, part of which had accrued as a result of the calculation of advance payments for corporate income tax from 19 January 2009 and the issue of a demand for payment of liability No. 14000004629 of 24 April 2009 [being the 2009 Notice]…"

61. Only two explanations of this contradiction are possible. If the 2009 Notice was not based on the seven types of tax debt described in the Bankruptcy Petition, Aktau SRA misled the Kazakh court and failed to comply with preconditions set by Kazakh Tax Code, which would mean that TNG bankruptcy proceedings are unlawful. Alternatively, if the 2009 Notice was based on the seven types of tax debt described in the Bankruptcy Petition, then it becomes clear that (and as I have explained in Dzhazoyan 1) the tax debts cited therein had already been paid and these provided no valid grounds for the Bankruptcy Petition. It follows that both Mr Akhmetkaliyev and the RoK, which stands behind TNG and Mr Kubygul, are misleading the Gibraltar court."

"33. Furthermore, [the applicable tax codes provide] that an application to declare a debtor bankrupt by tax authorities is a measure of last resort, which is why it is not usually taken immediately after tax arrears have been identified. The tax authorities first try to undertake all other measures that are stipulated by the tax legislation, so as to provide the debtor an opportunity to meet its tax obligations without the need to liquidate the company. In the meantime, the taxes that are overdue accrue penalties.

34. In the current case, the debtor's shareholders and beneficiaries had been involved in a long running arbitration and arbitration related court proceedings against the Government of Kazakhstan, the outcome of which was not predictable. One of the scenarios that the Aktau SRA had foreseen was that as a result of the arbitration and court proceedings the former subsoil users, TNG and an affiliated entity, Kazpolmunay LLP, would resume their business in Kazakhstan and would meet their tax obligations. This is the reason why the Aktau SRA did not initiate bankruptcy proceedings against TNG for a number of years."

"93. My view, based on all my knowledge of the relevant facts and matters and for the reasons stated above, is that TNG's bankruptcy is one of those examples where Kazakhstan's judicial branch simply rubber-stamped the claims of the tax bodies without critical scrutiny of the matter. In particular, I describe the specific details of what, in my view, constituted the most fundamental flaws of the relevant court decisions in Paragraphs 34 - 37 above."

The issues identified by Mr Vataev at paragraphs 34-37 of his first report are the following: Firstly, he says that it is not clear that the Mangystau Economic Court "checked the correctness of the Tax Authority's actions". Secondly, that there are apparent deficiencies in the court's decision (including that TNG does not appear to have been notified of the proceedings) but that these deficiencies would not render the decision unlawful. Thirdly, that the court did not examine whether TNG had assets from which to meet its debts.

"I consider that Mr Scott is correct that the authority issue should not be resolved by a choice of law or applicable law analysis such as found favour with the judge, concluding that because the directors were appointed by the Turkish court and Turkish law regards them as validly appointed, that is the end of the matter. That approach has the effect of assuming the authority issue in favour of the defendants. The issue is not about the exercise of Koza Altin's rights, as the judge seems to have thought, but about whether, despite the position under Turkish law, the process by which the directors were appointed, by the Sűer judgment, was a corrupt one, so that their appointment should not be recognised by the English court, which should conclude for the purposes of proceedings in England that the defendants do not have authority to act for Koza Altin."

"If [the Turkish directors] were appointed pursuant to the Sűer judgment and if that judgment were arguably corrupt, then the judge should have determined that there was a serious issue to be tried as to whether the authority of the individual defendants to act as directors of Koza Altin should be recognised by the English court."

"[t]he fact that a foreign court decision is manifestly wrong or is perverse is not sufficient … The decision must be so wrong as to be evidence of bias, or be such that no court acting in good faith could have arrived at it."

"Generally, the procedures of Mr. Kubygul's appointment as the interim manager and the bankruptcy manager formally complied with the Law on Bankruptcy and existing practice, as I explain below."

"To clarify, my opinion is that, although this decision is formally effective and there are no brazen defects in the decision, which would make it clearly wrong, the formal appearance of lawfulness does not at all imply or suggest that justice was adequately served."

"It is difficult to assess whether the resolution to dismiss the appellate complaint against the Bankruptcy Judgment is lawful and on which grounds it is based … I note that there are strong arguments in the appellate complaint (such as arguments about TNG's assets having been transferred under the management of KazMunaiTeniz ("KMT") and the absence of TNG's insolvency) and there must have therefore existed convincing reasons to justify the dismissal of the appeal."

(Mr Vataev does say that he finds it unusual and suspicious that the full version of the Mangystau Oblast appellate court was not made public.)

"With respect to the tax claims that were the basis of the bankruptcy proceedings, I note that, at all relevant times, the general limitation period under Article 48 of the Tax Code of the Republic of Kazakhstan has been five years. I understand and am instructed by Triay and King & Spalding that, as set out in the First Witness Statement of Egishe Dzhazoyan, the alleged tax liability which served as the legal basis for the initiation of TNG's bankruptcy and the appointment of the Bankruptcy Manager was based (at least in part) on a tax payment demand dating back to 24 April 2009, i.e. a much longer period than five years counting backwards from the date of the requisite bankruptcy petition (viz. 25 July 2019). This fact in and of itself raises serious doubts about the validity of TNG's bankruptcy proceedings and the legal authority of the Second Claimant to represent TNG."

"…the Aktau SRA is not precluded from claiming the payment of tax as long as it has been calculated within the period stipulated by the legislation (i.e. 5 years in the case of TNG)."

"Thus, there is a nuance in the definition of the limitation period in Article 48(1) of the Tax Code - the limitation period is defined as the period of time during which (1) the tax authority has a right to calculate, assess, or revise the calculated/assessed sum of taxes (2) the taxpayer (tax agent) has an obligation to submit the tax reports and has a right to amend and supplement the report or withdraw the tax reports; and (3) the taxpayer (tax agent) has a right to demand the refund or offset of the taxes or fines.

This definition does not say that the obligation to pay the already calculated/assessed tax ceases to exist once the limitation period expires. This definition may be interpreted as a bar for the tax authority to calculate or assess new tax obligations or revise the existing tax obligation after the limitation period has expired, but it does not preclude the tax authority from demanding the taxes that already have accrued and have been assessed by the tax authorities within the limitation period."

"…in order to create an estoppel of that kind, three requirements have to be satisfied. The first requirement is that the judgment in the earlier action relied on as creating an estoppel must be (a) of a court of competent Jurisdiction, (b) final and conclusive and (c) on the merits. The second requirement is that the parties (or privies) in the earlier action relied on as creating an estoppel, and those in the later action in which that estoppel is raised as a bar, must be the same. The third requirement is that the issue in the later action, in which the estoppel is raised as a bar, must be the same issue as that decided by the judgment in the earlier action."

"That does not mean, however, that the contractual source of an arbitral tribunal's substantive jurisdiction is irrelevant to the application of the doctrine of issue estoppel by the receiving court. Far from it. I accept that it is one of a number of reasons why any attempt to establish the preclusive effect of an award against anyone except the parties or their contractual privies will be an extremely challenging task."

"… it seems to me that the substratum of the doctrine is that a man ought not to be allowed to litigate a second time what has already been decided between himself and the other party to the litigation. This is in the interest both of the successful party and of the public. But I cannot see that this provides any basis for a successful defendant to say that the successful defence is a bar to the plaintiff suing some third party, or for that third party to say that the successful defence prevents the plaintiff from suing him, unless there is a sufficient degree of identity between the successful defendant and the third party. I do not say that one must be the alter ego of the other: but it does seem to me that, having due regard to the subject matter of the dispute, there must be a sufficient degree of identification between the two to make it just to hold that the decision to which one was party should be binding in proceedings to which the other is party."

"Without in any way purporting to identify all relevant factors (which I suspect would be an impossible task, as well as a pointless one when it is the particular combination of factors which matters), the authorities to which I was referred provided a number of signposts which I have found of particular assistance in this case:

i) The starting point – or basic rule – is that before a person is to be bound by a judgment of a court, fairness requires that he should be joined as a party in the proceedings, and so have the procedural protections that carries with it (Sales J in Seven Arts Entertainments Ltd v Content Media Corp plc [2013] EWHC 588 (Ch), [73] ).

ii) The test of identification is sometimes approached by asking if the party sought to be bound can be said in reality to be the party to the original proceedings.

iii) That argument must be approached with particular caution when it is alleged that a director, shareholder or another group company is privy to a decision against a company, because it risks undermining the distinct legal personality of a company as against that of its shareholders and directors. The danger is particularly acute as the company must necessarily act through and be subject to the ultimate control of natural persons, and directors and shareholders who control the company in this sense will frequently have a commercial interest in the company's success…"

"44. In this context, there are three relevant requirements.

45. The first is that the determination of that issue must be necessary for the decision… This is sometimes explained in positive terms (the issue must be fundamental, essential or an ultimate issue) and sometimes in negative terms (it must not be collateral or merely an evidentiary fact)...

46. The second is that the determination of that ultimate issue must be clear. That requirement is even more important when the original determination is said to have been made by an arbitration award...

47. The third is that for an issue estoppel to arise, the issue must be the same in both sets of proceedings…"

"80. No Court has decided the question whether there has been the fraud alleged. Neither the Swedish Court nor the US Court nor English Court has, although material has been put before those Courts that would allow them to decide that question…

90. I hold that the decision of the Swedish court and the decision of the US court do not create an estoppel, that the state is entitled to rely upon the evidence obtained since the award, and that there is a sufficient prima facie case that the award was obtained by fraud."

Mr Morgan submitted that Terra Raf needed to get past this finding and they had not even attempted to do so. I am not sure that this would be right and, in any event, Knowles J does not appear to say that the ECT Tribunal's findings do not create an estoppel. He is only referencing the courts of Sweden and the US court.

"109. The principle in Abouloff v Oppenheimer & Co (1882) 10 QBD 295 (CA) is that, in the context of recognition and enforcement of foreign judgments at common law, a foreign judgment may be impeached for fraud even though no newly discovered evidence is produced and even though the fraud might have been produced, or even was produced and rejected, in the foreign court. This is in contrast to the rule for impeachment of English judgments, which requires that the person seeking to impeach the judgment produces newly discovered evidence which could not have been produced at the trial with reasonable diligence…"

"58. It was common ground that even if the ingredients of an issue estoppel are otherwise established, the court may nonetheless refuse to give effect to the estoppel in special circumstances. In Arnold v National Westminster Bank plc (No 1) [1991] 2 AC 93, 109, Lord Keith explained the position as follows:

In my opinion your Lordships should affirm it to be the law that there may be an exception to issue estoppel in the special circumstance that there has become available to a party further material relevant to the correct determination of a point involved in the earlier proceedings, whether or not that point was specifically raised and decided, being material which could not by reasonable diligence have been adduced in those proceedings. One of the purposes of estoppel being to work justice between the parties, it is open to courts to recognise that in special circumstances inflexible application of it may have the opposite result…".

The learned judge then went on to accept that the exception should be kept to narrow limits, quoting Spencer Bower & Handley: Res Judicata 5th edition at paragraph 8.32 that:

the exception should be kept within narrow limits to avoid undermining the general rule and provoking increased litigation and uncertainty.

"2(1) The common law and the rules of equity from time to time in force in England shall be in force in Gibraltar, so far as they may be applicable to the circumstances of Gibraltar and subject to such modifications thereto as such circumstances may require, save to the extent to which the common law or any rule of equity may from time to time be modified or excluded by–

(a) any Order of Her Majesty in Council which applies to Gibraltar; or

(b) any Act of the Parliament at Westminster which applies to Gibraltar, whether by express provision or by necessary implication; or

(c) any Act."

"32.(1) Where, in the case of any action for which a period of limitation is prescribed by this Act, either–

(a) the action is based upon the fraud of the defendant or his agent or of any person through whom he claims or his agent; or

(b) the right of action is concealed by the fraud of any such person; or

(c) the action is for relief from the consequences of a mistake,

the period of limitation shall not begin to run until the claimant has discovered the fraud or the mistake, as the case may be, or could with reasonable diligence have discovered it."

"Reasonable diligence is to be tested by how a person carrying on a business of the relevant kind would act if he had adequate but not unlimited staff and resources and was motivated by a reasonable but not excessive sense of urgency - see Paragon Finance Ple v DB Thakerar & Co [1999] 1 All ER 400 per Millett LJ (as he then was) at 418…"

At paragraphs 25 and 27 he then said:

"25. It is common ground that deciding whether a claimant could not with reasonable diligence have discovered the fraud it alleges involves two questions – (a) whether and if so when with reasonable diligence that claimant was put on notice of a need to investigate, which is referred to in the authorities as the trigger issue; and assuming that question is to be answered in favour of the defendant, (b) what a reasonably diligent investigation would have revealed and when – see OT Computers Limited (In Liquidation) v. Infineon Technologies AG and another [2021] EWCA Civ 501 per Males LJ at paragraph 47...

27. The effect of the authorities is that for the purpose of deciding whether the trigger stage has been passed, the court must decide whether and when the claimant if acting with reasonable diligence would have learned of something that merited investigation as to whether there has been a fraud, concealment or mistake."

"I accept for present purposes that time should not start to run before such time as the fraud alleged could properly be pleaded. This approach is conventional … and is usually referred to in the authorities as the Statement of Claim test."

"An action is 'based on fraud' for this purpose when (and only when) fraud is an essential element of the claimant's claim."

"95. The action which the Claimant seeks to bring against the Defendants is for a conspiracy to injure by unlawful means. Fraudulent misrepresentation is relied upon in that regard. The question for the purposes of section 32(1)(a) is whether that cause of action is based upon fraud in the sense that fraud is an essential element of the cause of action. Given that the alleged fraudulent under-invoicing and retention of CID monies is an essential part of the claim (being the alleged unlawful means) it appears to me that fraud is an essential element of the cause of action relied upon by the Claimant."

"Rule 203 - (1) As a general rule, an act done in a foreign country is a tort and actionable as such in England, only if it is both (a) actionable as a tort according to English law, or in other words is an act which, if done in England, would be a tort; and (b) actionable according to the law of the foreign country where it was done. (2) But a particular issue between the parties may be governed by the law of the country which, with respect to that issue, has the most significant relationship with the occurrence and the parties."

In that case, the Privy Council was considering whether a defendant could rely on Saudi Arabian law (as the law where the conduct occurred) to establish liability in tort in Hong Kong (where the claim was being tried) when Hong Kong law did not recognize such liability.

"While recognising the relevance for some purposes of the foreign law (an important point to which I shall return) the judgment [in Phillips v Eyre] states explicitly that it is basically the lex fori which is applied and enforced."

(I would observe that applying and enforcing Gibraltar law is what would ultimately happen. However, the point is whether before getting to that stage a claimant has to prove that the claims would have been actionable under the law of the place where the wrong was said to have been committed.)

An act done in a foreign country is a tort and actionable as such in England, only if it is both

(1) actionable as a tort, according to English law, or in other words, is an act which, if done in England, would be a tort; and

(2) not justifiable, according to the law of the foreign country where it was done.

The second limb is in different terms to the rule which now applies and it may be that this resulted in a slightly different emphasis being given to actionability under the foreign law. Dicey Rule 203 is now clear. There has to be actionability under the foreign law.

"97. The law applicable to the Defendants' conduct is the common law and, accordingly, the 'double actionability' rule applies, whereby an act done in a foreign country is actionable as a tort in the Courts of Gibraltar if it is both (a) actionable according to the law of Gibraltar and (b) actionable according to the law of the foreign country in which it was done.

98. Alternatively, the law applicable to the Defendants' conduct is the law of Kazakhstan as a common law exception to the double actionability rule. Further, or alternatively, the law of Kazakhstan is applicable to those events on or after the 11 January 2009 which gave rise to the damage which TNG suffered: see Article 4(2) of EC Regulation 864/2007 on the law applicable to non-contractual obligations."

"Evidence of the law of Kazakhstan is necessary because the claimants need to satisfy the court that the torts complained of are actionable both in Gibraltar and in Kazakhstan."

"Our case is that whatever the position, Gibraltar law applies to each one of the four claims, so we have got to satisfy you that as a matter of Gibraltar law there is a serious issue to be tried. If you are satisfied on that, then in our case you go on and consider whether also we have made out a serious issue to be tried on the law of Kazakhstan, but if the defendants want to say some other law might apply, like the law of Moldova or Romania or New York, we do not have a duty to anticipate that, because we will at least have satisfied you on Gibraltar law… we cannot be required to second guess what defences they may take, unless it is clear on the facts that there is such an alternative."

"In our judgment, in double locality cases our courts should first consider whether, by reference exclusively to English law, it can properly be said that a tort has been committed within the jurisdiction of our courts… [If] they find that the tort was in substance committed in this country, they can thenceforth wholly disregard the rule in Boys v. Chaplin [1971] A.C. 356; the fact that some of the relevant events occurred abroad will thenceforth have no bearing on the defendant's liability in tort. On the other hand, if they find that the tort was in substance committed in some foreign country, they should apply the rule and impose liability in tort under English law, only if both (a) the relevant events would have given rise to liability in tort in English law if they had all taken place in England, and (b) the alleged tort would be actionable in the country where it was committed." [My emphasis.]

"The proposition that to plead actionability under the lex loci delicti is not required is supported by the editors of Dicey and Morris. It is also taken for granted in a substantial number of decisions."

And at 103:

"But, notwithstanding the intuitive appeal of the contrary view, the idea that actionability under the lex loci delicti must be pleaded finds favour in the leading precedent book. Perhaps for this reason it appears to be common practice amongst some practitioners. In reality, however, it is hard to justify this view in terms either of authority or principle. Such authority as there is in support of the practice of pleading the lex loci delicti is insubstantial, although it has enjoyed inconclusive support in cases in which it has simply been taken for granted. It has been endorsed directly in one English decision, but the comments were made obiter and undue reliance should not be placed on them…"

"The tort involves a perfectly general principle: where a defendant makes a false representation, knowing it to be untrue, or being reckless as to whether it is true, and intends that the claimant should act in reliance on it, then in so far as the latter does so and suffers loss the defendant is liable."

"In OBG Ltd v Allan [[2008] 1 AC 1] the House of Lords both confirmed the existence of a tort of hitherto uncertain ambit which consists of one person using unlawful means with the intention and effect of causing damage to another and clarified some aspects of the liability…The key conditions of liability for causing loss by unlawful means, at least in situations where three parties are involved, are: (i) an intention to cause loss to the claimant, (ii) use of 'unlawful means' against a third party; and (iii) interference with that third party's freedom to deal with the claimant."

"A conspiracy to injure by unlawful means is actionable where the claimant proves that he has suffered loss or damage as a result of unlawful action taken pursuant to a combination or agreement between the defendant and another person or persons to injure him by unlawful means, whether or not it is the predominant purpose of the defendant to do so."

have been identified by the claimants as being relevant and providing actionability for their claims in Kazakhstan. These are Articles 94, 917, 932 and 953. The experts agree that liability under 932 and 953 depends wholly on liability being first established under 917. Articles 932 and 953 were therefore described as being 'parasitic' on Article 917. Mr Baimurat's opinion (which was relied on at the 2020 without notice hearing) was that the claims were actionable under these Articles of the KCC. Prof Zhanaidarov agrees, subject to some qualifications. Terra Raf however says that its expert evidence shows that the claimants would not in fact have a realistic prospect of success under Articles 94 or 917 and therefore there is no actionability under the laws of Kazakhstan.

"Article 94. Subsidiary Organization

1. A subsidiary organization is a legal entity the preponderant part of the charter capital of which is formed by another legal entity (hereinafter – the parent organization), or if, in accordance with contracts concluded between them (or in another manner), the parent organization has the possibility to determine decisions taken by the given organization.

2. A subsidiary organization shall not be responsible for the debts of its parent organization.

A parent organization that by contract with a subsidiary organization (or in another manner) has the right to give the later instructions obligatory for it shall be responsible subsidiarily with the subsidiary organization with respect to transactions concluded by the later in performance of such instructions. In case of bankruptcy of a subsidiary organization due to the fault of the parent organization, the later shall bear subsidiary responsibility for its debts.

3. Participants in the subsidiary organization shall have the right to demand compensation by the parent organization for losses to the subsidiary organization caused by the fault of the parent organization, unless otherwise provided by legislative acts.

4. The particularities of the position of subsidiary organizations that are not determined by the present article shall be defined by legislative acts."

"A principal organisation is not liable to a subsidiary under the provisions set out in the second sentence of Article 94(2) of the CC as noted above. Under the rules set out in the second sentence of Article 94(2) of the CC, principal organisation can be liable to a subsidiary's creditors as directly follows from the disposition of this Article."

Prof Zhanaidarov is therefore agreeing, but only to the extent that the second sentence of Article 94(2) would not apply.

"Paragraph 3 of Article 94 provides protection only to "participants" in the subsidiary organization … [It] protects persons such as minority shareholders of a subsidiary organization by giving them the right to bring suit against the parent of the organization … Terra Raf has at all relevant times been the sole participating member of TNG … It will be appreciated accordingly that the application of this rule to the present case, as suggested by Bolashak, would lead to a legal absurdity whereby Terra Raf would be suing itself qua sole shareholder in TNG. It follows that Paragraph 3 of Article 94 has no application in the present matter."

Article 917. General Bases of Liability for Causing Harm

1. Harm (property and/or non-property) caused by unlawful acts (or inactions) to the property or non-property values and rights of citizens and legal person shall be subject to compensation in full by the person that caused the harm.

Legislative acts may impose an obligation of compensation for harm on a person that is not the one who caused the harm and may also provide a higher measure of compensation.

2. The one that caused the harm shall be freed from compensation for it if he shows that the harm was caused not by his fault, with the exception of cases provided by the present Code.

3. Harm caused by lawful activities shall be subject to compensation in cases provided by the present Code and other lawful acts.

"221. The principle of the competition of claims is not to be found expressly stated in any code. However, the principle has been explained in these terms by a leading commentator on Kazakh law, Academician M.K.Suleimenov, himself quoting a Russian legal commentator, E.A.Sukhanov:

"…under our legislation there is not allowed the "competition of claims" that is widely applied in Anglo-American law. By "competition of claims" is generally meant the possibility of presenting several different claims for protection of one and the same interest, with the satisfaction of one of these claims preventing (extinguishing) the possibility of presenting others."

222. Academician Suleimenov continued:

"In Kazakhstan's legislation, competition is allowed only by way of an exception in cases directly provided by legislative acts (for example in protection of the rights of consumers in cases of harm being caused to them by defects in goods sold to them).

In remaining cases competition of claims is not allowed. This means that if a dispute arises from contractual relations, a suit may be presented only with respect to contractual liability. One cannot bring a claim for non-contractual harm. One cannot use the rules governing obligations for compensation for harm."…

224. I accept that the principle of competition of claims is part of the law of Kazakhstan. It appears to be implicitly recognised (as Professor Maggs said in evidence) by Article 947 of the Civil Code which expressly states that a claim may be brought under the legislation which provides consumers with a cause of action in respect of defective goods, irrespective of whether the consumer is in contractual relations with the supplier or not."

"24 …where there is a contract between the parties, the court should apply the applicable general rule of the Civil Code and the rules of the Civil Code on contracts and not those on torts or unjust enrichment."

"25 …where a claimant has a contractual claim against party A and a tort claim related to the same loss against party B, the claimant must bring a contract claim against party A and not a tort claim against party B."

"whether a party that brings a claim against a contractual counterparty may choose between a tortious and contractual claim."

At paragraph 57, he then answers the question, saying:

"[As] a matter of Kazakhstan procedural law, alternative claims are allowed, at least in theory. However, as a matter of Kazakhstan substantive law, where a contractual claim is available, it will always prevail, while a claim in tort or unjust enrichment will fail."

"…Competing claims are permitted in Kazakh law. However, where there is an agreement between the parties regarding the extent of liability and the mechanisms for its application, preference is given to such agreements unless otherwise established by law."

I am not certain that this amounts to a concession. Prof Zhanaidarov appears to be saying that there has to be more than just a contractual relationship. The contract must limit the parties' liability to each other. Indeed, Mr Morgan pointed to the preceding paragraph in Prof Zhanaidarov's report where he says:

"39. I disagree with the categorical nature of the statement in paragraph 36 of Peter Maggs' Expert Opinion that 'under the law of the Republic of Kazakhstan, a party to a contract cannot bring a tort claim for damages against another party to the contract'. Firstly, it does not follow directly from the rules of the laws of Kazakhstan that a party to a contract cannot bring a tort claim for damages against the other party to the contract. It is rather the inability in certain cases to bring a tort claim that arises from the principle of freedom of contract, in accordance with which the parties independently determine the terms of the contract within the frames of legislation in force. In other words, the parties agree on the extent of liability and the mechanisms for its implementation within the limits permitted by the mandatory rules of law. Therefore, if recovery in tort does not violate the rules of contract law (for example, as regards the extent of liability), then it is possible. Secondly, it should be borne in mind, as I have already noted above, that a tort claim may be brought outside the scope of a specific agreement."

"49. The satisfaction of a claim under an agreement excludes (exhausts) the commencement of an action arising from an obligation to reimburse harm (action in tort), if the action is limited to a claim seeking reimbursement of property damage that arose from contractual relations and under the terms of the agreement. … We should draw attention that it is about the same interest, whilst in his Expert Opinion, Maggs emphasises something different - that the existence of a contractual relationship between two entities rules out a claim for damages on the basis of Article 917 of the CC. By way of illustration, lets use again the hypothetical situation set out above. Where a delivery of goods under a supply of goods contract is late, a penalty for late delivery of goods should be recovered under the contract. At the same time, during unloading the goods at the buyer's warehouse, the supplier caused physical damage to the warehouse building. In this case, we are dealing with two violated rights on the part of the buyer: the late delivery and the physical damage to the warehouse building. The two violated rights represent two different interests. Therefore, different claims should be filed – in the first case, a claim seeking recovery of a penalty, arising from the contract, and in the second case, a claim for damages ensuing from the obligation, arising from the infliction of harm."

"143. …with the exception of the law concerning limitation which I shall I address separately later, as far as I could detect the only area of disagreement between the Kazakh law experts is whether it is possible to bring concurrent claims in contract (including a claim under what is known as the JSC Law) and in tort.

144. Professor Suleimenov's position on this issue is that it is not possible to bring concurrent claims since there is a rule which is usually called a prohibition on the conflict of claims and Kazakh law 'does not provide for the filing of alternative claims'. Mr Vataev disagreed with this, explaining that 'there is no prohibition against the competition of claims under Kazakhstan law in general and in relation to company officers' breaches of duty in particular', so that Kazakh law 'does not prohibit alternative claims within the same lawsuit, even if the satisfaction of one of the claims excuse satisfaction of the other claim'. Mr Vataev agreed in cross-examination that a Kazakh court would not hold a defendant liable in both contract (including a company director under the JSC law) and in tort or, for that matter, both in tort and in unjust enrichment. However, Mr Vataev was not in the relevant exchanges asked whether a Kazakh court would permit the bringing of alternative claims, something which in his reports Mr Vataev had made clear he considered is permissible. It seems to me that this distinction is important. In short, I consider that Mr Vataev's view is to be preferred since I struggle to see why it should not be open to a claimant under Kazakh law to pursue claims in the alternative, although I recognise that I approach the matter from an English law perspective which has no difficulty with the bringing of alternative claims. Ultimately, however, since the question is really a matter of procedure rather than substantive law and since the Claimants have chosen to bring their claims before the Commercial Court rather than before a Kazakh court, it is a matter for this Court (as the lex fori) applying its own procedural law whether alternative claims should be permitted to be brought. Plainly, viewed as an English procedural matter, the answer must be in the affirmative." [My emphasis.]

Mr Morgan then pointed to how pursuant to the English Civil Evidence Act 1972, which applies to Gibraltar by virtue of the English Law (Application) Act, Picken J's determination should be followed. Section 4(2) of the English Civil Evidence Act, provides that where any question of law of a country outside the United Kingdom has been determined in any proceedings before the High Court, then, subject to certain provisos, the law of that county shall be taken to be as determined, unless the contrary is proved.

"In summary, it can be said that Kazakh legislation does not in principle restrict the right of claimants to file claims on any grounds. It is the prerogative of the court, based on a study of the case files, to decide to refuse to consider a claim on any given grounds."

It does not appear to me that this amounts to such a concession.

"Article 932. Liability for Jointly Caused Harm

Persons that have jointly caused harm shall be liable to the victim jointly and severally.

On petition of the victim and in his interest, a court shall have the right to impose liability in parts upon those that have jointly caused harm."

"I agree with Professor Maggs' statement that "[a]rticle 932 creates joint liability under Article 932 for persons that have jointly caused harm actionable under Article 917. A claim under Article 932 thus must fail for any of the reasons that a claim under Article 917 would fail. In particular, joint and several liability only arises for persons that have actually contributed to the causing of harm."

"Article 953. The Obligation to Return Unjust Enrichment

1. A person (the recipient) that without bases provided by legislation or a transaction has received or economized property (was unjustly enriched) at the expense of another person (the victim) shall return to the latter the unjustly obtained

2. The obligation provided by paragraph 1 of the present Article shall also arise if the basis under which the property was obtained or economized later ceased.

3. The rules of the present chapter shall be applied regardless of whether the unjustified enrichment was the result of conduct of the party that obtained the property, the victim itself, or their persons or as the results of an event."

"(1) Unless otherwise provided for in this Regulation, the law applicable to a non-contractual obligation arising out of a tort/delict shall be the law of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur.

...

(3) Where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply. A manifestly closer connection with another country might be based in particular on a pre-existing relationship between the parties, such as a contract, that is closely connected with the tort/delict in question."

i. That there was no active participation by Terra Raf in any of the matters being alleged by the claimants.

ii. That the claimants' specific claims in the tort of deceit are not recognized in law.

iii. That the claims in unlawful interference do not satisfy the 'dealing' requirement.

iv. That the four claims lack any proper evidential or factual foundation and are "speculative and, in many instances absurd". In its written submissions, Terra Raf outlined a number of matters which it says supports the assertion. However, these were not addressed at the hearing, Mr Ramsden accepting that it was not the court's function at this stage to conduct a mini trial of the facts. I have considered the matters raised but, in my judgment, these are matters of fact which are unsuited for resolution in a strike-out application. What the court has to consider is whether assuming the facts alleged by the claimants are true, their case is made out on the pleadings. As Lord Hope said in Three Rivers District Council v Bank of England (No 3) [2001] UKHL 16 at paragraph 47:

"The question to which I now turn relates to the adequacy of the pleadings. This is the first of the two broad grounds on which the Bank say the claim should be struck out. The issue here is directed to the sufficiency of the particulars. It is whether, assuming the facts alleged to be true, a case has been made out in the pleadings for alleging misfeasance in public office by the Bank. If it has, then the question whether the pleading is supported by the evidence is normally left until trial."

v. That under Kazakh law none of the claims have any real prospect of success. (In relation to this, Terra Raf relied on the submissions it made on the double actionability rule as set out above and my conclusions therefore apply in relation to this ground.)

"Tristan Oil intends to use $76.0 million from the net proceeds of this Note Offering to make a loan to Terra Raf, at an interest rate of 0%. Terra Raf intends to use $70.0 million of the proceeds from this loan to repay $35.0 million of accounts payable to each of TNG and KPM with respect to sales of oil and condensate."

"I would accept the submission … that if two parties conspire to misrepresent their true contract to a third party, the court is free to disregard the false arrangement."

"(a)… [TNG] will not consummate an Asset Sale unless (1) [TNG] receives consideration at the time of the Asset Sale at least equal to the Fair Market Value of the assets or Equity Interests issued or sold or otherwise disposed of…."

36… iii)… the English companies (and Menrela) were present at the material time in the ownership structure 'above' PSB only because an ownership structure involving such companies happened at that time to be, on tax advice, the Ananyevs' preferred ownership structure. The Ananyevs did not require them in order to be the ultimate beneficial owners of 'their' majority stake in PSB, that ownership having long pre-existed; and if at any time it had suited them, on advice, to structure their ownership differently they could no doubt have done so. Thus, the Ananyevs only needed to own the English companies (and Menrela) in order to be ultimate indirect majority owners of PSB so long as they chose to hold their majority interest in PSB, as an investment asset, in a holding structure that included those companies.

37… if used by its owner in order to implement a conspiracy, a parent company will be liable; but on any view it must have been used, i.e. it must have done something, before any question of possible liability might arise. For the avoidance of doubt, agreeing is doing something….

38. Thus, for there to be even a question of possible liability on the part of the English companies, they must have done something more than merely exist as corporate shareholders in Promsvyaz and thereby indirect majority owners of PSB. The claimants presented no evidence that the English companies did anything, however. The pleaded case is that the Ananyevs conceived and implemented a plan to raise funds to 'prop up' their businesses by getting PSB clients such as the claimants to give up funds deposited with PSB in return for the Notes, allegedly known to the Ananyevs to be worthless or at least highly likely to default. It is said that this necessarily involved the Ananyevs acting in combination with inter alia the English companies and Menrela. If this allegation of necessity were arguable, for present purposes that might overcome the claimants' inability to point by way of evidence to anything done by the English companies or Menrela. …. But the necessity alleged is not arguable. There is in truth no reason at all why the English companies or Menrela had to have any involvement of any kind in order for the Notes to be put together, marketed and sold as they were."

"95. These facts themselves give rise to a strong inference that the English Defendants are only being sued in order to be able to bring a claim in London against the First and Second Defendants. What other reason could there be for bringing a claim against limited companies that, on any fair analysis of the evidence that the Bank had about the scheme, were mere conduits that have no independent business or purpose or any realisable assets?"

There, the learned judge suggests that there is a difference between a company whose only involvement in an alleged fraud is that funds were fleetingly channelled through its accounts, and a company who channels funds and acts with an independent purpose and/or has realisable assets.

"Under the second subparagraph of Paragraph 2 of Article 94, a parent organization is subsidiarily liable for the obligations of a subsidiary organization if the parent has the right under a contract or otherwise to give obligatory orders to the subsidiary and the obligations arose under a transaction concluded in the performance of such orders. Terra Raf, as the sole owner of a limited liability partnership had the right, following appropriate formalities, to give such an order..."

"99. A principal organization's binding instructions to its subsidiary may be issued in any form (both written and verbal). The issuance of such instructions is established by a court on the basis of evidence presented by the party to the proceedings justifying its claims. Kazakh law does not establish any restrictions as regards the form of such instructions and does not specify any mandatory formalities that would allow actions to be classified as falling within the scope of Article 94(2)(2) of the CC."

"102. In terms of their consequences for the validity of a transaction concluded according to the will of the principal organization (as the sole participant) by a subsidiary, through a written order (for decisions falling within the competence of the general meeting) or a telephone call to the subsidiary's director (for decisions falling within the competence of the executive body), the form in which the instruction is conveyed is of no consequence. It does not matter in which form the instruction is issued by the principal organization and the decision is taken by the subsidiary (Article 94(2)(2) of the CC does not mention that it permits any form), the main thing is that a court, having evaluated the evidence produced, concludes that the subsidiary's actions were prompted by the principal organization's instruction. The binding nature of instructions is assessed by the court subjectively."

"122. To answer this question, we would need to ascertain Anatolie Stati's powers in signing the Tristan Trust Indenture on behalf of TNG, KPM and Tristan, and in signing the guarantee for the Tristan notes on behalf of TNG and KPM. As follows from paragraph 29 of the Claim, he was named in these documents as the "Authorised Agent", who was a representative of TNG. TNG's representative could have been appointed by the director of TNG or the sole participant of TNG (Terra Raf), depending on how their competence is set out in TNG's constitutional documents. Terra Raf's owner is Anatolie Stati, who was named as the "Authorised Agent". It is for a court to determine whether Anatolie Stati's signature in the Tristan Trust Indenture and in the Guarantee for the notes constitutes an instruction or order for TNG, based on the case materials and the evidence produced.

123. On the basis of the information provided to me, I would provisionally regard the signatures on behalf of TNG in the Tristan Trust Indenture and the Guarantees for the notes as a "binding instruction" to TNG according to the rule set out in the second sentence of Article 94(2) of the CC. I base this opinion on the premise of whose interests TNG was acting in when it authorised Anatolie Stati to sign these documents. For me, it is evident that this was the will of Anatolie Stati, as the owner of Terra Raf, passed on to Terra Raf, which in turn expressed its will in the instruction to sign the documents. It is this rigid and evident affiliation in the A.S.-Terra Raf-TNG vertical structure that, in my view, is what the second sentence of Article 94(2) of the CC calls "by other means", i.e., this is a situation where the principal organization has the right by other means (not under an agreement) to issue binding instructions to its subsidiary."

"C advances three Gibraltarian causes of action against Terra Raf (and the additional parties): (1) deceit or fraudulent misrepresentation; (2) causing loss by unlawful means; and (3) unlawful means conspiracy. C relies upon cause of action (1) as the unlawful means for the purpose of both causes of action (2) and (3), as well as a breach of the Tristan Trust Indenture by Tristan (which is governed by New York law)."

Therefore, if the deceit claims fail, the other two causes of action also fail, leaving only the breach of contract claims.

"Although the Claimants rely on the fraudulent misrepresentations made by the Defendants, they made those representations to investors who purchased the Tristan Loan Notes (in the case of Claim 1) and to KPMG and to the Trustee (in the case of Claims 2 to 4). Nevertheless, TNG was the victim of the Defendants' fraud. Tristan was only ever a vehicle for the issue of the Tristan Loan Notes and did not own the underlying assets. TNG and KPM were the operating companies which owned the assets and guaranteed the loans. The Claimants contend that AS and Tristan are liable for the tort of deceit to TNG in respect of Claims 2 to 4 on the basis that KPMG, as auditors, were acting as the agents of TNG itself."

"139. Furthermore, it is clear that where the agent acting on behalf of the principal has relied on the fraudulent misrepresentation and the principal thereby suffers loss, the principal can recover in deceit even if the relevant representation is not actually passed to him. In this context, Mr Matthews QC relied upon the summary of the law in [6–031] of Chitty on Contracts (31st edition):

'There may be said to be three types of representees: first, persons to whom the representation is directly made and their principals; secondly, persons to whom the representor intended or expected the representation to be passed on [which as footnote 149 says includes third persons to whom the representee passes on the representation to the knowledge of the representor] and thirdly, members of a class at which the representation was directed.'"

"49. In my opinion, and subject to one qualification, acts against a third party count as unlawful means only if they are actionable by that third party. The qualification is that they will also be unlawful means if the only reason why they are not actionable is because the third party has suffered no loss. In the case of intimidation, for example, the threat will usually give rise to no cause of action by the third party because he will have suffered no loss. If he submits to the threat, then, as the defendant intended, the claimant will have suffered loss instead. It is nevertheless unlawful means. But the threat must be to do something which would have been actionable if the third party had suffered loss. Likewise, in National Phonograph Co Ltd v Edison-Bell Consolidated Phonograph Co Ltd [1908] 1 Ch 335 the defendant intentionally caused loss to the plaintiff by fraudulently inducing a third party to act to the plaintiff's detriment. The fraud was unlawful means because it would have been actionable if the third party had suffered any loss, even though in the event it was the plaintiff who suffered. In this respect, procuring the actions of a third party by fraud (dolus) is obviously very similar to procuring them by intimidation (metus)."

"94. The dealing requirement performs the valuable function of delineating the degree of connection which is required between the unlawful means used and the damage suffered. This is particularly important in relation to a tort which permits recovery for pure economic loss and, moreover, by persons other than the immediate victim of the wrongful act.

95. The dealing requirement also minimises the danger of there being indeterminate liability to a wide range of claimants. As Roth J pointed out in para 43 of his judgment, if the appellants' case is accepted the potential claimants in the present case would include the various UK health authorities, generic competitors, private medical insurers, foreign health authorities and indeed individuals who had to pay more for [the drug]."

It was submitted that this dealing requirement was not met in any of the claimants' four claims.

A case particularly strong on the merits could not compensate for a weak case on forum conveniens; and a very strong connection with the English forum could not justify a weak case on the merits, if a stronger case would otherwise be required. The two elements are separate and distinct.

"3.1 The claimant may serve a claim form out of the jurisdiction with the permission of the court under rule 6.36 where –

.....

(3) A claim is made against a person ("the defendant") on whom the claim form has been or will be served (otherwise than in reliance of this paragraph) and –

(a) there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and

(b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim."