The High Court has refused to halt an alleged €2 billion conspiracy-to-defraud case against a Russia-based EU-sanctioned billionaire who allegedly controls an Irish-registered company central to the dispute.
Dmitry Mazepin, who is a close associate of Russian president Vladimir Putin, along with other Russia-based co-defendants, had claimed the Irish courts had no jurisdiction to hear the case and the service of the proceedings against them should be set aside.
Mr Mazepin is on an EU sanctions list due to the Russian invasion of Ukraine.
On Thursday, Mr Justice David Barniville refused the application saying justice required that the case against the Russian defendants be heard in Ireland.
The case, which began in 2016, mainly involves foreign registered and domiciled companies and individuals but includes a Dublin-registered company Eurotroaz Ltd, which Mr Mazepin allegedly controls.
Four firms: Trafalgar Developments, Instantania Holdings, Kamara and Bairiki Inc, all registered in the Caribbean, have brought the case.
They are suing Mr Mazepin; Eurotoaz; the United Chemical Company Uralchem (UCCU), a major ammonia producer allegedly controlled by Mr Mazepin and; a number of other companies and individuals based in Russia, Cyprus and Bulgaria.
It is claimed they were all part of a conspiracy to defraud the plaintiffs, through illegal and corrupt actions, of their 70 per cent interest in Russian firm Togliattiazot (ToAZ), a rival ammonia producing company to Mr Mazepin’s UCCU.
It is claimed Eurotoaz, in a campaign led by Mr Mazepin, engaged in a series of vexatious and false litigations in Russia, including criminal and regulatory complaints, to deprive the plaintiffs of their shareholding in ToAZ. The aim of the conspiracy was to obtain a majority shareholding in ToAZ by seeking falsely to establish Eurotoaz’s owns shares in ToAZ, it is alleged.
Eurotaz, and the other defendants, rejected the conspiracy claims or that there was a political motivation behind efforts to prosecute and sue ToAZ in Russia.
‘Raider attacks’
The allegations concern a phenomenon known as “raider attacks” where someone acquires a minority shareholding in a target company and, through various improper legal machinations, devalues a company’s stock.
It is claimed Mr Mazepin, a minority shareholder in ToAZ, was central to the scheme.
The claims brought against all defendants include that the conspiracy scheme involved putting undue and unlawful pressure on judges, criminal investigators, court-appointed experts and judicial officers in Russia to make improper and adverse orders against ToAZ, its officers and shareholders.
It is alleged the defendants were involved in making unlawful threats against shareholders and officers of ToAZ to the effect that improper legal proceedings would be brought in Russia, including fraudulent claims that Euotoaz was entitled to shares in ToAZ.
It is also claimed the conspiracy involved procuring improper arrest warrants and Interpol “red” notices (international arrest warrants) against ToAZ officers and those perceived to be connected with it.
The Russian UCCU defendants asked the court to set aside service of the proceedings against them outside this jurisdiction which would have meant they were no longer parties to the case. It was opposed by the plaintiffs.
Securing jurisdiction
Rejecting the application, the judge was satisfied those defendants were necessary parties to the action. He said the joining of Eurotoaz as a defendant was not a “mere device” to secure jurisdiction here.
He was not satisfied that the taking of proceedings here was precluded by a legal doctrine, the “act of state” doctrine, under which national courts must refrain from prosecuting the validity of official acts in foreign states except where there are violations of international norms.
His reasons for finding the case should be heard here included that the action against Eurotoaz, and other EU-based defendants, will in any event be going ahead in the Irish courts.
“If compelled to bring their claim against the Russian UCCU defendants in Russia, the plaintiffs’ case in conspiracy will be fragmented with part of the claim in conspiracy proceeding in Ireland and part in Russia”, he said.
That was a significant factor to weigh in the balance, he said.
Further considerations included the fact the plaintiffs’ witnesses will be unable to travel to Russia for any trial. The plaintiffs would also be unable to obtain relevant documents and to cross-examine relevant witnesses, which would substantially impede their case, were they required to do so in Russia, he said.
This would not serve the interests of all the parties and the ends of justice, he said.