Berezovsky v Abramovich: It’s All About Trustworthiness

On the last day of summer in 2012 the High Court of Justice in England closed the last chapter on the Berezovsky v Abramovich case. It dismissed both claims of the former Russian tycoon Boris Berezovsky.

Berezovsky had claimed a sum of in excess of 5.6 billion USD as compensation for unprofitable transactions. He alleged that at the beginning of the 2000s Roman Abramovich (with the knowledge of Vladimir Putin) had forced him to sell his and another oligarch’s stakes in the Russian companies Sibneft and RusAl.

Berezovsky had clearly understood that the filing of such a suit in a Russian court would have been unsuccessful. Furthermore, Berezovsky would not have been able to have been present at court hearings in Russia. The High Court decided it had jurisdiction to try the case between the two Russian oligarchs in England.

The other issue that Berezovsky would also have taken into account was the statute of limitations. Berezovsky argued that he and Badri Patarkatsishvili had been forced, “coerced” into selling their stakes in Sibneft, and Abramovich had breached his fiduciary duties by selling their “25% shareholding in RusAl to Mr. Deripaska, without consulting Mr. Berezovsky or Mr. Patarkatsishvili, or obtaining their consent. Both claims were time barred under Russian law because the three-year term for challenging the transactions had already expired (Articles 179, 181, 196 of the Russian Civil Code).

Legal Issues

In summary, the main legal issues in the case were:

(i) How to decide on a claim based on alleged oral agreements where the evidence is either oral and stale or  considerably later in origin than such alleged agreements and not unambiguously supportive of their existence and content; and

(ii) How to assess the truthfulness of the mutually contradictory and unsupported witness statements of the litigating parties themselves.

The case is very interesting because it turned out to be not a dispute on the legal issues but rather a dispute on the facts. The English court had to deal with “oral” evidence, oral agreements which were all “extremely stale” and had happened mostly in Russia.

The judge had to deal with a difficult situation, namely whom to believe when confronted by totally opposing testimonies neither of which was supported by evidence. Due to the fact that the relevant events had happened many years ago and oral evidence played the main role Justice Gloster had to simply decide which witness was better and more convincing.

Justice Gloster pointed out that it was Berezovsky who had “to convince the court, on the balance of probabilities. Finally Justice Gloster concluded that Berezovsky was an “unimpressive, and inherently unreliable, witness, who regarded truth as a transitory, flexible concept, which could be moulded to suit his current purposes.” When Berezovsky was “in trouble” because of contradicting his own pleadings and witness statements, he did not hesitate to use an “I blame my lawyers” argument.

On the contrary, Abramovich was characterised by the court as “frank in making concessions” and “a truthful, and on the whole reliable, witness.  Abramovich gained the trust of the court by his manner (as opposed to the manner of Berezovsky) of giving evidence.

Abramovich was careful, asked accurate questions and asked for clarifications when he was in doubt as to whether he understood a specific question properly. Even some inconsistencies in Abramovich’s evidence did not influence the court’s conclusion on his “truthfulness and reliability as a witness.

As result, the court denied the existence of the agreements named by Berezovsky.

Interestingly, having dismissed Berezovsky’s claims, the court praised the great work of the parties’ lawyers in the case.


It remains to be seen whether this is a landmark case and whether it will in any way influence the decisions awaited in respect of the other cases concerning Russian residents. We will see this play out in the English cases involving other Russian oligarchs (Cherney v Deripaska, for instance).

The kinds of implications which might flow from the Berezovsky v Abramovich case are still hard to specify because the case mainly concerned the factual circumstances in question and the claimant basically failed to prove the facts he alleged.

The decision may discourage other audacious claimants from bringing suits based only upon unbuttressed references to some past events arising out of unformalised business relations.

This case once again demonstrates the nasty face of the 1990s in Russia and introduced to (or perhaps reminded) the English judge of some specific terms from Russian colloquial speech from those times, such as “krysha” (literally “the roof”, which basically means a secret payment for protection and representation of business interests vis-à-vis state authorities, criminal elements or other bodies).

Hence, the Berezovsky v Abramovich case has proved that an echo of 1990s Russia is still on agenda, and even on the international agenda. However the case is not finished yet because Berezovsky may bring an appeal and appears to be willing to do so. Abramovich is likely to try to recover judicial costs incurred due to Berezovsky’s claim.

As result of these proceedings more dirty linen of the people involved has been put on public show. The parties seem to have sustained reputational losses. In addition, an English judge has found that the claimant, Berezovsky, was a “deliberately dishonest” person – a finding which appears to be detrimental to any of his future claims in the UK.

This case therefore appears to be one more example of a dispute more apt for an out-of-court amicable settlement than a public court procedure.

It looks odd indeed that Berezovsky brought such a risky case to the English court without any hard evidence except his own words. Maybe it was a strategic step of some bigger game? Perhaps nobody except Berezovsky knows. We all have to wait for the following developments of this case, if any.

Alexandra Khizunova, Dmitry Davydenko

Muranov Chernyakov & Partners law firm

Post a Comment