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Neutral Citation Number: [2008] EWHC 1530 (Comm) Case No: 2006 FOLIO 1218 IN THE HIGH COURT OF JUSTICE QUEEN'S BENCH DIVISION COMMERCIAL COURT Royal Courts of Justice Strand, London, WC2A 2LL Date: 03/07/2008 Before: MR JUSTICE CHRISTOPHER CLARKE --------------------Between: MICHAEL CHERNEY - and OLEG VLADIMIROVICH DERIPASKA ----------------------------------------Geoffrey Vos QC & David Lord (instructed by Dechert LLP) for the Claimant Roger Stewart QC, Nick Cherryman & Graham Chapman (instructed by Bryan Cave) for the Defendant Hearing dates: 30th April & 1st May 2008 --------------------Claimant Defendant

Judgment Approved by the court for handing down (subject to editorial corrections)

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MICHAEL CHERNEY V OLEG VLADIMIROVICH DERIPASKA

MR JUSTICE CHRISTOPHER CLARKE : 1. This is an application for permission to serve the claim form on Mr Oleg Deripaska, the defendant, out of the jurisdiction. The original claim form was issued on 24th November 2006. It was purportedly served on Mr Deripaska by service on a security guard at his house in Belgrave Square on 26th November 2006. In a judgment of 3rd May 2007 Langley, J decided that Mr Deripaska had not been properly served and that the Court had no jurisdiction to try the claim under Article 2 of Council Regulation (EC) 44/201 (the "Jurisdiction Regulation") because Mr Deripaska was not domiciled in England & Wales. He also refused (a) to dispense with service of the claim form; (b) to extend time for its service and (c) to grant permission to appeal. The history of the application 2. On 9th February 2007 Tomlinson, J, had fixed a second hearing for 21st- 22nd June 2007 (with evidence to be exchanged on 11th May, and evidence in reply by 5th June) at which the Court would determine, if relevant, any question of stay on the grounds of forum non conveniens, and, if the claimant was not successful at the first hearing, an application which, in that event, was anticipated, for permission to serve the defendant out of the jurisdiction. In the event no such application was made and the June hearing was vacated. The claimant's reasons for not making it, as put before Langley, J, were that, if he succeeded in establishing, on appeal, that Mr Deripaska was domiciled in England, no question of forum conveniens would arise, and that he would be trying to serve him within the jurisdiction. On 29th June 2007 Longmore, LJ, refused permission to appeal Langley J's orders. He ordered that no application for renewal of the application for permission to appeal should be made until the claimant had finally decided whether to seek permission to serve the defendant out of the jurisdiction; and that, if any such application was made, any renewal was to await a judge's decision on the matter. On 5th July 2007 the claimant gave notice of a change of solicitor and Dechert LLP, his new solicitors, wrote to the Listing Office to confirm that it was Mr Cherney's intention to seek permission to serve the defendant out of the jurisdiction. On 8th August 2007 Tomlinson, J retrospectively extended the time for service of the claim form for 4 months. On 3rd December 2007 Mr Cherney applied for permission to serve the amended claim form on Mr Deripaska out of the jurisdiction. On 4th December Gloster, J ordered, inter alia, that the time for service of the amended claim form should be extended until 14 days after the determination of the claimant's proposed application for permission to serve the amended claim form and amended Particulars of Claim out of the jurisdiction. The orders of 8th August and 4th December were made without notice. The claimant's case 5. The claimant is Mr Michael Cherney. He claims that he was a partner of Mr Deripaska, in a business whose principal asset was a large interest in an aluminium company ­ OJSC United Company Siberian Aluminium ("Sibal"). He and Mr Deripaska each had, he says, a 40% ultimate beneficial interest in Sibal. In about late 2000 or 2001 a merger took place between Sibal and an aluminium business called Sibneft, owned by Mr Roman Abramovich, Mr Boris Berezovsky and Mr Badri

3.

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Patarkatsishvili. Sibal and Sibneft transferred their assets to a company called Russian Aluminium ("Rusal"), in which Sibal and Sibneft took a 50% interest. As a result he became entitled to a 20% (40% of 50%) share in Rusal, the world's largest aluminium producer. 6. In March 2001 he and Mr Deripaska met at an hotel in London. They then entered into an agreement, principally contained in two written documents. Under the first document Mr Deripaska agreed to pay Mr Cherney $ 250 million up front for his shareholding in Sibal. Under the second Mr Deripaska undertook (a) to hold 20% of the shares in Rusal on trust for Mr Cherney, (b) to sell them between 10th March 2005 and 10th March 2007; and (c) to account to Mr Cherney for the proceeds of these sales, minus the $ 250,000,000. It was also orally agreed that the agreement would be governed by English law and be subject to English jurisdiction. It is not suggested that, in the absence of that agreement the agreement is governed by English law. Subsequently there was a merger of Rusal and two companies named Sual and Glencore to form United Company Rusal ("UCR"). The former shareholders of Rusal hold 66% of UCR. The effect of that, according to Mr Cherney, is that Mr Deripaska holds 20% of 66% i.e.13.2% of UCR on trust for him. He claims declarations to give effect to his trust claims, an order that Mr Deripaska sell or procure the sale of 20% of Rusal and 13.2% of UCR and account to him for the proceeds, and damages. It is common ground that the $ 250,000,000 has been paid, that Mr Deripaska does not accept that he has any obligation towards Mr Cherney in respect of 40% of the shares in Sibal, 20% of the shares in Rusal, or 13.2% of the shares in UCR, and that he has not accounted to Mr Cherney for any proceeds of any sale of shares in Rusal. Mr Deripaska's position 9. Mr Deripaska denies that he was ever a partner, in any normally accepted commercial meaning of the word, with Mr Cherney in the aluminium, or any other, business. He agrees that at a meeting at the Lanesborough Hotel on 10th March 2001 he signed the first of the two documents relied on by Mr Cherney, which provided for the payment of $ 250,000,000. That payment was made, he claims, because Mr Cherney, together with Mr Anton Malevsky ("Mr Malevsky"), was engaged in a "protection" racket in relation to what was Mr Deripaska's business. The $ 250,000,000 was paid in order to buy Mr Cherney off. The second document, which deals with the shares in Rusal, was not produced at the meeting, nor was it intended to be part of any agreement with Mr Cherney. It was a proposal to be put forward to Mr Malevsky. This is not a run of the mill claim. 66% of UCR Rusal is said to be worth of the order of $ 23 billion. If so 13.2% is worth $ 4.6 billion, making the claim, after deduction of the $ 250 million, worth about $ 4.35 billion. The payment of such a claim, if valid, would be beyond the reach of most individuals. But Mr Deripaska was, on his account, the beneficial owner of the majority of the shares of Rusal, together with many other commercial interests. The Rusal group employs some 100,000 people. Mr Deripaska's other companies employ over 250,000. He is said to be the richest man in Russia and ninth on the list of world billionaires.

7.

8.

10.

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The grounds on which Mr Cherney seeks permission to serve out. 11. Mr Cherney claims that the agreement under which he seeks to sue was (a) made in England; (b) governed by English law and (c) that the agreed forum for resolving any disputes should be the English courts. The latter two terms are said to have been agreed orally. The relevant principles governing permission to serve out. The first test 12. In order to obtain permission to serve a claim form outside the jurisdiction pursuant to CPR 6.20 and 6.21 the claimant must first establish that each cause of action in respect of which he claims stands a reasonable prospect of success. CPR 6.21 (1) (b) requires the claimant to state his belief that his claim has such a prospect. This is a relatively low threshold. In substance it is the same test as that of asking whether, on the written evidence, there is a serious issue to be tried: Seaconsar Ltd v Bank Markasi (1994) 1 A.C. 438,452D; Bas Capital Funding Corp & Ors v Mediaco Ltd [2004] 1 Lloyd's LR 253 at paragraphs 152-3; or of determining whether the claimant has a realistic prospect of succeeding on the claim: see CPR 24..2. (a) (i) and De Molestina v Ponton [2002] 1 Lloyd's Rep 271 at paragraph 3.8. The second test 13. The claimant must also show that, in respect of each of his claims, he has a good arguable case that the claim falls within one or more of the types of claim specified in CPR 6.20. The parties are in disagreement as to the approach that the court should take in circumstances where there are two conflicting accounts as to what occurred at a meeting, which the court cannot resolve on written evidence alone. In particular, what approach should the court take if, on the material available to it, both sides may be said to have a good arguable case? What if a disputed agreement as to English law or jurisdiction is said to have been reached orally at a meeting between two solicitors of unimpeachable probity, or the event which is said to constitute the making of the contract occurred, according to one solicitor, at a meeting in England, and, by the other at a meeting in New York; and, in either case, the remainder of the evidence on the question is inconclusive? Authorities 14. The adjective "good" adds something to the expression "arguable case": see Mance, LJ in ABCI v Banque Franco-Tunisienne [2003] 2 Lloyd's Rep 146, 167. That unsurprising proposition does not, however, take the matter much further. "Arguable" is the lowest threshold. The fact that a case is arguable does not necessarily mean that it enjoys a realistic prospect of success. In Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran [1994] 1 AC 438 the House of Lords made plain that the test of "good arguable case" is not to be equated with the civil burden of proof - "a standard of proof which in effect amounted to a trial of the action or a premature expression of opinion on the merits": see Lord Simonds, at p 879 of Vitkovice Horni a Hutni Tezirstvo v Korner [1951] A.C. 669. Lord Goff indicated that he saw no reason to suppose that there was any material

15.

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difference between "good arguable case" and "a strong argument" or "a strong case for argument", expressions that had been used by other members of the House in that case. 16. One solution to the problem would be to order the trial of an issue as to whether or not the claim falls with CPR 6.20. The court is extremely reluctant to do so on an application for permission to serve out because such a trial can be extremely expensive and time consuming. In some cases it would involve determining the major, or even the sole, disputed issue in the claim, e.g. whether an agreement had ever been made, as a condition of allowing the claimant to start the action containing the claim. If the Court were, when considering jurisdiction, to make an interlocutory decision that such a contract had been made on the written material alone, its status would be no more than that of a preliminary opinion. This would have two undesirable consequences. Firstly it might mean that the same issue had to be litigated twice. Secondly, the expression of such an opinion, which on fuller material might turn out to be wrong, could well be, or appear to be, unfair to the party denying the existence of such a contract. The "good arguable case" test is the means by which the Court has sought to avoid what amounts to requiring some form of trial as a condition for starting the action at all, and the unfairness that might arise from the expression of a preliminary opinion. In Canada Trust v Stolzenberg (No 2) [1998] 1 WLR 547, 555, Waller, LJ undertook a general analysis of the jurisdiction hurdle and affirmed what had been decided in Seaconsar (a domicile case) and in Agrafax Public Relations Ltd v UCR Scottish Society Inc [1995] CLC 862 namely that the standard of proof was the same both in cases where the issues going to jurisdiction went to the very matter to be argued at the trial, e.g. the existence of an agreement and in cases where they did not, e.g. domicile; and held that the "good arguable case" test reflected the fact that one side had a "much better argument on the material available". This has become known as the "Canada Trust gloss". In Canada Trust the jurisdictional question was whether for the purposes of Article 6 (1) of the Lugano Convention and RSC Order 11 Rule 1 (1) (c) the first defendant was domiciled in the UK at the material time. Waller LJ said: "It is I believe important to recognise, as the language of their Lordships in Korner's case [1951] A.C. 869 demonstrated, that what the court is endeavouring to do is to find a concept not capable of very precise definition which reflects that the plaintiff must properly satisfy the court that it is right for the court to take jurisdiction". 21. He went on to observe that the concept of "good arguable case"; "...also reflects that the question before the court is one which should be decided on affidavits from both sides and without full discovery and/or cross examination, and in relation to which therefore to apply the language of the civil standard of proof applicable to issues after full trial, is inapposite".

17.

18.

19.

20.

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22.

The passage in which he expressed the gloss is as follows: "It is also right to remember that the "good arguable case" test, although obviously applicable at the ex parte stage, becomes of most significance at the inter partes stage where two arguments are being weighed in the interlocutory context which, as I have stressed, must not become a "trial". "Good arguable case" reflects in that context that one side has a much better argument on the material available. It is the concept which the phrase reflects on which it is important to concentrate i.e. of the court being satisfied or as satisfied as it can be having regard to the limitations which an interlocutory process imposes that factors exist which allow the court to take jurisdiction. The civil standard of proof has itself a flexibility depending on the issue being considered and the concept "good arguable case" has a similar flexibility. It is natural, for example, in a case concerned with a contract where the jurisdiction depends on whether the breach took place within the jurisdiction, but where the issue to be tried will be whether there was a contract at all, not to wish to give even the appearance of pre-trying the central issue, even though the concept of being satisfied must apply both to the existence of the contract and the place of the breach. It is equally natural for the court in the process of being satisfied to scrutinise most jealously that factor which actually provides jurisdiction. It is equally natural that where the foundation of jurisdiction is domicile, i.e. an issue that will not arise at the trial, that particular scrutiny of the material available takes place in the context of the limitations applied to an interlocutory process." (Emphasis added).

23.

The use of the "good arguable case" test in the context of Article 6 of the Lugano Convention was expressly approved by Lord Steyn when Canada Trust reached the House of Lords [2002] 1 AC 1 at para 13: in the following terms: "The adoption of such a test [i.e. the balance of probabilities] would sometimes require the trial of an issue or at least crossexamination of deponents to affidavits. It would involve great expense and delay. While it is true that the jurisdictional issues under the Conventions are very important, they ought generally to be decided with due despatch without hearing oral evidence. In my view Waller LJ's judgment [1998] 1 WLR 502, 553-559 correctly explained on sound principles and pragmatic grounds why the defendants' argument is misconceived".

24.

In Konkola Copper Mines v Coromin [2006] 1 Lloyd's Rep 410 the issue was whether or not an exclusive Zambian jurisdiction clause applied so that proceedings against the London, European and Swiss reinsurers should be stayed (as the reinsurers claimed). Whether that clause or an English jurisdiction clause applied depended on which of two rival wordings applied to the reinsurance.

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25.

In the course of his judgment Rix, LJ said: "The problem in such a situation [where the jurisdictional issue is also an issue on the merits] is to find a test which answers the jurisdictional issue without trespassing further than is necessary on the merits. It was for this purpose that a test which was intended to be less onerous than the ordinary civil standard of proof on the balance of probabilities was adopted. Waller LJ spoke of this problem in his judgment in Canada Trust...... .........in such a case [i.e., where the jurisdictional issue is part and parcel of the ultimate merits of the trial] it seems to me that Waller LJ's warnings about avoiding even the appearance of pre-trying the central issue move to centre stage. 81. What is to be done in such a case? One possibility is that the Canada Trust gloss ("a much better argument") of the "good arguable case" test is not really appropriate in such circumstances. It is quite possible, especially at the opening, jurisdictional stages of such a dispute for both sides to have a good arguable case as to the central merits of a dispute ... I fear that, however much the judge couched his reasoning in terms of the provisional nature of his decision on the material available, he would inevitably be drawn into a trial of the merits. This is plainly undesirable. Is it necessary? I am doubtful that it is, especially in circumstances where, as was generally the case under the old RSC Order 11 or is now the position under CPR 6.20, the power to give leave to serve out of the jurisdiction is at the end of the day a discretionary one. However important the proper disposition of a jurisdictional challenge is, it is not something which should be allowed to subvert the merits of a potential trial".

26.

Konkola Copper Mines was a case in which reinsurers sought to derogate from an established English jurisdiction by way of a stay in favour of Zambia. Colman J had refused such a stay on the grounds that, applying Canada Trust1, the reinsurers had not shown a strong enough case that the reinsurance was subject to Zambian law to engage the court's jurisdiction to stay the Part 20 proceedings between the insurers and the reinsurers. He also decided that, if reinsurers had shown such a case he would have refused a stay on discretionary grounds. The Court of Appeal would have upheld the judge's decision even on the basis that the reinsurers had much the better of the argument as to the applicable wording, so that Rix, LJ's observations were not necessary to the decision on the appeal.

The reinsurers contended that the judge had misapplied the Canada Trust gloss, because (a) the onus of proof was on the insurers to show that the exclusive jurisdiction clause did not apply; and (b) he had not decided that they had shown that they had "much the better argument".

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27.

Rix, LJ indicated that he regarded the issue of the right test to apply as a difficult one because of the tension between a wish to avoid a test which set up a trial on the merits and the fact that the defendants were invoking an allegedly agreed Zambian jurisdiction clause in order to derogate from the established English jurisdiction. He went on to say (paragraph 86) that, given the flexibility of the "good arguable case" test, the answer could simply be that the applicant should make out a case which was sufficient in the circumstances to render it just to derogate from the established jurisdiction but which still remained short of proof on the balance of probabilities. He said that in the instant case he would: "96 ...prefer to say, on the documents, evidence and arguments that have been shown to the court, that both parties had made out a good arguable case, without saying which was much the better of the two. Or to put it another way, that the reinsurers had not shown that their case in favour of the KCM wording was sufficiently good either to be preferred to Coromin's case in favour of the CCIP wording or to displace the otherwise established jurisdiction in England".

28.

In Bols Distilleries BV v Superior Yacht Services Ltd [2007] 1 WLR 12 the House of Lords again endorsed Lord Justice Waller's Canada Trust approach in a case governed by the Judgments Regulation2. The issue was whether there was an agreement in writing or evidenced in writing conferring jurisdiction on the Gibraltar Courts so that they had jurisdiction under Article 23 (1) of the Judgments Regulation. The Privy Council, allowing the appeal, held that the court must be "satisfied, or as satisfied as it could be having regard to the limitations which an interlocutory process imposes, that factors exist which allow the court to take jurisdiction" (phraseology which was derived from Canada Trust). What amounted to a "good arguable case" depends on what was required to be shown in any particular situation to establish jurisdiction. What the claimants had to do in that case was, as the case law of the Court of Justice emphasised, to demonstrate "clearly and precisely" that the clause conferring jurisdiction on the court was in fact the subject of consensus between the parties. Accordingly, applying the "good arguable case" standard they had, but had failed, to show that they had a much better argument than the defendants that, on the material then available, the requirements of form in Article 23 (a) were met and that it could be established "clearly and precisely" (as European jurisprudence required) that the clause conferring jurisdiction on the court was the subject of consensus between the parties. In WPP Holdings Italy Srl v Benatti [2007] 1 WLR 2316 the defendant, an Italian businessman, entered into an agreement with the first claimant, an Italian company. The agreement was subject to English law and had an English exclusive jurisdiction clause. The agreement was terminated by the Italian company, which issued a claim form in England against the defendant for breach of contractual and fiduciary duty. The defendant issued a writ against the Italian company in Italy claiming that he had been working under a contract of employment which had been wrongfully terminated.

29.

2

The argument took place on June 21st-22nd 2006, the day before the judgment of Cooke J in the Bear Sterns case, on which Mr Vos relies, and to which I refer in paragraph 35 below. The judgment of the House was not, therefore, available to him.

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He challenged the jurisdiction of the English court on the ground that the Italian court was first seized under Article 30(2) of the Judgements Regulation and that under Article 20(1) as an employee he was entitled to be sued in the courts of his domicile. (Article 21 provides that the Article 20 requirement can be departed from by an agreement as to jurisdiction but only in limited circumstances which were not applicable). 30. Toulson, LJ, cited the Bols case as establishing that the "good arguable case" requirement was intended to encapsulate the critical rule that the Court must be as satisfied as it can be, having regard to the limitations which the interlocutory process imposes that factors exist which allow the court to take jurisdiction. He observed that the way in which the test of "good arguable case" came to be applied varied from case to case, both in order to take account of any relevant policy underlying the Regulations and of the particular limitations imposed by the interlocutory process. He rejected the submission that the Bols case meant that the WPP companies had to show that they had a much better argument than the defendant that he was a consultant rather than an employee in order to establish that Article 23 gave jurisdiction. The need for the claimants to satisfy such a test in the Bols case was, he said, the practical effect of the policy of the legislation that required it to be clearly established that the parties actually agreed on the clause alleged to confer jurisdiction. Here there was no doubt that they had agreed on such a clause. The question was whether there was a good arguable case that Article 23 applied and not section 5 and Article 20. Toulson, LJ, observed that there might be a case in which, because of the limitations of the interlocutory process, the court found it impossible to form a positive view which side had the better argument. He did not however consider it necessary to reach a final conclusion on what the court should do in such a case. But he did not exclude the possibility that application of the principle in the Bols case might lead a court to conclude that, if the case for jurisdiction was as good as the case against jurisdiction, but it was not possible to reach any firm conclusion without conducting a mini trial, in those circumstances factors would exist which would allow the court to take jurisdiction. However, the point would be much better considered on actual and not hypothetical facts. The Court of Appeal held that the judge had been entitled to hold that the agreement was not a contract of employment but a consultancy agreement and that the exclusive jurisdiction clause therefore gave the English court jurisdiction under Article 23. As is apparent WPP Holdings adverts to, but does not resolve, the question of the Court's approach if it is unable to reach a view as to who has the better side of the argument. The rejection by Toulson LJ of the submission that the WPP companies had to show that they had a much better argument than Mr Benetti that he was a consultant might appear to suggest that the Canada Trust gloss was inapplicable, at any rate in a case where the existence of an Article 23-compliant jurisdiction agreement was not in issue. But the judge, whose judgment was upheld, had applied the Canada Trust gloss and Toulson, LJ left open the question of its applicability where the court could not decide who had the better side of the argument. Further it is not wholly clear to me which principle in the Bols case would lead a court, in such a case, to find that factors exist which would allow the court to take jurisdiction. It may be that the reference is to the need to have regard to the limitations of the interlocutory process; but that leaves for consideration how the court can be "as

31.

32.

33.

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satisfied as it can be that jurisdictional factors exist" if it is unable to determine who has the better side of the argument. 34. Mr Geoffrey Vos, QC, for Mr Cherney submitted that, where a claimant puts forward credible evidence of an agreement that is both at the heart of his claim and the foundation of his claim to English jurisdiction, but there is a conflict of evidence as to whether the agreement relied on was made, the Court should not attempt to resolve that conflict, and, if the claimant has presented a good arguable case, should not apply the Canada Trust gloss i.e. determine which side has much the better of the argument. If both parties have an arguable case on the point, to require the claimant to show that his case is markedly better than that of his opponent is, in effect, to require him to establish it on the balance of probabilities, when the authorities show that that is not necessary: Seaconsar 453 C-F; Canada Trust 555 D. Mr Vos drew attention to what he submitted was the correct approach, namely that of Cooke, J in Bear Sterns PLC v Forum Global Equity Ltd [2006] EWHC 1666 (Comm). Cooke, J had before him an application to set aside an order giving Bear Stearns permission to serve the defendant ("FGE") in the Virgin Islands. One of the questions was whether there was any oral contract between Bear and FGE made on the telephone for the sale of distressed debt, there being a direct conflict of evidence between those involved in the conversation. Cooke J held that, with such a conflict, there was no possibility of coming to any definitive conclusion but, given the very clear evidence of the claimants' witness, he was "entirely satisfied that the appropriate test had been met as to the existence of a contract for the purpose of CPR 6.20". There was also an issue as to whether or not the putative contract included a choice of law clause. On this he said that it was again clear to him that there was a good arguable case made out for Bear Sterns backed up by documentation which passed between the solicitors thereafter. He again expressed himself "entirely satisfied" that Bear Sterns had met the burden on them to establish that the contract had an express choice of law clause. Mr Vos submitted that Cooke J did not proceed on the basis that he needed to be satisfied that the clamant had much the better of the argument; but only that it had, on the basis of its account, a strong case. I am not convinced that this is so. The judge referred at the beginning of his judgment to what he described as "the usual run of authorities in these respects" including Canada Trust. He did not suggest that the gloss was inapplicable; nor is there any indication that that was submitted to him3. In that context his reference to being "entirely satisfied" that the appropriate test had been met appears to me an acceptance, probably expressed in that way to avoid any possible unfairness, that Bear Sterns had much the better of the argument at that stage. My conclusion on the test 37. As will be apparent hereafter I do not find myself unable to form a view as to who has the better side of the argument in respect of the three grounds for jurisdiction asserted. But, in case my view on the facts is erroneous, I set out my conclusion as to the relevant approach.

35.

36.

3

I have been told that there is no hint of that in the claimants' skeleton argument.

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38.

The essential test, laid down by the rules, is that the claimant must satisfy the court that England is the proper place in which to bring the claim. If he satisfies the court of this, the court has a discretion to permit service out. As Rix, LJ pointed out in Konkola, the discretionary nature of the exercise enables the Court to couch its decision in terms that do not prejudice the final trial wherever it may be, e.g. by deciding that the material before it is not sufficiently good to displace an established jurisdiction, or, presumably, to establish jurisdiction here. An understandable wish not to prejudice future proceedings may influence the basis on which the court proceeds (i.e. on the basis of discretion) and the way in which it expresses itself (i.e. non prejudicially). But it cannot avoid the need to determine whether or not permission is to be granted in a case where the issue as to whether there was a ground for jurisdiction is no more than evenly balanced, or where the case in favour of an agreement is somewhat less convincing than the claim that there was not but is still plausible. Indeed it appears to me that Rix, LJ ended up propounding, even if sub silentio and obiter4, the Canada Trust gloss or something very like it. If the reinsurers' case was not sufficiently good to be preferred to that of the reinsured they would, by definition, have failed to show that they had the better of the argument, or much the better of the argument. Konkola was a case where the question was whether reinsurers had established that they could derogate from an established jurisdiction. But I see no reason why similar considerations should not apply when the claimant has to establish jurisdiction in the first place. That being so, I have come to the conclusion that, even in a case where there is a dispute between two apparently credible witnesses the Court should usually, before giving permission, be satisfied that the claimant's contentions about the alleged agreement provide a much better, or at any rate a better, argument in favour of there being the ground for jurisdiction alleged than of there not being one. In granting permission to serve out of the jurisdiction the court is exercising an exorbitant jurisdiction over those who are not within its ordinary reach. In those circumstances the court is, as it seems to me, justified in applying the good arguable test in that manner in order to avoid the risk of compelling individuals or companies to submit to a jurisdiction to which they ought not in truth to be made subject. Further if, as Canada Trust indicates, the concept which the phrase reflects is "of the court being satisfied or as satisfied as it can be having regard to the limitations which an interlocutory process imposes that factors exist which allow the court to take jurisdiction", it ought ordinarily to require that, when the Court looks at the material, it finds the points in favour of the ground for jurisdiction alleged to be more than just evenly balanced by those which point the other way. If it were otherwise it would appear to follow that a defendant who had at least as good a chance of showing that he did not agree to litigate in England as the claimant

39.

40.

41.

42.

In the event the case was decided by reference to discretionary considerations and the court found it unnecessary to decide whether the reinsurers' case in favour of a Zambian clause or Coromin's case in favour of an English clause had much the better of the argument.

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had of showing that he did, would be likely to find himself compelled to litigate in England, on the footing that, once a good arguable case was made out in favour of an English exclusive jurisdiction clause, discretionary considerations would be unlikely to call for the case to be decided elsewhere: see Bas Capital Funding Corp v Medfinco [2004] 1 Lloyd's Rep at paragraphs 192-3. 43. I am not persuaded that the fact that both Canada Trust and Bols Distilleries were Convention or Jurisdiction Regulation cases makes a critical difference. In such cases allowing a claimant to bring proceedings in England may have the result that the English Court asserts a jurisdiction which, had the Court's trial findings been available when jurisdiction was determined, it would not have regarded itself as having, (e.g. because the relevant agreement was never made) - with the result that the rules of the Convention/Regulation turn out to have been sidestepped. But I can see little justification for adopting a less rigorous test to cases where what is in issue is whether the English domestic conditions for jurisdiction are in play. In Canada Trust Waller, LJ indicated that the test was the same in Convention and (what was then) Order 11 cases: page 558G. I do not regard this as introducing by the back door a requirement that a claimant seeking permission should prove his case on the balance of probabilities. The Court is concerned, at this stage, with the arguments in favour of the respective parties in the light of the material then tendered. Whilst the Court is entitled to reject the wholly implausible, what it will be concerned with is the relative plausibility of the contentions. Proof on the balance of probabilities would require a finding of fact, not a decision about the strength of arguments, and would probably require the availability of oral evidence and discovery. The factual dispute 45. The factual background of this case is lengthy5, complex and in large measure in dispute. In the paragraphs that follow I set out so much of the account of events given by or on behalf of the claimant together with the response of the defendant as is necessary to determine the matters in issue on this application. Michael Cherney was borne in the Ukraine and grew up in Uzbekistan. He has a brother ­ Lev Cherney. He claims to have had significant influence and vast contacts in government circles which were completely transformed when Mr Putin came to power in Russia. He had lost such influence by 20016. He left the former territory of the USSR with his family in 1991 to live in the West. He stopped visiting the territory of the former USSR in 1994 as a result of fears for his safety, save for the Ukraine which he started to revisit in 2003. In 1994 allegations started to be made in the Russian press that he had links to organised crime. Following the election of Mr Yel'tsin as President in the middle of 1996 for a second term (Mr Cherney being

44.

46.

5

The evidence extends to sixteen lever arch files, which the parties estimated would require 2 ­ 2.5 days to read.

This claim may be contrasted with an interview he gave to Vedemost, a leading Russian business paper, on 2nd November 2000 in which, when asked "Did you really not play politics, not use ties for the development of your business?", he replied that he only knew one politician ­former vice-premier Oleg Soskovetz ­ who promised a copper export licence and then never provided it.

6

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connected with the opposition) there was an organised press campaign stating that he was connected with the mafia. At the end of 1993 and in 1994 and 1995 (and subsequently) he was warned by people with connections to the Russian security service, including retired personnel, that there were threats to his safety. He emigrated to Israel in 1994 and claimed Israeli citizenship. 47. In 1995 an attempt was made to assassinate him in Israel. It appeared from the trial of two of his would-be assassins and from what the Israeli police told him that a Russian business crime group, possibly connected to the Russian secret services, contacted an Israeli private investigation firm to kill him. That firm hired a would-be assassin who was in fact a police informant. Two former military intelligence officers were sentenced to prison. A third man, who was the go-between, fled to Russia. In a statement to the Swiss authorities made in 1997 Mr Cherney said that the "contract" [to kill him] referred to in a press article related both to him and Mr Malevsky and was in relation to business negotiated in Russia. In 2007 the Russian media in Israel published an article reporting that a private investigation firm had staged an attempt to assassinate him and had discovered that it would be very easy to do. Two private investigators have recently been arrested in Israel on suspicion of illegally phone tapping calls to gather information about him. According to Mr Cherney's evidence he is an unconventional businessman, who delegated day to day management to his trusted partners, as was, in any event necessary after he had left for the West in 1991. He did not retain or receive much in the way of routine documentation. Further the conclusion of deals for enormous sums on a handshake or primitive agreement was a common feature of business life in the former Soviet Union in the 1990s. Oleg Deripaska is said by Mr Cherney to have been his protégé, and the recipient of his trust. He is now, on any view, one of the modern Russian business elite. According to Mr Cherney he is part of former President Putin's close circle and one of his unofficial confidants and advisers, having been close to the family of Boris Yel'tsin. He is married to the stepdaughter of the daughter of former President Yel'tsin, whom he married in 2001 after Mr Yel'tsin left office and before her father, who was Mr Yelt'tsin's chief of staff, married President Yelt'tsin's daughter. Mr Cherney claims that Mr Deripaska is one of the most influential people in Russia having vast contacts and people he can trust in various positions of power which he successfully uses to promote his interests. Mr Deripaska accepts that he is a prominent businessman but not that he occupies some special unofficial position within the Russian government. In 1989 Mr Cherney started to trade in metals and raw materials in partnership with a company called Trans Commodities Ltd. That partnership ended in 1992 at which point he entered into partnership with a Mr Iskander Makhmoudov, his manager. Originally the partnership was 70/30 in Mr Cherney's favour but later became 50/50, with some of Mr Makhmoudov's half being shared with two junior partners. I call this "the Makhmudov/Cherney joint venture". The partnership owned companies and assets in the business of the processing and sale of copper, the sale and purchase of commodities and raw material in ferrous and non ferrous metallurgy, and later energy resources, engineering, ports etc.

48.

49.

50.

51.

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52.

Mr Cherney also started to create corporate structures in Liechtenstein, Switzerland, Cyprus and other countries. For this purpose he made use of the services of a Liechtenstein professional fiduciary called Prasidial Anstalt and, later its subsidiary, Syndikus Treuhandanstalt ("Syndikus"), where the relevant individuals were Messrs Staeger, Domenjoz, and Wyss; and of one Joseph Karam, a former banker, of Switzerland. . In 1992 Mr Cherney and his brother began to work in the aluminium business on a 50/50 basis with a company called Trans World Group, which was controlled by two brothers, David and Simon Reuben. TWG was involved in the supply of alumina ore from two refineries in the CIS to four smelters in Russia, of which the joint venture obtained control. Mr Cherney first met Mr Deripaska at the end of 1993 or the beginning of 1994 at an event at the Dorchester Hotel. He was impressed by him. He thought that he might be suitable as his manager and, later, as one of the partners in his future business. They became partners in a project to buy a share in the Sayansky Aluminium Plant ("Saaz") in Hakassia. I call this "the Cherney/Deripaska joint venture". The venture began to invest, with finance provided or procured by Mr Cherney, in various projects. But its core business was its interest in Saaz. Mr Deripaska was not then in a position to acquire any substantial interest in Saaz on his own. Subsequently the venture acquired interests in aviation, car manufacture, and hydro-energy. The agreement was that all the companies involved in the project, of both parties, would eventually be merged into one structure and that, so long as the joint venture continued, Mr Deripaska could not participate in any other business, although Mr Cherney could7. A large stake in Saaz was acquired by TWG and the Cherney/Deripaska joint venture, acting together, and the beneficial interest in the shares was held, as to 50% for TWG, as to 25% for Mr Cherney and 25% for Mr Deripaska. I refer to the beneficial interest in this and other corporations because the ownership structure of the businesses in both the Makhmoudov/Cherney joint venture and the Cherney/Deripaska joint venture involved a chain of different companies and other entities. At the end of 1994 Mr Deripaska became General Manager of the Sayansky plant, partly as a result of Mr Cherney persuading the Ministry of Metallurgy, who at that stage had an approximate 20% interest in Saaz, to vote for his appointment.

53.

54.

55.

56.

57.

But in proceedings before a Swiss Investigating Magistrate in June 2004 Mr Cherney is recorded as saying that he "...never had significant business interests with [Mr Deripaska], apart from the shares which we had bought together for these aluminium plants". Mr Cherney's explanation is that that was true because the aluminium business was by far the largest of their joint interests and the non aluminium interests were, as he understood, owned by and part of the aluminium business or at least were acquired and developed with profits derived from the aluminium business.

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Mr Deripaska's account of his investment in Saaz 58. According to Mr Deripaska Mr Cherney never provided him with any funds to purchase shares in Saaz or any other entity8. He began to purchase shares in Saaz in 1993 and was by 1994 its largest private shareholder. He continued to purchase shares thereafter together with TWG but the shares that they each purchased were financed by them separately and accounted for separately. He was elected General Manager of Saaz in November 1994. At that time the aluminium business in Russia was the subject of often violent struggles for control by factions that were sometimes connected to organised crime groups ("OCG"), which in turn had contacts with corrupt members of the security services and government ministries9. These struggles became known as the "Aluminium Wars", in which the gangs killed off their competitors or rivals in large numbers in lawless areas of Russia where the aluminium plants were located. Immediately after his election he received the first of a number of death threats, initially from the head of the local OCG. An unsuccessful attempt was made to assassinate his deputy. One such OCG was the Ismailovo organisation headed by Mr Malevsky. Ismailovo is an area in the north of Moscow with at least five hotels and huge outdoor markets. According to Mr Deripaska, Mr Cherney was closely involved with Mr Malevsky (a veteran of the Soviet invasion of Afghanistan) and was part of the Ismailovo group, of which, according to Professor Shelley, he was one of the leaders. This group was engaged in providing "protection" to businesses in return for a share in their profits. Legitimate businesses had little option but to accept such "protection". In turn, according to Professor Shelley, Mr Cherney and Mr Malevsky enjoyed the protection of Oleg Soskovets, who was first Minister of Metallurgy and then First Deputy Russian Prime Minister and other important officials. Developments in the mid 1990s 61. In about 1995-1996 Mr Cherney, so he says, entrusted Mr Deripaska with the management of all his business interests in the Cherney/Deripaska joint venture. Mr Deripaska was introduced to Syndikus and Mr Karam and was authorised to give instructions to Syndikus in relation to the management of the business of the joint venture and their mutual assets. This was in part necessary because at this time Mr Cherney was unable to enter Liechtenstein save for limited purposes. Mr Deripaska was granted the widest authority by Mr Cherney, particularly in the appointment of representatives, lawyers, and directors of relevant companies. Ms Skir, Mr Cherney's

59.

60.

8

In evidence given in an Irish action in April 2000 Lev Cherney asserted that TWG provided the necessary funds for the purchase of shares in Saaz, which Mr Deripaska describes as equally false. In the same statement Lev Cherney states that Michael Cherney had told him (apparently in early 1995) that he owned or was entitled to 1/3rd of Mr Deripaska' shareholding in Saaz. Mr Cherney says that the proper percentage is 50%.

A witness statement from Professor Louise Shelley, a distinguished expert on organised crime in the former Soviet Union sets out in considerable detail the development of OCGs from the time of the 1917 revolution and the provision by them of "krysha" = literally "roof", actually protection, initially to illicit private enterprise which used state owned materials and facilities (with the assistance of a network of corrupt government and party officials) and then to newly privatised businesses. The process became more sophisticated. Instead of cash the OCG took a financial interest in the business "protected" under a "silovoe partnerstvo" or "enforcement partnership".

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personal assistant, confirms that between 1994 and 1997 Mr Deripaska came to visit Mr Cherney in Israel about every two or three months and they spoke frequently on the telephone and communicated by fax. Mr Deripaska was treated as a member of the family when he came to Israel, appeared originally to be an employee, and was very respectful to Mr Cherney; and later appeared to be a partner. 62. In 1997 there was a serious conflict between TWG and Mr Deripaska in relation to his powers as CEO of Saaz. Mr Cherney supported Mr Deripaska. As a result Mr Cherney sold his 25% share in TWG for $ 410 million10. Mr Deripaska claims that the conflict had nothing to do with Mr Cherney supporting him. It arose because TWG regarded its connection with Mr Cherney as seriously damaging because of the constant allegations in the press of Mr Cherney's link to organised crime. The first merger: The Makhmudov/Cherney joint venture and the Cherney/Deripaska joint venture. 63. In 1997 Messrs Cherney, Deripaska and Makhmoudov agreed to merge all the businesses that Mr Cherney jointly owned with either Mr Deripaska or Mr Makhmudov into one structure. The interests of the trio were to be held through Liechtenstein Foundations: the Galenit Foundation for Mr Cherney; the Cole Foundation for Mr Deripaska; and the Witestone Foundation for Mr Makhmoudov. Those foundations were jointly to own (in differing proportions): (a) the Meganetti Foundation, which would primarily hold the former Cherney/Makhmoudov interests; and (b) the Radom Foundation ("Radom"), which would hold the former Cherney/Deripaska interests. According to Mr Cherney the original owners of Radom were himself, Mr Deripaska and Mr Makhmoudov. But Mr Makhmoudov had no beneficial interest in Radom and always held his legal interest on Mr Cherney's behalf. He had a nominee interest because Mr Cherney had hoped that he and Mr Deripaska would work together, in which case he would have had a beneficial interest. This plan did not work out and Mr Makhmoudov left Radom. A document dated 31st October 1997, signed by Mr Cherney, Mr Makhmoudov, and Mr Deripaska shows the ownership of the Radom Line as shared 50/50 between the Cole and Galenit Foundations (i.e. Mr Deripaska and Mr Cherney) and the ownership of the Meganetty (sic) Line shared 50/50 between Galenit and Witestone (i.e. Mr Cherney and Mr Makhmoudov). By a document dated 9th April 1998 Mr Makhmoudov confirmed that he had no interest in Radom from that date. Nevertheless, by a document dated 18th May 1998 Mr Deripaska confirmed to Syndikus that the ownership of Radom was as follows: Deripaska 40%; Cherney 30%; Makhmudov 10%; Andrei Malevsky (Mr Malevsky's brother) 10%; and Popov 10%. On a fax from Syndikus dated 20th May Mr Cherney confirmed these shareholdings. This position was reflected in Syndikus' records thereafter11.

64.

65.

10

Mr Cherney has produced what purports to be an agreement between the Cherney and Reuben brothers in which he sells 25% of Trans-World Metals S.A. for $ 300 million. He says he received $ 410 million.

11

There are also two earlier documents signed by Mr Cherney in which the interests in Radom are said to be (a) Deripaska 45%; Cherney 45%; Makhmoudov 10%; Malevsky 10% and (b) Deripaska 45%, Cherney 45% and Malevsky 10%.

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66.

According to Mr Cherney it was Mr Deripaska who recommended Mr Andrei Malevsky (as requested by Mr Anton Malevsky, his brother) and Mr Popov as minority partners and "as they were influential people", as Mr Deripaska stated them to be, he had little choice but to agree. Mr Deripaska claims that Mr Cherney knew both Mr Malevsky, by which he means Anton Malevsky, the gang leader, and Mr Popov, and introduced Mr Malevsky to him (i.e. Mr Deripaska) in Israel in 1995. Mr Malevsky had moved to Israel that year, where he brought a house close to Mr Cherney12. The evidence of Professor Shelley is that Mr Popov was one of the leaders of the Podolsk crime group, a ruthless criminal gang in central Moscow. Information to the same effect appears in a Swiss Federal police report of 10th August 200013. Mr Cherney stated in an interview with Konstatin Borovoy that he had met Mr Malevsky in 1993 and he said much the same in a declaration to the Swiss police in November 1996. In the same statement he described his friendly relationship with Mr Popov, who was staying at the hotel in Geneva where Mr Cherney was arrested. Mr Cherney accepts that he knew both Mr Malevsky and Mr Popov before Mr Deripaska did. What happened was that after Mr Deripaska met Mr Malevsky they became friends and met regularly in Moscow and elsewhere. The same happened with Mr Popov, who is the godfather of Mr Deripaska's daughter. It was in that context that Mr Deripaska recommended Malevsky and Popov as partners. He, himself did not see Mr Malevsky after about 1997, although he spoke to him occasionally by telephone; whereas, when Mr Malevsky was required to leave Israel in 1997 he spent a considerable amount of time at Mr Deripaska's invitation at a house owned by Mr Deripaska in Russia on Mr Deripaska's estate. Mrs Malevsky confirms this to be so. For six months her husband and Mr Deripaska spent a lot of time together; and the two of them, herself and Mr Deripaska's then girlfriend socialised. Mr Deripaska appears to have sought to hide any connection with Mr Malevsky from a Swiss Investigating Magistrate. On 17th February 2005 he told him: "I know this person [Mr Malevsky] only by name. I have seen his name in the press".

67.

68.

69.

70.

71.

Mrs Malevsky says that this statement is completely untrue and, in the light of her evidence, that seems likely to be so. She also states that the accusation that her husband was involved in organised crime is completely false. According to Mr Cherney at the time of the agreement reached in March 2001 Radom was beneficially owned in the following proportions:

72.

12

In 1997 or 1998 Mr Malevsky was deprived of his Israeli citizenship and deported on the grounds that he had not reported on his citizenship application that he had been on a criminal wanted list and on the basis of confidential information obtained by the police. This report was later held by the Swiss Federal Supreme Court to be one of several documents that did not provide "any tangible element of proof to support the allegations made therein".

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Mr Cherney Mr Deripaska Mr Malevsky Mr Popov I call these "the group of four".

40% 40% 10% 10%

TWG and Lev Cherney sell out to Sibneft 73. In 1999 TWG (i.e. David and Simon Reuben) and Lev Cherney agreed to sell all their assets in Russia and the CIS to Sibneft. Sibneft was a group controlled by Roman Abramovich, Boris Berezovsky and Badri Patarkatsishvili. Reorganisation of the Cherney/Deripaska joint venture 74. A meeting took place in Paris on 23rd April 1999. Mr Cherney and Mr Deripaska were there, as was Mr Todor Batkov, Mr Cherney's Bulgarian lawyer since 1996, together with representatives of Syndikus and others. Confirmation was given that the shareholding in Radom remained unchanged from what Syndikus had previously been told. (The note does not state what that shareholding was, but, according to Mr Domenjoz, the position as reflected in Syndikus' records was as in the fax of 20th May 1998). A decision was made to structure the business into four lines under one parent, namely (a) offshore tolling companies; (b) onshore trading companies; (c) Rostar Holding S.A., a Luxembourg company, which would primarily be engaged in the production of cans; (d) ownership of, or 75% or more participation in, about 10 Russian plants. The intention was that the plants should all be merged within a year into a new group to be called Sibal. All companies created as the result of the restructuring were ultimately to be owned by the owners of Radom. On 26th April 1999, pursuant to the Paris meeting, Mr Deripaska sent a letter to Syndikus setting out the proposed new structure. There was to be a Luxembourg parent company called Alincor S.A., which was to have 4 Luxembourg subsidiaries as follows: a) Rostar Holding S.A. , holding Rostar, a Russian company; b) Altechnology Invest Holdings S.A.: holding Benet Invest & Trade and the tolling companies; c) Almetaltrade Holding S.A.: holding the trading companies in the UK, Germany, USA, China and Cyprus; d) Intermetal Investment Holding S.A.: holding participations in Russian enterprises of the Siberian Aluminium Group and enterprises in other countries.

75.

76.

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77.

The structure was set out in an attached diagram in English. The minutes of the 23rd April meeting had recorded that Mr Deripaska was to deliver to Syndikus an English version of the "Holding Structure in the Russian Federation" in addition to the Russian version already provided. A note from Mr Stalbek Mishakov, Mr Deripaska's legal adviser, made it clear that the shares in Alincor were in due course to be transferred to the shareholders of Radom i.e. for the benefit of the group of four. Between 1998 and 2000 the joint businesses continued to develop in several fields. Mr Deripaska created new companies in Russia, the CIS and other countries. A decision was made to have the main managing company in Cyprus and Mr Deripaska chose NFM Holding Limited, which in 2002 was renamed Bazovy Element Ltd. He then started to move companies into place under that company. Upon completion of the process these companies were to form part of the Radom Group. At the end of July 1999 United Company Siberian Aluminium ­ "Sibal" ­ was formed by the merger of six entities controlled or owned by the group of four. Its core asset was Saaz. According to Mr Cherney, Sibal was effectively owned and controlled by Radom, although he is unaware as to the precise route by which that is so. The researches of Mr Batkov into records of the shareholding in Sibal at various times are said by him to support his understanding that Sibal was controlled by Mr Cherney and Mr Deripaska through the Radom Group14. The second merger: Sibal and Sibneft

78.

79.

80.

81.

In 2000 negotiations began for the merger of Sibal and Sibneft. The idea was that Sibal and Sibneft would contribute all of their aluminium assets to a company called Russian Aluminium (Russky Aluminy) ­ "Rusal". Because Sibal was smaller it was to pay Sibneft about $ 575 million. In March 2000, according to the evidence of Mr Berezovsky, a meeting took place at the Dorchester Hotel in London attended by Mr Berezovsky, Mr Abramovich and Mr Patarkatsishvili, and Mr Deripaska. It was acknowledged that Mr Abramovich would hold a 25% share of Rusal beneficially and 25% as trustee for Mr Berezovsky and Mr Patarkatsishvili. According to Mr Berezovsky, Mr Deripaska did not (at the meeting or thereafter) hide the fact that Mr Cherney was his partner. Mr Abramovich expressed the view that, given Mr Berezovsky's political activism, his name should not appear on any of the formal documents in relation to Rusal, and Mr Berezovsky agreed that Mr Abramovich's name would appear representing his own interests and those of the two others. He assumed that Mr Cherney's name did not appear there for political reasons also. Mr Deripaska's evidence is that he said nothing at the Dorchester meeting to the effect that Mr Cherney was his partner, because he was not. The names appearing on the legal documents were primarily those of the companies involved with some mutual guarantees from himself and Mr Abramovich. There was no discussion with

82.

83.

14

The labyrinthine company structure makes it somewhat difficult to follow the route by which that is so.

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Mr Deripaska's lawyers about the appearance of Mr Berezovsky's or Mr Cherney's name in the documents. 84. Mr Deripaska also draws attention to the fact that the original pleading in Mr Berezovsky's Particulars of Claim in his action against Mr Abramovich, in respect of which the statement of truth is dated 6th September 2007, stated that at the Dorchester meeting it was agreed that Mr Deripaska should own 50% of the shares in Rusal; and that it was not until 8th January 2008 that the particulars were amended to assert that 50% of the new company would be owned by Mr Deripaska and his partners, Mr Cherney being one of them. According to Mr Cherney, in the second half of 2000 Mr Deripaska showed him a draft of the proposed merger between Sibal and Sibneft, which was governed by English law and subject to LCIA arbitration. Mr Cherney and Mr Deripaska agreed that Mr Deripaska would sign it on behalf of the group of four, and Mr Deripaska later said that he had signed it. But when Mr Cherney asked for a copy of the signed agreement Mr Deripaska told him that a copy could not be produced until the competition authorities approved it. At a meeting in Israel in 2001 Mr Deripaska said that the agreement was confidential and that the parties had decided that their respective lawyers would keep it in their safes. Rusal was registered on 25th December 2000. By March 2001 the necessary State approval for the merger had been obtained and formal approval from the competition authorities was awaited. According to Mr Cherney, Mr Deripaska told him that the new partners and some important officials in Russia did not want Mr Cherney's name to be in the Rusal foundation documents or those of the companies affiliated with it because of the political risk, Mr Cherney being a controversial figure and associated with the wrong political faction. He also told him that the names of Mr Berezovsky and Mr Patarkatsishvili were similarly to be omitted. Mr Cherney reluctantly agreed to this, Mr Deripaska assured him that, after the creation of Rusal and the receipt of all necessary licences and permits, their group would receive 50% of Rusal, which would give Mr Cherney 20% of it. The meeting at the Lanesborough hotel Mr Cherney's account 87. Mr Cherney and Mr Deripaska met at the Lanesborough hotel on 10th March 2001. This was one of their regular meetings to discuss business. Mr Deripaska reported on the course of the Sibal/Sibneft merger. Mr Deripaska said that he and Mr Abramovich would jointly manage the company and that he, on behalf of both groups, would be in charge of Rusal's day to day management and strategy. They went through various documents which Mr Deripaska had brought relating to the merger. When Mr Cherney asked whether it would be possible to pay out a dividend from the joint business Mr Deripaska said that if he, Mr Cherney, wanted money, why was he offering to sell his business interests to third parties and not to him. Mr Deripaska then offered to make an advance payment of $ 250 million and promised that he would hold 20% of the shares in Rusal (to which Mr Cher