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England and Wales High Court (Chancery Division) Decisions


You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Okuashvili & Ors v Ivanishvili & Ors (Re Consequential Matters) [2025] EWHC 1267 (Ch) (16 May 2025)
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Cite as: [2025] EWHC 1267 (Ch)

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Neutral Citation Number: [2025] EWHC 1267 (Ch)
Case No: BL-2022-000657
Case No: BL 2023 000303

IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (CHD)

The Rolls Building
7 Rolls Buildings
Fetter Lane
London, EC4A 1NL
16th May 2025

B e f o r e :

MR. JUSTICE RAJAH
____________________

Between:
(1) ZAZA OKUASHVILI
(2) VELSAN TRADING CORPORATION
(3) OLYMPUS LTD
Case No: BL-2022-000657
Claimants
- and -

(1) BIDZINA IVANISHVILI
(2) OTAR PARTSKHALADZE
(3) LEVAN KIPIANI
(4) TBC BANK GROUP PLC
(5) JSC TBC BANK
Defendants


And Between:

(1) ALLIED GLOBAL TOBACCO LIMITED
(2) OMEGA MOTOR GROUP LLC
(3) ZAZA OKUASHVILI
Case No: BL 2023 000303
Claimants
- and -

(1) JSC TBILISI TOBACCO
(2) LEVAN KIPIANI
(3) BIDZINA IVANISHVILI
(4) OTAR PARTSKHALADZE
(5) IRAKLI CHUBINI
(also known as IRAKLI CHUBINISHVILI)
(6) IVANE CHKHARTISHVILI
Defendant

____________________

Digital Transcription by Marten Walsh Cherer Ltd.,
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____________________

DEAN ARMSTRONG KC and BEN WAISTELL (instructed by JMW Solicitors LLP) appeared for the Claimants in Claim 1 and Claim 2.
WATSON PRINGLE (instructed by Blake Morgan LLP) appeared for D1 in Claim 1 (and instructed by Fladgate LLP) appeared for D3 in Claim 2.
THOMAS MUNBY KC (instructed by Alius Law) appeared for D2 in Claim 1 (and instructed by Baker McKenzie LLP) appeared for D4 in Claim 2
WILLIAM BUCK (instructed by Fladgate LLP) appeared for D3 in Claim 1 (and instructed by Alius Law) appeared for D2 in Claim 2
SIMON OAKES (instructed by Baker McKenzie LLP) appeared for D4 and D5 in Claim 1.
BARRY COULTER (instructed by Blake Morgan LLP) appeared for D1 in Claim 2 (and instructed by Lawlex Solicitors) appeared for D6 in Claim 2.
SIMON ATRILL KC and CHRISTOPHER MONAGHAN (instructed by
Baker McKenzie LLP) appeared for D5 in Claim 2.

____________________

HTML VERSION OF APPROVED JUDGMENT
____________________

Crown Copyright ©

    If this Transcript is to be reported or published, there is a requirement to ensure that no reporting restriction will be breached. This is particularly important in relation to any case involving a sexual offence, where the victim is guaranteed lifetime anonymity (Sexual Offences (Amendment) Act 1992), or where an order has been made in relation to a young person.

    MR. JUSTICE RAJAH :

  1. I handed down judgment in this case on 7th April 2025 (Okuashvili & Ors v Ivanishvili & Ors [2025] EWHC 829 (Ch). I shall not repeat its contents – reference should be made to it for the background. This is the consequentials hearing. One of the matters which needs to be dealt with is how the costs of this case are to be borne.
  2. Costs are governed by CPR 44.2:
  3. "44.2(1) The court has discretion as to –
    (a) whether costs are payable by one party to another;
    (b) the amount of those costs; and
    (c) when they are to be paid.
    (2) If the court decides to make an order about costs –
    "(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but
    (b) may make a different order.
    (3) The general rule does not apply to the following proceedings –
    (a) proceedings in the Court of Appeal on an application or appeal made in connection with proceedings in the Family Division; or
    (b) proceedings in the Court of Appeal from a judgment, direction, decision or order given or made in probate proceedings or family proceedings.
    (4) In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including –
    (a) the conduct of all the parties;
    (b) whether a party has succeeded on part of its case, even if that party has not been wholly successful; and
    (c) any admissible offer to settle made by a party which is drawn to the court's attention, and which is not an offer to which costs consequences under Part 36 apply.
    (5) The conduct of the parties includes –
    (a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction – Pre-Action Conduct or any relevant pre-action protocol;
    (b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;
    (c) the manner in which a party has pursued or defended its case or a particular allegation or issue;
    (d) whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim; and
    (e)whether a party failed to comply with an order for alternative dispute resolution, or unreasonably failed to engage in alternative dispute resolution.
    (6) The orders which the court may make under this rule include an order that a party must pay –
    (a) a proportion of another party's costs;
    (b) a stated amount in respect of another party's costs;
    (c) costs from or until a certain date only;
    (d) costs incurred before proceedings have begun;
    (e) costs relating to particular steps taken in the proceedings;
    (f) costs relating only to a distinct part of the proceedings; and
    (g) interest on costs from or until a certain date, including a date before judgment.
    (7) Before the court considers making an order under paragraph (6)(f), it will consider whether it is practicable to make an order under paragraph (6)(a) or (c) instead.
    (8) Where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs, unless there is good reason not to do so."
  4. As appears from CPR 44.2(2) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party. The first question, therefore, is on the applications by each defendant, who is the successful party?
  5. In both claim 1 and claim 2, all the defendants except Mr. Kipiani are the successful parties. All of the applications which they have made to set aside service have been successful.
  6. So far as Mr. Kipiani was concerned, it is the claimants who are the successful party in Claim 1, except in relation to claims which were based in intimidation and conspiracy. Mr Kipiani's applications failed in their entirety.
  7. In claim 2, again, the claimants are the successful party. Mr. Kipiani was the unsuccessful party. His applications have failed. He has been validly served in both claim 1 and in claim 2, and claim 1 and claim 2 can proceed against him in this jurisdiction. In claim 2, it is arguably a pyrrhic victory as all that remains is a claim for something in the region of £15,000 in respect of an unjust enrichment claim.
  8. The next question is whether there should be a departure from the general rule that the loser pays. The claimants say there should be an issue-based costs order in respect of Mr. Ivanishvili and TT, where the judgment concluded that there was a serious issue to be tried on unjust enrichment, and also in respect of Mr. Kipiani on claim 2 where the claimants says they should be paid 75% of the costs of claim 2.
  9. Mr. Kipiani also says there should be an issue-based costs order but says that 100% of his costs should be paid until claim 1 was amended to assert that the 2015 Consultancy Agreement was governed by English law and 50% thereafter to reflect success on the various torts of intimidation and conspiracy. On claim 2, Mr. Kipiani says that the claimants should pay 75% of Mr. Kipiani's costs.
  10. I referred the parties to South Tees Development Corporation v PD Teesport Ltd [2024] EWHC 842, at paragraphs 8-9, where I said this:
  11. "Some of the guidance derived from the authorities as to whether to make an issue-based order was helpfully summarised by Stephen Jourdan KC sitting at a Deputy High Court Judge in the case of Pigot v Environment Agency [2020] EWHC 144 at paragraph 6:
    "'(1) The mere fact that the successful party was not successful on every issue does not, of itself, justify an issue-based cost order. In any litigation, there are likely to be issues which involve reviewing the same, or overlapping, sets of facts, and where it is therefore difficult to disentangle the costs of one issue from another. The mere fact that the successful party has lost on one or more issues does not by itself normally make it appropriate to deprive them of their costs.
    "'(2) Such an order may be appropriate if there is a discrete or distinct issue, the raising of which caused additional costs to be incurred. Such an order may also be appropriate if the overall costs were materially increased by the unreasonable raising of one or more issues on which the successful party failed.
    "'(3) Where there is a discrete issue which caused additional costs to be incurred, if the issue was raised reasonably, the successful party is likely to be deprived of its costs of the issue. If the issue was raised unreasonably, the successful party is likely also to be ordered to pay the costs of the issue incurred by the unsuccessful party. An issue may be treated as having been raised unreasonably if it is hopeless and ought never to have been pursued.
    "'(4) Where an issue-based costs order is appropriate, the court should attempt to reflect it by ordering payment of a proportion of the receiving party's costs if that is practicable.
    "'(5) An issue-based costs order should reflect the extent to which the costs were increased by the raising of the issue; costs which would have been incurred even if the issue had not been raised should be paid by the unsuccessful party.
    "'(6) Before making an issue-based costs order, it is important to stand back and ask whether, applying the principles set out in CPR rule 44.2, it is in all the circumstances of the case the right result. The aim must always be to make an order that reflects the overall justice of the case.'"
  12. Returning to what I said in that case:
  13. "9. I should make a couple of points about this passage. These are not rules which are being set out here by the learned Deputy High Court Judge but a summary, or compilation, of guidance derived from the authorities. I would add to that summary that whether or not an issue-based approach is justified is not a purely mechanistic exercise which turns upon whether a discrete issue can be identified which has given rise to additional costs. Also relevant is whether that issue is simply another basis or another argument for putting the principal claim or is one which would not have been litigated if the unsuccessful party had conceded the issue on which the successful party had won. For that see Kastor Navigation v AGF MAT."
  14. In this case none of the issues on which one party or another has failed are discrete issues which can be isolated or which have caused discrete costs to be incurred. There is one set of alleged facts in each claim which give rise to a number of alleged causes of action. The issues in relation to each overlap; for example, each of the claims categorised as torts raised the same issue on limitation. They are simply different ways of putting the claimants' case for damages on the basis that they have been subject to extortion by the defendants.
  15. In relation to Mr. Ivanishvili and TT, their applications have succeeded in full and the claimants have lost in full. The fact that along the way the claimants scored some hits does not detract from the outcome or justify an issue-based order. The claimants must pay the costs of the applications of all of the defendants, except Mr. Kipiani. I will come to the basis of assessment in a moment.
  16. In relation to Mr. Kipiani, his applications have failed, although the claims which have survived against Mr. Kipiani are more limited than originally asserted. Nevertheless, in claim 1 the claimant retains his principal claim for damages for breach of the 2015 consultancy agreement in relation to Mr. Kipiani's alleged role in the alleged extortion. The fact that the claim has been shorn of the claimant's other proposed routes to the same result does not in my judgment justify an issue-based costs order. Mr. Buck points out that the claims Mr Kipiani now faces were raised for the first time by the proposed amendments served on 8th September 2023 and that the claims before that date were very different, and they have been deleted.
  17. In claim 2, however, the position is more akin to a draw. The claimant has defeated Mr. Kipiani's applications but what he is left with is an insignificant claim.
  18. I conclude that Mr. Kipiani must pay the claimants' costs of claim 1, but only from 8th September 2023. There should be no order for costs before 8th September 2023 or in respect of claim 2.
  19. Turning to the basis of assessment, the principles were summarised in Thakkar v Mican [2024] 1 WLR 4196, at paragraph 19, where Coulson LJ said: "It is convenient to summarise, without going to the authorities in laborious detail, the general principles applicable to the award of indemnity costs. They are:
  20. "(a) The discretion to award indemnity costs is a wide one and must be exercised taking into account all the circumstances of the case, including but not limited to the conduct of the paying party" -- and he sets out the case justifying that proposition --
    "(b) In order to obtain an order for indemnity costs, the receiving party must surmount a high hurdle; to be able to demonstrate 'some conduct or some circumstance which takes the case out of the norm. That is the critical requirement': see Lord Woolf CJ in Excelsior Commercial and Industrial Holdings Ltd v Salisbury Hammer. Whilst it is preferable for the judge expressly to apply the test of 'out of the norm', the use of the word 'exceptional' may be consistent with the judge having applied the principles in Excelsior.
    "(c) To the extent that the application is based on the paying party's conduct, it is necessary to show such conduct was 'unreasonable to a high degree' in order to recover indemnity costs, but it is not necessary to go so far as to demonstrate 'a moral lack of probity or conduct deserving of moral condemnation' on the part of the paying party.
    "(d) Merely because the conduct in question may happen regularly in litigation does not mean that such conduct cannot also be 'out of the norm': 'in my view the word "norm" was not intended to reflect whether what occurred was something that happened often so that in one sense it might be seen as "normal" but was intended to reflect something outside the ordinary and reasonable conduct of proceedings': see Esure Services Ltd v Quarcoo [2009] EWCA Civ 595 at [25], in the judgment of Waller LJ."
  21. In relation to Claim 1 the defendants rely on my finding that there was a failure to make full and frank disclosure on the application for the Arkush Order to serve the original proceedings out of the jurisdiction. A material non-disclosure on a without notice application is not automatically penalised by an order for indemnity costs, but deliberate or seriously culpable non-disclosure is out of the norm and usually attracts indemnity costs (see Les Ambassadeurs Club Ltd v Albluewi [2020] EWHC 1368 (QB) at [12] and [13]).
  22. Whilst I have been very critical of the way in which the application was made to Master Arkush, I did not conclude that there was deliberate non-disclosure. I concluded that the application had not presented the merits, or rather the lack of merit, of the Claimants' case fairly. The facts are consistent with negligence and incompetence. I do not regard it as serious culpability of a kind deserving of indemnity costs. The appropriate penalty was setting aside the order. In the circumstances of this case, it does not in my judgment justify an order of indemnity costs.
  23. That is the key point which was relied on by the defendants in support of their application for indemnity costs. Various other points were made. It was submitted that this was a case in which there have been failed allegations of dishonesty. I do not accept that there are failed allegations of dishonesty. The court has not concluded that the defendants or any of them have not been dishonest and have not committed or participated in the extortion of which they are accused. This is not a case where the court has determined at trial that the allegations of fraud and dishonesty have failed. The claim fails for essentially technical reasons.
  24. Mr. Pringle says the fact that the claim has failed means it should never have been brought and it includes allegations of dishonesty and, therefore, the position is the same. There may be cases in which that is true, but not this one. I do not think the fact that the claims, which fail to overcome the necessary hurdles to establish jurisdiction in this country and to establish that the claims are not barred by a Georgian limitation issue, are such that it is fair to say that they are claims which should never have been brought.
  25. The suggestion which is made repeatedly in the skeleton arguments is that these defendants have unfairly had their reputations dragged through the mud. Firstly, that is simply a consequence of the open justice principle and the fact that these hearings and these proceedings are conducted in public. Secondly, I do not accept that reputations have been sullied by the mere making of allegations in these proceedings where the allegations have not been tried or determined.
  26. It is also said that the claims were speculative and weak. There was a perfectly plausible and credible factual basis for the claims. Mr. Okuashvili alleges a set of facts on the basis of which valid causes of action would have arisen at the point at which those facts occurred. He has simply not been able to overcome the barriers of limitation and jurisdiction. Again, I do not regard that as the sort of speculative and weak claim which attracts indemnity costs. I do not regard these claims as claims which are so speculative and weak that they should never have been brought.
  27. The TBC defendants made an offer on 3rd July 2023 to accept 40% of their costs if the claims against them were withdrawn. The claims against them have completely failed. The negligence claim against TBC UK was abandoned at the hearing. Part of the reason for that is that TBC UK was not the owner of TBC Georgia at the time the events for which TBC Georgia and through its alleged ownership of TBC Georgia, TBC plc UK, is said to be liable took place.
  28. In my judgment, the costs awarded to the defendants, except the TBC defendants, against the claimants and the claimants' costs against Mr. Kipiani should be assessed on the standard basis. The TBC defendants should have their costs on an indemnity basis from 10th July 2023 (when the offer of 3 July 2023 expired).
  29. So far as a payment on account is concerned, the parties agreed that the best way to deal with this is to fix an appropriate percentage. Some of the defendants have suggested they are slightly different and should be entitled to a slightly different percentage from the others. The principle which I follow is that the amount which is ordered on account should be an amount which errs on the side of caution, so that it does not exceed the amount which will be recovered on an assessment. This is not a case in which there has been any costs budgeting. The sums involved are very large. I have been given the headline figures and in respect of Mr. Ivanishvili it is £1.19 million. In respect of Mr. Partskhaladze, it is £337,000. In respect of the TBC defendants it is £842,000. In respect of TT and Mr. Chkhartishvili, it is £446,000. In respect of Mr. Chubini, it is £609,000.
  30. The costs judge dealing with assessment may be faced with arguments about the duplication of costs. All of the costs appear to be at rates which are in excess of guideline rates. They are, on any view, very high rates, whether or not guideline rates are taken into account on an assessment.
  31. Taking those matters into account, I will order a payment on account at the rate of 50% for all of the defendants, apart from Mr. Partskhaladze and the TBC defendants. Mr. Partskhaladze's costs are of a different order in my judgment to the others, and I will assess that as a payment on account at the rate of 60%.
  32. To reflect the fact that the TBC defendants have a partial indemnity costs order, their payment on account will also be at 60%.
  33. There will be interest payable at the rate of 1% above base rate from the date the costs have been paid to the relevant solicitors until the date of the order. I will say nothing about post-judgment interest which is governed by the judgment rate and CPR 40.8. The fact that the judgment rate is higher than commercial rates is not on its own a justification for deferring the date at which judgment rate applies. The judgment rate is a matter for the Secretary of State to decide.
  34. (After further legal argument)

  35. For the purposes of deciding this application for a stay of the payment on account pending an application to the Court of Appeal for permission to appeal, I will disregard the prospects of success of the appeal and ask myself in the usual way whether there is a risk of irremediable prejudice to the Appellant if no stay is granted and the appeal turns out to be successful, or to a Respondent if a stay is granted and the appeal fails.
  36. I am satisfied there is a real risk that sums paid and remitted to the Georgian resident defendants may not be recoverable, essentially for the reasons given by the Court of Appeal in Bermuda in Credit Suisse Life (Bermuda) Ltd v Ivanishvili and Ors [2024] CA (BDA) 2 Civ. The Court of Appeal, between paragraphs 33 and 38 of that judgment set out evidence, much of which was also deployed before me at the trial, as to the position and potential influence in Georgia which Mr. Ivanishvili may be able to bring to bear. In paragraph 30, Sir Christopher Clarke said this:
  37. "As to enforcement there are a number of potential problems. First, in relation to enforcement against Mr. Ivanishvili himself, there is a risk that he will sanctioned -- something for which the European Parliament has repeated called for on account of 'his role in the deterioration of the political process in Georgia': see, for example, the resolution of the European Parliament of 9 June 2022, followed by similar resolutions on 14 December 2022 and 15 February 2023. CSLB suggests that, in those circumstances, there is a significant incentive on him to move any assets outside Georgia into Georgia or to other jurisdictions outside the relevant sanctions regime or to transfer them too third parties or legal entities outside his direct control. Even if that does not happen there would be likely to be significant added difficulty in enforcing judgments against the assets of a sanctioned person in many countries. The Respondents characterise these suggestions as pure speculation. But, in my view, they represent a real risk."
  38. At paragraph 32, Sir Christopher Clarke continued:
  39. "In relation to enforcement in Georgia there are potential problems. Georgia has a process for enforcing foreign judgments. But the evidence before us indicates that, because of Mr. Ivanishvili's continuing position of influence in Georgia there is a real risk that the Georgian judiciary may reach a decision which is not free from Mr. Ivanishvili's interference or influence."

  40. Mr. Ivanishvili has now been subjected to US sanctions and so I am told has Mr. Partskhaladze. Those sanctions may present impediments to enforcement of judgments against their assets in many countries.
  41. One can see that this Bermuda decision concludes, as I would have done had I needed to for the purposes of the judgment, that there is a risk that the Georgian judiciary may reach a decision on matters before it which is not free from Mr. Ivanishvili's influence. Although the other defendants in this case have varying degrees of association with Mr. Ivanishvili, they have presented a united front in these proceedings. Subject to the exceptions which I am going to discuss, I consider that there is a risk that Mr. Ivanishvili's influence may be exercised for their benefit.
  42. Mr Pringle and Mr Munby submitted that the Claimants might not be good for the money they have been ordered to pay. The Claimants' impecuniosity is not a reason for refusing a stay, if anything it might be relied on as a reason for granting a stay so that an appeal is not stifled. In fact Mr Okuashvili has filed evidence that he has assets in Georgia of over £8 million in real estate and other assets which are available to meet the orders made in favour of the defendants, and accessible to them because they are situated in Georgia. While Mr Munby was dismissive of Mr Okuashvili's evidence, it is not actually challenged. If there were a risk of dissipation of assets while a stay is in force then that would be a factor to balance against the considerations in favour of a stay but neither Mr Pringle nor Mr Munby can point to any evidence of a risk of dissipation.
  43. There is no application for a stay of the costs order in favour of TBC UK. I will indicate that there will be no stay of the costs order so far as it relates to TBC Georgia if TBC UK undertakes to this court to repay any sum paid pursuant to that costs order, if ordered to do so by the court.
  44. Mr. Oakes is rightfully aggrieved that until five p.m. today as this hearing was reaching its conclusion he had no idea that the claimants intended to make any appeal in relation to the TBC defendants. Mr. Armstrong says that is, in fact, his intention, and the failure to make that clear in the draft grounds of appeal which have been provided is an error. While the manner in which this has been raised is not satisfactory, I remind myself that the draft grounds of appeal are just that - only drafts, the claimants' time for appealing has not even begun and it is procedurally still open to Mr. Armstrong to seek permission to bring an appeal in respect of the TBC defendants. Plainly, if the Claimants fail to bring an appeal against any of the defendants, then any stay against that defendant will fall away.
  45. In relation to Mr. Chubini, he is, in my judgment, in a different position. Mr. Atrill points out that he is resident in Kenya and there has been no evidence or attempt by the claimants to explain why he needs to be treated in the same way as the Georgian resident defendants. I will not grant a stay in respect of Mr. Chubini. Mr. Armstrong will have to make an application to the Court of Appeal if he wishes to apply for a stay in respect of him.
  46. - - - - - - - - - - -

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