BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
KING'S BENCH DIVISION
COMMERCIAL COURT
Fetter Lane, London, EC4A 1NL |
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B e f o r e :
(Sitting as a Deputy Judge of the High Court)
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Yermek Alimov |
Claimant |
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- and - |
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(1) Abdumalik Mirakhmedov (2) Rashit Makhat (3) Andrey Kim (4) Genesis Digital Assets Limited (a company incorporated in Cyprus) |
Defendants |
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Edward Cumming KC (instructed by Withers LLP) for the First and Third Defendants
Neil Kitchener KC and David Caplan (instructed by Mishcon de Reya LLP) for the Second Defendant
Sonia Tolaney KC and Adam Rushworth (instructed by Latham & Watkins (London) LLP) for the Fourth Defendant
Hearing dates: 15 and 16 October 2024
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Crown Copyright ©
Simon Birt KC:
Introduction
Factual background to the dispute
i) In around April 2017, there was an agreement between a cryptocurrency and cloud mining company called Genesis Mining Limited ("GM") and D1-D3 by way of a joint venture to develop bitcoin mining in Kazakhstan, with the aim of GM owning 50% and D1-D3 owning 50% of the ultimate business (the Claimant referred to this as the "GM JV"). D1-D3 were to find a cheap source of energy, find and acquire land and buildings near the energy source, and prepare that land and buildings for bitcoin mining on a turn-key basis (specifically, arranging for full repair and completion of all necessary infrastructure including an internet connection). GM was to install bitcoin mining machines, cooling machines, internal power transformers and other necessary technological equipment for bitcoin mining, and incorporate the new bitcoin mining factories in Kazakhstan into its existing bitcoin mining infrastructure in Europe.
ii) In seeking to find a cheap source of energy, in around May 2017 D2 and D3 contacted the Claimant. This contact was made on the recommendation of Mr Kairat Satybaldy, who the Claimant described as one of the most influential businessmen in Kazakhstan at the time, who had substantial influence over the then Kazakh government and who could provide "krysha" (protection). The Claimant said that both he and D2 had long-standing connections with Mr Satybaldy.
iii) In May 2017, there were a series of meetings in Kazakhstan, largely it appears at the Radisson hotel in Astana, between the Claimant and D1-D3 at which D1-D3 explained what they wanted and the Claimant said he would help them. The Claimant said he owned some assets which might be suitable, namely (a) the Stal electrical sub-station 110/10 ("Stal") in the city of Karaganda, and (b) a factory near Stal (the "Vtorprom Factory") and a group of surrounding buildings (the "ABK Buildings") together with further land. He said these assets were owned by a Kazakh limited liability partnership called KKS Karagandy LLP ("KKS Karagandy") which in turn was owned by a BVI company called KPC System Solutions Limited.
iv) On 10 June 2017, the Claimant met D1 in London, and (the Claimant alleges) reached the oral agreement on which his claim is (largely) based. The circumstances of the meeting are heavily disputed. I will deal with it in greater detail later in this judgment. Suffice to say for now that the meeting took place at a house at 27 Ingram Avenue, London (a house at which the Claimant contends D1 was residing with his family) on an occasion at which the Claimant and his family had been invited to share an Iftar meal with D1 and his family (Iftar is the meal eaten after sunset, during the religious festival of Ramadan to break the fast that is kept during the hours of sunlight). The Claimant contends that he and D1 reached an agreement (which he pleads as the "London Agreement") in the following detailed terms (which I take from paragraphs 27-28 of the Particulars of Claim, in which he used the abbreviation "MMK" to refer collectively to D1-D3):
"27. At the Ingram Avenue Meeting, Mr Alimov [the Claimant] and Mr Mirakhmedov [D1] (acting on behalf of MMK) reached the following agreement orally (the "London Agreement"):
(a) Mr Alimov would ensure that:
(i) MMK obtained a source of energy of up to 100 Megawatts for the GM JV; and
(ii) the electricity would be generated from that power station at a price of not more than US$0.04 per kWh.
(b) Mr Alimov would ensure that MMK obtained the energy source (as pleaded in sub-paragraph (a)(i) above) by:
(i) finding suitable power stations in Kazakhstan for MMK to purchase, of which there were three available options at the time (the Ridderskaya, KarGRES 1 and Sogrinskaya power stations), arranging for expert assessments of their suitability, and introducing MMK to their owners to negotiate their purchase; or
(ii) alternatively, if those negotiations to purchase those power stations failed, MMK would notify Mr Alimov of the same and, at that point, Mr Alimov would be obliged to, and would, procure that KKS Karagandy make available Stal, and such of the Vtorprom Factory, the ABK Buildings and adjacent land as might be required, for use by the GM JV and, in due course, transfer those assets to the corporate vehicle which would be used for the operation of the GM JV and the ownership of its assets. (In so doing Mr Alimov would also procure that KKS Karagandy cancel the sale to Hua Tun of Stal and any other relevant buildings.)
(c) Mr Alimov would ensure that MMK obtained electricity at a cheap rate of US$0.04 per kWh or less (as pleaded in sub-paragraph (a)(ii) above) by:
(i) arranging for the necessary technical works so that any power station which MMK obtained would be connected directly to the energy source provider, thereby avoiding the three other levels of energy power supply in Kazakhstan and avoiding the increased price associated with supply through each level (as set out in paragraph 24(a) above).
(ii) alternatively, if he was obliged to procure the transfer of Stal for use in the GM JV (as set out in sub-paragraph (b)(ii) above), Stal was already connected directly to the energy source provider and so obtained electricity at a cheap rate (as set out in paragraph 24(a) above).
(d) In consideration for Mr Alimov's said obligations in sub-paragraphs (a)-(c) above, MMK would give to Mr Alimov and/or procure that he received:
(i) 35% of the shares received by MMK collectively in the corporate vehicle which was to be established pursuant to the GM JV ultimately (directly or indirectly) to operate the GM JV and own its assets, and thus be the way in which MMK and GM were directly to participate in and receive the full economic benefit of the GM JV (including by receipt of dividends and/or profit from the GM JV and bitcoin mined by the GM JV). Mr Alimov would become entitled to those shares upon (or within a reasonable time of) the establishment of such corporate vehicle, and in any event no later than the date when each of MMK received their shares in the same;
(ii) 35% of the bitcoin, or any other cryptocurrency, mined by the GM JV which were received by MMK (whether themselves directly in the period before the said corporate vehicle was established or as received by them from the said corporate vehicle once it had been established); and
(iii) a further sum, being the difference between the maximum price of US$0.04 per kWh (as referred to in sub-paragraph (a)(ii) above) and the actual price at which electricity was obtained for the GM JV.
28. The London Agreement also contained implied terms that:
(a) Mr Alimov and each of MMK owed each other duties of good faith, and of mutual trust and confidence;
(b) MMK would keep Mr Alimov informed as to the progress in establishing the corporate vehicle referred to in paragraph 27(d)(i) above; and
(c) MMK would notify Mr Alimov when they had each received their shares in such corporate vehicle."
v) The Claimant subsequently introduced D1-D3 to the owners of various power stations in Kazakhstan and helped organise expert assessment of them by commissioning professional experts to assess their capacity and suitability. However, negotiations to purchase those power stations did not come to fruition. The Claimant therefore became obliged (under the London Agreement) to make available Stal and such of the Vtorprom factory and ABK Buildings and land as may be required. Following an inspection by a representative of GM, the Vtroprom Factory was found unsuitable, so D1-D3 and the Claimant decided that Stal and some of the ABK Buildings and the adjacent land should be used for the purposes of the GM JV.
vi) However, KKS Karagandy had previously been in negotiations with a company called Hua Tun (Central Asia) Cable LLP ("Hua Tun") and had reached an agreement in principle in March 2017 to sell Stal, the Vtorprom Factory and certain of the ABK Buildings to Hua Tun for US$7.5 million. The Claimant pleads that he therefore procured that KKS Karagandy would not sell Stal to Hua Tun, and negotiated to exclude Stal from that sale, reducing the sale price to Hua Tun to US$5 million. His pleading does not say anything similar about the ABK Buildings.
vii) Renovation work was carried out to Stal and the ABK Buildings between August and December 2017 by KKS Karagandy at an overall cost of approximately US$ 1.9 million, half of which was paid by D1-D3, and the other half initially funded by the Claimant, for which he was subsequently repaid in bitcoin that had been mined by the GM JV.
viii) Bitcoin mining operations at this location started from December 2017, which the Claimant referred to as the "ABK Project". The Claimant determined, with D3, that the further sum due to the Claimant under the London Agreement was US$ 0.016 per kWh of electricity transmitted through Stal and used for the ABK Project (being the difference between the actual price of US$ 0.024 per kWh and US$ 0.04 per kWh).
ix) The Claimant attended meetings relating to the ABK Project in D1's offices in Moscow, Russia and in Astana and Karaganda, Kazakhstan.
x) In around December 2017 or January 2018, D1-D3 requested the Claimant to transfer Stal and the ABK Buildings to a company called Prima Investment Company Limited ("Prima"), in which D2 was the sole shareholder, to be held temporarily pending the establishment of the corporate vehicle anticipated in the London Agreement. The Claimant agreed to the transfer, requesting in return 35% of the shares in Prima pending receipt of his entitlement in the anticipated permanent corporate vehicle (which he says D1-D3 agreed to). Stal and the ABK Buildings were transferred by KKS Karagandy to Prima on 22 and 24 January 2018 respectively.
xi) From January to September 2018, the Claimant received bitcoin from the ABK Project, which he says were recorded in reconciliations provided to him by D3 which calculated his share as 35% of that received by D1-D3. This totalled 226.78 bitcoin (worth US$1,686,719.58 at the time of payment). He was not paid any bitcoin after that.
xii) At some point around September 2020, Prima became subsumed into the corporate structure ultimately owned by GDA.
i) Breach of contract, based upon the alleged London Agreement (which he says is an agreement on joint activities under Article 228 of the Civil Code of Kazakhstan ("the Code"), such that the relationship between the Claimant and D1-D3 constitutes an ordinary partnership under the law of Kazakhstan). He claims an order that D1-D3 transfer, or procure or cause to be transferred, to him 35% of the shares held by D1-D3 in GDA; that D1-D3 take steps to see the Claimant is registered as a shareholder of such shares; that there be an inquiry into and account of the cryptocurrency mined in the ABK Project and received by D1-D3 together with an order that D1-D3 pay to the Claimant 35% of what they have received; and an inquiry into and account of the total amount of electricity transmitted through Stal and used by the ABK Project, with an order for payment to the Claimant of a sum at a rate of US$ 0.016 per kWh.
ii) In the alternative, a claim under Article 230 of the Code for similar orders, by reason of the Claimant and D1-D3 being "participants in an agreement on joint activities … and having regard to his contributions ... of property and services."
iii) In the further alternative, restitution and/or "compensation … for unjust enrichment" under the law of Kazakhstan, on the basis that the Claimant provided assets and services to the benefit of D1-D3 and at the request of D1-D3 in the expectation he would be compensated for them. The assets and services include the transfer by KKS Karagandy of Stal and the ABK Buildings to Prima (which he says was at an undervalue), KKS Karagandy providing electricity to the ABK Project at the reduced rate of US$0.024 per kWh, and organising legal, technical, operational and expert services for the ABK Project and related matters.
i) The allegations of an oral agreement are entirely denied. That is not just a matter of dispute between the two individuals (the Claimant and D1) about what they discussed and whether it amounted to an agreement – there is substantial dispute about many of the facts relating to the occasion on which it is said the agreement was made. For example, there is a dispute about the length of time the Claimant and his family spent at 27 Ingram Avenue (which has included the production of Uber receipts seeking to identify a departure time), and whether there could have been time to discuss the matters alleged, or whether the subject matter is likely to have been discussed (still less agreed) late in the evening, on the fringes of a family social occasion, when the parties had been fasting all day. There is also a dispute about whether a further discussion took place after D1 and the Claimant (with their sons) had attended prayers at the Central London Mosque. There is also disputed hearsay evidence from the Claimant's wife and son about what he told them after the discussions. Much of the context and background to the alleged agreement is also hotly disputed. I set out further aspects of this dispute below in considering the issue in the context of the questions whether there is a serious issue to be tried and a good arguable case.
ii) There is a dispute about whether D1 had any authority from D2 and D3 to commit them to an agreement. I also deal with this in greater detail below.
iii) Various points about the agreement the Claimant says he (or KKS Karagandy) had with Hua Tun, and the circumstances in which Stal and the ABK Buildings were released from it are disputed. The Defendants do not accept that a 12 March 2017 agreement between KKS Karagandy and Hua Tun pleaded by the Claimant is genuine. Also, the Claimant says that in order to persuade Hua Tun to release the property from the contract, Hua Tun's local representatives in Kazakhstan had to be offered items of residential property and two Mercedes-Benz S500s, for which D2 at least in part reimbursed the Claimant; this is something which the Defendants entirely refute.
iv) There is a dispute as to whether parties can agree cheap electricity prices in Kazakhstan or whether the prices are regulated by the relevant Kazakhstan competition authority.
v) The Defendants describe the Claimant as a "middle man" or "broker" in relation to the properties, Stal and the ABK Buildings, that they went on to acquire for proper value (as well as in relation to other properties they considered acquiring but did not do so), and say the Claimant has received all to which he was entitled in respect of those dealings. The Claimant denies that version, contending (among other things) that the sale price recorded in written agreements for the sale of those properties was not a market price, but rather their book value, because the transfer of the properties constituted his contribution to (what he described as) the joint venture.
Procedural background
The applications
i) An application by D1 dated 23 October 2023 to (i) strike out the claim for failure to serve it in the jurisdiction within the time permitted for service; or (ii) stay the claim on forum non conveniens grounds in favour of the courts of Kazakhstan. (D3, who became represented by the same solicitors as D1, issued an application in similar terms on 8 March 2024).
ii) Applications by D1 and D3 dated 31 October 2023, by D4 dated 7 November 2023, and by D2 dated 8 March 2024, all to set aside the Dias J Order.
i) The Defendants contend that D1 was not properly served within the jurisdiction, and could not have been as he was no longer domiciled or resident in the jurisdiction at the relevant time. In the alternative, D1 contends that if he was served properly within the jurisdiction, the claim against him should be stayed on forum non conveniens grounds.
ii) The Defendants seek to set aside the Dias J Order on the basis that there is no serious issue to be tried, that there is no good arguable case that the requirements of the gateways relied upon under CPR PD6B are met, and that the courts of England are not the appropriate forum. In relation to "no serious issue to be tried": (i) D1-D3 contend that there was no agreement as alleged by the Claimant; (ii) D2 and D3 also contend that even if there was such an agreement they were not party to it; and (iii) D4 contends there is no serious issue to be tried against it in circumstances where the Claimant has pleaded no claim against it and claims no relief against it.
iii) D1-D3 also seek to set aside the Dias J Order for alternative methods of service on the ground there was no basis for it.
iv) D1-D3 also seek to set aside the Dias J Order on grounds of non-disclosure.
i) An application dated 8 March 2024 made by D2 to rely on expert evidence in respect of the law of Luxembourg in support of his position on the main applications.
ii) An application made by the Claimant during the course of the hearing to amend the Particulars of Claim to plead a case of ratification.
Evidence served for these applications
i) 3 witness statements of Mihail Iatuha, a partner at Sterling Lawyers Ltd ("Sterling Law"), the Claimant's solicitors. His first statement ("Iatuha 1") was served for the without notice application.
ii) A witness statement of the Claimant.
iii) 6 supporting witness statements. These were statements of (i) Aydyn Alimov (the Claimant's brother), (ii) Arman Naurzaliev (Director of KKS Karagandy), (iii) Gulmira Alimova (the Claimant's wife), (iv) Noyan Alimov (the Claimant's son), (v) Sholpan Soyayeva (sole shareholder in KKS Karagandy), (vi) Andrew Wordsworth (Director at Raedas Consulting Ltd, an investigations firm engaged by the Claimant) and (vii) Asset Begaliyev (a former business assistant of the Claimant).
i) D1/D3:
a) 4 witness statements of Roberto Moruzzi, a partner at Withers LLP, D1/D3's solicitors.
b) 3 witness statements of D1.
c) 2 witness statements of D3
d) A statement from Vakha Goigov (Head of Operations at D4).
ii) D2:
a) 2 witness statements of Kasra Nouroozi Shambayati, a partner at Mishcon de Reya LLP, D2's solicitors.
b) 2 witness statements of D2
c) 3 supporting witness statements. These were from (i) Jon Abbas Zaidi and (ii) Elena Kaplunovskaya (both of whom provided some due diligence work for the Claimant in Kazakhstan), and (iii) Karlygash Yezhenova (a journalist in Kazakhstan).
iii) D4 relied on 2 witness statements from Andrea Monks, a partner at Latham & Watkins (London) LLP, D4's solicitors.
i) Law of Kazakhstan (2 reports from each of the following experts):
a) For the Claimant, Askar Konysbayev (the head of dispute resolution in Kazakhstan at GRATA International, an international law firm).
b) For D1/D3, Professor Farkhad Karagussov (a Professor of Jurisprudence at "Adilet" High School of Law of Caspian University (in Almaty, Kazakhstan) and a practitioner at K&T Partners LLP).
c) For D2, Askar Kaldybayev (a qualified Kazakh lawyer working in the Centre of Corporate and Insolvency Law "Talpyn").
ii) Law of the UAE (1 report from each of the following experts):
a) For the Claimant, Ghassan El Daye (a partner at Charles Russell Speechlys LLP, registered as a legal consultant in the UAE).
b) For D1/D3, Saleh Alobeidli (the managing partner of International Consultant Law Office, a lawyer qualified in the UAE).
c) For D2, Jonathon Davidson (Managing Partner at Davidson & Co Legal Consultants in Dubai, registered as a legal consultant in Dubai).
(There was also before the court a letter from a Luxembourg lawyer, on which as I have mentioned above D2 sought permission to rely.)
Service on D1 within the jurisdiction
i) In relation to service within the jurisdiction, the main question is whether D1 was served at his usual or last known residence, under CPR 6.9 (to be addressed as at the time of purported service of the claim form). The Claimant also contended D1 was properly served within the jurisdiction pursuant to section 1141 of the Companies Act 2006. Neither the Claimant nor D1 suggested any additional question arose in relation to service within the jurisdiction.
ii) In relation to service out of the jurisdiction, the question is whether D1 was domiciled in the UK, which both parties addressed by reference to whether he was resident in the UK, for the purposes of CPR PD6B paragraph 3.1(1) (at the time of issue of the claim form).
The parties' positions and the evidence
i) In respect of 27 Ingram Avenue and 26 Holne Chase, the Claimant said that one or other of those was D1's "usual or last known residence" for the purposes of CPR 6.9(2).
ii) In respect of 5A Falkland Road, the Claimant contended that D1 could be served there under section 1141 of the Companies Act 2006 on the basis that he had given that address as a service address.
i) 26 Holne Chase is registered in D1's wife's name. D1 says this was his family home from December 2014, and that he lived there until his move to Dubai (in September 2021), and that his family lived at that address until he says they moved to join him in Dubai (on 4 September 2022).
ii) 27 Ingram Avenue is owned by a Bahamas trust company, having previously been owned by a Jersey trust company. D1 has denied that he owns the property, but has not identified who he says is the beneficial owner. D1's case is that his mother lives in this house.
i) A filing in 2022 for D4 in Cyprus which noted the "Last Date of Changes" as 27 June 2022. This identified D1 as a shareholder and gave his address as 26 Holne Chase.
ii) A filing for MKM GP SARL, registered in Luxembourg, dated 5 April 2022. This gave D1's address as 26 Holne Chase. It also attached MKM GP SARL's constitution, which is dated 25 March 2022, and which identified D1 as the person appearing before the notary for the purpose of drawing up the articles of association (albeit via a proxy), and stated that he was "residing" at 26 Holne Chase (both at that start of the document and under the resolution appointing managers (including D1)).
iii) A filing for Scalo Technologies Pte Ltd, registered in Singapore. The filing showed details on the register at 16 August 2023, and listed D1 as both a director and shareholder, and gave his address at 26 Holne Chase as well as noting his British nationality.
i) This company was incorporated on 9 March 2022, with a proposed registered office address c/o a corporate services provider in Hertfordshire. The Companies Register lists D1 as a Person with Significant Control ("PSC") (noting he held 75% or more of the voting rights and the right to appoint or remove a majority of the board of directors). The listing confirms D1's "Country/State Usually Resident" as the UK, and identifies a services address c/o the same corporate services provider. D1's son (Halil Mirakhmedov) was identified as a director of the company (stating he was usually resident in the UK and giving the same address as a service address).
ii) On 5 May 2023, new address details were filed with Companies House for the registered office, which was now identified as 5A Falkland Road. At the same time, D1's details, as a PSC were updated noting (with a date of change of 1 March 2023) that his service address was the company's registered office. The update also recorded "New Country/State Usually Resident: United Kingdom".
iii) D1 said very little about this company in his evidence, simply noting that he was not a director or company secretary such that, in his understanding, the addresses provided were not formal addresses for the purpose of serving legal proceedings.
Was D1 properly served within the jurisdiction?
"i. The inquiry is a multi- factorial and fact-dependent evaluation, in which all relevant circumstances are considered in order to see what light they throw on the quality of the individual's absence from the UK.
ii. For residence to cease there should be a distinct break in the sense of an alteration in the pattern of the individual's life in the UK.
iii. This may well encompass a substantial loosening of social and family ties, but does not require a severance of such ties.
iv. The individual's intention to cease residing in the jurisdiction is relevant to the inquiry but not determinative.
v. Actions of the individual after the material time (here, the issue of the claim form) may be relevant, if they throw light on the quality of the individual's absence from the UK.
vi. If the individual has in fact ceased to be resident according to the applicable criteria, the fact that his motive for doing so was unworthy or even unlawful will not affect the position.
vii. One should be careful to avoid the risk of over-analysis in applying what are ordinary English words."
i) It is undoubtedly the case that, in 2023, D1 travelled less to the UK than he had in 2022. That was not only D1's own evidence, but it was also evidenced by the (albeit redacted) travel records that were disclosed coupled with the results of the review undertaken by D1's solicitors of the unredacted records and D1's passport.
ii) There was, however, beyond that (and beyond D1's own word) a distinct lack of evidence as to his and his family's move to Dubai and his intentions for the future. One would have supposed it would be relatively easy for D1 to provide documents and other evidence to support his case in this respect. There was, however, no evidence for example as to the property in which D1 and his family live (whether it had been purchased, or was rented and, if rented for what period of time); no evidence in relation to utility bills (so no evidence that D1 and his family are paying for utilities, which might be an indicator of a more permanent set up than if they are renting for a shorter term); no evidence from D1's wife or any other member of his family confirming their move to Dubai and that they intend to stay there; it is said one of D1's sons is working in Dubai, but there is no supporting evidence of that and it is not clear if this is the same son as is director of the Mirakhmedov Foundation Limited (a UK company for which his son has said he is UK resident).
iii) It is difficult, on an application such as this, to disbelieve the evidence in D1's statement that his family have moved to Dubai, and that his children now go to school there – there is no evidence directly contradicting it – but it is surprising that no other evidence has been produced to support it (save for D1's redacted travel records). Whilst, therefore, I proceed on the basis that the family are in Dubai and that the children are now at school there (or, in the case of one son, working there), there is a question mark over the degree of permanence intended by D1 and his family in terms of living in Dubai.
iv) Moreover, the period of time over which to assess any establishment of a new pattern of life on the part of D1 is a short one. The travel records showing D1 travelled to the UK less in 2023 than in 2022 might be the first part of a longer period of less travel to the UK, or it might be a one-off year. There has not been a sufficiently long period of time to test that. Records for 2024 might have assisted in trying to work this out (as noted in Shulman at point v.) but there was no evidence about that.
v) The filing made with the UK companies registry on 5 May 2023, with "date of change" 1 March 2023, in respect of the Mirakhmedov Foundation confirmed that D1 was usually resident in the UK. This is telling:
a) This is a formal document, which no doubt would have been completed with care. What was striking about the evidence in respect of the filings for this company is that D1 said nothing about what was on the filing in respect of his residence. He simply addressed the "service address" point, saying that he was not a director or company secretary such that his understanding of the legal rules in England was that the addresses given were not formal addresses for the purpose of serving legal proceedings. But the point that had been made in Iatuha 1 was that the filings recorded he was "usually resident" in the UK (in fact, that was the first point made in paragraph 43 of Iatuha 1 which referred to these filings) and it was clear that was something being relied upon by the Claimant.
b) Moreover, in respect of the various other corporate filings (of companies registered in other jurisdictions) the point made by D1 in his second statement was that he was not particularly involved in their incorporation, which were often processed without his involvement (often D2 and D3 being involved) and he believes the incorporation agents simply used information they had on file for him. D1 did not in his evidence make any similar point in respect of the filings concerning the Mirakhmedov Foundation Limited (whether at paragraph 41 of his second statement, where he dealt with that company's filing, or elsewhere). It is also notable that he says nothing about D2 or D3 being involved in these filings in the UK (in fact, he says elsewhere that to his knowledge neither D2 nor D3 have had any business dealings in the UK). If he had not had any involvement in the filing, he presumably would have said so. The inference to be drawn is that D1 was well aware of the fact of the filings and what was being said about him, including that he was resident in the UK, both when that was said on incorporation and when change of details was lodged in May 2023.
c) It appears, therefore, that D1 was entirely content to represent to Companies House that he was resident in the UK, and no reason has been suggested by D1 as to why he would have done that unless he did see himself as resident in the UK.
vi) That is entirely consistent with his having previously stated to various company registries that he was UK resident, and having taken no steps to amend the entries in those registries after he says he moved to Dubai (in September 2021) or when he obtained his 10 year visa. There was no evidence that he has taken any steps to change what is stated about his residence on the various registers (including the UK register) since it was drawn to his attention by the evidence in this case that they all referred to his residence in England. On his account, it is difficult to understand why he would not have done that (and, having done so, why that would not have been prayed in aid in support of his evidence that the filings in other jurisdictions had been completed without his input and using 'old' information).
vii) It is right to say that his travel records indicate that he was in the UK for a shorter total time in 2023 compared to 2022, and that is not surprising in circumstances where his wife and children are said to have moved to join him in Dubai in September 2022, but that itself is not decisive. As the Court of Appeal in Relfo Ltd v Varsani [2011] 1 WLR 1402 made clear, residence, still less "usual residence", is not dependent upon a merely quantitative analysis where one merely compares the duration of periods of occupation (see paragraphs 27-30). However, to the extent that conclusions can be drawn about any new settled pattern of life post September 2022, it is clear he continued to regard London as a place where he lived (including because his mother continued to live there) and was content to describe himself as UK resident.
viii) He says that he does not carry out work in the UK, but that sits ill with the fact that he chose to incorporate the Mirakhmedov Foundation in the UK, and to do that after he says he moved to Dubai. It is also inconsistent with the evidence of what was said to the process server by D1's mother when the claim form was served at 27 Ingram Avenue (that D1 "was not in Dubai but was out working").
Sections 1140 and 1141 of the Companies Act 2006
"1140 Service of documents on directors, secretaries and others
(1) A document may be served on a person to whom this section applies by leaving it at, or sending it by post to, the person's registered address.
(2) This section applies to—
(a) a director or secretary of a company;
…
(3) This section applies whatever the purpose of the document in question.
It is not restricted to service for purposes arising out of or in connection with the appointment or position mentioned in subsection (2) or in connection with the company concerned.
(4) For the purposes of this section a person's "registered address" means any address for the time being shown as a current address in relation to that person in the part of the register available for public inspection.
(5) If notice of a change of that address is given to the registrar, a person may validly serve a document at the address previously registered until the end of the period of 14 days beginning with the date on which notice of the change is registered.
(6) Service may not be effected by virtue of this section at an address—
(a) if notice has been registered of the termination of the appointment in relation to which the address was registered and the address is not a registered address of the person concerned in relation to any other appointment;
(b) in the case of a person holding any such position as is mentioned in subsection (2)(b), if the overseas company has ceased to have any connection with the United Kingdom by virtue of which it is required to register particulars under section 1046.
(7) Further provision as to service and other matters is made in the company communications provisions (see section 1143).
(8) Nothing in this section shall be read as affecting any enactment or rule of law under which permission is required for service out of the jurisdiction."
"(aa) a person who is a registrable person or a registrable relevant legal entity in relation to a company (within the meanings given by section 790C)".
That brought a PSC within the scope of section 1140. It is common ground that, if subsection (2)(aa) had been in force at the date of service in this case, D1 could have been served at his address registered at Companies House as PSC of Mirakhmedov Foundation Limited.
"1141 Service addresses
(1) In the Companies Acts a "service address", in relation to a person, means an address at which documents may be effectively served on that person.
(2) The Secretary of State may by regulations specify conditions with which a service address must comply.
(3) Regulations under this section are subject to negative resolution procedure."
"The whole point of section 1140 is that where a director has provided a "registered address" in the sense set out in subsection (4), which encompasses the "usual residential address" provided for in Form 288a, and that address is within the jurisdiction, the effect of the section is that the director can be served with proceedings at that address even if he is not physically present within the jurisdiction at the time of service. The position is different if the address given on the Form or in the records held at Companies House is an address outside the jurisdiction. As Master Marsh explained in Key Homes that is the situation covered by section 1140(8): if the "service" address provided is outside the jurisdiction, section 1140 cannot be used to effect service and the normal rules requiring permission to serve out of the jurisdiction to be obtained apply"
"This clause is a new provision. It ensures that the address on the public record for any director or secretary is effective for the service of documents on that person. Sub-section (3) provides that the address is effective even if the document has no bearing on the person's responsibilities as director or secretary."
i) Section 1141 simply identifies what a "service address" is (namely, an address at which documents may be served on a person) and provides that regulations may be made specifying conditions with which a service address must comply. Regulations have been made: see the Companies Act 2006 (Annual Return and Service Addresses) Regulations 2008 (SI 2008/3000 as amended by SI 2011/1487) which include, at regulation 10, that:
"For the purposes of section 1141 of the Companies Act 2006 (conditions with which a service address must comply) the conditions are that the service address must be a place where—
(a)the service of documents can be effected by physical delivery; and
(b)the delivery of documents is capable of being recorded by the obtaining of an acknowledgement of delivery."
ii) Section 1141 therefore identifies what a "service address" is, and makes provision for the regulations which specify conditions to be met for an effective service address, but it does not, by itself, create any new or separate rule whereby a person may be served with legal process. Nor does section 790K(1)(b), in requiring a PSC to give a "service address", mean that section 1141 creates such a new or separate rule permitting service of legal process.
iii) The authorities that have considered section 1140, and which have concluded that it may be used to serve a person falling within its scope at a "registered address" within the jurisdiction even when they are resident abroad, have considered carefully the detailed provisions of section 1140 in coming to the view that it can be used for that purpose. It was intended, as described in the commentary to the Bill set out above, to ensure that the address was effective for the purpose of service, even when the document had no bearing on the role that had led to the inclusion of the registered address on the companies register. That latter intention was expressly spelt out in subsection (3). None of the authorities suggest that the conclusion arrived at would have been possible without reliance on section 1140, and none of them suggest that section 1141 by itself would have been sufficient.
iv) There was inserted at subsection (8) of section 1140 the wording preserving the need to serve out of the jurisdiction where the registered address was outside the jurisdiction. If section 1141 was intended to have the effect for which the Claimant contends, it is difficult to see why similar wording would not have been included in relation to section 1141.
v) If section 1141 did have the effect contended for by the Claimant, it would beg the question why section 1140 was necessary at all. When I asked Mr Samek (who appeared for the Claimant, along with Mr Halban) in argument what, on his interpretation of section 1141, the purpose was of section 1140, he ultimately ended up saying that it might be thought section 1140 is otiose. That cannot have been what Parliament intended.
Application for permission to serve out of the jurisdiction
i) In relation to the foreign defendant to be served with the proceedings, there is a serious issue to be tried on the merits of the claim, i.e. the claim has to have a real, as opposed to a fanciful, prospect of success.
ii) There is a good arguable case that the claim against the foreign defendant falls within one or more of the classes of case for which permission to serve out of the jurisdiction may be given. These are set out in paragraph 3.1 of PD6B.
iii) In all the circumstances England is clearly or distinctly the appropriate forum for the trial of the dispute and that in all the circumstances the court ought to exercise its discretion to permit service of the proceedings out of the jurisdiction. This is reflected in CPR 6.37(3).
See AK Investment CJSC v Kyrgyz Mobil Tel Limited [2011] UKPC 7, [2012] 1 WLR 1804 at paragraph 71; Brownlie v Four Seasons Holdings Inc [2017] UKSC 80, [2018] 1 WLR 192 at paragraph 3.
Tests for serious issue to be tried and good arguable case
"For the purpose of determining an issue about jurisdiction, the traditional test has been whether the claimant had 'the better of the argument' on the facts going to jurisdiction. In Brownlie v Four Seasons Holdings Inc [2018] 1 WLR 192 , para 7, this court reformulated the effect of that test as follows: '(i) that the claimant must supply a plausible evidential basis for the application of a relevant jurisdictional gateway; (ii) that if there is an issue of fact about it, or some other reason for doubting whether it applies, the court must take a view on the material available if it can reliably do so; but (iii) the nature of the issue and the limitations of the material available at the interlocutory stage may be such that no reliable assessment can be made, in which case there is a good arguable case for the application of the gateway if there is a plausible (albeit contested) evidential basis for it.' It is common ground that the test must be satisfied on the evidence relating to the position as at the date when the proceedings were commenced."
i) In relation to limb (i), that the Supreme Court had, at least in part, confirmed the relative test in Canada Trust (Kaefer, paragraphs 73-74). The reference to "a plausible evidential basis" in limb (i) was a reference to "an evidential basis showing that the claimant has the better argument" (but not "much" the better argument). The test is not one of balance of probabilities and is context-specific and flexible. The burden of proof is on the claimant.
ii) Limb (ii) explains how the court is to approach that task, in a context in which evidence may well be incomplete, there has been no disclosure, and witness evidence has not been tested by cross-examination. Limb (ii) is (Kaefer, paragraph 78):
"… an instruction to the court to seek to overcome evidential difficulties and arrive at a conclusion if it "reliably" can. It recognises that jurisdiction challenges are invariably interim and will be characterised by gaps in the evidence. The Court is not compelled to perform the impossible but, as any Judge will know, not every evidential lacuna or dispute is material or cannot be overcome. Limb (ii) is an instruction to use judicial common sense and pragmatism, not least because the exercise is intended to be one conducted with "due despatch and without hearing oral evidence"…. It should be borne in mind that it is routine for claimants to seek extensive disclosure (as was done on the facts of the present case) from the defendant in the expectation (and hope) that the defendant will resist, thereby opening up the argument that the defendant has been uncooperative and is hiding relevant material for unacceptable forensic reasons and that this should be held against the defendant. Where there is a genuine dispute judges are well versed in working around the problem."
iii) Limb (iii) arises where the court is unable to form a decided conclusion on the evidence before it and is therefore unable to say who has the better argument (Kaefer, paragraphs 79-80). "To an extent it moves away from a relative test and, in its place, introduces a test combining good arguable case and plausibility of evidence. Whilst no doubt there is room for debate as to what this implies for the standard of proof it can be stated that this is a more flexible test which is not necessarily conditional upon relative merits."
"There was some debate between the parties as to the point at which limb (iii) cut in, the Bank, in particular, being keen to depict it as very much an option of last resort. On the face of things, the idea of the court being "unable to form a decided conclusion" on who has the better case on the evidence appears an improbable one – indeed, both sets of legal advisers are likely to have done exactly that. However, the evidence in some cases will be such that reaching a judicial decision on relative merit will be incompatible with the nature of the hearing, and the injunction not to conduct a mini trial. Further, the limitations of the material may be such that any decision on relative merit will lack the robustness which a judicial decision of this significance requires. Green LJ referred in his discussion of limb (iii) to Teare J's decision in Antoni Gramsci Shipping Corp v Recoletos Ltd & Ors [2012] EWHC 1887 (Comm), [39] and [45], in which he referred to cases where there is "a conflict of evidence which cannot be resolved without appearing to conduct a pre-trial," instancing "a stark dispute between opposing witnesses" in a case where "to seek to judge who has the better of the argument on such evidence risks a pre-trial at the interlocutory stage." Earlier in his judgment, Green LJ had cited Lord Sumption in Goldman Sachs International v Novo Banco SA [2018] UKSC 34, where he described limb (iii) as applying where "no reliable assessment" can be made of relative merit."
Serious issue to be tried – introduction
i) D1-D3 all contended that the Claimant had no real prospect of succeeding in his case that the oral contract he alleged existed.
ii) D2 and D3 contended that, even if the contract was made between the Claimant and D1, there was no real prospect that it bound them under the law of Kazakhstan.
Gateway (1) - D1's domicile
"(1) A claim is made for a remedy against a person domiciled within the jurisdiction within the meaning of sections 41 and 42 of the Civil Jurisdiction and Judgments Act 1982."
Gateway (3) - necessary or proper party
"(3) A claim is made against a person ('the defendant') on whom the claim form has been or will be served (otherwise than in reliance on this paragraph) and –
(a) there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and
(b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim."
"I agree … that caution must always be exercised in bringing foreign defendants within our jurisdiction under [the necessary or proper party gateway]. It must never become the practice to bring foreign defendants here as a matter of course, on the ground that the only alternative requires more than one suit in more than one different jurisdiction."
Gateway (6) – claim made in respect of a contract made within the jurisdiction
"(6) A claim is made in respect of a contract where the contract –
(a) was (i) made within the jurisdiction …"
The alleged oral agreement
i) The Claimant says he and his family arrived at 27 Ingram Avenue at around 8.40pm. D1 says it was around 9.15pm. Neither has any record to substantiate their recollection in this respect.
ii) The Claimant says after he arrived, he and D1 had a discussion separate to their family members, punctuated by their joining their families to eat. During that separate discussion (before and after the food) the Claimant says they reached the agreement. D1, however, says once the Claimant and his family had arrived, there was a short, light meal, followed by evening prayers, then returning to the table for the main meal; he says it was purely a social occasion, and that no business at all was discussed. In addition, he says that "it is considered inappropriate to discuss business on a religious occasion such as Iftar."
iii) The Claimant says they left the house at about 10.50pm to go to the mosque. D1 had originally recalled they had left for the mosque at about 9.55pm, but subsequently found the relevant Uber receipt showing they had in fact left at about 10.15pm. D1 contends that the (on his account) single hour would not have been sufficient for the Iftar meal and the discussions/agreement that the Claimant contends took place. The Claimant, of course, contends he arrived earlier and that there was time.
iv) After prayers at the mosque, they agree they walked together towards the Claimant's hotel (D1 says he would not have been able to get a taxi from immediately outside the mosque). The Claimant contends they reviewed the points of their agreement as they walked; D1 says no business was discussed.
v) The Claimant also served witness statements from his wife and his son supporting his account of events, including each of them saying that at the end of the evening, once they were on their own, the Claimant told them that he had "become a business partner of [D1] in the bitcoin mining project and he had been offered a good share in the venture".[1]
i) On 23 July 2017, D3 emailed the Claimant a document listing project assets and expenses, which the Claimant contended referred to "Y. Alimov's facility" as an asset of the GM JV valued at $16 million. The Claimant says that this referred to Stal and the ABK Buildings, being his assets he was contributing to the alleged joint venture, thus recognising his contribution (albeit he recognises the $16m as an overstatement of value). D3 disputes this and gives a detailed explanation saying that this refers to a different power station – Ridderskaya – which the Claimant did not own but which he recommended to them (hence the description "Y. Alimov's facility") and that the purpose of the table was to run profitability figures for this potential site.
ii) On 10 August 2017, Mr Goigov, an employee of D1-D3, sent by WhatsApp to the Claimant a spreadsheet of income and expenditure for the GM JV ("the August 2017 spreadsheet"). That included entries for the income of the "KZ [Kazakh] side" of the GM JV (i.e. D1-D3) of around $16.6m (half of the total JV profit). That was followed by an entry for "Income of KZ partner (EA)" of around $5.8m. "EA" are the Claimant's initials in Russian, and that figure is exactly 35% of D1-D3's figure.
a) The Claimant contended this matched his case that it had been agreed he would be entitled to 35% of the bitcoin received by D1-D3.
b) The Defendants dispute the authenticity of this spreadsheet. Although the telephone number from which the WhatsApp message appears to have been sent has been confirmed by Mr Goigov as his number, Mr Goigov said in a witness statement served for these applications that he did not recognise the message or the document said to be attached to it. He said he did not recall communicating via WhatsApp with the Claimant at all, although he had spoken with him a few times on the phone. He has not been able to check whether such a message was sent because he has changed his phone since 2017, has been using a different number since 2018, and does not have access to historical messages.
c) The Defendants alleged that the spreadsheet had been amended by (or on behalf of) the Claimant, from a document that D3 had emailed to him (which was very similar), and that the line referring to "Income of KZ partner (EA)" had been added.
d) The Claimant's solicitors have confirmed that they have inspected the original WhatsApp message on the Claimant's phone, which attaches the spreadsheet in the form exhibited by the Claimant. However, neither the Claimant nor the Defendants have sought to engage any IT or forensic document expert in relation to this.
iii) The Claimant says that he chased D1-D3 for when the corporate structure would be created and when he would receive his shares. He refers to Telegram messages (which he says were sent on 16 February 2018) that he received from D3 in the following terms (in translation):[2]
"Besides, brother, we are all undocumented anywhere, you can see yourself, we are not hiding anything from you. Do you really think that one of us is going to cheat you?"
"Brother, this is not HIS [i.e. D1's] deal, this is our deal. I think that his proposals were great, he pays for everything in full no matter what, we're becoming shareholders, it is possible to find anywhere people with such a broad SOUL nowadays?"
The Claimant contended that the reference to "we're becoming shareholders" was a reference to the represented process of establishing D4, leading the Claimant to think that the alleged London Agreement was being performed. D3 contended in response that the reference to "shareholders" was only to D1-D3, and not also to the Claimant, and said the wider context of the messages was important to show that these messages were sent in response to the Claimant's chasing for payment, and not in the context of any shareholding he was claimant.
i) The Claimant's evidence is that he was the beneficial owner of KKS Karagandy and decisions of the company were taken on his instructions, which he says is inconsistent with the idea he was a "broker" or "intermediary" in relation to the sale of the properties he owned. Other witnesses who provided statements for the Claimant supported that, including Mr Naurzaliev (the director of KKS Karagandy) and Ms Soyayeva (said to be the nominee shareholder of KKS Karagandy).
ii) The Claimant points to D2's evidence saying that the defendants just accepted the figure of US$1.75m that the Claimant had proposed as his "commission" without any negotiation. He says it is simply unrealistic, from a commercial point of view, that the defendants would not have sought to negotiate the figure.
iii) The Claimant also notes that the figure for "commission" of US$1.75m was almost double the entire sale price of the assets as recorded in the sale agreements, which (in US$ equivalents) were $159,000 for Stal and $855,000 for the ABK Buildings. He says it does not make sense that a broker or intermediary would be paid not only more than the value of the asset sold, but almost double the sale price.
i) The Defendants contend that the Claimant's case about the alleged agreement having been made on 10 June 2017 is inconsistent with the fact that on 13 June 2017, KKS Karagandy signed a contract with Hua Tun to sell Stal and the ABK Buildings (along with the Vtorprom Factory) to Hua Tun. (This was an agreement described in the Claimant's letter before action as "a preliminary agreement"). They say if the Claimant had thought he had made the agreement he now contends for on 10 June (which included potentially contributing Stal and the ABK Buildings to the joint venture), he would not have agreed to sell the assets to Hua Tun only 3 days later.
ii) The Claimant responds to this by saying that there had been an earlier written agreement with Hua Tun on 12 March 2017 (although it had not been referred to or identified in his letter before action), under which KKS Karagandy was late in transferring the assets such that there was a risk of collapse of the sale to Hua Tun, and that KKS Karagandy signed the 13 June agreement with Hua Tun to "keep the sale alive" knowing that if he ended up needing to transfer Stal and the ABK Buildings to the joint venture, he could always seek to renegotiate with Hua Tun to exclude them from that sale.[4]
iii) The Defendants in turn challenge the authenticity of the alleged 12 March 2017 agreement, and rely on a letter said to be from Hua Tun denying the existence of that agreement.
iv) In response, the Claimant served a witness statement from one of his employees, Mr Begaliev, who produced email correspondence with Hua Tun's representative in Kazakhstan and its Chinese lawyer, showing amendments to travelling drafts of the agreement and a final draft along with emails confirming the date of a signing meeting.
i) The alleged agreement included the Claimant ensuring that the price of the electricity generated for the joint venture would be not more than (what he pleads as "a cheap rate of") US$0.04 per kWh and that he would receive (in addition to the shares and bitcoins) a sum being the difference between US$0.04 per kWh and the actual price at which electricity was obtained for the joint venture. In his witness statement the Claimant says he "guaranteed to [D1]" rates of around US$0.024 and US$0.027. The Defendants, however, point to the fact that, as part of discussions just a few months before, Mr Begaliev had informed Hua Tun that it was not possible to guarantee cheap electricity prices and there could be no clause in the proposed sale agreement to Hua Tun guaranteeing it, because that was a matter for the "TPP (Thermal Power Plant) and the Agency on the Regulation of Natural Monopolies." This is in general terms consistent with D1's evidence that energy power rates are set by the "Committee on Regulation of natural Monopolies of the Ministry of National Economy of the Republic of Kazakhstan."
ii) The fact that, under the alleged agreement, the Claimant would receive the same by way of payments (being 35% of D1-D3's shares, 35% of the bitcoin received by D1-D3 before the corporate vehicle was established, and the differential relating to the electricity price referred to above) whether he satisfied his obligation by (i) finding suitable power stations for D1-D3 to purchase (including introduction and negotiations), or by (ii) himself transferring ownership of Stal and the ABK Buildings. On its face, (ii) would have been a good deal more costly to the Claimant than (i).
i) It would involve preferring one of the Claimant's and D1's evidence regarding the content of the discussion at the 10 June 2017 meeting over the other, in circumstances where there is little (or no) independent or (uncontested) documentary evidence to shine a light on who is more likely to be correct. This would involve considering the credibility of each of them, which would pull in a potentially wide variety of other matters bearing upon that credibility. It would also involve considering the credibility of the evidence given by the Claimant's son and wife, again without any documentary context for any sort of guide.
ii) It would involve taking a view on the authenticity of at least some of the documents in relation to which questions as to authenticity have been raised. In particular, the August 2017 Spreadsheet, which on its face supports the Claimant's case, but the individual said to have sent it says he never sent the Claimant a WhatsApp, and the Defendants say the spreadsheet has been amended from another one previously sent to the Claimant. Another example is the alleged 12 March 2017 agreement between KKS Karagandy and Hua Tun, which the Claimant deploys to counter the point that his case on the oral agreement is undermined by the 13 June 2017 agreement with Hua Tun, but which again is the subject of a challenge to authenticity and the parties have produced conflicting evidence (including, for the Defendants, a letter from Hua Tun denying its existence, and for the Claimant a witness statement exhibiting email correspondence appearing to show travelling drafts and arranging a signing meeting).
iii) It would involve taking a view on matters going to the question whether the alleged oral agreement was commercially realistic in the absence of evidence which (as at least the Defendants suggested) would be required to resolve the matter at trial e.g. expert evidence as to the regulation of the electricity market in Kazakhstan, which is said to be required to deal with the point whether the parties could ever have agreed on certain prices for electricity.
iv) It would involve an assessment of whether the sale prices of Stal and the ABK Buildings were market prices (as contended by the Defendants) or "nominal book values" (as contended by the Claimants). Counsel for D1 and D3 suggested at the hearing that expert evidence as to land valuation in Kazakhstan would be required in relation to this at trial, but that is not available on this application.
v) There are other factual issues between the parties (as I have identified in setting out their respective positions, above) on which a view may also need to be taken. I have not sought to identify each and every one, but those I have identified above seem to me to be ones that would need to be resolved but which, on an application such as this, cannot be.
i) The Claimant's own evidence (along with that of his wife and son, albeit that only amounts to hearsay) supports his case. Whilst there may be some material on which to doubt his account, on which he would no doubt be cross-examined at trial (including but not limited to the relatively short opportunity it appears there was for the discussion that he alleges, the points the Defendants noted as commercial oddities of his alleged agreement, and the changing nature of his case between the letter before action and the Particulars of Claim), those potential difficulties do not justify rejecting his evidence at this stage.
ii) His account is supported by some documents, at least on their face, and on this application (as I have already said above) I cannot go behind what those documents appear to be and say. The August 2017 Spreadsheet is plausible supporting evidence, as are the 23 July 2017 email from D3 and D3's Telegram messages. Those pieces of evidence may or may not survive trial as supporting material but, as I have already said, I cannot take a view on those matters on this application.
iii) The fact that the Claimant was paid substantial amounts of bitcoin, which appear to reflect what he says was his entitlement under the alleged oral agreement in the period January to August 2018, supports his account. The Defendants put forward a different explanation (which is not without its own difficulties), but I cannot determine who is right about that on this application. The payment of the bitcoin is plausible evidence supporting the Claimant's position.
iv) There is also the other evidence, which I have referred to above, which the Claimant relies upon in support of various parts of his case (and to seek to undermine the Defendants' case), which is not capable of rejection at this stage and which therefore also supports, at this stage, the plausibility of his case.
Authority
i) At paragraph 2, it is pleaded: "At all material times (save where pleaded to the contrary) each of [D1, D2 and D3] acted jointly, such that each acted for and on behalf of himself and also at the same time as the agent of the others, …". The Claimant referred to them throughout the Particulars of Claim as a single unit termed "MMK", pleading that "such references include any one or two of them acting on behalf of all three".
ii) At paragraph 27, it is pleaded that D1 "acting on behalf of MMK" reached the "London Agreement".
i) The issue was governed by English law, not the law of Kazakhstan, although this was not a point that was pursued in Mr Samek's oral submissions.
ii) Under the law of Kazakhstan, a power of attorney is not the only route to finding actual authority. It could also be found in the context or environment of the transaction (this was a point raised for the first time at the hearing).
iii) In any event, ratification was available under the law of Kazakhstan, which he sought permission part way through the hearing to amend to plead.
"1. A transaction made by one person (representative) on behalf of another person (represented) by virtue of an authorisation based on a power of attorney, legislation, court decision or administrative act directly creates, changes and terminates civil rights and obligations of the represented.
The authority may also be evident from the environment in which the representative acts (retail salesman, cashier, etc.).
2. Under a transaction performed by a representative, rights and obligations arise directly with the represented."
"Therefore, unless authority is evident from the environment in which the representative acts (like in the examples given in the Article), only an authorised representative according to a power of attorney, legislation, court decision or administrative act may conclude contracts on behalf of someone else (the represented party)."
"1. A power of attorney is a written authorisation of one person (the principal) to act on his behalf, issued by him to another person (the attorney)."
He followed this with an explanatory paragraph in similar terms to the one I have already set out:
"It is the existence of a written power of attorney that determines a person's ability to act as a representative of another person, unless the powers of a representative are derived from legislation, a court decision or an administrative act, or are evident from the environment in which the representative acts."
"A transaction made on behalf of another person by an individual not authorized to make the transaction, or exceeding their authority, creates, alters, and terminates civil rights and obligations for the represented party only if they subsequently approve the transaction. Subsequent approval by the represented party makes the transaction valid from the moment it was made."
"As to showing that Mr Makhat and Mr Kim are parties to the London Agreement, Mr Alimov sets out the evidential basis to show that Mr Makhat and Mr Kim were bound by the agreement because Mr Mirakhmedov was acting on their behalf, as their business partner, they treated Mr Alimov as a partner and Mr Kim even referred to "our partners" (referring to GM) in message to Mr Alimov."
i) The Claimant's expert on the law of Kazakhstan has not given any evidence about this provision at all. In particular, he did not give any evidence about what sort of situations might be caught by the words in question ("evident from the environment in which the representative acts") nor whether the words in parentheses ("retail salesman, cashier, etc") should be read as identifying the types of "environment" that would satisfy the rule or were examples from a wider category that might stretch to scenarios that were factually distant. There was no evidence of any case law or commentary that suggested how to interpret these words.
ii) Mr Konysbayev had an opportunity to do so. The authority point was put squarely in issue by the defendants in their evidence in support of the set aside application. Article 163 was set out by Mr Kaldybayev. Professor Karagussov said (at paragraph 195): "These rules require, in order for [D1] to have been able to bind [D3] and [D2] to the alleged "London Agreement", [D3] and [D2] to have provided a written power of attorney." It was clear that the case against the Claimant was that a power of attorney was required (and in addition D2 made clear that was his position at paragraph 37(b) of his statement). Mr Konysbayev put in a second report, explaining in paragraph 1 that he had been asked to comment on and reply to those two reports, and saying he disagreed with some views of each of them "for the reasons stated below". In the section of his second report responding to Professor Karagussov, he said nothing about paragraph 195 at all. In responding to Mr Kaldybayev, as I have set out above, he referred to what Mr Kaldybayev had said (without any reference to the "based on the environment" point) and said nothing about Article 163, instead moving on to deal with Article 165 and ratification. (Nor was anything said by Mr Samek at the hearing to suggest that his client's expert would have more to say about this if the point went to trial or that there was otherwise any further material that might bear on it).
iii) If Mr Konysbayev, or those acting for the Claimant in these proceedings, had contemplated that the words now relied upon by Mr Samek might have supplied authority under the law of Kazakhstan, it is very difficult to understand why nothing was said about it. The inference to be drawn is that Mr Konysbayev did not consider they were applicable.
iv) The upshot is that none of the three experts in the law of Kazakhstan who have given reports have suggested that the words now relied upon by Mr Samek might cover the situation that is alleged by the Claimant to have led to the oral agreement here.
v) In the absence of any expert evidence about these provisions, Mr Samek made his own points on what he said the words meant, and that "the environment" covered D1 acting in London when the alleged agreement was made. However, the words relied on in Article 163 are not, on their face, apt to cover the situation in this case, in particular given the examples set out as to the type of situation in which such authority would arise. It is readily understandable that a retail salesman or cashier must be taken to have the authority of the business (whether that is an individual, a company or another type of legal entity) within whose "environment" they are acting. However, the situation in this case is very far from that type of example.
vi) It is not only the words themselves which fall to be considered, however, but also the fact that the Claimant has engaged an expert in the law of Kazakhstan to deal with the issues that arise, including the issue of how D2 and D3 came to be bound to the alleged oral agreement, and that in addressing that issue, he has placed no weight at all on the words Mr Samek now identifies. To put it another way, if Mr Konysbayev had considered there was a real prospect of these words applying as the basis for authority in this case, he surely would have said so.
vii) Mr Samek's argument was put very shortly – it was, as I have noted above, that D1-D3 "are all in it together in the project", that D1 was the "main player" with authority to bind them all, and that his authority is "evident from the particular environment in which [D1] was acting in this case, specifically including in London when the agreement was made." However, it was far from clear what was meant in this submission by reference to "the environment" as it appears in Article 163. Nothing was said by Mr Samek to seek to explain that (no doubt because he would have found difficulty in doing so in the absence of any assistance from his client's expert on this issue).
viii) In determining this issue, I am not deciding anything about the allegations of fact made by the Claimant, but only whether the fact pattern that he alleges falls within the rule of Kazakhstan law identified by Mr Samek (even though not by the Claimant's expert in Kazakhstan law). So, for example, the fact that the Claimant alleges that D1 told him on 10 June 2017 that he was acting on behalf of "all brothers" (said to be a reference to D2 and D3) does not change the analysis. Even assuming that was said, it does not turn the situation here into a "retail salesman" type of example (a retail salesmen's authority is evident from the environment in which he/she sells, not from any oral confirmation from the salesman of his/her authority) absent any expert evidence explaining that.
Ratification
"New para. 29A.
If (which is denied) Mr Mirakhmedov [D1] did not have authority from Mr Kim [D3] and Mr Makhat [D2] to conclude the London Agreement on their behalf pursuant to Art 163 of the Kazakhstan Civil Code, then Mr Kim and Mr Makhat subsequently approved or ratified the London Agreement so that, pursuant to Art 165 of the Kazakhstan Civil Code, it was valid as against them and they were bound by it from the time it was made on 10 June 2017. Mr Alimov [the Claimant] relies on the following matters as constituting such approval or ratification: i) the request made, in or around December 2017 or January 2018, of Mr Alimov by Mr Makhat and Mr Kim to transfer Stal and the ABK Buildings, as pleaded in paragraph 39 below; ii) the payments of Bitcoin made to Mr Alimov by Mr Kim on behalf of himself, Mr Makhat and Mr Mirakhmedov, as pleaded in paragraph 43 below; iii) the message from Mr Kim dated 16 February 2018 as pleaded in paragraph 50 below."
i) Relied upon what was said by Asplin LJ in Elite Property Holdings Ltd v Barclays Bank plc [2019] EWCA Civ 204 at paragraph 40 that "the question of whether permission to amend should be given must be considered in the light of the need to conduct litigation fairly and justly and at proportionate cost."
ii) Pointed to the fact that questions about how D2's alleged liability was said to have arisen and what the case on agency was were not new ones. In particular, he placed reliance upon:
a) The fact that the point was taken in Mishcon de Reya's response (dated 23 September 2022) to the letter before action that the grouping of D1-D3 together and treating them as a single unit (as "MMK") was embarrassing and led to incoherent claims being advanced where it could not be worked out how claims against each of the individuals was said to have arisen.
b) D2's second statement (served in reply, dated 9 September 2024), which noted that Mr Iatuha's third statement (served in response to the set aside application) had suggested that D2 was bound to the alleged agreement because his subsequent conduct had "approved" and "performed" it, and said that appeared to be a fundamentally different case from that which he had understood was advanced against him (based on D1's authority to enter into the agreement on his behalf) and that he did not understand what was said to amount to "approval" or "performance".
iii) Relied upon the evidence of Mr Kaldybayev in his second report (where he responded to what Mr Konysbayev said about ratification under the law of Kazakhstan), in particular where he said:
"…in my view a Kazakh court would not find that there had been approval/ratification of an agreement unless it was clear that the person approving/ratifying knew what they were approving/ratifying, knew that the possibility of approving/ratifying the agreement in question existed and knew the consequences of approval/ratification, and did something that clearly and unambiguously showed that they were approving/ratifying the precise agreement that is alleged to have been made."
Mr Kitchener noted that no further report was put in from Mr Konysbayev seeking to take issue with that, nor was any indication otherwise given that this was not an accurate reflection of the law of Kazakhstan. He also pointed out that the draft amendment made no effort to address matters of knowledge.
iv) In terms of the particulars provided with the draft, he suggested only the first of them directly involved D2, dealing with the transfer of buildings, and he pointed out that was not an act unambiguously approving the alleged agreement given it was common ground that the Defendants were buying the buildings. He said there was not sufficient evidence of what constituted sufficient "approval" under the law of Kazakhstan in order to be able to test whether the pleaded particulars would be sufficient. In addition, the fact that the draft amendment had been produced so late had given the Defendants no opportunity to show those particulars to their own experts to identify whether or not they were sufficient or whether they otherwise might create potential issues under the law of Kazakhstan.
v) He also referred to the fact that there may be limitation issues that arose under the law of Kazakhstan but that, due to the lack of notice of the application to amend, there had not been an opportunity to look into those or how that might impact the position in relation to amendment.
vi) As a matter of discretion, he pointed not only to the lateness of the application, but also to the fact that, even though the issue about properly identifying the basis upon which D2 was said to be liable had been raised in the Mishcon de Reya letter of 23 September 2022, nothing was said on the without notice application seeking to deal with that.
i) The Claimant's reliance on Article 165 and the concept of approval/ratification was flagged in the evidence served on 28 June 2024 in response to the set aside applications. The Defendants had an opportunity to consider and deal with it in their reply evidence, including by way of reply evidence on the law of Kazakhstan. Indeed, Mr Kaldybayev did deal with it. The Defendants emphasised that the application was made extremely late, and with no prior notice. In terms of the terms of the draft put forward, that is right. However, as I have noted, the reliance upon ratification was flagged some months earlier. This was not something that came entirely out of the blue.
ii) It is right to say that, in the Claimant's evidence in response, there was no identification of particular acts that were going to be relied upon to support the case of approval under Article 165. However, Mr Iatuha's evidence was clear (if fairly general) that D2 and D3's conduct in approving and performing the alleged agreement would be relied upon, and the inference was that this would encompass what had been alleged in the Particulars of Claim as to their conduct in performing the alleged oral agreement.
iii) The lateness of the appearance of the draft was not a source of real prejudice to the Defendants. The particulars contained in the draft amendment were all points that were already pleaded in the Particulars of Claim. Although those particular paragraphs had not specifically previously been identified in the context of a ratification plea, it ought to have been reasonably apparent to the Defendants that it was those points (and/or any other similar points in the Particulars of Claim) that would be prayed in aid of the ratification argument.
iv) It is right to say that the draft amendment contains no plea of knowledge on behalf of D2 and D3 in any of the respects that Mr Kaldybayev suggested in his second report would be required for a Kazakh court to find ratification. However:
a) Mr Kaldybayev's evidence in this respect was not entirely categoric. He recognised that Article 165 did not set out any specific conditions and requirements for approval/ratification, and went on to say that in his view, a Kazakh court would not find approval/ratification unless there was knowledge in the various respects he identified. However, he did not refer to any cases or commentary or other authority to support that. He also did not include any further reasoning to support it – simply stating that was his view. This was notable because, in the previous paragraph, he had referred to two commentaries which had stated that "approval" may be in any form, neither of which appear to have addressed any specific knowledge requirement.
b) There was no further round of expert evidence after that report, with the result that it is difficult to have confidence in what, if any, requirement of knowledge exists in the law of Kazakhstan in order to constitute "approval" under Article 165.
c) In any event, although not spelled out in the draft amendment, it is clear from the existing paragraphs in the pleading to which the draft amendment makes cross-reference that it is alleged that D2 and D3 knew about the alleged oral agreement. For example, the allegation in paragraph 39 of the Particulars of Claim is that D2 and D3 requested the transfer of Stal and the ABK Buildings to Prima pending the establishment of the corporate vehicle referred to in the express terms of the alleged oral agreement. If (as is alleged) the request was in those terms, it includes an allegation that D2 and D3 knew about the alleged oral agreement.
d) Whilst, therefore, this issue could perhaps have been more comprehensively addressed through the expert evidence, and could have been the subject of a clearer draft pleading, I cannot say on this basis that the plea has no real prospect of success.
v) As to the point that only one of the particulars directly involves D2 and that, said Mr Kitchener, did not constitute an unambiguous approval of the alleged oral agreement, that is not a reason not to allow the amendment. There is a factual dispute as to whether the buildings were transferred pursuant to the alleged oral agreement (as the Claimant alleges) or as a stand-alone sales contract (with commission payment to the Claimant, as the Defendants allege). I cannot resolve that on these applications and I have already held that the Claimant's account generally has a real prospect of success. That is sufficient at this stage.
vi) The Defendants say they would have liked to show the draft amendments to their respective experts in the law of Kazakhstan to discover if their particular formulation gave rise to particular points of the law of Kazakhstan that they might want to pray in aid. I have no doubt that they would have liked to show them to their respective experts, however given the very general terms in which Article 165 had been addressed by the experts thus far, it is far from clear whether any specific points would have arisen. Mr Kaldybayev's evidence was that "approval" of an agreement could be in any form, whether written or oral or in the form of conduct. Apart from what he went on to say about knowledge, he did not suggest there was any other particular aspect of the law of Kazakhstan that would confine what could constitute ratification or would otherwise bear upon it. As I say, it was clear that ratification under Article 165 was a point that was going to be taken by the Claimant, and the Defendants had had an opportunity for their experts to address it.
vii) The point made that there may have been limitation issues suffers from the same problem. If there were any such limitation issues, I would have expected the Defendants to be alive to them, given that it had been clearly set out some time ago that ratification was the (or at least a) basis on which the Claimant would be dealing with the "lack of authority" issue (albeit there was no formulated pleading of it until the hearing). However, the Defendants did not advance any particular submission in relation to limitation, and Mr Kitchener accepted the amendment did not introduce a new claim.
viii) Mr Cumming also made a point that one part of the proposed new pleading did appear to be new, namely the suggestion that the payments of bitcoin made to the Claimant had been made by D3 (on behalf of D1-D3), whereas the paragraph of the Particulars of Claim to which it cross-referred said that "in partial performance of the London Agreement by MMK, Mr Alimov received some of the bitcoin…". In other words, the pleading had not previously alleged that the payment had been made by D3 on behalf of D1-D3 (as opposed to "by MMK"). This point goes nowhere. There was no dispute that the payment was made by D3 (paragraph 71 of Moruzzi 1, served on behalf of D1, expressly said as much) or that it was made on behalf of D1-D3 (albeit the Defendants' case is that it was a commission payment, not a payment under the alleged oral agreement).
ix) Mr Samek was right to suggest that his client would suffer prejudice were the amendment application not permitted because the Claimant then could not bring the claim against D2 and D3. Whilst to some extent that might be said to be a problem of the Claimant's, and his legal representatives', own making, that does not seem to me to be a complete answer, given that ratification as an issue had been flagged in the response evidence.
Appropriate forum
"(a) The basic principle is that a stay will only be granted on the ground of forum non conveniens where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, i.e. in which the case may be tried more suitably for the interests of all the parties and the ends of justice.
(b) … in general the burden of proof rests on the defendant to persuade the court to exercise its discretion to grant a stay. … [i]f the court is satisfied that there is another available forum which is prima facie the appropriate forum for the trial of the action, the burden will then shift to the plaintiff to show that there are special circumstances by reason of which just requires that the trial should nevertheless take place in this country (see (f) below).
(c) … the burden resting on the defendant is not just to show that England is not the natural or appropriate forum for the trial, but to establish that there is another available forum which is clearly or distinctly more appropriate than the English forum. …
(d) Since the question is whether there exists some other forum which is clearly more appropriate for the trial of the action, the court will look first to see what factors there are which point in the direction of another forum. These are the factors … indicating that justice can be done in the other forum at "substantially less inconvenience or expense"… [I]t may be more desirable … to adopt the expression … the "natural forum" as being "that with which the action had the most real and substantial connection". So it is for connecting factors in this sense that the court must first look; and these will include not only factors affecting convenience and expense (such as availability of witnesses), but also other factors such as the law governing the relevant transaction … and the places where the parties respectively reside or carry on business.
(e) If the court concludes at that stage that there is no other available forum which is clearly more appropriate for the trial of the action, it will ordinarily refuse a stay;
(f) If however the court concludes at that stage that there is some other available forum which prima facie is clearly more appropriate for the trial of the action, it will ordinarily grant a stay unless there are circumstances by reason of which justice requires that a stay should nevertheless not be granted. In this inquiry, the court will consider all the circumstances of the case, including circumstances which go beyond those taken into account when considering connecting factors with other jurisdictions. One such factor can be the fact, if established objectively by cogent evidence, that the plaintiff will not obtain justice in the foreign jurisdiction; … on this inquiry, the burden of proof shifts to the plaintiff."
"If there is a real risk of the denial of substantial justice in a particular jurisdiction, then it seems to me obvious that it is unlikely to be a forum in which the case can be tried most suitably for the interests of the parties and the ends of justice."
"Comity requires that the court be extremely cautious before deciding that there is a risk that justice will not be done in the foreign country by the foreign court, and that is why cogent evidence is required."
A claimant making this sort of point must assert it "candidly and support his allegations with positive and cogent evidence": The Abidin Daver [1984] AC 398 at 411C-D.
"175. I was also referred by both sides to, and found helpful, the commentary of Professor Briggs in Civil Jurisdiction and Judgments. At para 4.30, in relation to the second stage of the Spiliada test, he says:
"What is required of the claimant is that he establish, by clear and cogent evidence, the grounds on which he says it would be unjust to leave him to go to a foreign court. An English court will not proceed on the basis of whisper or suggestion, and it will not be at all receptive to a general disparaging of a foreign court's procedure. Despite the occasional surprising decision, it is only rarely that the strong presumption of a stay will be rebutted on these grounds."
"…an advantage to the plaintiff will ordinarily give rise to a comparable disadvantage to the defendant; and simply to give the plaintiff his advantage at the expense of the defendant is not consistent with the objective approach…".
"…if a clearly more appropriate forum overseas has been identified, generally speaking the plaintiff will have to take that forum as he finds it, even if it is in certain respects less advantageous to him than the English forum. He may, for example, have to accept lower damages, or do without the more generous English system of discovery. The same must apply to the system of court procedure, including the rules of evidence, applicable in the foreign forum. This may display many features which distinguish it from ours, and which English lawyers might think render it less advantageous to the plaintiff. Such a result may in particular be true of those jurisdictions, of which there are many in the world, which are smaller than our own, and are in consequence lacking in financial resources compared with our own. But that is not of itself enough to refuse a stay. Only if the plaintiff can establish that substantial justice cannot be done in the appropriate forum, will the court refuse to grant a stay…".
"It is not enough to say that the foreign system of law is different, and may provide a different outcome; or that the applicable procedure will be different, and may provide (for example) for more limited or more expansive rules on discovery, as the case may be."
"…if the claimant argues that he will win if permitted to sue in England, but will lose if compelled to sue in a foreign court, there is no justification for a presumption that a claimant is entitled to win or that a defendant must be found to be liable."
Similarly, Briggs, Civil Jurisdiction and Judgments (at paragraph 22-23):
"…a claimant who can, in essence, say no more than that he may win in England but will lose if forced to go overseas has not done enough to satisfy the court that England is the proper place to bring the claim."
Available and appropriate forum
i) The claims are all pursued (and only pursued) under the law of Kazakhstan.
a) Whilst in some cases, this may be a factor of less weight, here it is an important factor. It is clear, even from the expert evidence on the law of Kazakhstan served in relation to the issues that arise on these applications, that there is much disagreement between the parties' respective experts, e.g. the characterisation of a key rule about the admissibility of witness testimony as one of substance or procedure under the law of Kazakhstan; whether the alleged oral agreement is an agreement on joint activities (under Article 228 of the Code) such that the relationship between the Claimant and D1-D3 constitutes an ordinary partnership under the law of Kazakhstan (as alleged by the Claimant); and what the necessary elements are of a claim to unjust enrichment in the law of Kazakhstan (including whether it is necessary for the Claimant to prove that the Defendants did not have any legal right to possess any of the property in question).
b) One such issue is the question whether the alleged oral agreement would constitute a "foreign economic transaction" under articles 1084 and 1104 of the Code, such that it would be void insofar as not made in writing. Mr Karugussov (D1/D3's expert) says it would constitute such a transaction (something with which D2's expert largely agreed, though being careful not to give a view on the facts); Mr Konysbayev (the Claimant's expert) says not. It will obviously to have be resolved at trial, which is likely to be a particularly difficult issue in circumstances where Mr Konysbayev states that "Kazakh judicial practice lacks a definition of a 'foreign economic transaction' …".
c) This is not a case where issues arising under Kazakh law are likely to be peripheral or might not affect the ultimate outcome. They are central.
d) The Commercial Court is, of course, well used to determining issues of foreign law, and there are well-known cases where the law of Kazakhstan has been in issue, but that does not nullify foreign law as a factor, in particular where the issues that arise under the foreign law appear to be ones that have not previously been determined in the courts of the relevant forum (here, Kazakhstan): see in particular the point above about there being no definition of a "foreign economic transaction" in Kazakh judicial practice. The point made by Cockerill J in VTB Commodities Trading v JSC Antipinsky Refinery [2021] EWHC 1758 (Comm) at paragraph 201 is relevant here:
"…it is a particularly unappealing prospect to ask a judge of this Court to express a view as to an area where Russian law appears to be hotly contentious and indeed in the process of development. This is the more so when any appeal from a decision on Russian law here would be impeded by being a decision on facts and expert evidence, where the Court of Appeal is very unlikely to interfere, whereas in Russia the full appeals process would be available."
(See also PJSC Bank "Finance and Credit" v Zhevago [2021] EWHC 2522 (Ch) (Flaux C) citing and endorsing this at paragraphs 82 and 141).
e) It is generally preferable (other things being equal) that a case should be tried in the country whose law applies, and that factor is of particular force where issues of law are likely to be important and where there are relevant differences in the legal principles or rules applicable to those issues in the two countries in contention as appropriate forum (VTB v Nutritek at paragraph 46). Here, therefore, where the legal issues are complex and where it is not a case of the substantive laws of England and Wales being substantially similar to those of the governing law, the general principle that another court will apply its own law more reliably than a foreign court is a weighty factor that points in favour of the courts of Kazakhstan.
ii) The Claimant and the three individual defendants all have substantial connections to Kazakhstan.
a) The Claimant lived in Kazakhstan until (on his account) August 2018, having been a "leading specialist in the energy sector" there (as he pleads at paragraph 1 of his Particulars of Claim), which included being the head of AstanaEnergoServis JSC, the public holding company which owned all of the power companies in Astana, and of Karaganda EnergoTsentr LLP, a private energy company which owned a power station and provided energy to the city of Karaganda. It is right that he currently resides in England, but his website confirms that he sees his future in Kazakhstan. It refers to the fact that he is currently studying a 2-year master's program at a UK university and that he "plans to return to Kazakhstan after completing his studies and improving his knowledge and skills in the field of investments and venture capital. With knowledge and experience in the energy sector, he believes in the progressive development of the national economy."
b) The Particulars of Claim pleads that the three individual defendants "are also businessmen of Kazakh origin" (in fact D1 was born in Uzbekistan, but subsequently developed roots in Kazakhstan and has substantial business interests there). They all have substantial economic and business interests in Kazakhstan.
c) The fact that (as I have held) D1 is resident in the UK and has been served as of right within the jurisdiction is a connecting factor to England. However as I have also noted, whilst I have found D1 maintained residence in England, he is also living in the UAE and the likely position is that he is resident is both places.
d) The alternative claim in unjust enrichment is brought by the Claimant, as assignee of the claim of a Kazakhstan company, KKS Karagandy.
iii) Almost all of the events relevant to this dispute took place in Kazakhstan.
a) They concern the development of a bitcoin-mining project in Kazakhstan.
b) The events involve individuals almost all of whom were resident in Kazakhstan at the material times. Of the individual parties, D1 was no longer resident in Kazakhstan by the time the alleged oral agreement was made, but he nonetheless still had substantial business interests in Kazakhstan and spent time there (indeed, the Claimant alleges it was in Kazakhstan that he first met with D1, along with D2 and D3, in connection with the bitcoin mining project).
c) The allegations involve a number of meetings in Kazakhstan. In his statement, the Claimant described the discussions he had had with D2 and D3 in Kazakhstan (before the alleged oral agreement was made) as "extensive". He says he met with D1 (both before and after the alleged oral agreement) at least 6 or 7 times, of which all but i) the meeting at dinner in London on 10 June 2017, and ii) a possible meeting in Moscow,[7] were in Kazakhstan. D2 thinks he met the Claimant three or four times in total; the Claimant added in his response evidence six further meetings with D2; all of these were in Kazakhstan. The Claimant said he had "dozens" of meetings, most of which he said were with D3, and his description of those meetings included that they were all in Kazakhstan.
d) The property that was transferred (Stal and the ABK Buildings) is in Kazakhstan.
e) The only significant event relevant to the claim that appears, from the Particulars of Claim and the evidence served to date, to have taken place outside Kazakhstan is the "London meeting" when the Claimant alleges the oral agreement was made. However, there is no particular importance to that meeting having taken place in London – that is simply where the Claimant (who was on holiday) and D1 happened to be at the time. Moreover, whatever the ultimate conclusion as to whether there was a legally binding agreement reached at that meeting, it is notable (a) that the Claimant did not consider it sufficiently important to mention in his detailed letter before action, and (b) that in his evidence for these applications his explanation for the relative brevity of the discussions at the meeting in London was "because we had already discussed the key issues and contours of our deal in our earlier discussions in Kazakhstan." Therefore, the fact that the alleged oral agreement is alleged to have been made in London is, in the circumstances of this case, of little weight in relation to the appropriate forum question.
iv) In relation to Stal and the ABK Buildings, not only were they situated in Kazakhstan, but also:
a) The relevant context includes the (written) agreements for the sale and purchase of the Stal sub-station and the ABK buildings. Those agreements were between Kazakhstan entities (namely, KKS Karagandy, a vehicle alleged by the Claimant to be associated with him, and Prima, a vehicle associated with the Defendants), on the basis of written agreements negotiated and executed in Russian, and which were expressly governed by the law of Kazakhstan and which contained jurisdiction clauses for the courts of Kazakhstan.[8]
b) There is a dispute as to whether those transfers took place at nominal or market value. That may well require valuation evidence of the relevant property in Kazakhstan.
c) On the Claimant's alternative case (under the Kazakhstan law rules on unjust enrichment) it appears that he seeks to unwind these transactions and, as assignee of KKS Karagandy, seeks an order that Stal and the ABK Buildings are restored to him in kind (pursuant to Article 955 of the Code). The Defendants did not suggest that engages any particular separate jurisdictional rule, but the fact that such relief is sought is a strong connecting factor to Kazakhstan.
v) The first language(s) of all the potential witnesses for trial identified so far is Russian and/or Kazakh, both being official languages in Kazakhstan.
a) It is unlikely, therefore, that any translation of witness evidence would be required if the dispute is heard in Kazakhstan. There was no suggestion that any witness for trial would need to give their evidence in English.
b) However, many of the witnesses would need to give evidence through an interpreter if the proceedings took place in England. Eight of the witness statements served for the purposes of these applications were made in Russian and served with an English translation.[9]
c) That includes the Claimant himself (whose first witness statement states that he speaks "limited English" and that his oral evidence in England "would require the assistance of an interpreter"). That is of particular significance in a case where the central allegation is of an oral agreement that was concluded in another language, and where one would expect some emphasis to be placed on the actual words used (to the extent they can be recalled) in the discussions and their significance in terms of concluding a legally binding agreement. It is apparent that almost all (if not all) of the conversations between key people that are likely to be relevant would have taken place in Russian.
d) D2 also said in his statement that, if he was to give oral evidence, he would want to do so in Kazakh or in Russian.
e) Other potential witnesses, who have not given statements in the context of these applications, but several of whom the parties identified as possible witnesses, are also likely to be based in Kazakhstan and may well have to have to give evidence in Kazakh or Russian.
vi) Almost all of the relevant documents are in Kazakh or Russian.
a) This would increase the cost of proceedings in England, through the cost of obtaining translations of documents to be deployed in the proceedings as well as likely making disclosure exercises more difficult or more expensive (either because lawyers who speak the relevant language(s) have to be found and/or huge numbers of documents need to be translated before disclosure).
b) It is also evident, from the exchanges of evidence to date, that there is every prospect of disputes over the precise translation of documents into English from Kazakh / Russian. Such disputes have already arisen in relation to the (relatively) small number of documents deployed in evidence for these applications.
vii) It appears, from the evidence served for these applications, that the issues between the parties at trial are likely to include a number of matters that the Defendants characterised as "nuanced questions of Kazakhstani regulation and commercial practices." Examples of these include (i) matters relating to the Kazakhstani energy and electricity markets and pricing, including their regulation (in particular in relation to whether and to what extent energy power rates are set by central government committee in Kazakhstan); (ii) the Claimant's allegation, disputed by the Defendants, that amongst "old school businessmen" in Kazakhstan, there is a "common understanding that a deal is conducted on a gentleman's agreement without any written contracts in place"; and (iii) the suggestion, made in Mr Naurzaliev's statement served on behalf of the Claimant (and in the context of the ownership of KKS Karagandy), that it is "normal practice in Kazakhstan" for shares to be transferred "without any documents in place." Whether or not expert evidence would be required in an English court to deal with these (as the Defendants suggested), it is clear that these sorts of issues are likely to be ones more easily (and, potentially, cost-effectively) determined in Kazakhstan.
viii) The location of witnesses is not a particularly powerful factor in any direction. The Claimant is currently in England. The individual Defendants are all in the UAE (even though I have held D1 is also resident in England, he appears mainly to be in the UAE). Of the other witnesses some (the Claimant's family) are in England, but most of the others identified so far are in Kazakhstan. In circumstances where giving evidence by video-link is often a possibility (and it has been confirmed by the expert evidence in this case that Kazakh courts will accept evidence given by video), this factor does not seem to me to be of real assistance either way.
Stage 2 – is there a real risk of substantial injustice?
(1) Article 153 of the Code
"…failure to comply with a simply written form of a transaction deprives the parties of the right, in the event of a dispute, to confirm the conclusion, content or execution by witness statements. The parties, however, have the right to confirm the conclusion, content or execution by written or other evidence other than witness statements."
i) The exclusion of "witness testimony" does not stop a party to proceedings from giving their own account in their "primary case document". That account would be taken into account by the court in a similar way to witness evidence. This was explained by the Defendants' experts, and was not substantially disputed by the Claimant's expert.
ii) The Claimant would not be precluded from adducing "witness testimony" from third parties in relation to context or matrix, for example as to the behaviour and conduct of a party, as to the relevant course of events or as to other objective facts. There was no real dispute about that on the expert evidence.
i) Articles 152(1) and 153(1) of the Code have an understandable and rational basis. Similar provisions are found in other CIS legal systems (for example, the equivalent in Russia was the subject of argument in Filatona Trading Limited v Navigator Equities Limited [2019] EWHC 173 (Comm)). Each legal system may strike a different balance in terms of formalities required for a legal binding contract and/or the evidence that is admissible in support of a contract. The fact that another country's system has struck a different balance to that struck by English law is not, in itself, a reason why substantial justice could not be obtained in the courts of that country.
ii) It is clear on the authorities set out above that the fact that the foreign system is different and may provide a different outcome is insufficient to constitute a "substantial injustice". Moreover, if – as here – a clearly more appropriate forum has been identified, generally speaking the claimant has to take that forum as he finds it; and that includes the system of court procedure, including the rules of evidence, applicable in the foreign forum (see Connelly v RTZ, above).
iii) It is not clear whether the rule in question would be characterised as procedural or substantive in character under the law of Kazakhstan. The Defendants' experts suggested it was substantive; the Claimant's expert procedural. At any trial in England, that would have to be resolved. But, even if it is properly to be regarded as procedural (which was the conclusion reached by Teare J in Filatona at paragraph 341 in relation to the equivalent provision in Russian law[10]), and therefore would not be applied in England, there would appear to be no real injustice in a party who has made an agreement which is governed by the law of Kazakhstan having its existence subject to all the rules of the law of Kazakhstan which pertain to it, rather than only to some of them.
iv) It is, in fact, a slightly odd proposition that 'justice' can only be obtained by the Claimant through the application of some, but not all, of the rules of the law of Kazakhstan relating to contract formation. What the Claimant is attempting to do here is to bring a claim under the law of Kazakhstan, but to seek to do so outside Kazakhstan (which is the natural forum) so that one of the rules of the law of Kazakhstan, which would operate to his detriment, does not apply. It is not a substantial injustice for him not to be able to do that.
v) What the Claimant's complaint really amounts to is that he says he would win in England, but lose in Kazakhstan. But that, it is clear on the authorities, does not constitute a 'substantial injustice' for this purpose.
(2) Alleged threats
i) Mr Naurzaliev said in his statement that, since meeting the Claimant in 2012, he has been employed by the Claimant in a directorial role within companies where the Claimant was the ultimate beneficial owner. Since November 2016, he has been director of KKS Karagandy. He said he considered the Claimant, and the Claimant's brother Aydyn, as effectively part of his family.
ii) Having given some evidence about KKS Karagandy and the transactions involving the Stal substation and the ABK buildings, Mr Naurzaliev gave an account (without reference to any documents or other evidence) about a meeting he had had in May 2024 with a "longstanding acquaintance" of his with "connections to the criminal world in Kazakhstan" who he meets once every 2-3 months, and with whom the meetings "are more like meetings between friends". At the said meeting (which took place "in a prearranged neutral location on a road near a residential complex") Mr Naurzaliev said he was passed a message by his friend from D2 urging him to stop supporting the Claimant and warning about serious consequences if he did not do so. He said his friend had been contacted by what Mr Naurzaliev referred to as the "bandit committee" who he said were a group of individuals with connections to the criminal world in Kazakhstan (which is also how he had described his friend). He said his friend asked him not to give any witness statement about a gold-mining project (in which the Claimant and D2 were said to be involved, but in any event which does not appear to be connected to this dispute) or about the Claimant's proceedings against D2 in London or any other matters in which the Claimant is involved. Mr Naurzaliev said it would not have been worthwhile to report these threats to the law-enforcement authorities in Kazakhstan because, he said, "this "bandit committee" has its people in the law-enforcement institutions and if I had reported these threats the "bandit committee" would have found out about it within the space of half an hour, and it was not clear what consequences I might have faced as a result."
iii) Notwithstanding that account, Mr Naurzaliev gave a witness statement for the purposes of this application, dated 24 June 2024, and there was no evidence adduced at the hearing to suggest he had suffered any consequence as a result.
i) The Claimant says that these two individuals had agreed to provide him with witness statements, but that following threats they then refused to do so. He says that in a call with him on 7 June 2024 (which he recorded and transcribed) Ms Kaplunovskaya informed him that: i) Mr Abbas was working on a project in Uzbekistan and had been told by an Uzbek government official that, if he planned to give evidence for the Claimant, he should resign from the project; and ii) that her husband had been approached by people in Kazakhstan offering money if Ms Kaplunovskaya did not testify for the Claimant and then, when that was refused, those people made threats against her, her husband and children.
ii) The Claimant recognises that he does not know who made those alleged threats, but he says he cannot imagine anyone else interested in making them other than the Defendants.
i) She said she had also been approached by the Claimant in March 2024, and that she had been inclined to assist him given their past good relationship, although she thought her contribution as a witness would necessarily be limited to confirming which projects she had worked on. She said the Claimant told her that, if he won the case, he would share with her the amount awarded to him. She said the Claimant discussed potential pressure on her as well as threats that might be made, and asked her to testify that she had been threatened. She said she had come under no pressure and no threats had been made, and so she refused to provide the Claimant with such testimony.
ii) However, she said that the Claimant sought to "impose" on her his view that she must have been coming under pressure. She then said that she thought she could avoid participating in the legal process by telling the Claimant what he wanted to hear, which she then did. She explains that she felt her only choice was to tell the Claimant what he wanted to hear, i.e. that family members had been threatened and pressured, and that the same thing had happened to Mr Zaidi, and hoped that by telling him that, she would be spared the need to participate in the legal process.
iii) This provided the background to her explanation for the conversation with the Claimant on 7 June. She said that, before the call, she had drunk quite a lot of alcohol with friends and that on the call, which she regarded as just an "evening conversation", she was "quite drunk". She explains that she felt the best way to get herself out of the legal process was to tell the Claimant what he wanted to hear, as she had been doing, and during the call she now says she embellished those stories further. She says she did not know she was being recorded.
iv) The transcript of the call itself is not always easy to follow, but as well as containing the parts the Claimant relied upon (which Mr Kaplunovskaya says she made up) it is also clear that the Claimant was very keen to get her to say that she had been threatened and so as to use that in these proceedings ("[i]n the English courts … just one word about being threatened to come here and testify changes the whole case fundamentally"), even to the extent of suggesting that was the only valuable evidence she might be able to give (saying she "[was] never a witness initially … We never even had the understanding or format of you being a witness … you were never a witness").
v) In her witness statement she stated she had come under no pressure or threats, nor had any intermediaries pressured her or any member of her family.
i) Mr Zaidi has in a short and straightforward witness statement denied that any threats were made to him (and, in fact, suggested the Claimant tried to bribe him).
ii) Although Ms Kaplunovskaya's account is somewhat more convoluted, and might come across as slightly odd, the gist of her account (that she ended up deciding to tell the Claimant what he wanted to her so that he would go away and leave her alone, and then embellished her account in a drunken phone call) is not so implausible that (without any hard evidence suggesting it was not correct) it can be dismissed out of hand. Moreover, the transcript suggests that the Claimant never had the intention of calling her as a witness to deal with substantive matters in the case, but only to say she had been threatened.
i) The alleged threats that are said to have been made to date (and which the Claimant relies upon) are alleged to have been made in the context of these proceedings taking place in England. The Claimant suggests that they have been effective in getting Mr Zaidi and Ms Kaplunovskaya to change their evidence (on which I cannot reach, and am not reaching, any conclusion), but if anything that suggests (on the Claimant's evidence) that any threats might be made just as well if proceedings continue in England as if they took place instead in Kazakhstan. The alleged threats against Mr Naurzaliev did not cause him not to make a statement, and he did not suggest that the position would have been any different if he was being asked to give evidence in proceedings in Kazakhstan. In other words, the (alleged) threats are not a forum-related point. Insofar as the evidence can be relied upon at all, it suggests any threats (if they were made) would appear to be directed to the pursuit of the litigation in general, rather than to litigation in a particular venue.
ii) There was no cogent evidence that the Defendants have influence over the courts in Kazakhstan, or that in any other way the courts of Kazakhstan would not be just as well placed as the courts in England to deal with any allegations of witness intimidation in the context of this dispute or to make assessments of evidence accordingly.[11] Mr Samek confirmed in his submissions that there was no cogent evidence of a risk that judges in Kazakhstan would not be true to their judicial oath, and that there was no evidence of interference with the judiciary. Although there were some vague suggestions by the Claimant and his solicitor (Mr Iatuha) in their witness statements that the Kazakh criminal authorities would not act independently and that D2 had some level of influence, these were entirely subjective and unsubstantiated allegations. Those were serious allegations of institutional (police and/or judicial) misconduct which cannot be supported on the basis of such evidence – there was no "cogent evidence" or anything approaching it. This does not go beyond the sort of "whisper or suggestion" that Briggs notes (in the passage cited by Butcher J in Dynasty (above)) is not sufficient. There was certainly no expert evidence (e.g. from any of the experts in the law of Kazakhstan) that Kazakh courts or other similar institutions in Kazakhstan were not reliable.
iii) As the authorities I have referred to above make clear, caution must be exercised before deciding that there is a real risk that justice would not be done in the foreign forum and cogent evidence is required.
Summary in relation to substantial justice allegations
Summary on appropriate forum
The Fourth Defendant's position
i) The Particulars of Claim state, at paragraph 6:
"GDA is a company incorporated in Cyprus on 15 June 2017. It is one of the world's largest bitcoin-mining companies and operates (through subsidiaries) from facilities in Kazakhstan and elsewhere. It is joined as a Defendant to this claim so that it is bound by any relief granted in relation to MMK's shares in GDA and so that it can give effect to that relief." [underlining added]
ii) There were two places in the Particulars of Claim where it might have been thought possible that the Claimant was pursuing relief against the Fourth Defendant:
a) Paragraph 61(b), where it was pleaded that the Claimant claimed "an order that MMK take steps to see that Mr Alimov be registered as the shareholder of such shares [i.e. 35% of the shares in D4 held by "MMK"] and that GDA [i.e. D4] so register him"; and
b) The Prayer for Relief, paragraph (2), which reflected paragraph 61(b).
However, in his oral submissions, Mr Samek made it clear that he accepted that was not a proper claim for relief against D4.
iii) The evidence in support of the Claimant's ex parte application for permission to serve out at Iatuha 1, paragraph 89, stated:
"GDA is a necessary and proper party to the claim. It is not alleged to have done anything wrongful towards Mr Alimov, but it is joined so that it can be bound by and give effect to any relief ordered in relation to its shares. This is akin to the joinder of the company in shareholders' disputes, such as unfair prejudice petitions."
iv) In Iatuha 2 (served in response to an application by D4 for expedition in the hearing of its application, which was refused), the Claimant asserted at paragraph 35 that:
"(a)…if D1-D3 refused to comply with an order made at trial for them to transfer to C some of their shares in D4, the court could then make it effective by requiring D4 to register C as a shareholder. Otherwise, if D4 were not a party to this claim, it would not be bound by the order, and C would then have to start separate enforcement proceedings (potentially in Cyprus) against D4 to obtain those shares.
(b) Thus, … relief can be ordered against D4, if necessary, to do so to ensure the effectiveness of any primary relief ordered against D1-D3. This is analogous to the joinder of the company in a dispute as to ownership of shares and in unfair prejudice petitions – the company is joined to bind it to the order made against the shareholders, and relief can be granted against the company relating to the shares claimed or owned by the claimant."
v) In Iatuha 3 (served in response to D4's application) it was put slightly differently (at paragraph 40):
"GDA is a proper party to the claim because it controls the property which is the subject matter of the claim – the bitcoin generated and held by GDA (and due to MMK) and the shares in GDA itself, recorded in its share register kept at its registered office in Cyprus. If it were an English company, it would be proper to join it to a claim about the ownership of its shares and property which it holds, and so it is proper to grant permission to serve it out of the jurisdiction and join it to the claim as a foreign company."
vi) The result is that no claim is made against D4, nor is any relief sought against it, in the Particulars of Claim. The reason why the Claimant seeks to include D4 as a party is to bind it to findings and decisions in this litigation and to facilitate enforcement in the event that the Claimant succeeds against the other Defendants.
vii) In his submissions at the hearing, Mr Samek made it clear that he did not seek to say that the Claimant had any claim at the moment against D4, but rather that he could have a contingent claim against D4, in the event of success against the other Defendants, which would take the form of a claim against D4 for the Claimant "to be recognised as a shareholder, participate in the rights of all shareholders and in consequence be registered [as a shareholder]".
i) Given Mr Samek's acceptance that the passages of the Particulars of Claim noted above (paragraphs 61(a) and prayer for relief (2)) do not advance a proper claim against D4, there is no claim advanced in the Particulars of Claim against D4 and no relief is sought from it. There is, therefore, no serious issue to be tried against it. The Claimant has no real prospect of succeeding against D4 in circumstances where it does not plead any claim against it or seek any relief from it.
ii) The Claimant sought to say that it was possible to make D4 a party to the proceedings not on the basis of a claim now advanced, but on the basis of possible contingent enforcement proceedings, for example if the Claimant were to succeed in his claim for specific performance against the other defendants, compelling them to transfer to him a proportion of their shares in D4, if they failed to do so, the court could make an order against D4 to recognise the Claimant as a shareholder. However, in my view, that is flawed:
a) The possibility of a future claim, or future enforcement proceedings, based on one or more contingencies does not mean that there is a serious issue to be tried between the Claimant and D4, at least not where the Claimant has not actually sought to bring such a claim (even on a contingent basis) in its Particulars of Claim.
b) The English court will not generally take jurisdiction in respect of enforcement against assets in another state, as explained by the Court of Appeal in SAS v World Programming [2020] 1 CLC 816,19 at [64]:
"It is recognised internationally that the enforcement of judgments is territorial. When a court in State A gives judgment against a defendant over whom it has personal jurisdiction, it is for that court to determine in accordance with its own procedures what process of enforcement should be available against assets within its jurisdiction. But for a court in State A to seek to enforce its judgment against assets in State B would be an interference with the sovereignty of State B."
There was no dispute that D4 was incorporated in Cyprus or that its share register is in Cyprus nor did the Claimant take any issue with D4's submission that, as a result (see Akers v Samba [2017] AC 424 at paragraph 19), the situs or location of the shares is in Cyprus. Whilst it was not possible to identify with precision the relief that the Claimant might seek against D4 (because it had not spelled it out in a pleading), at least part of what it suggested it would seek was effectively enforcement against the shares in Cyprus. Indeed, Mr Samek's suggestion that the Claimant might seek an order that D4 should recognise the Claimant as a shareholder and that the Claimant be registered as a shareholder would be, or at least would be akin to, an order that the shareholder register in a company incorporated abroad be rectified, relief which is not available in this country (see International Credit Investment Co (Overseas) Ltd v Adham [1994] 1 BCLC 66 (Harman J) at page 78[12]).
i) It was said that the joining of D4 to the proceedings was akin to the joinder of a company in shareholder disputes, such as unfair prejudice petitions. However, this is not an unfair prejudice petition, and nor are the suggested potential contingent claims equivalent to an unfair prejudice petition (and, in fairness, in his submissions Mr Samek did not seek to suggest that they were). The reference to "shareholder disputes" more generally does not advance matters – it all depends on what the claim is and what, if any, relief is sought against the company.
ii) It was also said that D4 "controls the property which is the subject matter of the claim – the bitcoin generated and held by GDA (and due to MMK) and the shares in GDA itself". However, that does not advance matters either. It does not identify any serious issue to be tried against D4. At best, it simply seeks to set up the (flawed) argument dealt with above that it is sufficient that the Claimant might bring future enforcement proceedings against D4. Moreover, it is wrong. First, D4 does not control the bitcoin that are the subject matter of the claim. The alleged oral agreement is that D1-D3 agreed to transfer 35% of the bitcoin they received, and the relief sought includes a claim to "35% of the cryptocurrency received by MMK (or cryptocurrency to the same value"; there is no allegation that the Claimant is entitled to bitcoin held by D4. Second, it was not explained how it was said that D4, as opposed to the shareholders in D4, controlled the shares in D4. Indeed, the unsurprising premise of the relief that is sought in the Particulars of Claim is that the shares in D4 held by D1-3 are controlled by D1-D3 (such that they can be ordered to transfer, or cause or procure to be transferred, a proportion of those shares to the Claimant).
Alternative service
i) Article 5.1 states:
"1. Requests for judicial assistance shall be made via the Central Authorities and be transmitted through Diplomatic Channels. In cases of urgency, requests may be transmitted directly to the Central Authority. In which case, copies of such requests shall also be sent through diplomatic channels as soon as practicable thereafter."
ii) Article 5.2 specifies that the Central Authorities are the Senior Master of the (now) KBD for the UK and the Ministry of Justice for the UAE.
iii) Article 7 provides that service "shall be effected in accordance with the procedure provided by the domestic law of the Requested Party, or by a particular method desired by the Requesting Party, unless such a method is incompatible with the domestic law of the Requested Party".
iv) Article 10 states:
"1. The competent authority in the Requested Party shall serve the said documents and papers in accordance with its domestic law and rules applicable in this regard.
2. Service may be effected in a special mode or manner specified by the Requesting Party, provided that it does not contravene the domestic law of the Requested Party and further subject to the payment of costs of such special mode of service."
It was common ground between the parties' experts in UAE law that the "competent authority" in the UAE would be the local court of the place where the UAE domiciled litigant is located.
i) Mr El Daye (whose report was served on behalf of the Claimant) asserted that service "through the diplomatic channels" can take "anywhere from 12 to 18 months", and also that there have been instances where it took over 18 months (though he gives no details of such cases including whether or not they had particular features that contributed to the additional time required for service to be effected). He noted the part of article 5(1) dealing with "cases of urgency", but said that what constituted "urgency" was not defined in the UK/UAE Treaty and therefore seeking the urgent route might be refused.
ii) Mr Alobeidli (whose report was served on behalf of D1 and D3) said that the timeframe for completing service through diplomatic channels could vary based on several factors, including the circumstances of the case, the geographical locations of the parties involved and the chosen method of service. He said that, in relation to an English claim being served in the UAE, and specifically in Dubai, the typical processing time was approximately 6 months. He noted that the Dubai court regularly receives requests for service of UK proceedings which are executed directly by the Notification Department at the Dubai Court. This was one of the reasons he identified why the timeframe for serving a summons relating to an English claim within the Emirate of Dubai was "notably shorter than the typical 12-18 months' duration". He suggested that a case of urgency would be one so designated by the Central Authority in the UK.
iii) Mr Davidson (whose report was served on behalf of D2) agreed with Mr El Daye in relation to what was required to effect service in the UAE under the Treaty and the usual timescales, though saying that in his experience service in a case of urgency would be about 4-7 months (though noting such cases were rare and the timescales inconsistent).
i) Delay: the Claimant contended (based upon Mr El Daye's evidence) that service under the UK/UAE Treaty would take 12-18 months (or longer).
ii) Such delay was "particularly acute" where (the Claimant contended) D1 had already been served in England so the progress of the claim against him would be delayed waiting for service on the other Defendants in the UAE.
iii) D2 and D3 were aware of the claim, had instructed English solicitors, had engaged with the pre-action correspondence via those solicitors and had given no reason for refusing to authorise their London solicitors to accept service.
Discussion
"(1) Where it appears to the court that there is a good reason to authorise service by a method or at a place not otherwise permitted by this Part, the court may make an order permitting service by an alternative method or at an alternative place."
"There has been some debate as to what the requirement of "exceptional" or "special circumstances" means, but it has generally been interpreted as requiring some factor sufficient to constitute good reason, notwithstanding the significance which is to be attached to the Article 10 HSC reservation…".
i) Cecil v Bayat [2011] EWCA Civ 135, Stanley Burnton LJ at paragraph 67:
"I would consider that in general the desire of a claimant to avoid the delay inherent in service by the methods permitted by CPR r 6.40, or that delay, cannot of itself justify an order for service by alternative means."
ii) Société Générale v Goldas Kuyumculuk Sanayi Ithalat Ihracat AS [2017] EWHC 667 (Comm), Popplewell J, at paragraph 49(9)(a):
"Where service abroad is the subject matter of the Hague Convention or a bilateral treaty, it will not normally be a good reason for relief under CPR 6.15 or 6.16 that complying with the formalities of service so required will take additional time and cost."
(This was not one of the points subject to appeal: see [2018] EWCA Civ 1093 at paragraph 16).
i) If these matters were a good reason to permit alternative service, it would mean that a litigant could bypass a relevant treaty simply by sending pre-action correspondence (which will in many cases prompt the recipient to seek representation) and/or by sending a Claim Form to a prospective defendant or its solicitors (but not by way of service). That would largely subvert the value of the treaty.
ii) It is clear that awareness of the claim form cannot of itself constitute a good reason: Société Générale v Goldas (above) at paragraph 49(4).
iii) There is nothing in the implicit criticism made by the Claimant of the Defendants' not having authorised their London solicitors to accept service. There is no duty on a party to instruct a solicitor to accept service (see e.g. SMO v TikTok Inc [2022] EWHC 489 (QB) at paragraph 77 and Wragg v Opel Automotive GmbH [2024] EWHC 1138 (KB) at paragraph 91). Moreover, whilst the Claimant had offered to D2 and D3 to preserve arguments on forum conveniens, that did not extend to other points that might arise in relation to jurisdiction (such as serious issue to be tried and arguments about the gateways).
Non-disclosure complaints
"(1) The duty of the applicant is to make "a full and fair disclosure of all the material facts" …
(2) The material facts are those which it is material for the judge to know in dealing with the application as made: materiality is to be decided by the court and not by the assessment of the applicant or his legal advisers…
(3) The applicant must make proper inquiries before making the application … . The duty of disclosure therefore applies not only to material facts known to the applicant but also to any additional facts which he would have known if he had made such inquiries.
(4) The extent of the inquiries which will be held to be proper, and therefore necessary, must depend on all the circumstances of the case including (a) the nature of the case which the applicant is making when he makes the application; and (b) the order for which application is made and the probable effect of the order on the defendant…; and (c) the degree of legitimate urgency and the time available for the making of inquiries….
(5) If material non-disclosure is established the court will be "astute to ensure that a plaintiff who obtains [an ex parte injunction] without full disclosure... is deprived of any advantage he may have derived by that breach of duty" …
(6) Whether the fact not disclosed is of sufficient materiality to justify or require immediate discharge of the order without examination of the merits depends on the importance of the fact to the issues which were to be decided by the judge on the application. The answer to the question whether the non-disclosure was innocent, in the sense that the fact was not known to the applicant or that its relevance was not perceived, is an important consideration but not decisive by reason of the duty on the applicant to make all proper inquiries and to give careful consideration to the case being presented.
(7) Finally, it "is not for every omission that the injunction will be automatically discharged. A locus poenitentiae may sometimes be afforded:" …. The court has a discretion, notwithstanding proof of material non-disclosure which justifies or requires the immediate discharge of the ex parte order, nevertheless to continue the order, or to make a new order on terms."
"The rule that an ex parte injunction will be discharged if it was obtained without full disclosure has a two-fold purpose. It will deprive the wrongdoer of an advantage improperly obtained…. But it also serves as a deterrent to ensure that persons who make ex parte applications realise that they have this duty of disclosure and of the consequences (which may include a liability in costs) if they fail in that duty. Nevertheless, this judge-made rule cannot be allowed itself to become an instrument of injustice. It is for this reason that there must be a discretion in the court to continue the injunction, or to grant a fresh injunction in its place, notwithstanding that there may have been non-disclosure when the original ex parte injunction was obtained."
"The importance of the duty of full and frank disclosure, on applications for permission to serve out, just as in the context of a freezing injunction, cannot be over-stated. There is a difference in terms of what the disclosure must be directed at, and the matters being considered, but the underlying reason and rationale for the duty remains the same, as is the need to comply with the same. A failure to comply with that duty is by its very nature serious – an individual or entity has been brought into the jurisdiction without having had any opportunity to address the court as to why permission should not be granted, and as demonstrated by the present case, they are then exposed to very considerable costs upon an application to set jurisdiction aside."
"…the duty is not confined to the applicant's legal advisers but is a duty which rests upon the applicant itself. It is the duty of the legal team to ensure that the lay client is aware of the duty of full and frank disclosure and what it means in practice for the purposes of the application in question; and to exercise a degree of supervision in ensuring that the duty is discharged. No doubt in some cases this is a difficult task, particularly with clients from different legal and cultural backgrounds and with varying levels of sophistication. But it is important that the lay client should understand and discharge the duty of full and frank disclosure, because often it will only be the client who is aware of everything which is material. The responsibility of the applicant's lawyers in this respect is a heavy one, commensurate with the importance which is attached to the duty itself. It may be likened to the duties of solicitors in relation to disclosure of documents (see CPR PD31A and Hedrich v Standard Bank London Ltd [2008] EWCA Civ 905)."
The case made on res judicata arising out of the criminal judgment in Kazakhstan
i) A Kazakh journalist, Mr Abzhan, had reported information about D1-D3, the bitcoin mining factory and the involvement of Mr Satybaldy. That was information that the Claimant had provided to Mr Abzhan.
ii) A criminal complaint was brought against Mr Abzhan by D2 in Kazakhstan, which resulted in a criminal judgment against Mr Abzhan (for "the distribution of false information with a group of people by prior agreement, and for criminal defamation" as described in Iatuha 1). That judgment found that certain information reported by Mr Abzhan was false.
iii) The Claimant was not a party to the criminal proceedings and was given no procedural status (although he was named in the judgment as the party who had provided the information in question to Mr Abzhan). The criminal court refused the Claimant's request to provide evidence in the case, because he was subject to separate criminal investigation.
iv) That information was (said Mr Iatuha) important to the Claimant in his ability to advance his claim. Iatuha 1 contended that the Claimant would not be able to advance his claim without at least some of it.
v) However, (based upon evidence from Mr Konysbayev) there was a real risk that other courts in Kazakhstan, including civil courts, would apply a principle of res judicata and find themselves bound by the criminal court's findings without further investigation, even though the Claimant had not been a party to that criminal case. It would follow that the civil court would find that the information the Claimant needed to rely upon was (based on the criminal court judgment) false.
vi) The res judicata effect of the criminal court judgment against Mr Abzhan would not apply in England, because the Claimant was not a party to the criminal case that resulted in the criminal judgment.
vii) There was, therefore, a real risk of substantial injustice if the Claimant had to bring this claim in Kazakhstan.
"I believe that all the other Kazakh courts (criminal or civil) or law enforcement agencies may apply a principle of res judicata, i.e. will accept and be bound by the findings of the Criminal Court Judgment, without any further investigation. In other words, it will accept that the information above is false, as found in the Criminal Court Judgment."
i) The Claimant, contending he was an interested party, sought to appeal the criminal judgment against Mr Abzhan in Kazakhstan. The appellate court dismissed that appeal, stating that "the verdict against Abzhan M. M. doesn't have prejudicial value with respect to Alimov Ye.G [ie the Claimant]."
ii) This appellate court judgment was dated 24 March 2023, before the claim form was issued in May 2023, and well before the evidence was filed for the without notice application in October 2023.
iii) It would, of course, have been highly material for the Judge looking at the without notice application to know, in considering whether a res judicata might arise in Kazakhstan from the criminal judgment, that an appellate court in Kazakhstan had already considered that very question and had determined that it would not. It is, in fact, difficult to see how this point could ever have been advanced as an issue of res judicata had the appellate court judgment been revealed.
i) It was said that Sterling Law did not know about the appellate judgment until they had been made aware of it through D2's evidence in these proceedings. Nor, it was said, had Mr Konysbayev been aware of the appellate judgment when preparing his reports.
ii) In relation to the Claimant himself, the letter stated:
"We understand from Mr Alimov that all that he understood from his Kazakh lawyer was that he had lost the appeal; that he did not read the Appeal Judgment as he saw no reason to read it because he had lost; that he in effect then put it out of his mind, not appreciating whatever significance it had."
"(a) the founders of GDA (i.e. MMK) had close connections to Mr Satybaldy;
(b) MMK set up a bitcoin mining factory with a Mr Tokhtarov, in the former Karaganday woodworking plant, i.e. the ABK Project;
(c) other purchasers for Sogrinskaya stepped aside when it was clear that Mr Makhat wanted to buy it; and
(d) Mr Satybaldy owned an interest in the ABK Project via Mr Makhat (and Mr Makhat avoided transferring those assets to the Kazakh state following Mr Satybaldy's criminal conviction by transferring them to a third party)."
i) The most serious was the complete failure to disclose the appeal judgment, or even to refer to the fact that there had been such an appeal (i.e. the second point above). On its own, that constitutes a serious failure on the part of the Claimant, for which no satisfactory reason has been provided.
ii) Mr Samek contended that it was "inadvertent and unintentional", but that does not seem to me to grapple with the obvious difficulties with the Claimant's explanation why he had not referred to it, or told his English solicitors about it, or even told them that he had sought to appeal the criminal judgment that was being referred to in the evidence. If it was not a deliberate omission on his part, his response to his English solicitors explaining to him his duty of full and frank disclosure (which there is no reason to think they did not do) must have been a complete absence of action in relation to this issue, because any inquiry (e.g. with his own Kazakhstan lawyer who had appeared for him in the appeal in Kazakhstan) surely would have reminded him about the appellate judgment.
iii) The first failure was also a serious and material misrepresentation of the application of the principle of res judicata in Kazakhstan. Whilst the Claimant's solicitors may have been in the hands of Mr Konysbayev in that respect, it is difficult for the Claimant to put himself in the same position, given the appellate judgment (which, even if he did not read it (as he says) was available to him as a source of evidence about the operation of the res judicata point).
iv) The third point is, as is evident from the account above, more nuanced. But nonetheless, in particular in light of the other two points, it contributes to the overall misleading nature of this section of Iatuha 1 and the presentation that was given to Dias J on this point.
i) There was a clear failure to make full and frank disclosure of material facts. That was admitted, at least in part (as regards the appellate judgment) though, as I have said, the non-disclosure went further than simply the failure to disclose the appellate judgment (although that was the most obvious of the failures).
ii) This was a substantial breach of the obligation. The court therefore inclines strongly towards setting aside the order, even where the breach is innocent (Banco Turco Romana, Popplewell J, above).
iii) On the part of the Claimant, if the non-disclosure of the appellate judgment was not deliberate, it could only have come about as a result of the complete disregard of his obligations to ensure he had made full and fair disclosure in relation to this issue. It is difficult to see how he can have made any inquiries without being reminded that there had been an appeal on this issue that had resulted in an appellant judgment in Kazakhstan.
iv) As Bryan J noted in Libyan Investment Authority v JP Morgan (above), the importance of the duty of full and frank disclosure on applications for permission to serve out cannot be over-stated. A failure to comply with that duty is by its very nature serious – an individual or entity has been brought into the jurisdiction without having had any opportunity to address the court as to why permission should not be granted, and they can then be exposed to very considerable costs upon an application to set jurisdiction aside.
v) The Claimant contended, in support of the argument that the Dias J Order ought not to be set aside, that the point made in the without notice application about res judicata did not stand alone, and that other points were made in support of the contention that there was a real risk that substantial justice could not be obtained in Kazakhstan. However, I do not find that a compelling point:
a) It is clear that the point advanced on res judicata was a serious one and was, as presented in Iatuha 1, at least on its face a potentially compelling point, and is likely to have played a part in the decision of Dias J to make the order sought. I cannot realistically go further in trying to work out what part it played or weight it carried compared to the other points advanced (in particular in light of the fact that I have, in any event, concluded that there is no real risk of substantial injustice in Kazakhstan on the two grounds that the Claimant did pursue at the hearing before me).
b) I do note, however, that there are problems with both of the other two points that were advanced in favour of the substantial justice point on the without notice application. The first was the point based on Article 153 of the Code, which I have rejected, above. I also explain below why there was a failure to comply with the duty of full and frank disclosure in relation to that point as well. The second other point was a submission that a court in Kazakhstan might be disinclined to make an order for specific performance, which never appeared a promising point, and was not in fact taken in the Claimant's skeleton argument or persisted in at the hearing before me at all.
c) In a case where it was always clear that most of the factors relating to the litigation pointed to Kazakhstan as the appropriate forum, it must also have always been clear to the Claimant, and those representing him, that arguments about substantial justice in Kazakhstan were likely to play an important part in any argument about forum and, therefore, would be central to the ultimate outcome. They were never going to be peripheral points.
Other failures to make proper disclosure
i) However, the woman so observed was not D1's wife. It was a photograph of his mother, who D1 explained lived at 27 Ingram Avenue.
ii) When this was explained, the Claimant's response was to distance himself from the original identification, saying "I have only met Mr Mirakhmedov's wife only once in my life, during my visit to 27 Ingram Avenue on 10 June 2017. I therefore did not recognise her and so I did not question Raedas' identification of the lady in the photograph as her. The lady in the photograph was wearing sunglasses and a headscarf, and she is small in the photograph, which was taken at some distance away, making it more difficult for me to identify her face." These difficulties in identification ought to have been made clear in the evidence in support of the without notice application.
iii) The Claimant also deployed a statement from Mr Andrew Wordsworth, a Director at Raedas, who explained that the "identification" of D1's wife had been made by his firm without any prior knowledge of what D1's wife looked like, including no photograph to compare to the woman who had been observed, and he said (in his statement) that Raedas could not positively confirm the identify of the woman and could not confirm conclusively if she was D1's wife (in the absence of any photograph). However, that was not what had been said in the Raedas letter or in Iatuha 1, which had recorded the "identification" without caveat or explanation.
iv) In fact, as Mr Wordsworth explained in his statement the "identification" had been based on a series of assumptions, including D1's wife having had a historic connection to the property in public records (e.g. credit records and planning permission), that the woman was driven away by a chauffeur in a Bentley (and therefore, it was said, was unlikely to be an employee) and assumptions about age and ethnicity. It was acknowledged that the wearing of headscarf and glasses by the woman observed made this difficulty.
v) A proper presentation of this would, of course, have undermined the bare assertion that D1's wife had been observed at the properly. But on an application requiring full and frank disclosure, it ought to have been set out.
Luxembourg law application
i) Evidence that another system does things differently to both England and Kazakhstan (even if similar in some respects to the latter) does not seem to me to advance the points I needed to consider on these applications. The evidence is not directly relevant. If the application of the rule in Kazakhstan would have created a real risk of substantial injustice, I do not see that the fact a similar result would have been reached in Luxembourg would have changed that.
ii) The deployment of expert evidence must be kept under control. It is to be restricted to that which is reasonably required to resolve the proceedings (CPR rule 35.1). The Luxembourg law evidence does not fall within that description.
iii) Permission had already been granted for expert evidence in the law of Kazakhstan and of the UAE to be served by each party. I was not told why the court had not also been asked in advance to rule on the question whether expert evidence about the law of Luxembourg should be permitted, such that there could have been an exchange of reports, and a joint memorandum. In any event, the course that was followed meant there had not been such a process.
iv) The evidence referred to in the application did not comply with the requirements of CPR part 35.
Overall conclusions
i) D1 was properly served within the jurisdiction.
ii) The proceedings against D1 are stayed on the grounds of forum non conveniens in favour of the courts of Kazakhstan.
iii) The Dias J Order granting permission to serve the Defendants out of the jurisdiction is set aside:
a) On the ground that England is not the proper place to bring the claim.
b) As regards D4, also on the ground that there is no serious issue to be tried against D4.
c) On the ground of failure to give full and frank disclosure on the without notice application.
iv) The order for alternative service in the Dias J Order therefore falls away, but I would in any event have set it aside.
Note 1 The quotation is from the Claimant’s son’s statement (which was made in English), but the equivalent part of the English translation of the Claimant’s wife’s statement (made in Russian) is in almost identical terms. [Back] Note 2 Initially, there were competing translations of these messages. The quotation here is from a translation relied upon by D3 in his first statement which the Claimant, in his (subsequent) statement was content to adopt for these purposes. [Back] Note 3 Aydyn Alimov describes himself as “mainly [the Claimant’s] junior partner or hired manager, depending on the business venture I was involved in with him”. [Back] Note 4 There is also a side dispute about what the Claimant says had to be offered to Hua Tun’s local representatives in Kazakhstan in order to get them to persuade Hua Tun to release KKS Karagandy from its obligation to sell Stal and the ABK Buildings to Hua Tun. The Claimant says he gave them a residential property and two Mercedes-Benz S500s and that D2 agreed to reimburse him for that, which D2 denies. [Back] Note 5 The Defendants also referred to what was said by Popplewell J in Edgeworth Capital (Luxembourg) SARL v Aabar Investments PJS [2018] EWHC 1627 (Comm) at paragraph 34, that the absence of a contemporaneous written record by those with business experience may count heavily against the existence of an oral contract. [Back] Note 6 Indeed, in another paragraph of Iatuha 3, the distinct impression was given that the answer in the law of Kazakhstan to the Defendants’ point about the requirement of a power of attorney was only the ratification point: “100. … As [Mr Konysbayev] explained in his second report, he disagrees that the only way a party can be bound to an agreement entered into by another is through a power of attorney: he points out that, under the [sic] Article 165 of the Civil Code, a party can also be bound by their later approval of the transaction and that approval can be evidenced in any form, including by conduct.” [Back] Note 7 D1 says it is possible that the Claimant came to his office in Moscow prior to February 2022 (when he closed that office), but he cannot recall. [Back] Note 8 The agreement dated 13 June 2017 between KKS Karagandy and Hua Tun in relation to the properties was also an agreement (written in Russian) that was expressly governed by the law of Kazakhstan. [Back] Note 9 This was also the case for one of the expert Kazakhstan law reports, that of Mr Kaldybayev. [Back] Note 10 Though cf. Bank of St Petersburg PJSC v Arkhangelsky [2018] EWHC 1077 (Ch) at paragraph 829(9) where Hildyard J came to a different view. [Back] Note 11 See Ahmed v Khalifa [2017] EWHC 1190 (Comm) where, at paragraph 51, Sir Jeremy Cooke (sitting as a Judge of the High Court) reached a similar conclusion in relation to the courts of Bahrain in the context of alleged threats. [Back] Note 12 Consistently, (i) the Companies Act 2006 only gives the Court the power to rectify the register of companies registered in England and Wales, and the Part on overseas companies does not contain a power to order rectification of the register: see Companies Act 2006, sections 1 and 125, and Part 34; and (ii) shares in companies incorporated abroad are excluded from the Charging Orders Act 1979, unless the register is kept in England and Wales: see section 2(2)(b). [Back] Note 13 It was a suggestion made for the first time in the Claimant’s skeleton argument (but not mentioned or developed orally) that, if the Claimant succeeded against D1-D3 but they failed to account for the bitcoin they had received, an order for “this information” might be sought from D4. However, a party cannot be joined to proceedings simply for the purpose of obtaining disclosure (see e.g. Unilever v Chefaro [1994] FSR 135 and Briggs, Civil Jurisdiction and Judgments, page 497 at fn 122) and no attempt was made by the Claimant to explain the order it had in mind or the basis for it. or why it justified joining D4 to the proceedings now. [Back]