Magnitsky, the libel courts, and sanctions

Finacial Times

On 16 November 2009 Sergei Magnitsky died in prison in Russia. Shortly before his arrest and imprisonment he had been investigating a substantial tax fraud committed against the Russian Federation by a criminal gang. I shall refer to this tax fraud as the Hermitage Fund fraud.

Beyond this short summary, many of the facts in issue between the parties are unknown or controversial, and are subject to stark divisions of opinion…

So began Mr Justice Simon’s judgment in Pavel Karpov v William Felix Browder & Hermitage Capital Management Limited & others on Monday. And the rest is very much worth reading.

The High Court judge ultimately threw out the libel claim made by Karpov (a Russian ex-cop and Magnitsky List member) against Browder — largely because of “exiguous” grounds to link the case to the UK. Simultaneously, Mr Justice Simon said that there were “inadequate particulars to justify the charge that the claimant was a primary or secondary party to Sergei Magnitsky’s torture and murder”.

The “exiguous” point alone will probably see the case feted as a turning point for ‘libel tourism’, even beyond the Defamation Act which is just coming into force in the UK. Perhaps even for overseas litigants making use of English courts in general. So, here are key bits of the judgment on this stuff:

For these reasons, I am satisfied that the Claimant had no connection with, and had no reputation to protect within, the jurisdiction; and therefore cannot establish a real and substantial tort within the jurisdiction. His reputation exists in Russia and the damage to his reputation (which is presumed as a matter of English law) is in Russia. The contrast with the facts of Berezovsky v. Michaels (see above) is stark…

His connection with this country is exiguous and, although he can point to the continuing publication in this country, there is ‘a degree of artificiality’ about his seeking to protect his reputation in this country. This is an important, but not determinative, consideration on the Defendants’ application to strike out the claim…

But there’s more to it. For one thing, an end to libel tourism or not, the case’s legal bill sounds pretty big: Monday’s ruling refers to the “substantial costs” if Karpov’s claim had reached a full trial.

Which is in fact another, rather noteworthy reason why Mr Justice Simon threw out Karpov’s claim — this time citing ‘On Presumption’ in Montaigne’s Essais. The costs vs benefits of a trial were part of why the case wasn’t “worth the candle”. But the judge made this particular point

The impact of any such judgment and order would be unlikely to assist (let alone achieve) the most important of the Claimant’s stated objectives: his removal from the Magnitsky list. This is because the libel action is necessarily directed to the confined pleaded issues and the trial will be based on material disclosed by the parties. The issues which would be determined at trial would not deal with other damaging allegations that have been made against the Claimant, let alone significantly affect views based on different material, which led to legislation enacted by the United States Congress.

That (we think) may come to be rather important. The US Magnitsky Act is on the books: Browder’s made huge claims for its power, and it might be followed by similar legislation elsewhere in the west, even though the Kremlin will hardly take that sitting down. And in general, the whole idea of financial sanctions against individuals is in relatively early days.

Should targets of sanctions not be able to fight their effects using the libel courts, that seems significant.

Meanwhile, this isn’t the post to go into the complexities of the Magnitsky saga. But it’s worth noting the judgment’s view on how Karpov (the ex-policeman) could fund this litigation, and whether this was relevant:

The present state of the evidence is that the Claimant’s costs of bringing and pursuing the claim are being supported by a friend who has guaranteed bank loans which the Claimant is using to pay his own costs and to provide security for the Defendants’ costs. Despite Defendants’ enquiries the Claimant has not identified the friend…

Browder’s lawyers had originally argued that the court “cannot be satisfied that the Russian state is not behind the claim in some way”. But the judge said that this involved “exiguous evidence that a friendly State is supporting an abusive claim for its own purposes”, and in further argument the defendants simply alleged a lack of information. Still no dice, as per Justice Simon’s conclusion:

The fact that the Guarantor does not wish to be identified has raised the Defendants’ suspicions, but (at least at this stage) I am not prepared to draw adverse inferences against the Claimant on the basis of the funding of the Claim.

In any event — whoever’s going to pay Karpov’s fees to Messrs Olswang… it surely won’t be cheap.

This entry was posted by Joseph Cotterill on Monday October 14th, 2013 16:42. Tagged with Law, Russia. payday loan займ на карту срочно без отказа https://zp-pdl.com/online-payday-loans-cash-advances.php https://zp-pdl.com/emergency-payday-loans.php онлайн займы