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SOVCOMFLOT LOSES FINAL APPEAL IN LONDON CASE AGAINST FORMER CHIEF EXECUTIVE DMITRY SKARGA

scarga_vs_frank

By John Helmer, Moscow

The Supreme Court, the UK’s highest court of appeal, has dismissed an application from Sovcomflot, the state-owned Russian shipping group, to appeal against earlier judgements in favour of former chief executive, Dmitry Skarga (right). A three-judge panel issued its ruling on October 29, saying Sovcomflot’s application “does not raise an arguable point of law of general public importance…bearing in mind that the case has already been the subject of judicial decision and reviewed on appeal.”

This judgement brings to an end eight years of litigation in which two High Court judgements exonerated the conduct in office of Skarga, awarding him at least £8 million ($12.7 million), plus more than £1 million ($1.6 million) in costs. In two successive rulings High Court Justice Andrew Smith found that Skarga’s successor at Sovcomflot, Sergei Frank (left), had been “dishonest”. According [1] to the judge’s ruling of March 24, 2011, , “Mr. Frank…[was] largely responsible for the conduct of the Fiona [Sovcomflot] actions on behalf of the claimants, [and] was, as I concluded in the main judgment, dishonest… he dishonestly supported Mr Borisenko’s untruthful account about Mr Skarga being party to bribing him… without any significant exception the claimants’ witness statements were shown to be misleading. I could not rely upon the statements even of honest witnesses because their oral evidence departed so far from them. I do not accept that they ever gave the witnesses’ real account of events… The claimants [Sovcomflot] made and pursued allegations that were obviously unsustainable when proper disclosure was eventually made, often during the trial… The key witnesses called by the claimants gave dishonest evidence, in particular Mr. Borisenko and Mr. Privalov in the Fiona actions and Mr. Oskirko and Mr. Privalov in the Intrigue action. I consider it relevant that the claimants’ primary contentions of corrupt conspiracies were pursued almost entirely on the basis of dishonest evidence. Further… many specific allegations that had been pleaded and relied upon in the claimants’ opening submissions were either not developed or not supported by evidence that survived cross-examination.”

Louis Flannery, Skarga’s lawyer, commented yesterday: “during this legal battle, Mr Skarga has had to suffer an imposed exile, a bitterly fought (and ultimately unsuccessful) extradition request, unlawful hacking into his bank and email accounts and seizure of all his assets, whilst being separated from his wife and children. Only today can he rest assured that the fabricated claims against him will finally dissipate.”

The Supreme Court ruling orders the lower court to assess the legal costs of Skarga and former Sovcomflot chartering partner, Yury Nikitin, which Sovcomflot must now pay. Most of Sovcomflot’s claims against Nikitin in the case have also been dismissed. Now that the Supreme Court has removed the last legal obstacle, Nikitin will recommence his application to the High Court for more than $180 million in compensation from Sovcomflot for the freeze of his assets during the lawsuit.

In a separate proceeding, Nikitin has won a ruling from the UK Court of Appeal to reconsider findings of fact and a judgement in favour of Sovcomflot subsidiary Novoship, which was granted in December of 2012. According to Lord Justice Tomlinson of the appeal court, the grounds of Nikitin’s appeal “enjoy real prospect of success.” Tomlinson was also critical of the trial judge, Christopher Clarke, for hearing “no oral evidence relevant to these issues other than that of Mr Nikitin, whose cross-examination on these points… was extremely short.” Details of that proceeding and the Clarke ruling can be read here [2].

In its reference to this case Sovcomflot said in its financial report [3] for 2012 that “the Group was successful in all claims and has been awarded principal of approximately $169.4 million plus interest.” Sovcomflot has yet to issue an official response to the London rulings; there has been no Russian press reporting of them either.

Nikitin’s lawyer Mike Lax said today “to get permission to appeal on findings of fact is rare. This will come as a major blow to Sovcomflot/Novoship.”