Billionaire Wars

February 22 2012, 4:22 pm

By Khristina Narizhnaya – Busness Insider – 17/02/2012

The disputes playing out in London courts increasingly feature tough guys with private jets who deploy armies of attorneys to fight over obscene piles of cash. What they lack, however, is British plaintiffs or defendants.

London has become the battleground of choice for big business disputes emerging from Russia and countries that once belonged to the Soviet Union, a group known as the Commonwealth of Independent States, or CIS.

As these countries’ economies grow and globalize, post-Soviet businessmen increasingly shun local judicial systems, which often lack experience and are riddled with corruption. Instead, they take their disputes to international courtrooms and arbitral tribunals. Many of the legal narratives from this newfangled world of offshore lawyering read like the scripts for gangster movies.

A third of all cases at the London Court of International Arbitration, which gets the majority of business disputes because of its speed and confidentiality, involve a Russian-speaking party. The International Commercial Court also gets its fair share.

The scuttlebutt among London lawyers says that the Kremlin has encouraged litigants to stop fighting their battles in the UK, concerned about how the sheer volume of high-profile litigation in English courts reflects on Russia.

The Kremlin denied any knowledge of such efforts. “It’s not so great that they are suing each other, but everyone is free to decide where to litigate,” a Kremlin spokesperson said. The Stockholm Arbitration Tribunal has long been a popular venue for CIS cases, but London has now taken the lead.

“The cases are always interesting — great characters, and often dramatic allegations. It’s never boring,” said Rupert D’Cruz, secretary of the Russian-British Law Association, who heads the Littleton Chambers CIS Dispute Resolution. They typically involve “multi-billion dollar assets, privatized under questionable circumstances,” said one corporate investigator, who requested anonymity due of the nature of his work.

Events in the cases are usually dramatic, with clients battling over everypoint, said Alastair Shaw, a Swan Turton commercial litigation partner who has worked with CIS clients in the past.

The disputes provide growth for the UK’s recession-stricken economy. One entrepreneur opened a firm last year that supplies Russian-speaking paralegals. Dispute consulting firms are hiring more private investigators to accommodate CIS cases, which often lack transparency.

The High Court commercial division moved into a new state-of-the-art 300 million pound ($460.6 million) building in October. The building houses 31 courts and is adorned with a glass staircase and modern art.

English law is often used in business contracts across the CIS for its reliability, independence and established reputation. With capital flight of over $80 billion and Russia’s overworked courts and arbitration tribunals, the disputes are likely to stay in London for years to come, experts say.

Russian President Dmitry Medvedev’s push to increase credibility of the Russian legal system will take years to accomplish, said Evgeny Raschevsk, director of international arbitration and litigation at Egorov Puginsky Afanasiev & Partners, a prominent Moscow-based law firm with offices in London.

In the early part of the last decade there was an influx of cases filed in American courts, mainly in New York. But most were turned away because judges ruled that the United States lacked jurisdiction over them.

American courts demand a tighter connection when it comes to accepting foreign cases than the British courts. Moreover, many more oligarchs and businessmen from the former USSR live in London than in New York.