Legal
Wealthy Shop Around For Jurisdiction Of Choice

For those with great wealth, national boundaries present no real obstacle. But when legal disputes arise, they will invariably have an international dimension, leaving the individual exposed to "forum shopping".
For those with great wealth, national boundaries present no real
obstacle. They can travel frequently and widely, own property in
a number of countries and use foreign companies to hold, and
perhaps conceal, their wealth.
One possible disadvantage to such a lifestyle is that, when legal
disputes arise, they will invariably have an international
dimension, leaving the individual exposed to "forum shopping" –
the practice of litigating disputes in a country that, for
political or legal reasons, is reckoned to give the claimant the
best chance of success.
The venue of the dispute might be hugely important. Some
countries are generous in the financial awards they make, some,
for example, awarding non-compensatory losses: others adopt a
conservative approach. Some countries' courts will grant
pre-trial remedies such as injunctions whereas others find such
measures draconian. In some countries lawyers will share the risk
of bad outcomes through "no-win-no-fee" arrangements. In other
countries access to lawyers is reserved for the wealthy.
Recent cases involving two well known and wealthy Russians, Roman
Abramovich and Oleg Deripaska, shed light on UK courts' attitudes
to international disputes.
The case involving Mr Abramovich is complicated - the judgment is
136 pages long. It concerns allegations that Mr Abramovich
defrauded a Russian company out of billions of pounds, being its
share of a Russian joint venture set up to exploit the South
Priobskoye & Palyanovske oil fields in the Khanty Mansiysk region
of Siberia. It is alleged that Mr Abramovich did this in part
though nominee companies operating variously in Russia, the UK,
Cyprus and the British Virgin Islands.
The Abramovich case addresses an issue which commonly arises in
litigation with an international element. Whose law
applies? In order to assess whether Mr Abramovich should
pay compensation or return property that he'd allegedly
appropriated, should an English court apply English law or
Russian law?
The claimants argued for the application of a doctrine known to
lawyers as lex fori. This means that the law of the country
hearing the dispute applies: i.e. English law. It suited
the claimant to argue this because, was Russian law to apply, the
claimant would lose. Russian law set a date by which proceedings
should be started and, to put it simply, the claimant had started
its case too late.
The defendants argued that the lex fori should not be the
applicable law and that the court should ask, with whose law did
the case have its closest and most real connection? The court
agreed that this was the proper test and had little doubt that
the strongest connecting factors were with Russia. Russia is
where the claimant suffered its loss, Russia is the place of
business of the claimant, Russia is where the key relationships
existed and Russia is where the physical operations of the JV
were conducted.
The court then applied Russian law and decided that in Russian
law the claimant's claims were time barred. On the other hand,
English courts will in certain circumstances apply the law of a
foreign country in an English court with the assistance of expert
evidence.
In English law, legal proceedings are started by the issue and
service of a claim form. The form was duly delivered to Mr
Abramovich's flat in London. But for that to constitute proper
service, Mr Abramovich needed to be domiciled in England when the
form was delivered. This is a crucial issue. If Mr Abramovich was
domiciled in England when served, the claimant would rely on a
European Court judgment to the effect that if a defendant is
domiciled in a Member State of the European Union, the court has
no power to stop proceedings against him. It can do so on the
grounds that there is an alternative more appropriate place where
the trial should take place. The test applied by the court
was: what was Mr Abramovich's settled or usual place of abode
when the claim form was served on him?
In assessing this point the judge referred to earlier litigation
involving another well known Russian, Oleg Deripaska. In that
case, the judge there commented on how difficult it is to apply
the test of residence to "a modern phenomena" such as Mr
Deripaska, and this characterisation applies with equal force to
Mr Abramovich. Both are international businessmen who jet around
the world on frequent and brief meetings. For both the costs of
travel are insignificant. As was said in the Deripaska case: "it
hardly rings true to say of Mr. Deripaska that he was resident
for (say) last Tuesday afternoon or next Thursday morning. It
would be a misuse of language." The "quality" of the time
spent in England and other places needed to be considered as well
as the "quantity" of time.
In Mr Abramovich's case it was noted that he is a Russian citizen
and speaker but he is not fluent in English. In 2007, he spent
only 57 full days in England, all in connection with football
matches. He is not treated as resident in the UK for tax
purposes. It was said on Mr Abramovich's behalf that no
inferences should be drawn from his ownership of Chelsea which
was simply part of a growing phenomenon of wealthy foreigners
acquiring English football clubs.
Mr Abramovich's £30 million property in England was said to
represent less than 0.5 per cent of his net wealth. On the facts
of the case the trial judge decided that in 2007 Mr Abramovich
was resident in Russia and not in England. He had not been
validly served.
As one would expect, Messrs Abramovich and Deripaska both had
top-drawer legal teams. It is crucial to take advice early on
these issues. If arguments about forum and choice of law are not
raised, a person might find himself litigating in front of an
unsympathetic tribunal whose law, customs and language he barely
understands.