Contempt of Court decision in Chernukhin v Deripaska

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In July 2020, Mr Justice Andrew Baker dismissed an application made by Vladimir Chernukhin seeking an order that Oleg Deripaska be sent to prison for contempt of court.

The Judge concluded, in a judgment reported at [2020] EWHC 1798 (Comm) (the "Judgment"), that Mr Chernukhi's application was an abuse of the English court's process for a number of interconnected reasons:

  • Mr Chernukhin refused to be open with Mr Deripaska or the Court as to the extent of his awareness of the facts which were said to amount to contempt.
  • Mr Chernukhin's evidence in support of the application was "in material respects misleading or not the whole truth, or both of those together".
  • Mr Chernukhin instituted the contempt application for reasons of "revenge and personal animosity".
  • The contempt application was presented to the court in a "heavy-handed, aggressively partisan fashion that was inappropriate, vexatious and unfair to Mr Deripaska".

In addition, the Judge concluded that there had not, in any event, been any contempt of court.

The Court of Appeal (Males LJ) granted permission to appeal against certain aspects of Andrew Baker's decision on 10 November 2020. The appeal will be heard over two days in October 2021.

1. Abuse of process

Andrew Baker J dismissed the contempt application on day three of the four day hearing on the basis that it was an abuse of process.

The key allegation made by Mr Chernukhin was that Mr Deripaska caused shares in a Jersey company called EN+ to be "redomiciled" to Russia in December 2018 (the "Redomiciliation") when he voted in favour of a resolution that EN+ be re-registered in Russia.

This, he said, was a contempt of court because it was prohibited by undertakings given by Mr Deripaska to the English Court in June 2018 (the "Undertakings").

Findings of fact

The key findings of fact relevant to the abuse of process application were as follows:

  • Mr Chernukhin was aware at all material times (ie from before the Undertakings were given) that "EN+ was actively considering a redomiciliation to Russia" [68].
  • Mr Chernukhin was untroubled by the possibility that the shares would move from Jersey to Russia, and was content to treat the Undertakings are acceptable notwithstanding that possibility [68].
  • The motivation for the contempt application was not a belief or concern on Mr Chernukhin's part that the Redomiciliation had somehow prejudiced or threatened to prejudice his interests [68].
  • Mr Chernukhin followed press coverage of the Redomiciliation, including a November 2018 press article in Vedemosti which explained that EN+'s board had approved the Redomiciliation and that the matter was being placed before an EN+ shareholder's meeting in December 2018 [69(v)].
  • Mr Chernukhin's evidence that he did not learn about the result of that shareholder's meeting from the press was false [76].
  • Mr Chernukhin's motivation for bringing the contempt proceedings was one of "revenge", a "tit-for-tat" response to Mr Deripaska having commenced a private prosecution against him [103].

The law

The Judge then assessed the critical legal principles, as follows:

  • An applicant's subjective motivation for bringing contempt proceedings is relevant to determining whether those proceedings are abusive [138]. There is an open question as to whether the 'predominant' motivation has to be improper or illegitimate or whether it is sufficient for there to be a 'real and substantial' improper purpose [140].
  • Contempt proceedings are civil proceedings but bear several important hallmarks of criminal proceedings [141].
  • Contempt applications have a particular capacity to "be used vexatiously by litigants to further interests that it is not the function of the contempt jurisdiction to serve." [142]
  • An applicant pursues a contempt charge as "much as a quasi-prosecutor serving the public interest as it does as private litigant pursuing its own interests in the underlying dispute." [143]

Application of the facts to the law

The Judge's overall conclusion was that:

"... The contempt application ought to have been pursued dispassionately by the claimants as parties with no interest in the outcome. It was instead pursued in aggressive, partisan fashion, as if it were just the latest round in this long-running, 'no-holds barred', commercial litigation wrestling match. ..."

The Judge referred to four particular features of the claimants' abuse:

First, the Claimants did not fairly consider whether to institute the contempt application in the first place [155]. A fair approach would have involved Mr Chernukhin explaining to the Court why he was content with the Undertakings even though he knew the Redomiciliation was in prospect.

Secondly, Mr Chernukhin's evidence in support of the contempt application "was in material respects misleading or not the whole truth, or both of those together" [156]. The Judge gave various examples to buttress this finding, including that:

  • The evidence in support of the application was "seriously misleading" because it gave the very clear impression that neither Mr Chernukhin nor his advisers knew anything about the Redomiciliation until May 2019 [156(ii)]
  • Mr Chernukhin relied on the fact that certificates relating to the EN+ shares were no longer held by Mr Deripaska's solicitors. But a year earlier Mr Chernukhin's evidence to the court had been that the location of share certificates was irrelevant [156(v)]
  • The evidence gave the impression that the relevant shares were trade-able on the LSE before the Redomiciliation, but not tradeable afterwards. But this again was incorrect, as Mr Chernukhin's solicitors had previously explained [156(vi)]

Thirdly, it was right to draw the inference against Mr Chernukhin that "revenge and personal animosity towards Mr Deripaska was the real reason for the contempt application, not any public-minded desire to bring matters to the court's attention for it to consider the issue of breach and, if relevant, sanction."

Fourthly, the contempt application was presented to the court in a "heavy-handed, aggressively partisan fashion that was inappropriate, vexatious and unfair to Mr Deripaska" [158].

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