Enter the bear tamers

The multibillion-pound Berezovsky v Abramovich case occupied the Commercial Court at the shiny new Rolls Building for many months, and last week Mrs Justice Gloster finally handed down her judgment. Berezovsky's claim against his former business partner referred back to the 1990s and the murky world of Russian business following the collapse of the Soviet Union. At that time, state assets such as steel plants, oil companies, mines and large factories were sold to private purchasers, often at knock-down prices. The era was mired by corruption and few would pretend that the process of privatisation was clean. Many new business owners acquired fabulous wealth, and a group of more than 30 became known as the 'oligarchs'. In addition to Berezovsky (once a major powerbroker but now a vocal enemy of Vladimir Putin) and Abramovich (best known in the UK as the owner of Chelsea FC), there were other now-familiar names. Oleg Deripaska was the man behind the giant aluminium company RusAL and owner of a yacht visited by various British politicians. Former KGB man Mikhail Khodorkovsky became the owner of oil company Yukos, but he is now serving a 14-year jail sentence in Russia, having been convicted on a variety of business and tax-related charges. His supporters are entirely convinced that his trial was politically motivated and he has appealed on several occasions to the European Court of Human Rights. Amnesty describes him as a prisoner of conscience.

Friendships among the oligarchs have proved fickle. Berezovsky and Abramovich's dispute is almost reminiscent of a bitter divorce; the writ was apparently served in a Hermes store. Berezovsky claims Abramovich owes him an eye-watering £3.8 billion in relation to stockholdings in the privatised oil company called Sibneft. Abramovich was having none of it and there was no written documentation to prove anything.

The English courts have heard this kind of claim before. In 2006 Oleg Deripaska was sued in London's Commercial Court by a former Uzbek business associate, Michael Cherney, who claimed to be the beneficial owner of 20% of the stock in a company called RusAl. As to why that case is being heard here in England, the words of Mr Justice Clarke should explain. He acknowledged that Russia was the natural forum for the litigation, but that "risks inherent in a trial in Russia... are sufficient to make England the forum in which the case can most suitably be tried in the interest of both parties and the ends of justice". Bringing the case to trial here is further complicated by the fact that Cherney is likely to be arrested if he steps onto English soil. He is the subject of an outstanding Interpol arrest warrant and hopes to give evidence via videolink from Israel.

Given the context and complexity of these Russian disputes, you have to admire the English lawyers who handle them. Abramovich was represented by Skadden, Arps, Slate, Meagher & Flom (UK) LLP, and the team must surely be hugely satisfied with the judgment. By contrast, Berezovsky's lawyers Addleshaw Goddard have much to consider in the case post mortem. The judge severely criticised the reliability of their client, while he simply blames them for things not going his way. The two firms' legal fees and other related expenses are reported to have spiralled to £100 million, which is of a size that can make or break a firm's fortunes unless the risks have been hedged correctly.

What Addleshaw Goddard must now be considering is how well their venture into the world of legal expenses insurance has worked out, and just how well suited to big-ticket litigation the conditional fee agreement (CFA) actually is. The most common form of CFA between a lawyer and their client is 'no win, no fee' and they are most often used in relation to personal injury claims. Without knowing the exact terms of the CFA Addleshaw Goddard created with Berezovsky, it's difficult to estimate how much they will actually get paid for their years of work on the case. Reports suggest that they would have been able to issue a bumper invoice had their client been successful.

Abramovich's legal costs must now be borne by Berezovsky, and this is where a legal expenses insurance policy comes into its own. Just imagine the anxiety levels of Berezovsky's lawyers right now if there hadn't been one in place.

There are several themes for the budding commercial litigator to consider in this story:

1. The reputation of English law around the world and why it is that foreign litigants want to issue claims here rather than at home or in the country where the dispute arose.
2. The usefulness of CFAs in high-value cases.
3. The usefulness of legal expenses insurance to firms and their clients.
4. The scale of the legal costs and whether it comes in for criticism. Keeping civil litigation costs under control is a hot topic at present. Look into the Jackson Review.  

Here are some recent reports about the case from the mainstream and legal press:

• The Telegraph
• The Guardian
• The Lawyer
• Legal Week