Home News Civil Litigation Ukraine War Disruption Forces Adjournment of Bank’s $4.2 Billion Fraud Claim

Ukraine War Disruption Forces Adjournment of Bank’s $4.2 Billion Fraud Claim

The hugely disruptive impact of Russia’s invasion of Ukraine is being felt throughout the world – and the English legal system is far from immune. The point was made by the High Court’s momentous decision to adjourn the trial of a very substantial fraud claim being pursued in England by a state-owned Ukrainian bank.

The bank claimed that, prior to its nationalisation, over $1.9 billion of its assets were fraudulently misappropriated by two of its founders. After it launched proceedings in London, the founders and various companies they were alleged to control (the defendants) denied any wrongdoing. The case – in which the bank was claiming, with interest, about $4.2 billion – had been listed for a trial which was due to last 10-13 weeks, commencing in June 2022.

In seeking an adjournment of the case, the defendants pointed out that the founders and the directors of the companies are all Ukrainian citizens, living in Ukraine. Non-party witnesses in the case were also Ukrainian and almost all the issues in the case had to be determined under Ukrainian law. The Russian invasion had already severely impacted on the defendants’ ability to prepare for trial and they contended that it was hard to imagine a more compelling case for an adjournment.

For its part, the bank stressed the determination of the Ukrainian people to carry on with their lives as normally as possible and argued that an adjournment of such a substantial and significant trial should only be countenanced as a last resort. With such a large sum at stake, the litigation had become all the more important to the bank since the outbreak of war. Any funds recovered from the defendants would be dedicated to the noble cause of rebuilding a post-war Ukraine. There was also the possibility of peace talks leading to stabilisation, or even resolution, of the situation on the ground prior to the listed trial date.

In adjourning the trial for 12 months, to June 2023, the Court noted that, although the invasion had not gone as planned, Russian forces continued to occupy significant parts of Ukraine. Life there had in some respects continued with a semblance of normality, with essential services being largely maintained. However, attacks on Ukrainian cities were causing widespread destruction and regularly interrupting day-to-day life. Travel within the country was dangerous, curfews were enforced and hundreds, quite possibly thousands, of civilians had lost their lives.

The Court was satisfied that the war had interrupted the free flow of information between the defendants and their lawyers, both in England and Ukraine. It had impacted on their ability to prepare for the case at a critical pre-trial stage. Martial law in Ukraine, and current restrictions on men between the ages of 18 and 60 travelling abroad, meant that the founders might be unable to attend or participate in a trial in London.

One of the founders claimed to be fully engaged in the war effort and the Court noted that it should tread very carefully before prioritising the litigation over the wishes of a Ukrainian to assist his country. Although any recovery of damages by the bank would be delayed by a year, interest would carry on accruing and, in the interim, it would continue to be protected by a worldwide asset freezing order.

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Published
5 April 2022
Last Updated
18 May 2022