Judgments - Berezovsky v. Michaels and Others Glouchkov v. Michaels and Others (Consolidated Appeals)

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    Next counsel for Forbes argued that, in any event, on conventional Spiliada principles Russia, or the United States, are more appropriate jurisdictions for the trial of the action. This submission must be approached on the basis that the plaintiffs have significant connections with England and reputations to protect here. It is, of course, true that the background to the case is events which took place in Russia. Counsel for Forbes argued that evidence in support of a defence justification is to be found in Russia. Popplewell J. and Hirst L.J. concluded that in the absence of a particularised plea of justification to give no or little weight to this factor. Despite the valiant attempts by counsel for Forbes to argue that there is an evidential basis for a plea of justification, I remain unpersuaded. A full examination of the merits and demerits of the charges and counter-charges must, however, await the trial of the action. It is true that Forbes may also be able to plead qualified privilege on the basis of the law as stated by the House of Lords in Reynolds v. Times Newspapers Ltd. [1999] 3 W.L.R. 1010. But the evidence of such a plea would presumably largely be in the United States where the reporters are based and where the documents are. In any event, there is nothing to indicate the contrary. Moreover, there are two substantial indications pointing to Russia not being the appropriate jurisdiction to try the action. The first is that only 19 copies were distributed in Russia. Secondly, and most importantly, on the evidence adduced by Forbes about the judicial system in Russia, it is clear that a judgment in favour of the plaintiffs in Russia will not be seen to redress the damage to the reputations of the plaintiffs in England. Russia cannot therefore realistically be treated as an appropriate forum where the ends of justice can be achieved. In the alternative counsel for Forbes argued that the United States is a more appropriate jurisdiction for the trial of the action. There was a large distribution of the magazine in the United States. It is a jurisdiction where libel actions can be effectively and justly tried. On the other hand, the connections of both plaintiffs with the United States are minimal. They cannot realistically claim to have reputations which need protection in the United States. It is therefore not an appropriate forum.

    In agreement with Hirst L.J. I am satisfied that England is the most appropriate jurisdiction for the trial of the actions.

Issue (5): Was the Court of Appeal entitled to interfere with the exercise of discretion by Popplewell J.?

    Counsel for Forbes submitted that the Court of Appeal was not entitled to interfere with the exercise by Popplewell J. of his discretion. Popplewell J. certainly observed that if a plaintiff is libelled in this country, he should prima facie be allowed to bring his claim here. But Popplewell J. also said that the case "involves nothing but Russia". He also described the connections of the plaintiffs with England as "tenuous". He therefore by necessary implication took the view that in substance the plaintiff did not have reputations to protect in England. In the result he misdirected himself as to a significant English dimension of the case. I am satisfied that the exercise of discretion by the judge was flawed. The Court of Appeal was entitled to intervene.

Issue (6): Mr. Glouchkov

    Counsel for Forbes finally submitted that, even if his appeal in respect of the action brought by Mr. Berezovsky fails, the appeal in respect of Mr. Glouchkov must succeed. He did not suggest such a possible outcome to the Court of Appeal. The Court of Appeal was entitled to assume, and did assume, that the two appeals ought to be decided in the same way. If alerted to the possibility of a differential result the Court of Appeal might have dealt with the matter differently. In my view this argument is not open to Forbes. But I am also unpersuaded that it has any merit.

Postscript on the Internet

    In their statements of claim the plaintiffs relied on the fact that the Forbes article is also available to be read on-line on the Internet within the jurisdiction. The Court of Appeal referred to this aspect only in passing. During the course of interesting arguments it became clear that there is not the necessary evidence before the House to consider this important issue satisfactorily. Having come to a clear conclusion without reference to the availability of the article on the Internet it is unnecessary to discuss it in this case.


    I would dismiss both the petition and counter-petitions presently before the House. For reasons which are substantially the same as those given by Hirst L.J. in his careful and impressive judgment, I would also dismiss both appeals.


My Lords,

    I agree with the views expressed by my noble and learned friend Lord Steyn. I too would dismiss this appeal.

    The central question raised by the appeal is whether the Court of Appeal were justified in reversing the decision of Popplewell J. that the plaintiffs' actions could be stayed. The learned judge held that the plaintiffs had not made out their case for seeking leave to serve process out of the jurisdiction; they had failed to establish that the English courts were the most appropriate forum for the trial of their actions.

    The essence of both plaintiffs' claims is that their reputations in this country have been severely damaged by the article complained of, and that it is vital for the successful continuation of their personal, business and, in the case of Mr. Berezovsky, official activities in this country that they should be able to defend and vindicate their integrity in an English court. The claims are confined to damage sustained within the jurisdiction.

    Popplewell J. granted the stay because he took the view that "the two plaintiffs' connection with this country is tenuous. There is some, but it is tenuous." He added:

    "It is clear from reading the article that there is no English connection in the article at all. It is in an American magazine, written in American style (if that is the right way of putting it) and it is wholly connected with matters in Russia. There is no connection with anything which has occurred in this country in the article."

    In the Court of Appeal Hurst L.J. with whom May L.J. and Sir John Knox agreed, said:

    "It is elementary, and was rightly stressed by Mr. Robertson, that these were decisions within the scope of the judge's discretion, so that the Court of Appeal should only interfere if the judge erred in principle, or seriously misapprehended relevant matters, or took into account irrelevant ones. Mr. Price submitted that his case meets these criteria on two main grounds -


          The judge in his second judgment disregarded the important line of authority canvassed in his first judgment, and gave little or no weight to the key fact that the torts sued on were committed in England.


          He misapprehended the extent of the plaintiffs' connections with and reputations in England on the evidence then before him, which has, of course, been significantly supplemented by the further evidence."

    Dealing generally with these grounds, Hirst L.J. said that he found it somewhat surprising that the judge had concluded, on the evidence before him, that Mr. Berezovsky's connections with England were tenuous. However, in addition to that evidence, the Court of Appeal had the advantage of further evidence which, to Hirst L.J.'s mind, placed the strength of his connections beyond doubt.

    Hirst L.J. recited the further evidence in some detail. I would refer briefly to the affidavit of Mr. Eugene Shvidler, who is Vice President of Sibneft, one of the largest oil companies in Russia. Mr. Berezovsky served on its board of directors until 1996 and, according to Mr. Shvidler, still tends to be publicly identified with it. Mr. Shvidler states among other things that he has been personally involved in the company's efforts to raise capital, and has had frequent dealings with people in London, because of the City's importance as a major financial centre. The Forbes article had frequently been mentioned to him. He had received "a great deal of negative feedback from investors, including those in the U.K. who have expressed concern about Mr. Berezovsky's role in the company . . . " He was left in no doubt about "the detrimental effect of the Forbes article upon Mr. Berezovsky's reputation and upon the reputation of the companies with which his name is associated amongst the financial community of London."

    Further evidence to the same effect is contained in the affidavit of Mr. Kuppers, the Managing Director of Forus Services S.A., whose business consists in the provision of financial services to leading corporations in Russia and elsewhere. Mr. Berezovsky was a co-founder of the company, and Mr. Glouchkov was a non-executive director of other companies in the Forus group until 1997. The gist of the evidence put forward by Mr. Kuppers is that the reputations and credit of both plaintiffs, and thus the fund-raising ability in London of the companies with which they are associated, were seriously damaged by the Forbes article.

    Bearing in mind the colourful and explicit terms of the article - it quotes one American businessman as saying "These guys are criminals on an outrageous scale. It's as if Lucky Luciano were Chairman of the board of Chrysler" - it would be hardly surprising if it had a detrimental effect upon the reputations of the plaintiffs and the credit of the companies concerned. But in the international business and political world it is by no means unknown for scoundrels, and even major criminals, to survive, to be accepted, and to prosper. Standards of conduct and of tolerance in such matters vary widely from country to country. This case is solely concerned with the plaintiffs' reputations in England. They seek to have their reputations judged by English standards. The Court of Appeal thought that for this purpose England was the natural forum, and I agree with them. I do not follow the relevance of the judge's remark that the article has "no connection with anything which has occurred in this country." A businessman or politician takes his reputation with him wherever he goes, irrespective of the place where he has acquired it.

    Mr. Robertson Q.C., for the appellants, criticised Hirst L.J. for saying that the judge had erred in principle in failing to take into account the decisions in The Albaforth [1984] 2 Lloyd's Rep. 91, and Schapira v. Ahronson [1999] E.M.L.R. 735 in his second judgment although, as Hirst L.J. acknowledged, the judge had given careful consideration to these cases in his first judgment. But as the judge himself had said in his second judgment, "As to the law on the subject, the principles are not in dispute. Like all these principles their application is not always very easy."

    The Court of Appeal plainly considered that the judge had erred in his application of the governing principles to the evidence before him, and that they were accordingly entitled to consider the matter afresh. In the light of the evidence before the judge they were in my judgment fully justified in doing so and in concluding, with the assistance of the additional evidence, that his decision should be reversed.


My Lords,

    The plaintiffs are Russian businessmen who claim that they have been defamed by an article published in an American business magazine and distributed almost entirely in the United States but also in limited numbers in other countries including England. The article is concerned with their activities in Russia. The plaintiffs seek to invoke the extra-territorial jurisdiction of the English court to require the American editor and publishers to answer for the injury which they say has been done to them in this country. Their claim is limited to the effects of publication in England and they say that England is clearly the appropriate forum in which such an action should be tried.

    The question of whether leave should be granted to serve the defendants in the United States came before Popplewell J. on 22 October 1997. Ord. 11, r.1(1)(f) confers jurisdiction when "the claim is founded on a tort and the damage was sustained, or the resulted from an act committed within the jurisdiction." The plaintiffs adduced evidence that, as Russian businessmen, they made frequent visits to this country and were known to people here. One of them had a divorced wife and children living here. Their activities in Russia had attracted a certain amount of publicity, not all favourable, in English newspapers. So they had a reputation in this country and had therefore suffered "significant damage" here. That was enough to found jurisdiction under Ord. 11, r. (1)(f).

    It not sufficient, however, to bring one's case within one of the paragraphs of Ord. 11, r. 1. The plaintiff is also required by Ord.11, r. 4(2) to show that "the case is a proper one for service out of the jurisdiction under this Order." A decision on this question involves an exercise of the court's discretion, taking into account all the circumstances of the case. The principles upon which the discretion should be exercised are definitively stated in the speech of Lord Goff of Chieveley in Spiliada Maritime Corporation v. Cansulex Ltd. [1987] A.C. 460. The burden is upon the plaintiff to show that England is clearly the appropriate forum in which the case should be tried in the interests of all the parties and the ends of justice. The various paragraphs of Ord.11, r. 1 include some where "one would have thought [that] the discretion would normally be exercised in favour of granting leave" and this was a matter to be taken into account but "the court should give to such factors the weight which, in all the circumstances of the case, it considers to be appropriate." (At pp. 481- 482). Lord Templeman, in the same case, said, at p. 465, that the decision was "pre-eminently a matter for the trial judge. . . . An appeal should be rare and the appellate court should be slow to interfere."

    Popplewell J. dealt with the application with commendable expedition. Submissions and judgment were concluded within a single day. He dealt first with a preliminary point as to whether in the special case of a libel published within the jurisdiction, he had any discretion to refuse leave. He was referred to the decision of the European Court of Justice in Shevill v. Presse Alliance S.A. (Case C-68/93) [1995] 2 A.C. 18. This case concerned the application to libel proceedings of article 5(3) of the Brussels Convention, which confers jurisdiction in tort actions upon "the courts of the place where the harmful event occurred." The European Court decided that in the case of an international libel through the press, the courts of each contracting state in which the defamatory publication was distributed and in which the victim was known had jurisdiction to award damages for the injury to his reputation in that state. This was a jurisdiction which, in accordance with the fundamental principles of the Brussels Convention, could not be declined on the ground of forum non conveniens.

    Popplewell J. rightly pointed out that the existence of jurisdiction under the Brussels Convention as against a person domiciled in a contracting state was not necessarily a reason for exercising an extra-territorial jurisdiction under Ord. 11 against a person not so domiciled. He did not develop the point, but the differences which he no doubt had in mind were fully articulated by Lord Goff of Chieveley in the later case of Airbus Industrie G.I.E. v. Patel [1999] 1 A.C. 119, 132. He said that the purpose of the Brussels Convention was to parcel out jurisdiction according to clear rules:

    "This system achieves its purpose, but at a price. The price is rigidity, and rigidity can be productive of injustice. The judges of this country, who loyally enforce this system, not only between United Kingdom jurisdictions and the jurisdictions of other member states, but also as between the three jurisdictions within the United Kingdom itself, have to accept the fact that the practical results are from time to time unwelcome. This is essentially because the primary purpose of the Convention is to ensure that there shall be no clash between the jurisdictions of member states of the Community."

The common law approach to conflicts of jurisdiction was altogether different:

    "There is, so to speak, a jungle of separate, broadly based, jurisdictions all over the world. In England, for example, jurisdiction is founded on the presence of the defendant within the jurisdiction, and in certain specified (but widely drawn) circumstances on a power to serve the defendant with process outside the jurisdiction. But the potential excesses of common law jurisdictions are generally curtailed by the adoption of the principle of forum non conveniens - a self-denying ordinance under which the court will stay (or dismiss) proceedings in favour of another clearly more appropriate forum."

    Counsel nevertheless submitted that English case law showed that even outside the Convention, a plaintiff with a reputation in this country who complained of a libel published in this country by a foreign resident had an unqualified right to bring proceedings against him here. He referred first to the well-known decision in The Albaforth (Cordoba Shipping Co. Ltd. v. National State Bank, Elizabeth, New Jersey) [1984] 2 Lloyd's L.R. 91 which decided that a negligent misrepresentation in a telex sent from the United States but received and acted upon in England was a tort committed within the jurisdiction within the meaning of Ord. 11, r. 1(1)(h) as it then stood. Ackner L.J., following a dictum of Lord Pearson in Distillers Co. (Biochemicals) Ltd. v. Thompson [1971] A.C. 458, 468, said that "the jurisdiction in which a tort has been committed is prima facie the natural forum for the determination of the dispute." Robert Goff L.J. said, at p. 96:

    ". . . where it is held that a court has jurisdiction on the basis that an alleged tort has been committed within the jurisdiction of the court, the test which has been satisfied in order to reach that conclusion is one founded on the basis that the court, so having jurisdiction, is the most appropriate court to try the claim, where it is manifestly just and reasonable that the defendant should answer for his wrongdoing. This being so, it must usually be difficult in any particular case to resist the conclusion that a court which has jurisdiction on that basis must also be the natural forum for the trial of the action."

    The Albaforth was alluded to by Peter Gibson L.J. in Schapira v. Ahronson [1999] E.M.L.R. 735, in which the Court of Appeal refused to stay proceedings brought by a British national, long resident in England, against an Israeli newspaper which had a very small circulation in this country. The defendants had accepted service within the jurisdiction. The burden of showing that Israel was clearly the more appropriate forum was therefore upon the defendants. Phillips L.J., at p. 749, described it as an "uphill task." Peter Gibson L.J. said that the fact that the tort had been committed in the jurisdiction was a factor which he said should be taken into account, but he went on to say, at p. 745:

    "It is common ground that the court must conduct a balancing exercise, weighing the factors which tell in favour of a trial in England against the factors which tell in favour of a foreign trial."

    Popplewell J. considered these cases and decided that they did not constitute an exception to the general principle, laid down in Spiliada Maritime Corporation v. Cansulex Ltd. [1987] A.C. 460, that the question of whether England was clearly the appropriate forum should be decided on a consideration of all the facts of the case. He referred to Kroch v. Rossell [1937] 1 All E.R. 725, in which the Court of Appeal set aside an order for service of libel proceedings upon a French and Belgian newspaper, notwithstanding the fact that some copies had been distributed in England, and concluded:

    "I therefore do not accept Mr. Price's view that his clients have a right, an unchallengeable right, to bring proceedings here and that it is not open to the defendants to argue on the merits about it."

    This conclusion has not been disputed.

    The judge then proceeded immediately to hear argument on the merits and gave another ex tempore judgment. A large number of cases were cited to him but he referred to no authority except the general principles stated by Lord Goff of Chieveley in Spiliada Maritime Corporation v. Cansulex Ltd. [1987] A.C. 460. He explained his restraint as follows:

    "Each case depends upon its own particular facts, and one element in a particular case which is absent from another case may in fact be the factor which persuaded the judge to decide the case one way rather than the other."

    This seems to me entirely right and in accordance with the wish expressed by Lord Templeman in Spiliada (at p. 465) that "I hope that in future the judge...will not be referred to other decisions on other facts."

    The judge considered the evidence of the plaintiffs' links with this country. He summed it up by saying: "I take the view that the two plaintiffs' connection with this country is tenuous. There is some but it is tenuous." He went on to comment on the article: "[T]here is no English connection in the article at all . . . [I]t is wholly connected with matters in Russia." He said that he was satisfied on the expert evidence that substantial justice could be done if the plaintiffs sued in Russia. The same would be true if they sued in the United States, despite differences in the libel laws of the three countries. He said:

    "The argument in favour of the case being tried in Russia is that this is a peculiarly Russian case. It involves nothing but Russia. It involves Russian witnesses, it involves Russian companies, it involves Russian personalities and it involves a period of time with which the Russian courts are more familiar than the English courts or those of the United States, with which they have no connection. . . .

    "I come back to look at the matter as a whole. I do not have to decide whether Russia or America is more appropriate inter se. I merely have to decide whether there is some other forum where substantial justice can be done. This case, to my mind, has almost no connection at all with this country. The fact that the plaintiffs want to bring their action here is, I suppose, a matter that I should properly take into account. If a plaintiff is libelled in this country, prima facie he should be allowed to bring his claim here where the publication is. But that is subject to the various matters to which I have already made reference and, in my judgment, it seems to me unarguable that this case should...be tried in this country."

    The plaintiffs appealed against the exercise of the judge's discretion. The function of an appellate court in such a case was stated by Lord Diplock in Hadmor Productions Ltd. v. Hamilton [1983] 1 A.C. 191, 220:

    "The function of the appellate court is initially one of review only. It may set aside the judge's exercise of his discretion on the ground that it was based upon a misunderstanding of the law or of the evidence before him..."

    The Court of Appeal [1999] E.M.L.R. 278, in a judgment given by Hirst L.J., said that the judge had misunderstood the law. After examining a large number of other cases, Hirst L.J., at pp. 299-300, accepted the submission of Mr. Price Q.C. for the appellants that where the English circulation of a foreign publication gives rise to a "substantial complaint", the question of the more appropriate forum is "governed" by The Albaforth [1984] 2 Lloyd's L.R. 91 and Schapira v. Ahronson [1999] E.M.L.R. 735. He concluded:

    "The judge gave careful consideration to these cases in his first judgment, but unfortunately erred in principle in failing to take them into account in his second judgment, thus entitling us to exercise our discretion afresh."

    My Lords, there seems to me absolutely no basis for thinking that the judge failed to take those cases into account. He had, as Hirst L.J. said, analysed them in his earlier judgment. He had explained why he did not think it necessary to refer to them or any other cases again his second judgment. He had summarised the gist of them in the passage I have already quoted when he said: "If a plaintiff is libelled in this country, prima facie he should be allowed to bring his claim here where the publication is." All that can be said is that he did not give the factor of publication in England the overwhelming weight that the Court of Appeal thought he should have done. But the fact that an appellate court would have given more weight than the trial judge to one of the many factors to be taken into account in exercising the discretion ("The factors . . . are legion" said Lord Templeman in Spiliada at p. 465) is not a ground for interfering with the exercise of his discretion.

    Your Lordships were invited to examine a large number of cases, both at first instance and in the Court of Appeal. I have already referred to Kroch v. Rossell [1937] 1 All E.R. 725, in which the plaintiff proved no reputation in this country. On the other hand, in Schapira v. Ahronson [1999] E.M.L.R. 735 the plaintiff had lived here for many years and acquired British nationality. The decision of the Court of Appeal in this case has since been distinguished in Chadha v. Dow Jones & Co. Inc. [1999] E.M.L.R. 724, in which the plaintiff and the defendants were both resident in the United States. The respondents say that that case is likewise distinguishable. So it is. All the cases cited are in some respects similar and in some respects different. But, my Lords, I protest against the whole exercise of comparing the facts of one case with those of another. It is exactly what Lord Templeman in Spiliada said should not be done and what the judge rightly refused to do.

    A second ground upon which it was suggested in argument that the Court of Appeal were entitled to review the judge's decision was that fresh evidence had been admitted. The function of an appellate court which has admitted fresh evidence in a case such as this was also considered by Lord Diplock in Hadmor Productions Ltd. v. Hamilton [1983] 1 A.C. 191, 220. He said:

    "I cannot agree that the production of additional evidence before the Court of Appeal, all of which related to events which took place earlier than the hearing before [the judge], is of itself sufficient to entitle the Court of Appeal to ignore the judge's exercise of his discretion and to exercise an original discretion of its own. The right approach by an appellate court is to examine the fresh evidence in order to see to what extent, if any, the facts disclosed by it invalidate the reasons given by the judge for his decision."

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