Neutral Citation Number: [2012] EWHC 3586 (Comm) Case No: 2006 FOLIO 1267 IN THE HIGH COURT OF JUSTICE QUEEN'S BENCH DIVISION COMMERCIAL COURT Royal Courts of Justice Strand, London, WC2A 2LL Date: 14/12/2012 Before : MR JUSTICE CHRISTOPHER CLARKE - - - - - - - - - - - - - - - - - - - - - Between : NOVOSHIP (UK) LIMITED Claimant and others – and – (1) VLADIMIR MIKHAYLYUK Defendant (2) WILMER RUPERTI (3) SEA PIONEER SHIPPING CORPORATION (4) PMI TRADING INC (6) YURI NIKITIN (7) AMON INTERNATIONAL INC (8) HENRIOT FINANCE LIMITED - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dominic Dowley QC, Charles Dougherty and Laura Crowley (instructed by Ince & Co) for the Claimants Mr Mikhaylyuk did not attend Nigel Eaton (instructed by Holman Fenwick Willan) for the 2nd – 4th Defendants did not attend Steven Berry QC and Nathan Pillow (instructed by Lax & Co) for the 6th – 8th Defendants Hearing dates: 16th, 17th 21st – 24th, 28th – 31st May, 12th and 13th June, 2nd – 5th July - - - - - - - - - - - - - - - - - - - - - Judgment Approved by the court for handing down (subject to editorial corrections) If this Judgment has been emailed to you it is to be treated as ‘read-only’. 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Subject Paragraphs The parties 1 – 10 The claims 11 – 18 History of the proceedings 19 – 25 Mirador Shipping and Pulley Shipping 26 – 69 The PDVSA Charters and the rival cases 70 – 75 The law 76 – 112 The facts 113 – 165 The explanations 166 – 175 Conclusion 176 Further consideration of Mr Mikhaylyuk’s explanation 177 – 196 The secret payments made to Mr Ruperti’s companies 197 –251 and the Misha Fu account The payments to Amon 252 – 260 The payment to Mirador Shipping 261 – 268 The payments to Pulley Shipping 269 – 297 What do the payments represent 298 – 300 The underperformance claim and the house purchase 301 – 307 Explanations for the Amon payments , discussion 308 – 404 and conclusions The claims arising out of the PDVSA charters 405 – 418 The damages claim in respect of the Sorokaletie 419 – 449 Pobedy The claims in respect of the Amon payments 450 – 452 The Henriot Finance claims 453 – 534 The Stena Charter claims 535 – 569 The ACM Shipping claim 570 – 588 The Tula payments 589 – 605 The Compromise Agreement 606 – 612 Documents 613 Summary 614 – 616 Annex 1 – 46 Judgment Approved by the court for handing down Novoship v Mikhaylyuk (subject to editorial corrections) MR JUSTICE CHRISTOPHER CLARKE: 1. This action concerns the activities of the First Defendant, Mr Vladimir Mikhaylyuk (“Mr Mikhaylyuk”). He was from 1 September 1997 employed by the First Claimant, Novoship (UK) Ltd (“NOUK”), as its Deputy Chartering Manager and from 1 December 1999 as Commercial Manager. On 18 October 2002 he was appointed Acting General Manager, whilst remaining Commercial Manager, and on 23 May 2003 he was formally appointed General Manager, in which position he remained until 24 March 2006, when he was dismissed. He was appointed a director of NOUK on 5 November 2003 and remained one until his dismissal. The Claimants 2. NOUK acted, at the times with which this action is concerned, as the agent and manager of a number of one-ship companies, including the second to fifteenth Claimants. All the Claimants are indirect subsidiaries of JSC Novorossiysk Shipping Company (“NSC” or “Novoship”) a company incorporated in the Russian Federation. NOUK’s issued share capital is held by Intrigue Shipping Inc (“Intrigue”), a Liberian company, which, itself, is wholly owned by NSC. NSC is now majority owned by OAO Sovcomflot, a shipping company incorporated in the Russian Federation which is wholly owned by the Russian State. The Group has one of the largest tanker fleets in the world. Personnel at NSC 3. From November 2001 until 14 October 2005 the President of NSC was Mr Tagir Izmaylov. Mr Vladimir Sakovich was from 27 October 1995 to 12 October 2007 Senior Vice President of NSC responsible for overall supervision of the chartering of the NSC fleet. He was a member of the NSC Executive Board from 24 May 1993 to 12 October 2007, a director of Intrigue from 6 March 2002 to 15 October 2007, and a Director of NOUK from 12 November 2001 to 10 January 2006. Mr Vladimir Oskirko was until the end of December 2003, when he left to join a start up venture, the Vice President of Finance and Planning. He was, also, a member of the NSC Executive Board and a director of Intrigue and NOUK. He returned to NSC in December 2005 and was a Vice President from January 2006. 4. The Claimants allege that Mr Mikhaylyuk dishonestly solicited and received bribes for himself and others during the course of his employment in connection with four areas of chartering business in respect of which they have the following claims: a) The PDVSA Charter claims; b) The Henriot Finance Charter claims Page 4 Judgment Approved by the court for handing down Novoship v Mikhaylyuk (subject to editorial corrections) c) The Stena Charter claims d) The Tula Charter claims. The Defendants Mr Mikhaylyuk 5. The Defendants may be divided into three groups. First there is Mr Mikhaylyuk. He is resident in this country. He has filed extensive pleadings and several statements, which appear to have been professionally drafted. He also submitted a response to the Claimants’ opening. But, although he appeared at a directions hearing shortly before the trial, he has not been present at any stage during the trial itself. He claimed to be unwell but he has declined to seek an adjournment of the trial or to provide any medical evidence. He has put in his witness statements but has not been prepared to be cross examined on them. Whilst I have had regard to what is said in those statements, they are worth very little in circumstances where his evidence raises many questions and he has denied the Claimants the opportunity of asking any of them. The Ruperti defendants 6. Next there are Mr Wilmer Ruperti, the Second Defendant and two Panamanian corporations of which he is the beneficial owner and controller namely Sea Pioneer Shipping Corporation (“Sea Pioneer”), a Panamanian company, which is the Third Defendant, and PMI Trading Inc (“PMI Trading”), also a Panamanian company, which is the Fourth Defendant. Mr Ruperti is a Venezuelan businessman who owns and controls a number of companies including Maroil Trading Inc, Nautica Shipbrokers C.A., Interpetrol & Trafigura de Venezuela S.A., which in late 2004 became Interpetrol S.A. and Wisteria Enterprises Ltd. Other Ruperti companies are Suramericana de Transporte Petroleo S.A. and Global Shipmangement Inc. Another company is Maritima Altair- Petromar (“Maritima”), which appears to have been related to Mr Ruperti in some way and to have acted either as an intermediary between Mr Ruperti or his companies and PDVSA (see para 11 (ii) below) or as a broker for PDVSA. The Ruperti defendants have filed extensive pleadings and supplied (but not put in evidence) witness statements. But none of them has taken any part in the trial. The Nikitin defendants 7. Thirdly, there is Mr Yuri Nikitin, the Sixth Defendant, and two British Virgin Island companies owned and controlled by him, being Amon International Inc (“Amon”) and Henriot Finance Ltd (“Henriot”). Henriot is a wholly owned subsidiary of Standard Maritime Holding Corp, a British Virgin Islands company owned and controlled by Mr Nikitin. Another such company is Premium Nafta Products (“PNP”) of which Henriot is said to be a sub-division. Page 5 Judgment Approved by the court for handing down Novoship v Mikhaylyuk (subject to editorial corrections) 8. Mr Nikitin has sought refuge in this country. He is the subject of criminal proceedings in Russia which have been proceeding for some 6 years but are still at the investigative stage. He has successfully resisted extradition to Russia as has Mr Mikhaylyuk. 9. According to a report for the Board of NSC dated 2 September 2005 prepared by Mr Sakovich, as from April 1999 several cargoes owned by PNP were transported on Novoship vessels from the Baltic to various destinations (including the USA). Between 1999 and 2003, some 36 vessel chartering agreements were concluded and executed. During the same period, PNP time chartered a number of Sovcomflot vessels, transferring some of its cargoes to them. In late 2002, PNP informed Novoship of its intention to time charter additional tonnage under the same scheme. There was talk of PNP time chartering a product tanker of 40,000 tonnes. Mr Sakovich said that there were no doubts on the market that PNP was a first class charterer as a result of which NSC sanctioned NOUK’s negotiations about the time charter for The Trogir (see para 13). 10. As will become apparent the Nikitin defendants rely on these matters as an indication of a reason why Mr Ruperti should seek an introduction to someone like Mr Nikitin. He was a name in the Russian oil cargo market. Summary of the claims The PDVSA charter claims 11. The Claimants contend as follows: i) Mr Mikhaylyuk solicited and received bribes in connection with the charters of five vessels, namely (i) the Marshal Chuykov, (ii) the Moscow Kremlin, (iii) the Moscow Stars, (iv) the Sorokaletie Pobedy and (v) the Adygeja (‘the PDVSA vessels’). These vessels were owned by the Second, Third, Fourth, Ninth and Tenth Claimants, which are all Liberian companies and wholly owned subsidiaries of Intrigue. Bribes were paid by or on behalf of the Ruperti Defendants: a) to a Nevis company called Mirador Shipping Inc (‘Mirador Shipping’) in the sum of $ 217,100; b) to another Nevis company called Pulley Shipping Limited (‘Pulley Shipping’), which is said to be beneficially owned and controlled by Mr Mikhaylyuk in amounts totalling $ 1,491,000; and c) to the Seventh Defendant, Amon, Mr Nikitin’s company, incorporated in the British Virgin Islands, in sums totalling some $ 410,379.