PJSC Tatneft v Bogolyubov & Ors [2021] EWHC 411 (Comm)

“This whole litigation leaves me uneasy. The essence of the limitation defence is that the Defendants’ fraud was so obvious that KK ought to have discovered it and issued proceedings before 2013. If the Defendants ultimately succeed on that defence, they might then have achieved the ‘perfect’ fraud. The money which has been stolen (over $100 million) will become irrecoverable as a consequence of the judgment of the English court.”

“53. Both Experts are in agreement that: … Burden of proof that the limitation period expired is on the defendant, whereas the claimant bears the burden of proof with respect to suspension or interruption of the limitation period.”

“10. Pursuant to Article 199(2) of the Russian Civil Code the limitation period will only apply upon request of a party to the proceedings which by virtue of Article 56 of the Russian Civil Procedure Code and Article 65 of the Russian Arbitrazh Procedure Code bears the burden of proof of the facts evidencing that the claim is time-barred.”

"The lack of formal requirements for application concerning the limitation period does not mean exemption from the burden of proof that the limitation period has expired. As a general rule, this burden is borne by the person who seeks application of this remedy, i.e., usually the defendant. According to Clause 2 of Article 199 of the RCC, the limitation period applies only at the request of the party to the dispute, which, by virtue of the provisions of article 56 of the Civil Procedure Code of the Russian Federation and article 65 of the Commercial Procedure Code… bears the burden of proof of circumstances indicating the expiration of the limitation period (Para 10 of the resolution of the SC Plenum Number 43 dated 29 September 2015). If theclaimant believes that the limitation period has not expired, theclaimant is entitled to provide its own evidence in reply to thedefendant's petition regarding the limitation period and provisionof evidence of its expiration by the defendant, i.e., the claimantbears the burden of rebutting the defendant's evidence. “Since evidence about the subjective elements of the limitation period is often inaccessible to the defendant, applying a high standard of proof to the defendant may result in a violation of his or her right and therefore should not be allowed."

“Q. So just looking at 53.2 again, do you actually agree that burden of proof that limitation period expired is on the defendant? Do you actually think that or not?” “A. No. Again on first stage it's -- the burden of proof is on thedefendant, yes, but the argument or the dispute betweenProfessor Asoskov and me is in the standard of such burden. So, again, Professor Asoskov believes that it's a usual standard, so quite high standard; I believe that the standard is really easy here, so the test is simple here, so just to raise this argument, and usually it's enough.”

“Professor Asoskov has not presented any relevant case law or authority to prove that the standard is usual, and I did the opposite. So I provided quite authoritative text and case law supporting my position that the standard is much less than a usual one.”

“accept the clear evidence of Professor Asoskov. Time begins to run when the claimant has the necessary actual or constructive knowledge to be able to bring a claim with a real prospect of success as described above.”

“If S−K knew or had known that an asset dissipation orsiphoning scheme was in place with respect to T and T, S−K hadsufficient knowledge with respect to the substance and gist of thescheme and it understood that as a result of that criminal scheme S−K would not be in a position to receive funds for the oil that had been supplied and it understood the existence of a causal link, causation, between those two events, then I do agree with you, sir that that would have been sufficient for the limitation period to start running.”

“Q. In order to have knowledge −− if we break it down −− in order to have knowledge for the purposes of Article 200 in relation to a tort claim, you are saying you must have knowledge of at least the three elements which constitute the cause of action: harm, wrongful acts and causation. Sorry, let me put it another way: a wrongful act that has caused you harm; correct?”

“Such a claim will obviously require the claimant to articulate the means by which the defendant caused the harm as this is essential to pleading causation.”

“You cannot simply say that −− assert that the unlawful act has been committed. You have to specify what the act was and what the harm that has been inflicted upon you was and you have todescribe the causation, the causal nexus, the link.”

“If S−K knew or had known that an asset dissipation or siphoning scheme was in place with respect to T and T, S−K had sufficient knowledge with respect to the substance and gist of the scheme and it understood that as a result of that criminal schemeS−K would not be in a position to receive funds for the oil thathad been supplied and it understood the existence of a causallink, causation, between those two events, then I do agree with you, sir that that would have been sufficient for the limitation period to start running.”

“However, time only starts running where the claimant is in a position to plead a proper claim with a proper objective basis asopposed to a claim based on guesswork or speculation. Hence, time only starts to run when the claimant has sufficient actual or constructive knowledge to plead a claim with a real prospect of success (which can also be expressed as a claim “that has realistic chances of being granted”, an “actual and robust claim” or a case with a “solid evidential base” – all ways of expressing the same underlying idea).” (paragraph 899.2) [emphasis added] 48.The evidence of Professor Asoskov was as follows: “Q. …The claimant has to either himself believe that, on the material he has, his rights have been violated and harm has been caused to him by the defendant or objectively the material has to demonstrate that a person in his position would reasonably form that belief. Do you agree?”

“Q. …What the claimant as a matter of Russian law has to have knowledge of is harm caused to him by wrongful act of the defendant. That I think you do agree; correct?”

“That does not mean, and Professor Asoskov is not suggesting, that time only starts to run when the claimant has all the evidencenecessary to succeed on its claim at trial.”

“Q. …Do you agree with this, Professor, that there is a distinction drawn in the case law between knowledge of violation of rights and evidence necessary to prove the case at trial? Do you agree that the cases draw such a distinction or not? A. Yes, I agree with that. Q. And the fact that the cases draw such a distinction suggests that, although a claimant may not have sufficient evidence to prove its case at trial, that does not mean that it does not have knowledge for the purposes of Article 200 and limitation; do you agree? A. I agree that one has to draw a distinction between knowledgeand evidence and, for the purposes of the running of thelimitation period, one has to use the concept of knowledge whichmay not necessarily at that point in time be supported byevidence. Q. So I think what we can agree, Professor, is once the claimant has knowledge of the elements of the cause of action that we’ve discussed, it cannot rely on the fact that it needed to gather moreevidence about the case in order to allow it to prove matters atthe trial in order to delay the start of the limitation period; correct? A. Yes, I agree.”

“Q. If one asks oneself about the policy here, the policy of the law, by giving the three years, is to give a claimant, who has knowledge of the violation of his rights −− he has three years within which to gather evidence, whether through ordinary channels of communication or utilising court processes or whatever; do you agree? A. That is one of the policies, one of the purposes. There are others to allow him to instruct lawyers, to prepare the pleadings to be filed with the court, et cetera.”

“From 1 September 2013 a further subjective element was addedto the rule [regarding the commencement of the limitation period]– knowledge of the person that breached the right…It is a well-known situation in practice that a person may be aware of a breach of its rights (for example, in the event of a tort or involuntary loss of possession of an item) but not of the identity of the person responsible for the breach. Ultimately even beforethis addition was made to the law the second element ofidentification of the moment at which the limitation periodcommences had begun to be recognised in judicial practice (see… Information Letter No 126 of the Presidium of the Supreme Commercial Court of the Russian Federation dated 13 November2008). Failure to take this element into account could have resulted in an entitled person’s right to file a claim expiring without his ever having been able to file that claim due to not knowing the identity of the respondent. From 1 September 2013this criterion was reflected in statute.”

“When shown this commentary in cross-examination, Mr Kulkov rightly accepted that Professor Sarbash was speaking generally about the position under Article 200 of the RCC.”

“Q. …Now that is an accurate statement of the position, isn't it? A. Yes, but again it adds nothing new to what we just discussed. So, yes, even before 2013 -- so it was clarification that information letter 126, we already discussed -- but thisinformation letter was dedicated exclusively to vindicationclaims. Then, so, Professor Sarbash said that it was unfair, and I agree that it was unfair, so therefore the law was changed in 2013, and from 2013 this criterion applies to any other types of claims, including tort claims, so nothing new in it. Q. Yes, but this commentary we have in front of us is speaking generally about the position under Article 200 of the Civil Code; correct? A. Correct.”

“Q. Yes. Indeed if you see at the bottom of this page we have on screen, it says: "The fact that [the] criterion for determining the date from which the limitation period should start running [knowledge by the claimant of the amount of the losses] is not mentioned in the statutory provision ... [The fact that it is not mentioned] does not in itself constitute an absolute bar, because, before, before ... September 2013, the absence of reference to such subjective element as the knowledge about the proper defendant in the same provision did not prevent the courts from deriving it from purposive interpretation of law ..." And it refers to the information letter. So, again, he's speaking generally aboutthe position under Article 200; correct? A. Not correct because he refers to the same information letternumber, 126, which was quoted exclusively to vindicationclaims and there -- well, by reference to this information letter, so we cannot say that this is a -- was a general approach. Forexample, if in this text there were some references as well to tortclaims with the same approach, yes, I could agree with thecounsel that it was a general approach, but it quite clearly followsfrom this text that this is all about vindication claims -- well,before 2013.”

“12. The limitation period for a claim seeking to reclaimmovable property from another entity’s unlawful possession starts on the date of discovery of such property… By virtue of Article 195 of the Russian Civil Code the limitation period means the period during which the affected party may bring an action to defend its right. However, no adversary proceedings to defend a right may be instituted unless and until the affected party becomes aware of who the wrongdoer and the potential defendant is. Though the owner’s property was misappropriated in 1997 the limitation period for a vindication claim started torun from the time the claimant became aware that the propertywas in possession of the defendant.”

“Q. And I think it's also your evidence that, pre-September 2013 there was a fundamental distinction between cases where the claimant's property was stolen on the one hand and cases where the claimant's property was damaged on the other hand. Do you understand what I mean? A. Yes, so it was in 2008, so it was a clarification of Supreme Commercial Court about, yes, stolen property, so claims in -- socalled vindication claims. For this specific type of claims the court clarified that the identity of the tortfeasor was an additional condition for the statute of limitation to start to run.”

“The logic and good sense of these decisions is plain enough. Article 200 of the RCC is being interpreted such that time cannot begin to run until the claimant is actually in a position to bring a claim against the relevant defendant.”

“A. … I think we should divide between a legal principle and the logic. I expressly agreed that it was illogical, so logic was in breach, but it doesn't mean that the legal principle, the legal principle is always logical. Unfortunately the law is not always fair. Yes, at that time it was illogical to apply another principle to tort claims, I agree, but, well, dura lex sed lex.”

“…the limitation period for the insurer who paid the insurance indemnity shall start from the moment the insured event occurs.”

“The conclusion of the court that the limitation period, which was asserted by the Defendants as to be expired, was not expired for the claimant, because the claimant’s right to claim the Defendant A.G. Litvinenko arose on 20 April 2007, when Progress-Garant Insurance Company OJSC knew about the General Power of Attorney issued by I.V. Kianovsky to A.G. Litvinenko, cannot be considered as correct. According to Article 200 of the Civil Code, the limitation period runs from the day when the person knew or should have known about the violation of their right. Exceptions to this rule are established by the Civil Code and other laws. In this case, thelimitation period for the insurer, who paid the insurancerecoveries, starts from the time of occurrence of the harm, andnot from the time when the Claimant learns of the Defendantunder the specified claims. According to the Civil Code andother laws, there is no such exception to the general rules oflimitation period that would define the commencement of thelimitation period at the moment when the Claimant learns aboutwho is the Defendant in the dispute.”

“The Applicant's argument that the Courts failed to correctlydetermine the limitation period in this case against Kubanoptprodtorg-2 LLC is unfounded and is due to an incorrectinterpretation of Article 200(1) of the Civil Code by theApplicant. This provision states that the limitation periodcommences when the person knew or should have known aboutthe violation of its right, and not when the person who violatedthe right was identified. In relation to the present Case, the Claimant learned of the violation of its rights from the moment of the road traffic accident on 20.06.2003, for which reason the commencement of the limitation period from the moment of rendering Judgement dated 25.09.2008 on the review of the judicial acts upon discovery of new circumstances by the Commercial Court of the Krasnodar Territory is deemed inconsistent with the law.”

“A. When I prepare my reports, I try not to refer to rulings which deny to grant leave to appeal because all Russian lawyers understand that such documents have limited value. These court rulings are of limited value and cannot serve as grounds for reliable conclusions…”

“I set out below a number of Russian court judgments, which show that the recognition and enforcement of English court judgments and orders has become settled practice…”

“The Russian Supreme Court refused to grant leave to appeal” and in the footnote to that sentence, he stated: “The fact that the Russian Supreme Court (before 2014 – the Russian Supreme Arbitrazh Court) renders a ruling on the case does not mean that the case is difficult. Different from the English procedure, Russian law allows the losing party in each case to make a request to the Russian Supreme Court for granting a leave to appeal. Even if the request is denied, the judge of theRussian Supreme Court has to issue a reasoned ruling. Suchrulings are frequently cited by Russian lawyers as persuasive. In other words, the involvement of the Russian Supreme Court can occur in any Russian case, if the losing party files the relevant request.”

“In practice there are cases when the claimant due to lack of knowledge about the person who is subject to liability cannot issue rei vindicatio claims, delictual claims, as well as claims against a testator. The current legislation does not provide forany exclusions from the general rules in relation to the limitationperiods for these claims, which makes it impossible to protectviolated rights effectively.”

“7.4. It is a common occurrence in practice that due to lackingdetails of the responsible party in rei vindicatio claims andclaims for damages, a claimant is unable to bring thecorresponding claim. There are various means by which this problem may be resolved. Firstly, a rule could be introduced stating that the limitationperiod for these claims only runs from the moment that theclaimant became aware or should have become aware of theresponsible party, but in any event expires at the end of the maximum limitation period after the moment of loss of possession or infliction of harm. In this instance the maximum limitation period would be established by law and could amount to ten years, for example. Secondly, provision could be made for reinstatement of thelimitation period for individuals and legal entities in the eventthat they have been prevented from bringing a claim by such acircumstance as unawareness or uncertainty as to the identity ofthe respondent, by adding a provision to this effect to Art.205 of the Civil Code.”

“… And when a new amendment of the Civil Code text is coming about, all the main legal positions previously enshrined in court practice have to be transferred into the text of the Code. Consequently the authors of the concept are saying that the Code text is not perfect and it has to be amended – Q. Right. A. -- but they're not commenting upon the matter about what the case practice is, what the court practice is, not in any way. …. A. It says further on that current legislation does not encompass any exclusions for such situations. They are formulating -- they are saying that the Civil Code is imperfect. We have to touch it up in some way to address the situation, and it's natural that -- it would be logical to touch it up in the same vein as the Russian courts are solving that problem.”

“prefer the clear and compelling evidence of Professor Asoskov on this point. It is worth remembering in this regard that the task for the English court applying foreign law is to assess that foreign law from the perspective of the highest appeal court of the foreign jurisdiction: see the National Bank Trust case at [937] 1327 per Bryan J referring to Re Duke of Wellington [1947] Ch 506 at [514]. One only needs to imagine what the Russian Supreme Court would have decided had a sophisticated financial fraud case come before it prior to September 2013 in circumstances where the defendant was arguing that the limitation period could start to run and indeed expire before the defendant had any reasonable means of discovering that the defendant was responsible for the fraud. There would have beenevery reason for the Russian Supreme Court to adopt ProfessorAsoskov’s analysis since that had already been employed in thevindication cases and was consistent with the principlesunderlying the existence of a limitation period in the first place.”

“Q. …I would suggest is that it was overwhelmingly likely that the Russian courts would have held in a fraud case that time only starts to run when the claimant knows the identity of the proper defendant. A. I disagree. My Lady, you may imagine that fraud took place in Russia quite often, especially 10/20 years ago, and if the counsel is right, so we would have plenty of cases confirming such argument, that identity of the tortfeasor is essential for the statute of limitation and that, unless the claimant knows such identity, the statute doesn't start to run. But we have no support for it and so the question: why? And the answer is simple: because the law didn't provide for it. The law was different, maybe unfair, but the courts must follow the law. They cannot just take a fair decision against the law because it would be unlawful judgment. So therefore we don't have -- well, Asokov argument is that even before the reform we had the unified case law about this issue, but Asokov didn't refer to any case law with regard to tort cases, so the question: why? My answer I already said.”

“If S−K knew or had known that an asset dissipation or siphoning scheme was in place with respect to T and T, S−K had sufficient knowledge with respect to the substance and gist of the scheme and it understood that as a result of that criminal scheme S−K would not be in a position to receive funds for the oil that had been supplied and it understood the existence of a causal link, causation, between those two events, then I do agree with you, sir that that would have been sufficient for the limitation period to start running.”

“In 2009 Bogolyubov and Kolomoisky, with the assistance of the other Defendants, procured that a series of steps be taken whereby the value of the oil payments was paid by UTN to Taiz and Tekhnoprogress and then siphoned out of Taiz and Tekhnoprogress in fraud of their creditors and in particular S-K and Tatneft, by way of the Oil Payment Siphoning Scheme”

“Q. It is correct, isn't it, Mr Syubaev, that by the time that you had -- in June 2009, when you discovered that the payments either had been or were to be made by UTN to Taiz and Tekhno and that the intermediaries had changed hands, it's true, isn't it, that at that stage you were convinced that there was no intentionthat these monies should be repaid to Tatneft? You were convinced of that fact, weren't you?”

"We were convinced that there was no intention to repay the money to Tatneft."

"Tatneft did not inform S-K of the alleged payments supposedly made by UTN since the information in possession of Tatneft was unofficial and Tatneft had no proof that the payments were actually made by UTN."

“Q. You see, what I'm trying to find out is whether you can cast any light on the fact that S-K's business gets transferred to Neftetradeservice, S-K is left as a shell company in 2014 and then, in 2015, S-K assigns its claims to Tatneft and then S-K goesinto liquidation. Are you able to explain to us the relationshipbetween these different events?”

“All legal advice provided to Tatneft by Akin Gump prior to SK’s liquidation in May 2015 as to the reasons for and/or scope of the assignment of claims by S-K to Tatneft.”

“In May 2015 I learnt from Tatneft's lawyers that S-K's members had adopted a decision to wind the company up due to the deplorable financial condition - S-K's net equity had been negative for three years, and the law required the members to so decide. This was not a surprise for me, as I remember, sometime in towards autumn of 2014 Maganov informed me of his call with Korolkov during which the CEO of S-K told him about the unavoidable liquidation of the company. In this regard, Ms. Boulton's allegation in para. 131 of her Affidavit that "S-K's liquidation may have been equally convenient for Tatneft" appears to be odd and unfounded. As I have already said, Tatneft's pursuance of S-K's liquidation was not in the bestcommercial interests of Tatneft, although Tatneft had had such an opportunity for several years.”

“Q …Now, let's then see the upshot of the conversation [with Gubaidullin re BIT proceedings] that you are describing [in his witness statement]. The comfort, insofar as it was comfort to SK, was that what you were indicating was, whilst you were trying to pursue matters in the BIT arbitration, you would not pursue SK for the debt. Is that the comfort you were giving them? A. No, the comfort consisted in the fact that I recommended that they do enforce their debt. I expected them to do all that they had to do with a view to do that and we would not be trying to enforce. Q. Yes. You would not be trying to enforce, as you put it, during the course of the arbitration proceedings. Stop there for a moment. That is right, isn't it? A. Which arbitration proceedings are you referring to, sir?”

“Q. Mr Maganov, as I understand your evidence, Mr Gubaidullin informed you that UTN had not paid for the oil; correct -- at the end of October 2007; correct?”

“Q. At every single stage in the BIT arbitration and indeed in the criminal investigations, Tatneft was saying that the payments had in fact been made, just as indeed Ukraine was saying in this document; do you agree or disagree with that? Please answer the question directly. A. Before I answer the question I'd like to clarify, please, Mr Howard. What do you mean "every stage", by "every stage"? When you say "every stage", from what period of time to what period of time? And stages, please, connected to what events? Because in my head I associate the word "stage" with a certain event. Event, and then let's go stage by stage, please.”

“44. At the end of October, we (my colleagues and I at Tatneft) were increasingly worried about whether the outstanding debt would be paid to Tatneft. We also understood that in the event of a delay of payment, S-K may be subject to sanctions for violation of currency legislation. The fine could be large. I was afraid that there could also be negative consequences for the reputation of Tatneft. I therefore gave instructions to Mr. Karpov and Mr. Gaifutdinov (then the Deputy Head of the URNiN) to take this issue under their control and to deal with it. At about the same time, as I recall, Mr. Gubaidullin called me and said that UTN had not paid for Tatneft's oil delivered in AugustOctober 2007..”

“Q… but the first sentence is dealing with whether you would be paid at all, is it not? A. I did not even think that there was a possibility that peoplecan just up and go away with the money, steal the money and failto pay. As I say in my paragraph 44, we understood that in the event of a delay, Suvar-Kazan can face sanctions because of the violation of the currency regulations and that they could be liable to pay a penalty. So if you read this in context, you will see thatI'm referring to a delay in the payment of the debt. I was really worried that they would not pay us and then that would expose us. We would face the risk of having to pay a penalty.”

“No, no. This is not what I'm -- I'm upset that I might have said something or thought something which, alas, does not coincide with what is said in the police minutes. I'm upset that I didn't know something. That's what I'm upset by.”

“…I BELIEVE IT IS NECESSARY TO CONDUCT NEGOTIATIONS ON THE LEVEL OF THE PRIMEMINISTERS OF UKRAINE AND THE REPUBLIC OF TATARSTAN IN ORDER TO SUPPRESS THE ACTIVITY OF THE UNLAWFUL MANAGEMENT OFUKRTATNAFTA, JSC WHICH VIOLATES THE INTERESTS OF ITS SHAREHOLDERS”

"I have been told that it is an issue in this litigation how much I and others at Tatneft knew of the defendants' involvement in the raid and of the defendants' involvement in the oil payments siphoning scheme. I set out below details of my knowledge and, where applicable, the extent of my interactions with various individuals at SK…"

“Upon termination of the criminal investigation, Tatneft, in its capacity as the aggrieved party, was given access to the case files.”

"…ACCORDING TO OUR INFORMATION UKRTATNAFTA JSC HAS MADE SEVERAL MULTIMILLION PAYMENTS DURING THE LAST DAYS TO THEACCOUNTS OF THE COMPANIES TA1Z, LLC AND RPTECHNO-PROGRESS… PAYMENTS MADE TO THEACCOUNTS OF TA1Z, LLC AND RP TECHNO-PROGRESS,LLC ARE UNLAWFUL AND HAVE FEATURES OFFINANCIAL MACHINATIONS AND CONSIDERABLY VIOLATE THE INTERESTS OF THE MAJOR SHAREHOLDERS OF UKRTATNAFTA, JSC. 1 BELIVE IT IS NECESSARY TO CONDUCT NEGOTIATIONS ON THE 179. LEVEL OF THE PRIME-MINISTERS OF UKRAINE AND THE REPUBLIC OF TATARSTAN IN ORDER TO SUPPRESS THE ACTIVITY OF THE UNLAWFUL MANAGEMENT OF UKRTATNAFTA, JSC WHICH 180. VIOLATES THE INTERESTS OF ITS SHAREHOLDERS"

"the circumstances of a transfer from the account of [UTN] to bank accounts of [Taiz and Tekhnoprogress] of the money intended to repay the debt for Tatneft's oil supplied in 2007". 186. In the application letter it stated that payments were transferred to the accounts of Taiz and Tekhnoprogress with Privat Bank: "…As a result of illegal replacement of the management, in October 2007 Ukrtatnafta without any lawful grounds ceased to make payments to its counterparties for the oil received. As we learned, Ukrtatnafta resumed payments and transferredfrom its bank account No. 26004055234413 to the bank accountof OOO Taiz No. 26003050007161 and the bank account ofOOO Techno-Progress No. 26004050005797 with JSC Privatbank, Dnepropetrovsk, the money designated to pay for theoil supplied. Despite the payments made by Ukrtatnafta Tatneft never received the payment for the oil it supplied. We also know that OOO Taiz and OOO Techno-Progress by the judgments of the Poltava Commercial Court dated 21 August 2009 were declared bankrupt and their liquidation was commenced. Claims against Ukrtatnafta for payment for the oil supplied in the amount of over US$450 mln were assigned by OOO Taiz and OOO Techno-Progress to OOO Suvar-Kazan Company acting for Tatneft. The Arbitrazh Court of the Republic of Tatarstan found the assignment legal and the debt to be recovered. In view of such facts, payments to the accounts of OOO Taiz and OOOTechno-Progress inflict material damages upon Tatneft andcontain elements of fraud."

“First, Taiz and Tekhnoprogress are Ukrainian owned and controlled entities that in 2009, through a series of opaque and suspect transactions, along with another Ukrainian entity, Avto, came under the control of Igor Kolomoisky and Privat Group -the principal partners and co-conspirators of Mr. Ovcharenkoand his group of raiders - who now control the management of Ukrtatnafta and who are responsible for the orchestrated purchase at auction of shares seized from AmRuz and Seagroup. Thus, for Respondent now to argue that payment of hundreds of millions of dollars of debt for oil supplied by Tatneft has been made in full to two companies controlled by those who seized control of Ukrtatnafta and are attempting to own it outright is preposterous. Not a penny of the amounts allegedly paid by Ukrtatnafta under Mr. Ovcharenko's control has gone to Tatneft. Instead, all of these amounts apparently would have gone toPrivat, a further flagrantly illegal misappropriation of Ukrtatnafta's funds which has caused harm to Claimant.”

“…In the summer of 2009, Ukrtatnafta JSC made a number ofmulti-million [dollar] payments (around UAH 2.1 billion) to theaccounts of the intermediary companies which delivered the unpaid oil to Ukrtatnafta JSC in 2007. Previously, the management of the illegally taken-over Ukrtatnafta JSC had accused these intermediaries of "tax evasion" and had in this way substantiated its refusal to pay for the oil. The payments were made to these companies' accounts open atPrivatBank. According to unofficial information, the Privatbusiness group had preliminarily established control over theseintermediary companies (acquired them) and is currently handling their bankruptcy and winding-up. Taking into account that - the perpetrators of the illegal takeover avoided paying for the Russian oil for more than a year and a half, having essentially embezzled it, - the rights of claim against Ukrtatnafta JSC regarding the payment for the previously delivered oil were assigned by the intermediaries to Suvar-Kazan LLC (of which Ukrtatnafta JSC was aware, insofar as it participated in the court proceedings), - the funds were sent to PrivatBank, - the Russian courts ruled against Ukrtatnafta JSC, compelling itto pay Suvar-Kazan LLC for the oil - the payments made to theintermediary companies' accounts are unlawful, show signs offinancial fraud and inflict material harm on the interests ofUkrtatnafta JSC's main shareholders. Subsequently, at the end of June 2009, Korsan LLC acquired at an "auction" (at which it was the sole participant) 18% of shares in Ukrtatnafta JSC for UAH 2.1 billion - an amount close to the amount siphoned off from Ukrtatnafta JSC through "payment" for the oil. According to unofficial information, the "payment"for the oil to the Ukrainian intermediary companies and theacquisition by Korsan LLC of 18% of shares in Ukrtatnafta JSCconstituted elements of a financial operation aimed at siphoningoff funds from Ukrtatnafta JSC, the elimination of its disputed accounts payable, and also the transfer of 18% of its shares into the ownership of a company affiliated with the Privat group.”

“Highly significant witness evidence was given twice (in October 2009 and in March 2010) by the Ukrainian nationals Yu.V. Konov (a former director of Taiz LLC) and A.N.Vakhnyuk (a former director of TP TekhnoProgress LLC) in response to international requests for legal assistance from the Russian law enforcement authorities. The testimonies are particularly valuable in that they confirm the involvement of thePrivat Business Group with the corporate raid of UkrtatnaftaJSC, while the witnesses are in no way connected with Ukrtatnafta JSC's Russian shareholders.”

“517. Indeed, Ukrtatnafta - which is now controlled by the Privat Group and the Ukraine - refuses even to acknowledge the existence of the debt to Tatneft, given an alleged payment of that debt to Taiz and Technoprogress Research and Production. The pretense of this assertion of payment becomes evident if one considers that both of these companies had assigned their claims to Suvar-Kazan, Tatneft's commission agent, in early 2008, as Ukrtatnafta was well aware. Moreover, both of these companies, as well as Avto, the final Ukrainian intermediary through which Tatneft's oil deliveries had been made, were acquired by IgorKolomoisky and the Privat Group in the course of 2009. In effect, Respondent has claimed that payment by and tocompanies all controlled by the Privat Group, from their rightpocket to their left, satisfied the hundreds of millions of dollarsin debt that should have been paid indirectly to Tatneft. The absurdity of such a defense needs no elaboration. 518. In reality, Tatneft has recovered nothing from any Ukrainian party. The only sums recovered, in the amount of US $105 million, were recouped pursuant to legal proceedings initiated by Suvar-Kazan, Tatneft's commission agent, in the Russian Federation, as discussed below. In short, theintermediaries acquired by Igor Kolomoisky and the PrivatGroup were simply utilized to simulate the repayment ofUkrtatnafta's debt to Tatneft, and, once their role in a patentlyself-serving scheme was complete, liquidated.”

“…Ukrainian citizen Yu.V. Konov, a former director of OOO Taiz was interrogated as witness in this case and testified that he had been instructed to become CEO of the said company, to open a new account with ZAO KB PrivatBank and to apply the funds received from ZAO Ukrtatnafta to purchase the shares by a lawyer representing Privat financial and industrial group… Ukrainian citizen Yu.V. Konov, a former director of OOO Taiz was interrogated as witness in this case and testified that he had been instructed to become CEO of the said company, to open a new account with ZAO KB PrivatBank and to apply the funds received from ZAO Ukrtatnafta to purchase the shares by a lawyer representing Privat financial and industrial group… Further, Yu.V. Konov and A.M. Vakhniuk acting for OOO Taiz and NP OOO Tekhno-Progress, respectively, confirmed their testimonies with copies of reconciliation statements for the period from 1 May 2007 to 20 May 2009 between their companies and ZAO Ukrtatnafta, statements of securities accounts of OOO Taiz and NP OOO Tekhno-Progress opened for the companies by OOO FK Gambit (Dnepropetrovsk, Ukraine) evidencing acquisition of shares of various Ukrainian companies. In their witness statements V.A. Fedotov, First Deputy Chairmanof the Management Board of AO Ukrtatnafta, and N.U.Maganov, First Deputy General Director of Tatneft,confirmedthat the persons acting on behalf of the Privat group had beeninvolved in these actions… The subject matter of criminal proceedings No. 242927 certain materials in which were reviewed in separate proceedings and served as a basis for instituting these proceedings is the embezzlement by unidentified persons from among the executives of Privat, a Ukrainian financial and industrial group, of the property owned by Tatneft. Since 19 October 2007 ZAOUkrtatnafta is part of the Privat group, and its CEO P.V.Ovcharenko reports to I.V. Kolomoisky and other persons whichare the senior managers of this group. That is why repayment by ZAO Ukrtatnafta in 2009 of its debt to OOO Taiz and NP OOO Tekhno-Progress for the oil received in 2007 is a sham transaction used to cover up the earlier embezzlement of the oil. Such actions designed to cover up embezzlement of oil include: purchase by unidentified persons acting on behalf of Privat group of OOO Taiz and NP OOO Tekno-Progress, appointment as their CEOs people who would act in their interests, transfer to accounts of such companies of the money, their use to fund the purchase of illiquid shares of Ukrainian companies, bankruptcy and liquidation of OOO Taiz and NP OOO Tekno-Progress. Yu.V. Konov and A.M. Vakhniuk, persons designated as CEOsof OOO Taiz and NP OOO Tekhno-Progress, did not have anintent to cause damages by deceit to Tatneft or OOO KompaniyaSuvar-Kazan, and the persons acting on behalf of Privat groupdid not inform them of their criminal intent… [emphasis added]”

“Q…the payments from UTN to Taiz and Tekhno you full well understood could not have happened unless Mr Kolomoisky, Mr Ovcharenko, Yaroslavsky and anyone else who you regarded as involved in the raid had been behind it; correct? Yes.” [Day 10 p135] Yes.” [Day 10 p135] ii) In the Rejoinder in BIT proceedings in December 2009 Tatneft stated: "…Taiz and Teckhnoprogress are Ukrainian owned and controlled entities that in 2009, through a series of opaque and suspect transactions, along with another Ukrainian entity, Avto, came under the control of Igor Kolomoisky and Privat Group - the principal partners and co-conspirators of Mr. Ovcharenko and his group of raiders - who now control the management of Ukrtatnafta…" Mr Syubaev confirmed that that represented a fair representation of his understanding at the time but said that Tatneft did not have any evidence to support that. [Day 5 p61, p63] iii) In the April 2010 memorandum Tatneft said: "…According to unofficial information, the Privat business group had preliminarily established control over these intermediary companies (acquired them) and is currently handling their bankruptcy and winding-up.”

"asking the law enforcement authorities to verify, to check the circumstances of these bank transfers. We are not asserting that the money had been transferred; we're asking for a verification or a check to be made."

"…in accordance with information provided by Ukrainian legal advisers to the international arbitration considering the lawsuit of Tatneft against Ukraine under the UNCITRAL procedure, it was revealed that in midJune 2009, [UTN] had transferred the entire amount ofdebt in the amount of about 2.1 billion UAH to theaccounts of Taiz LLC and Tekhno-Progress LLC…"

“Q. Yes, and you were telling the criminal investigator because that was evidence that you, Mr Maganov, in making -- in giving evidence to the criminal investigator, relied on. You were taking as a fact what Ukraine had said, correct? A. No. Everything that Ukraine was saying, I did not believe it was a fact. For me it was a gambit, a ruse, trying to mislead us, lead us down the garden path.”

“Not a penny of the amounts allegedly paid by Ukrtatnafta under Mr. Ovcharenko's control has gone to Tatneft. Instead, all ofthese amounts apparently would have gone to Privat, a furtherflagrantly illegal misappropriation of Ukrtatnafta's funds whichhas caused harm to Claimant.”

“Subsequently, at the end of June 2009, Korsan LLC acquired atan "auction" (at which it was the sole participant) 18% of sharesin Ukrtatnafta JSC for UAH 2.1 billion - an amount close to theamount siphoned off from Ukrtatnafta JSC through "payment"for the oil. According to unofficial information, the "payment"for the oil to the Ukrainian intermediary companies and theacquisition by Korsan LLC of 18% of shares in Ukrtatnafta JSC constituted elements of a financial operation aimed at siphoningoff funds from Ukrtatnafta JSC, the elimination of its disputed accounts payable, and also the transfer of 18% of its shares into the ownership of a company affiliated with the Privat group.”

“Q Yes, and I think, having read it, it's perfectly clear that as at 5 April 2010 Tatneft was setting out and your subordinate was setting out in this document all of the essential elements of what you, in these proceedings, describe as the "Oil Payment Siphoning Scheme"; correct? A. Yes. However, Mr Howard, I would like to mention that thecoincidence of the sums, of the amounts, that are presumablytransferred from UTN to the intermediary companies and theamount for which the 80% of shares were purchased, it's only asupposition based on unofficial information. There is no confirmation in this document. It's not mentioned here.”

"The payment by Korsan LLC for 18% shares in [UTN] in the amount similar to the amount of debt of the refinery to Tatneft OJSC is also one of the links in the illegal scheme conceived by Kolomoyskyi I. V. and implemented by Korban …"

“Not a penny of the amounts allegedly paid by Ukrtatnafta under Mr. Ovcharenko's control has gone to Tatneft. Instead, all ofthese amounts apparently would have gone to Privat, a further flagrantly illegal misappropriation of Ukrtatnafta's funds which has caused harm to Claimant.”

"In October 2009, Avto Taiz and Techno were declared bankrupts under the lawsuits of one of the enterprises of the Privat Group- Optima- Trade LLC…" 233.In the April 2010 memorandum it said: "…According to unofficial information, the Privat business group had preliminarily established control over these intermediary companies (acquired them), and is currently handling their bankruptcy and winding-up…"

"I believe that the entire scheme of seizure of the refinery and the alleged "repayment" of the debt for oil supplied by Tatneft …was planned by Mr Kolomoisky and Mr Ovcharenko"

“Firstly, Privat group, which a few months ago had become one of the [UTN] shareholders through Korsan Ltd., as well as the commercial structures controlled by Yu.A. Boyko, Minister of Fuel and Energy. It is highly likely that Mr. P.V. Kolomoisky and Mr. I. L. Boyko are currently both business partners and political allies.”

“1.2% were acquired by the company affiliated with the Privat Group (Korsan Ltd.).”

“As time passed by, Tatneft were still in the dark and there was a feeling that the criminal investigation was way too long. InDecember 2011 as part of the BIT arbitration Tatneft receivedfrom Ukraine copies of UTN's payment orders dated June 2009to Taiz and Tekhnoprogress for the total amount owed for ouroil. Now for the first time Tatneft had documentary evidence thatthe money in fact left UTN and reached the intermediaries but appeared to dissipate at their level which could not happen without involvement of their top managers. Such top managers could act either for their own benefit or for the benefit of third parties. Tatneft still had no information on how and where themoney disappeared from the intermediaries, or indeed whoexactly was involved in orchestrating its disappearance orbenefiting from it. At this moment it became clear that it wasnecessary to investigate the role of the top managers as soon as possible so Tatneft's criminal attorneys recommended that we promptly file a relevant complaint with the investigation authorities.”

"…Ovcharenko also made it clear that that new power was PrivatGroup. Maganov was also told by Ovcharenko and by Korban, who arrived at the Refinery, that he needed to speak directly with Kolomoisky to solve the situation with the raid. I knew thatPrivat Group was a conglomerate of businesses headed byKolomoisky. I also knew that PrivatBank, a major Ukrainianprivate bank, was connected somehow to Privat Group andKolomoisky and that another major oil company in Ukraine, JSCUkrnafta, was controlled by Privat Group. I was now shown the interview of Korban published in Ukrainska Pravda on 26 October 2007 where Korban stated that Bogolyubov is an equipollent partner of Kolomoisky. I have not read this article before I was shown it now. I shall say there was no need for me and I believe anyone in Tatneft to read all publications where certain information about the raid on UTN was mentioned since I and my colleagues had full knowledge of the raid and about individuals in whose interests UTN was took over. I was told by Maganov that when he was at UTN immediately after the raid that same Korban told him that he needed to speak directly with Kolomoisky to solve the situation. There was nothing that couldlead Tatneft's management, Maganov and me into thinking thatsome Bogolyubov of whom none of us was aware was involvedin the raid."

“What can you say regarding Privat, the financial and economic group of enterprises of Ukraine?” 260. His answer was (in material part): “This group includes about a hundred of enterprises, most of which are located in Dnepropetrovsk (Ukraine). One of the owners of the enterprises that are part of the Privat Group is Igor Valeriyovych Kolomoyskyi. Kolomoyskyi I. V. is one of the coowners of Privatbank CJSC in Dnepropetrovsk, which in turn owns Moskomprivatbank CJSC in Moscow. The enterprises of Kolomoyskyi I. V. is mostly engaged in metallurgical, gas and oil spheres. It was the Privat Group that organized and carriedout seizure of Ukrtatnafta CJSC in Kremenchug (Ukraine) onOctober 19, 2007.”

“… if Mr Bogolyubov was relying also on a further point that the payments to Taiz and Tekhnoprogress were made to their accounts at PrivatBank…it is right that the payments were made to their accounts at PrivatBank and that was known to Tatneft although not to S-K. But …that does not begin to implicate Mr Bogolyubov in anything and it's not even a matter that we rely on in these proceedings.”

"I believe that the whole scheme for the takeover of the plant and "sham" debt repayment for the oil supplied by OJSC "

“In view of such facts, payments to the accounts of OOO Taiz and OOO Techno-Progress inflict material damages upon Tatneft and contain elements of fraud”

“According to the available information, Naftogaz of Ukraine NJSC initiated the holding of a general meeting of shareholders of Ukrtatnafta JSC for the purpose of changing the composition of the company's management bodies that were elected at the meeting of shareholders in February of this year (as a result of collusion between Privat group and the former management of Naftogaz of Ukraine NJSC who were removed in March of this year)…. The main results of the meeting were the election of a new supervisory board of Ukrtatnafta JSC and the retention ofpositions by representatives of Privat group involved in the dayto-day management of the enterprise. That being said, whereas the board officially includes 6 representatives of the Ukrainian state and 5 representatives of Privat group, Privat group actuallygained de facto control over the supervisory board, since at least2 of the 6 state representatives have close ties to Privat group…”

"Despite the state owning 50% plus one share in the company, Ukrnafta has for years been effectively controlled by theshareholders of the country's largest lender PrivatBank,oligarchs Gennady Bogolyubov and Igor Kolomoisky, who arecollectively referred to as Privat Group."

"Privat took over the Kremenchug Refinery controlled byTatnafta, last year. In May 2007 the shares of the Swiss company AmRuz Trading AG and American company SeaGroup 293. International plc., which were carrying out the joint policy with the Tatarstan Ministry of Property and Land Resources, owning 28.9% of shares, and with Tatneft (8.6%), were disposed to the benefit of Naftogaz of Ukraine. And although LLC Korsan, affiliated with Privat Group owns only 1.2%, Kolomoisky andBogolyubov managed to implant their own management in theenterprise."

"83. Privat's medium-term strategy to seize control over the Ukrainian energy industry in general and the oil market in particular, was widely known. To this end, Privat has repeatedly aimed at grabbing command over key assets necessary for the different stages of the energy production and distribution cycle. Seizing control over Ukrtatnafta was a pivotal step in this process."

“41. I was shocked by the news [of the raid]. I immediately called Mr Ovcharenko. I asked him what was going on, what this seizure meant and why our employees could not move freely. I demanded that our employees be released. I also later called Mr Yaroslavsky who, as far as I knew, was his business partner at the time when they had owned 1% of UTN' s shares.”

“When asked in whose interests P. Ovcharenko acts, N. Maganov suggested that the Privat Group of Igor Kolomoisky and Alexander Yaroslaysky, his partner co-owner of Ukrsibbank, are behind all this.”

“Q…the payments from UTN to Taiz and Tekhno you full well understood could not have happened unless Mr Kolomoisky, Mr Ovcharenko, Yaroslavsky and anyone else who you regarded as involved in the raid had been behind it; correct?”

"there were a number of events that allowed us to suppose, to speculate if [Mr Yaroslavsky] is behind it and that the Privat Group headed by [Mr Kolomoisky] is behind it. However we did not have documentary proof of that."

“In short, the intermediaries acquired by Igor Kolomoisky and the Privat Group were simply utilized to simulate the repayment of Ukrtatnafta’s debt to Tatneft, and, once their role in a patently self-serving scheme was complete, liquidated.” b) The payment by the intermediaries was not to pay the debt to SK but was a “pretence” (paragraph 517): “…Ukrtatnafta – which is now controlled by the Privat Group and the Ukraine – refuses even to acknowledge the existence of the debt to Tatneft, given an alleged payment of that debt to Taiz and Technoprogress Research and Production. The pretense of this assertion of payment becomes evident if one considers that both of these companies had assigned their claims to Suvar-Kazan, Tatneft’s commission agent, in early 2008, as Ukrtatnafta was well aware.”

"Q. So insofar as these proceedings are concerned with what representatives of Tatneft told representatives of S-K, you are not the appropriate witness because it was not part of your sphere of responsibility to communicate with S-K; correct?"

"Q…you personally were not involved during the period from October 2007 to let's take April 2013 in any discussions with anybody from S-K other than the discussion that we'll come to that takes place in June 2008 when Mr Gubaidullin telephoned you about the criminal investigation; is that right? Yes, you're right."

“Q…But, as far as you understood, [the BIT arbitration] was simply a claim for compensation in respect of the shares; is that right? A. Yes, compensation for the investment which Tatneft had been making into the refinery. Q. Right. And it didn't include -- you didn't realise that itincluded a claim for the oil monies; is that right? A. I don't remember it exactly. Perhaps it did include it. But what I have noted, what I have kind of identified in my mind is the raid, the takeover and expropriation of Tatneft's holding. Q. Right. You see, the reason I come back to it, because I'm a little bit puzzled. You've given a witness statement in these proceedings … And you can see in that statement, which you affirmed 45 minutes ago, … you say: "I first learnt about these proceedings from the media. Iunderstood that Tatneft was seeking payment for UTN'stakeover, expropriation of the Tatneft-owned UTN shares, andfor the oil it had supplied." Was that statement true when you affirmed it 45 minutes ago? A. Yes. Q. So the position is, if we go back a stage, therefore, that you did understand that the BIT arbitration included a claim for the oil supplied, right? A. Yes.” [Day 13 p108] [emphasis added] A. Yes.” [Day 13 p108] [emphasis added] iii) On the role of the accountants at SK and the BIT arbitration he provided a lengthy explanation which appeared in my view to be evasive and without any credible foundation: “Q…You've got these accountants you tell us about who were concerned about how much money was owed and the impact on S-K's finances, and you've told us that -- what that concern related to. Would you agree with this: that you would expect theaccountants who were concerned to seek to follow up what washappening in the BIT arbitration, the nature of the claims, inorder that they could properly consider the nature of S-K'sexposure? Do you agree with that? A. No, I don't agree with it altogether. The thing is, the accountants had their own body of work and their own authorities. They were not authorised or tasked with followingany kind of proceedings, be it in the territory of Ukraine, with the participation of Tatneft, or in the territory of the Russian Federation, with the participation of S-K.”

“A. … At that time a decision was taken in Ukraine of invalidity of the assignment agreement, so in fact the payment UTN made to the intermediaries was absolutely legitimate and lawful in my view and there were no grounds to see that the UTN management were the final beneficiaries of this embezzlement scheme. We just simply could not see that.”

“29. Following enforcement against the UTN Tatnefteprom shares in 2009, it was apparent to us at S-K that the bailiffs could hardly recover anything in Russia because UTN was not understood to have other assets there. At the time, Mr Abdullinand I discussed (internally, with our Ukrainian counsel, andseparately with Tatneft) whether S-K should attemptenforcement in Ukraine. S-K analysed the prospects of enforcing a Tatarstan court ruling in Ukraine. Following this (and consultation with S-K's Ukrainian counsel), S-K concluded that it made no sense to attempt the enforcement of the Tatarstan court ruling in Ukraine given the political situation in Ukraine at the time, and the prior rulings of the Ukrainian courts to the effect that the assignment agreement was invalid.”

“36. Around November 2011, I found out from the investigatorthat in the summer of 2009, UTN had allegedly made paymentsfor the oil supplied to Taiz and Tekhnoprogress. It sounded strange to hear about payments from UTN given I knew S-K had not received any money from the intermediaries. The investigator did not communicate to me any details. I shared this information with Mr Gubaidullin and Mr Abdullin. Before thatconversationwith the investigator no one had told me UTN hadpaid for the oil. I did not hear any rumours about it nor had I come across this information in the press or otherwise. No one from S-K mentioned it to me.”

"… let's take the position of S-K from 1999 to 2014. Its main customer throughout that period of 15 years was Tatneft; correct?” [Day 7 p60] The immediate response was: “The customer? Purchaser? Could you please specify?” Having tried to clarify the issue for the witness, four questions later the question posed was: "… the provision of those services [under the agency contracts] by S-K to Tatneft was the principal area of S-K's business; correct?"

"… I simply want you to tell us, in the last financial year, what was the value to your company in terms of commission of its agency agreement with Tatneft?..."

“My understanding when I saw the contract on the whole was that Suvar-Kazan was liable to Tatneft, i.e., the client, for the return -- the repatriation of the funds and for the payment with Tatneft. That was the general understanding. [Day 7 p120]”

"…when Mr Maganov suggested that S-K act as Tatneft's commission agent, I understood that it would mean assuming the following obligations. First, S-K would be required to ensure that foreign currency proceeds for the supplied oil were transferred from the foreign buyer to S-K's account in a timely manner. I understood that late transfer of foreign proceeds would mean a violation of currency control laws and potential liability on S-K's part. Second, S-K was required to provide a guaranteeof payment for the supplied oil to Tatneft. If that foreign buyerdid not pay, then S-K was liable to Tatneft for any shortfall…"

"To guarantee is a broad term. The way I use this term here, the term "guarantee", means that I understood, as the former exporter, that I was liable to the agent for the sale of the oil, for the receipt of the funds and I was liable for making payment for the goods supplied. That was the guarantee. That guarantee, however, does not fully express the sense that the word "guarantee" has in the banking sphere, where a bank issues a written guarantee and that guarantee can be used in order to create a certain piggy-bank(sic). This, to me, meant that I was responsible for the receipt of the goods from me as the commission agent and for the payment of the funds to the client. You can call it -- in Russian, we could call it a "guarantee", but that is a Russian expression that I would be using."

“A. Oh, is that what you meant? Bond Solon for me is a training because when you said "preparation" or "training", which is -- I thought of Tatneft lawyers. When I started asking them questions, they said to me, "We can't train you. We can't prepare you. We can arrange a training course for you". So you askedme for preparation and I automatically thought that my lawyerswould have been training me, which they didn't; whereas yes,indeed, I attended a training. We had a role play, we were told how to behave, how to speak clearly and we had a role play -”

“Q. And, as I understand it, Ms Savelova gave you this information without any prompting on your part. A. I'm not sure I understand the question. Q. Right. “A. It's not very clear. Who would have prompted what to whom?”

"(1) In certain circumstances a court may be entitled to draw adverse inferences from the absence or silence of a witness who might be expected to have material evidence to give on an issue in an action. (2) If a court is willing to draw such inferences, they may go to strengthen the evidence adduced on that issue by the other party or to weaken the evidence, if any, adduced by the party who might reasonably have been expected to call the witness. (3) There must, however, have been some evidence, however weak, adduced by the former on the matter in question before the court is entitled to draw the desired inference: in other words, there must be a case to answer on that issue. (4) If the reason for the witness's absence or silence satisfies the court then no such adverse inference may be drawn. If, on the other hand, there is some credible explanation given, even if it is not wholly satisfactory, the potentially detrimental effect of his/her absence or silence may be reduced or nullified."

"…Lawyers of Tatneft and S-K jointly looked into the situation. As I was informed by Savelova S-K's lawyers again sought assistance from Tatneft's lawyers on this issue. As I remember, Tatneft even sought advice from a Ukrainian law firm. The forecast was pessimistic…S-K and Tatneft jointly decided not to seek enforcement of the Russian court judgment in Ukraine."

"…At the time, Mr Abdullin and I discussed (internally, with our Ukrainian counsel, and separately with Tatneft) whether S-K should attempt enforcement in Ukraine…"

"In 2009, I was contacted by Ms Savelova from time to time and other members of the Tatneft legal team to provide documents. I did not know why Tatneft might have needed those documents. I had no discussions with the Tatneft lawyers about Tatneft's intentions regarding recovery and about its litigation strategy. I did not know anything about this…"

“90. In April 2013 Maria Savelova, the Head of Legal of the Strategic Planning Department, told me that she accidentally met Gubaidullin and she shared, with him the news about Kolomoisky's testimony and siphoning of the oil payments which came as a great surprise to him. Maria also told me that Gubaidullin was very surprised by the news, since before that time he believed, based on our joint complaint filed with the investigation authorities in 2011, that the top managers of the Ukrainian intermediaries had been responsible for the theft.”

"In any event he would not likely have been a material witness, since he was not the executive in charge of S-K's oil department (that was Mr Gubaidullin) and anything he could have given evidence on was already addressed by other witnesses."

"The sheer extent of the missing disclosure is extraordinary. Notwithstanding that Akin Gump LLP have acted for Tatneft since at least September 2014, something has gone very wrong in relation to Tatneft's preservation of documents and thus disclosure."

"As soon as litigation is contemplated, the parties' legal representatives must notify their clients of the need to preserve disclosable documents. The documents to be preserved include Electronic Documents which would otherwise be deleted in accordance with a document retention policy or otherwise deleted in the ordinary course of business."

"As part of a routine exercise to reduce the size of certain individuals' mailboxes by Tatneft's IT department, in 2017 the IT department inadvertently deleted all emails held in the mailboxes of Maria Savelova and Nurislam Syubaev up to the end of 2015. Only those documents dated 2016 and 2017 were not deleted…"

"the obvious inference in relation to such significant deletion of two separate accounts, and where no Tatneft witness has been produced at trial to properly explain and be tested as to how such deletions came about, is that this was deliberate."

"For Mr Malhotra reliance was placed on the broad principle expressed in the Latin maxim omnia praesumuntur contra spoliatorem. However, it was accepted that the true principle was not as extensive as the maxim would suggest for not everything is to be presumed against the destroyer."

“First, if it is found that the destruction of the evidence was carried out deliberately so to as hinder the proof of the plaintiffs claim then such finding will obviously reflect on the credibility of the destroyer. In such circumstances it would enable the court to disregard the evidence of the destroyer in the application of the principle… Second, if the court has difficulty in deciding which party's evidence to accept, then it would be legitimate to resolve that doubt by the application of the presumption. But, thirdly, if the judge forms a clear view, having borne in mind all the difficulties which may arise from the unavailability of material documents, as to which side is telling the truth, l do not accept that the application of the presumption can require the judge to accept evidence he does not believe or to reject evidence he finds to be truthful.”

“Without waiving any privilege, I understand from RGP as follows: 56.1 Ms Savelova and Mr Gloushkov have confirmed to RGP that, as stated in Akin Gump's letter dated 11 October 2019 (pages 106 to 119), at the May 2015 meeting which Mr Gubaidullin discusses in his witness statement (see paragraph 207 of Gubaidullin 1), Ms Savelova and Mr Gloushkov asked for Mr Gubaidullin's assistance, including in relation to potentially appearing as a witness. 56.2 Once Mr Gubaidullin agreed to help Tatneft, Ms Savelova and Mr Gloushkov asked Mr Gubaidullin to preserve and not delete documents relevant in any way to UTN and to the performance by S-K of its obligations as a commission agent of Tatneft which he could have held, and also to assist in ensuring that S-K's documents relevant in any way to UTN and to S-K's performance of its obligations as a commission agent of Tatneft were preserved and not deleted. 56.3 Mr Gubaidullin confirmed at that meeting that such documents would have existed in the form of hard copy documents, would have been kept, and continued to be kept by S-K and potentially S-K's former employees. 56.4 Mr Gubaidullin in turn asked Mr Suntsov, Mr Shmelev, Mr Abdullin and Mr Aleksashin to preserve and not delete documents relevant in any way to UTN and to the performance by S-K of its obligations as a commission agent of Tatneft, to the extent they were in possession of such documents. 56.5 In addition, towards the end of 2015, from around midOctober until the end of December 2015, lawyers from theMoscow office of Akin Gump had a number of meetings withMr Gubaidullin. Without waiving any privilege, I understand from Mr Rybalkin (then partner at the Moscow office of Akin Gump) that in those meetings the necessity that all formeremployees and representatives of S-K (including MrGubaidullin) should preserve documents relevant to UTN wasreiterated. Mr Gubaidullin confirmed that they were indeed aware of that, and had been preserving and would continue to preserve such documents.”

"…As part of this litigation, Tatneft's lawyers asked me to provide documents and/or emails that might be relevant to this dispute. I identified no such material, and communicated this to Tatneft's lawyers…"

"…It is one thing to draw an inference that the evidence of a missing witness would or might be adverse. It is another to speculate that there exists a document which is adverse. Absent at least a reason to believe that such a document does exist, this would be going too far. Nonetheless, in considering the documentary record in the trial bundle, I must always remember that that record is incomplete, that the Defendants have not furnished their disclosure and that the Bank and the Court have been prevented, by the Defendants' conduct, from finding out whether documents do exist which might be adverse to the Defendants' case. At the very least, I would expect the benefit of any doubt to be firmly in the Bank's favour."

“Without waiving any privilege, at my meeting in August 2016 with Mr Abdullin and Mr Aleksashin Mr Abdullin told me the following. The S-K Legal Department addressed Tatneft's Legal Department with a query to analyse the potential outcome of the enforcement proceedings in Ukraine in order to recover the rest of the indebtedness from assets of UTN located in Ukraine. Mr Abdullin and Mr Aleksashin informed me that the local Ukrainian counsel was dealing with it. As I know the bundle of documents requested by the local counsel in order to initiate the enforcement proceedings in Ukraine was gathered and sent to him. At that time, however, Tatneft's lawyers, the S-K LegalDepartment and the local counsel having analysed the situationcame to a joint opinion - the enforcement of the Russian decision in Ukraine was hopeless at that time: first, due to political situation in Ukraine; and second, due to the existence of a conflicting Ukrainian court decisions invalidating the 2008 Assignment Agreement. It was a decision taken by S-K and approved by Tatneft's lawyers not to pursue further the enforcement of the decisions because there were no prospects.”

"…At the time, Mr Abdullin and I discussed (internally, with ourUkrainian counsel, and separately with Tatneft) whether S-Kshould attempt enforcement in Ukraine. S-K analysed the prospects of enforcing a Tatarstan court ruling in Ukraine. Following this (and consultation with S-K's Ukrainian counsel), S-K concluded that it made no sense to attempt the enforcement of the Tatarstan court ruling in Ukraine given the political situation in Ukraine at the time, and the prior rulings of the Ukrainian courts to the effect that the assignment agreement was invalid…"

“48. During that conversation, Mr Gubaidullin expressed some concern over S-K's outstanding obligations towards Tatneft and asked whether Tatneft would be pursuing S-K for the outstanding unpaid oil monies from UTN. I told Mr Gubaidullinthat the arbitration proceedings were brought against Ukraineand largely concerned the breach of Tatneft' s rights as a foreigninvestor in Ukraine. He did not ask for any more details, nor didI provide them. I said to Mr Gubaidullin words to the effect thatTatneft would not pursue S-K during the course of the arbitrationproceedings against Ukraine but this was on the basis that I expected S-K to be doing whatever it could to recover monies from Avto and UTN for the oil supplied. I believe I reported that conversation with Mr Gubaidullin to Mr Syubaev immediately after it took place.”

“Mr Syubaev told me that the investigation had been initiated byTatneft and the Ministry of Property of the Republic of Tatarstan in connection with infringement of their rights as shareholdersof UTN and misappropriation of Tatneft's oil. Mr Syubaev and I also discussed briefly whether Tatneft had plans in the near future to demand from S-K payment of outstanding amounts for supplied oil. Mr Syubaev explained to me thatTatneft was undertaking independent steps in an effort to resolve the issue with UTN, including as part of the BIT arbitration against Ukraine (which could, as he said, last for several years), and wasnot planning to claim the outstanding amounts from S-K duringthis time. Mr Syubaev repeated what Mr Maganov previously told me in terms of Tatneft's recognition that the issue with payment was not the result of S-K's fault. I must say that this came as a relief. I briefly informed Mr Korolkov of the results of my call with Mr Syubaev.”

“…I recall that Tatneft employees reported to me receiving a part of the money that had been recovered by S-K. The same was reported to me by Mr Gubaidullin. I congratulated him and thanked him for his efforts. We did not discuss any other matters.”

“Q…if Tatneft knew in the summer of 2009 that UTN was proposing to make and making payments to Taiz and Tekhnoprogress of these sums, that was something which, from your perspective, definitely and obviously they should have told you about; do you agree?”

"In view of the non-participation of Suvar-Kazan Company LLC in the resulting debt for oil supplied and the actions taken by Suvar-Kazan Company LLC to recover the overdue debt from the Ukrainian debtors, OJSC TATNEFT does not envisage submitting any monetary claims and legal actions against SuvarKazan Company LLC in connection with the failure of the Ukrainian counterparties to meet their obligations to pay for the oil."

“I said to Mr Gubaidullin words to the effect that Tatneft would not pursue S-K during the course of the arbitration proceedings against Ukraine but this was on the basis that I expected S-K to be doing whatever it could to recover monies from Avto and UTN for the oil supplied.”

"…I told Gubaidullin that I fully understood that S-K was not to blame for the non-payment of oil and that Tatneft still had nointention to recover the indebtedness for oil from S-K, at least,while the arbitration against Ukraine, which could take a while,was pending. I, however, made it clear that S-K was to undertake all possible steps to recover the contractual indebtedness and to transfer the funds to Tatneft in terms of performance by S-K of its obligations under the 2007 commission agency agreement."

“Q…was it your understanding throughout that that debt to Tatneft was a real liability of S-K's?”

“A. That information was confidential. It was definitely confidential. It had to do with the criminal investigation and everyone had been warned that no leaks were allowed. That information had to be kept confidential…”

"Optima Trade, and that it's connected with Privat Group, I may have said that, although I think he knew it himself because thatwas a dominating story."

“Towards the end of April 2013, when I was in Moscow on business, I accidentally met Ms Savelova on a street. Here I should explain that at that time I came to Moscow in connection with my work for Efremov Kautschuk GmbH, whose Moscow office had just recently been relocated close to Ms Savelova’s office. I would sometimes run into her on the street during my business trips to Moscow. I was acquainted with Ms Savelova asshe had been working at Tatneft for some time, dealing withcorporate matters concerning UTN, so we usually exchanged acouple of words if we ran into each other.When I ran into heragain this time we had a quick catch up and she mentionedcertain developments that had taken place during Tatneft’s BITarbitration against Ukraine.” “200. Ms Savelova told me that she had attended the hearings of the arbitration during which Mr Kolomoisky, one of the major Ukrainian oligarchs, gave oral testimony. I understood from that conversation that Mr Kolomoisky’s testimony pointed to the possibility that he and his associates had been directly involved in the siphoning of funds owed to S-K and ultimately Tatneft. In particular, I remember Ms Savelova mentioning that Mr Kolomoisky practically admitted that the Privat Group and Mr Yaroslavsky, another Ukrainian oligarch, were behind the reinstatement of Mr Ovcharenko and after his reinstatement they were directing UTN’s operations and decisions. Ms Savelova also mentioned that Mr Kolomoisky confirmed that Privat Group controlled in some way the bankruptcy of the Ukrainian intermediaries. That meant that the Defendants together could have caused UTN to make payments to the Ukrainian intermediaries in 2009 and then make the monies vanish into air.”

“58. As I explained in RVG1, 23 in April 2013 I had a chance meeting with Ms Savelova in the street in Moscow. I do not recall the exact date. The meeting was shortly after the hearings in the BIT arbitration, which I learned about from Ms Savelova. The office of Efremov Kautschuk was close to her office so I would bump into her from time to time. This was one such occasion. We exchanged pleasantries. 59. Ms Savelova then told me that there had been some dramaticdevelopments in the BIT arbitration. She said that fairly recently she had attended the hearings and that in one of them Mr Kolomoisky had given oral evidence. She told me that MrKolomoisky had practically admitted that the Privat Group werebehind the reinstatement of Mr Ovcharenko and following hisreinstatement he had been directing UTN’s operations anddecisions. Additionally, that Mr Kolomoisky and others hadeffectively stolen the money which UTN had paid in 2009. That was why it had never been paid to S- K. 60. My recollection is that the discussion with Ms Savelovalasted about 10-15 minutes. I remember her giving me the brief overview outlined above. I am not sure whether she told me that all four individuals were involved. I do remember that Mr Kolomoisky and Mr Ovcharenko were mentioned, as was the Privat Group...”

“…I had not heard of any of the Defendants before except for Mr Ovcharenko (who I knew was the Chairman of UTN's Management Board, who was involved in the raid) and Mr Kolomoisky (who I only knew from the media to be a Ukrainian oligarch). At the time, I was not even aware that the defendantsin this litigation had been involved in the theft, and I only learnedof this when Mr Gubaidullin reported on his meeting with MsSavelova in 2013. It was only then that I learnt of MrKolomoisky, Mr Ovcharenko, Mr Yaroslavsky and MrBogolyubov's involvement.”

"…Mr Syubaev and Ms Savelova kept me informed on most issues. They never mentioned SK, so I do not believe they had any contact with the individuals at SK during that time [20122014] except for Ms Savelova's chance conversation with Mr Gubaidullin in April 2013."

“In connection with the investigation of criminal case No. 242927, initiated under Article 160(4) of the Criminal Code of the Russian Federation, I kindly request that you: 1) Inform me whether Tatneft OJSC and Suvar-Kazan Company LLC have received any payments since 12 June 2009 from [UTN], Taiz LLC, NP Tekhno-Progress LLC or any other company towards the repayment of outstanding debt under Agency Agreement No. 13-ZN/126-1 dated 26 January 2007 and Contract No. 3-0407 dated 23 April 2007 respectively. 2) Designate an employee of your company to be examined as a witness regarding the circumstances surrounding [UTN]'s transfer of funds during the period 12-17 June 2009 to the accounts of Taiz LLC and NP Tekhno-Progress LLC as repayment of outstanding debt for oil supplied in 2007.” repayment of outstanding debt for oil supplied in 2007.”

“I remember that sometime around the end of December 2011 Mr Korolkov informed me that Mr Maganov of Tatneft had visited him while I was out of office (I do not now remember the exact reason for my absence, probably I was away for business) with a request to co-sign the hard copy of joint request to initiate the criminal proceedings against the General Directors of the Ukrainian intermediaries. Out of the request Mr Korolkov foundout that in 2009 UTN had actually made the payments whichwere due to S-K under the 2008 Assignment Agreement butinstead of making those payments to S-K they were made to Taizand Tekhnoprogress. When I returned to the office Mr Korolkovshared this information with me. I was shocked by this news. I could not believe that UTN had made those payments; I thought UTN was just sitting on the money and was avoiding payment to S-K, and ultimately to Tatneft, as a result of its reliance on the Ukrainian court decision which declared the 2008 Assignment Agreement invalid.”

"So if we then apply our minds to the meeting that you had with Mr Korolkov in December, we've seen, firstly -- let's see if we can agree this - the background to the meeting must have been the letter of 24 November 2011, which must have provokeddiscussions between S-K and Tatneft. Do you agree? A. It ought to have caused the discussions between the lawyers,if those discussions did not take place before. Q. Yes, and just to pick you up on that, the discussions between the lawyers -- you said "if [they] did not take place before"

"… if Tatneft's lawyers had spoken to S-K's lawyers, as you would expect they would have done, and if they had spoken to them honestly, in answer to a question, "

"I think so, yes." [Day 11 p133] However, he then sought to qualify that answer by saying that: "… they would have said that the money is transferred to Avto and Taiz; that Avto and Taiz are either bankrupted or are in liquidation, initiated by the company Optima, which means that the money went somewhere with the help of the management of Avto and Taiz, and we need to know where the money is gone. That's what I was saying "yes" to, to this particular text of my witness statement."

“…Notwithstanding the court's decision and the enforcement proceedings, instead of paying the debt recognised by the court and payable to Suvar-Kazan LLC, in around the summer of 2009, Ukrtatnafta CJSC started making payments to TAIZ and TECHNO-PROGRESS. To date, no payments have been made to Suvar-Kazan LLC (with the exception of the amount received as a result of the enforcement proceedings). Furthermore, as we later became aware, bankruptcy proceedings subsequently commenced for Avto, TAIZ and TECHNO-PROGRESS, and they were subsequently wound up. Thus, there is reason to believe that the directors of Avto, TAIZ and TECHNOPROGRESS embezzled the funds that were supposed to be transferred by way of the implementation of the Russian court's decision, thereby inflicting harm on Russian companies…”

“72. I believed that it made sense for Tatneft and S-K to make a joint application. I visited Mr Korolkov at his office to sign the joint application for a case against the managers of the intermediaries. I mentioned to him then that the monies owed forthe oil had been paid by UTN to the accounts of the Ukrainianintermediaries in the summer of 2009 and that these sums hadbeen stolen. I did not know who exactly these sums had been paid to and I thought the investigating authorities could help to clarify this by questioning the managers of these companies. We had no other way to proceed. I took the complaint document withme but I do not recall discussing its contents in detail. Mr Korolkov agreed to it and signed it in my presence.”

“39. In December 2011 N.U. Maganov visited me at my offices which was unusual. I do remember that for some reason R.V. Gubaidullin was not in the office at that moment. N.U. Maganovtold me that the money owed for the oil delivered had been paidby UTN to the accounts of Ukrainian intermediaries in thesummer of 2009 and had been subsequently stolen from theiraccounts, and the intermediaries themselves had been driven tobankruptcy. N.U. Maganov also indicated that obviously, the vanishing of the funds from the accounts of the intermediaries was impossible without the involvement of those companies' management. Tatneft therefore had decided to file a complaint to the investigation authorities requesting that they initiate criminal proceedings in connection with embezzlement of funds for oil by directors of Ukrainian intermediaries. N.U. Maganov asked that S-K join Tatneft in filing the criminal complaint since neither Tatneft, nor S-K had received the oil monies. N.U. Maganov had brought the prepared criminal complaint with him and we signed it together. I briefly read the document before I signed it. Once R.V. Gubaidullin was back at the office I informed him of what had happened during my meeting with N.U. Maganov. I did not discuss my signing of the criminal complaint with R.V. Gubaidullin before I signed it and I did not personally study the text of the criminal complaint in detail before signing it. So far as I was concerned I was simply going to provide some assistance to Tatneft in resolving this matter. We had already done what we could to recover the oil monies and S-K was not looking to pursue further civil claims against anyone. 40. At the time that I signed the complaint, I had not seen any ofthe arbitration materials against Ukraine and knew nothing ofwhat Tatneft was saying in that process. If Tatneft did have any suspicions that someone from Taiz's or Technoprogress' management may be behind the embezzlement of the oil funds, nobody shared those suspicions with me. I did not know or think that it was any of the Defendants in this case, and Tatneft did not say that they thought it was. The criminal complaint onlyreferred simply to the managers of the Ukrainian intermediaries.I cannot speak for Tatneft but if I had had any reason to thinkthat any of the Defendants were responsible I would have askedN.U. Maganov to name them in the criminal complaint.”

"I am aware that we alleged that Mr Ovcharenko, Mr Kolomoisky and Privat Group may have been involved in a number of unlawful events…" v) The evidence of Mr Maganov is that Mr Korolkov already knew that Privat Group was involved with the bankruptcy of the intermediaries. vi) Mr Korolkov's account of the meeting suggests that he had no knowledge of the involvement of the defendants but he makes no reference to the involvement of Optima or its links with Privat which Mr Maganov suggested he would have known. Further in my view his account of the meeting is unreliable as he makes no reference to the November letter from which he would have learnt of the payments to the intermediaries which he says in his witness statement he was told by Mr Maganov at the meeting and of course his evidence was untested at trial. vii) Although Mr Maganov's evidence is that he said to Mr Korolkov that the "money had gone somewhere", Mr Maganov, as discussed above, had identified the link to Korsan's purchase of the UTN stake as "one of the strands of the Scheme" as early as January 2010 and in the Memorial on the Merits in June 2011 (paragraph 517) Tatneft described the payments by and to companies "all controlled by the Privat Group" as having moved from "their right pocket to their left"

“We went to the international arbitration against the government of Ukraine asking for our stolen investment to be returned to us by way of assets, shares and turnover capital that existed at the refinery.”

“I am aware that we alleged that Mr Ovcharenko, Mr Kolomoisky and Privat Group may have been involved in a number of unlawful events…”

“…Lawyers reported to me, they told me about the arbitration proceedings, they told me in general terms about documents that they were drawing up, and my knowledge derived from my contacts with the lawyers.”

“798. Case law indicates that pursuant to this principle a defendant in specific cases may be prevented from relying on a limitation defence (i.e., expiry of a limitation period) where the expiry was caused by its own abuse of rights preventing a claimant from seeking judicial protection. 799. The legal commentaries elaborate on the matter of interplay between abuse of rights and the statute of limitations as follows: “If individuals or legal entities abuse their civil rights, a court may, by virtue of Article 10(2) of the RCC, refuse to grant protection of their respective rights. This provision is fully applicable to the right of defence (regardless of its legal characterisation), in particular, to such method of defence as invoking the expiration of the limitation period by the defendant.” 800. Case law shows that to rebut a limitation defence by relyingon Article 10 the claimant must demonstrate that it wasprecluded from issuing a claim in time as a direct result of thedefendant’s bad faith actions. In such situation, the commencement of limitation would be deemed to begin from the moment those circumstances ceased to exist. 801. Otherwise, there are no grounds to reject an argument on the expiration of a limitation period. Further, not every actioncarried out in bad faith would preclude a defendant frominvoking the expiration of a limitation period, but only those thatessentially and directly prevented a claimant from filing a claim. In other cases, where the alleged abuse of rights did not prevent the claimant from filing the claim in time, a court would apply the limitation period in order to maintain the stability of civil relations.”

“Both Experts, with qualifications made below, are in agreement that: 64.1 In certain instances, a defendant may be precluded from relying on a limitation defence (i.e., expiry of a limitation period) based on the principle of prohibition of abuse of rights. 65. The Experts have the following qualifications to the above conclusions and have different opinions on the following issues: (i) Conditions which must be satisfied for the application of the rule in paragraph 64.1 above 65.1 Mr Kulkov is of the view that in order to rebut a limitation defence by relying on Article 10 of the Civil Code the claimant must demonstrate that it was precluded from issuing a claim in time as a direct result of the defendant's bad faith actions. 65.2 Professor Asoskov is of the view that there is no test of “direct result” which is proposed by Mr Kulkov. The court will refuse to accept the limitation defense in any situation where the defendant acted contrary to the principle of inadmissibility of abuse of right (Article 10 of the Civil Code), including by way of concealing available information or documents. If the courtfinds that the Defendants acted in bad faith and influenced theability of the Claimant to file its claim on time, the Defendantswould be precluded from relying on the limitation defense.”

“793. The abuse of rights exception is therefore limited mainly to the situation when the claimant was aware of the breach of his rights but was nonetheless prevented by abusive conduct of the defendant from bringing any claim to enforce those rights. Although it is, in principle, possible that concealment ofinformation could amount to such an abuse of rights, it would beunusual that such concealment would prevent the claimant frombringing a claim in circumstances in which the claimant hadknowledge of the violation of its rights. There are three reasons for this. 794. First, the abuse of rights exception cannot be relied onwhere a claimant says it could not resort to judicial protectionsooner because it had insufficient evidence to prove its claim. A lack of evidence would not prevent the issuing of a claim, and where the claimant lacks necessary evidence, it may be obtained with the assistance of the court (see paras 690-702 of this Report). 795. Secondly, the rules on abuse of rights do not impose a selfreporting obligation on the defendant. In other words, thedefendant’s failure to disclose the alleged tort committed by himdoes not prevent the defendant relying on limitation. Otherwise,the position would be that limitation would never begin to run ina claim which was disputed, because the defendant’s failure toadmit the claim would amount to concealment. Rather, there could only be a relevant abuse of rights where the defendant concealed some specific fact necessary to the commencement of a claim which it had an obligation to disclose. 796. Thirdly, it follows from the principle that the allegedly abusive conduct must actually have precluded the bringing of a claim that only those representations that were relied upon by theclaimant could potentially affect limitation. Representations that were not believed and relied upon are irrelevant, because they could not preclude the claimant from bringing his claim. 797. Therefore, in this case a statute of limitation defence could not be denied to the Defendants merely because the Claimant might rely on abuse of rights. It may only be denied if it is provedthat the Defendants by their actions directly caused the Claimantto be unable to submit its claims earlier. The fact that certaindetails in relation to the alleged Oil Payment Siphoning Schemeare said not to have been easily ascertainable would not be sucha ground.”

“It is plain, and Mr Kulkov accepted, that, if this was the legal position pre-September 2013, a defendant could be guilty of an abuse of right if he relied on a limitation defence despite having taken steps to conceal his participation in the wrongdoing.”

“Q. …I think you would accept −− well, you are accepting there that concealment of the defendant of his participation can be a relevant factor in assessing whether it’s an abuse of right to rely on a limitation defence. A. Yes, but just please pay attention to why I consider this exception as a very narrow one. So I provide three reasons in the paragraph 794 and further on. So the first reason is that:” ... the abuse of rights exception cannot be relied on where a claimant says it could not resort to judicial protection sooner because it had insufficient evidence to prove its claim.”

“54. Sixthly, there are policy issues. Both parties advanced arguments based on policy, and I am unimpressed with those arguments in this case. The imposition of prescription and limitation periods inevitably involve balancing competing public and individual interests. In particular, it involves balancing the public interest in valid claims being litigated and legal wrongs being righted with the public interest in claims not lingering over the heads of potential defenders and claims not being difficult to dispose of justly due to their antiquity. Similarly, it is an area which throws up another, familiar, tension: on the one hand, it is desirable to have general and clear rules about limitation, even if they occasionally appear to produce a harsh result; on the other hand, it is sometimes appropriate to have specific exceptions to avoid too many unfairnesses. I see no particular policy reasons for adopting either interpretation in the present case, as each of them seems to me to result in a defensible and appropriate outcome. 55. Seventhly, and connected with the sixth point, there is the alleged unfairness on a potential pursuer if time runs against him from the date he knows of the injury, even though he may not know of the identity of the person who caused the injury or what the cause of the injury was. In my view, the legislature could perfectly reasonably have assumed that in almost every case, five years from the date of discovery of loss, injury or damage would represent plenty of time for the injured party to discover all he needs to know to bring proceedings. The fact that there may be a very rare case where five years may not be enough is simply an example of the inevitable consequence of the compromise which limitation law involves. After all, even under the interpretation favoured by Lord Hodge there could be potential unfairnesses in individual and unusual cases, sometimes to pursuers and sometimes to defenders.”

“Private international law is founded on principles of comity and mutual respect and on the recognition that in many areas of law different approaches may be reasonably taken. That is obviously true in the field of limitation law, which involves striking a balance between allowing claimants to assert their legal rights and protecting defendants against stale claims. Different legal systems may legitimately strike this balance in different ways. An English court should for this reason be very slow to substitute its own view for the solution adopted by the foreign legislature.”

“General Bases of Liability for the Causing of Harm 1. Harm caused to the person or property of a citizen and also harm caused to the property of a legal person shall be subject to compensation in full by the person who has caused the harm... 2. The person who has caused harm shall be freed from compensation for the harm if he proves that the harm was caused not by his fault. A statute may provide for compensation for the harm even in the absence of fault of the person who caused the harm. 3. Harm caused by lawful actions shall be subject to compensation in the cases provided by a statute. Compensation for harm may be refused if the harm was caused at the request, or with the consent, of the victim, and the actions of the person who caused the harm do not violate the moral principles of society.”

“Compensation for Losses 1. A person whose right has been violated may demand full compensation for the losses caused to him unless a statute or a contract provides for compensation for losses in a lesser amount. 2. Losses means the expenses that the person whose right was violated made or must make to reinstate the right that was violated, the loss of or injury to his property (actual damage), and also income not received that this person would have received under the usual conditions of civil commerce if his right had not been violated (forgone benefit). If the person who has violated a right has received income thereby, the person whose right has been violated has the right to demand –along with other losses –compensation for forgone benefit in a measure not less than such income.”

“416 Article 1064 itself refers to the causation of harm to an individual (i.e., personal injury) or to the property of an individual or a legal person. Property for these purposes can include contractual rights. The critical dispute between theparties prior to the trial was whether Article 1064, read togetherwith Article 15, also allows a claimant to claim financial oreconomic losses or whether, in every case, the claimant mustidentify a specific item of existing harmed property. As set out in detail below, it is now very clear indeed, in particular from the important concessions made by Mr Kulkov in his oral evidence, that Tatneft is right to say that Article 1064 includes claims foreconomic loss or “economic benefits foregone” as the Court ofAppeal put it. Tatneft has therefore proved at trial the Russian law case which underpinned the conclusion of the Court of Appeal that Tatneft had a “good arguable case” under Article 1064.”

“260.1 …on Professor Asoskov’s evidence, Tatneft has a good claim under Article 1064 if the Scheme caused S-K financial loss (which it did). That is so even if the true analysis is that S-K’sonly contractual right as at June 2009 was a right to be paiddirectly by UTN. Whether that contractual right was formally “harmed” by the Scheme does not matter if it is established thatthe Scheme in fact caused financial loss to S-K.”

“260.2. Putting it another way, Tatneft has, on the basis of Professor Asoskov’s evidence, a good claim under Article 1064if (i) S-K’s contractual right to be paid by UTN was not itselfharmed by the Scheme but (ii) the Scheme nonetheless causedfinancial loss to S-K by causing it not to receive economicbenefits that it had a legitimate expectation of receiving in theordinary course of business but for the Defendants’ unlawfulactions. Once again therefore, what matters is the causation analysis based on the facts as they actually were in mid-2009 (including the Ukrainian Judgment).”

“1.2.1. Is it necessary for specific harmed tangible or intangibleproperty to be identified? If so, what constitutes “property ”? 15. Both Experts, with qualifications made below, are in agreement that: 15.1 The elements of a claim under Article 1064 of the Civil Code are harm, unlawfulness, causation and fault 15.2 Russian law is based on the principle of “general tort” (“general delict”). 15.3 The notion of “property” is reflected in Article 128 of the Civil Code, which contains the following list: “The following are objects of civil-law rights: things, including money, commercial paper and securities; other property, including property rights; work and services; protected results of intellectual activity and means of individualization equated to them (intellectual property); non-material values”

“Professor Asoskov is of the view that, even where it is notpossible to identify assets or property rights (includingcontractual rights) on which harm has been inflicted, the Russiancase law and doctrine recognise that a tort claim is available,where the claimant's legitimate expectations not to incurfinancial losses as a result of another person's unlawful acts, havebeen breached. In this situation, harm is understood as any negative change in the value of the claimant's existing property or the property which the claimant expects to receive. This approach is a logical consequence of the principle of “general tort” (“general delict”)”

“…Russian judges prefer to write in simpler terms, so they say there had been a financial loss…”

“In cases of abuse of other rights that do not arise out of an existing relationship in regard to obligations, what the partyacting in bad faith violates is not so much a specific right butrather a lawful interest of the affected party. It is a matter of tort and recovery of pure economic loss. Pure economic losses shall be recovered from a person whose wrongful (including bad-faith) conduct did not cause any damage to the health, personal immunity, honor and dignity, business reputation, property or other absolute rights of the affected party but consisted in directly causing purely economiclosses (both costs and lost profit).Financial losses to berecovered were not caused by the infringement of the claimant’sabsolute rights but were sustained by the claimant directly as aresult of wrongdoing…” “Fourth, when dealing with tortious liability one must bear in mind that a classic delict (tort) consists of infliction of harm on the affected party’s personal and property rights, whereas the harm itself means violation of such right (e.g., an absolute right of ownership, or personal non-property right to physical integrity). However, recent years have witnessed a briskdevelopment of the pure economic loss doctrine whereby a tortclaim seeks compensation of losses incurred by a person as aresult of the wrongful (including, expressly dishonest) conductof another person, who however in the strict sense of this wordhas not violated any specific personal or property right of theaffected party. Such situation arises, for example, in case of a deceit during negotiations, or employment of other bad-faith methods of negotiation, and in a number of other situations. In these situations, compensation of losses does not seek to protect any specific violated right, but rather a lawfully protected interest. The basis for compensation of losses here lies in thedirect engineering of financial losses borne by one personthrough unlawful acts of the other person, rather than thesuffering of losses as a consequence of direct interference withany of the latter’s absolute or relative rights…”

“Harm can include economic benefits foregone”

“proved at trial the Russian law case which underpinned the conclusion of the Court of Appeal that Tatneft had a “good arguable case” under Article 1064.”

“23 …The alleged harm suffered by S-K is the fact that it never got paid as a result of the defendants’ allegedly unlawful conduct. “Harm” can include economic benefits foregone; Tatneft asserts that S-K is entitled to be paid for the oil which it has sold; the pleading, in paragraphs 85-89, is saying that the benefit of that debt has been foregone and S-K has suffered harm as a result… 24 The judge was correct to say that Tatneft had in paragraph 48 pleaded the 2008 Assignment Agreement as having terminated the obligations up the contractual chain but it had also pleaded the effect of the Ukrainian Judgment that the assignments were unlawful and invalid by Ukrainian law which would have left the contractual chain intact. All of this is contained in the narrative part of the pleading (paragraphs 13-82) before the assertion of liability under Article 1064 of the RCC….It then pleads causation in paragraph 89:- “But for the acts and omissions of the Defendants pleaded above comprising the unlawful acts, UTN would have paid Taiz and Tekhnoprogress what it owed them for the Tatneft oil sold and delivered in accordance with the agreements pleaded above, who in turn would have paid Avto and Avto would have paid S-K. Asa matter of Russian law, it is an actionable wrong under Article1064 of the RCC fora person to cause another person to breachhis contractual obligations to, or not to pay his debt to, a thirdperson, and the loss sustained by that third person is recoverableas damages by him pursuant to Article 15 of the RCC.”

“25. In these circumstances it is clear enough that Tatneft’s claimrelates to sums that ought to have been (but were not) paid forthe oil to S-K. Tatneft has not nailed its claim solely to the mast of the 2008 Assignment Agreement but is saying that the money for the oil should have reached S-K by whatever route was appropriate. If the defendants want to rely on the 2008 Assignment Agreement as a matter of defence and to say that UTN’s debt was discharged by payment to Tekhnoprogress and Taiz, that defence can be pleaded and can be tried but the claim (that payment for the oil was stolen by the defendants) cannot now be said to be bound to fail. Indeed one wonders if the defendants are likely to plead that Tatneft’s claim is destroyed by the assignment when the position may well be (1) that it was the defendants themselves who procured the Ukrainian courts to hold that the assignment was invalid and (2) that the consequence of that plea would be that the contractual chain remained inviolate.”

“…the short point in relation to all of the abuse allegations is that Tatneft has not pleaded that the 2008 Assignment Agreement was invalid and cannot therefore be guilty of making that allegation abusively.”

“What can be done in other situations where abuse of oneperson’s rights does not produce indirect consequences likeviolation of another person’s relative or absolute right but stillcauses that person to suffer losses? It appears that in such situations recovery of losses is also possible provided a case can be made for a tort claim for compensation of pure economic losses. A reference to a violated right as a condition for recoveryof losses is made in Article 15 and in Article 1064(1) of theRussian Civil Code, but it does not prevent courts from graduallydeveloping a practice of recovery of purely economic losses,which are not a consequence of an initial interference withcertain absolute or relative rights of the claimant, throughdelictual (tort) claims. In such situations, losses are recovered when a person’s unlawful acts cause damage to another person’s legitimate interests, resulting in financial losses incurred by the latter. The provision of the paragraph in question shall have an extensive interpretation: damages shall be recovered also in those cases when an obvious abuse of right has been aimed against a particular affected party causing a violation of their legitimate interest of not incurring financial losses as a result of such abuse. Effectively, it would be reasonable to imply aviolation of a legitimate interest in inviolability of one’sproperty.”

“commentaries such as the Karapetov Commentary, although not binding as a source of law, are accorded “great weight”, especially when the law is silent on a particular point.”