ENGARDE has reported that the British Virgin Islands Commercial Court delivered a judgment on behalf of its client, bringing a nearly five-year-old dispute between three Kiev-resident shareholders of Oledo Petroleum, a BVI company, to a close.
The judgment was delivered by Justice Edward Bannister QC of the BVI Commercial Court on October 1, 2014. The unfair prejudice case was tried before Judge Bannister for five weeks in Road Town, Tortola, in the British Virgin Islands.
According to an ENGARDE press release: “In early 2010, Oledo Petroleum sold its controlling stake in Vik Oil, a Ukrainian petrochemicals distribution business, to TNK-BP, the Anglo-Russian oil venture. On January 18, 2010, USD 71.6 million arrived into Oledo Petroleum’s bank account in Riga, Latvia from the sale. One day before the funds arrived, Andrey Adamovsky, the sole director and a 50% shareholder of Oledo Petroleum, secretly terminated minority shareholder Andriy Malitskiy’s authority to act as a co-signatory over the company’s bank account in Riga. Over the next 48 hours, the funds from the sale of Vik Oil were transferred from the company’s account to the account of Stockman Interhold SA, a BVI company owned by Mr Adamovsky.”
In 2012, Malitskiy and Igor Filipenko, 50% shareholders of Oledo Petroleum, sued Adamovsky and Stockman in the BVI in response. ENGARDE advised the Claimants, and instructed Martin Kenney & Co (BVI), led by Justin Fenwick QC (London).
The Court dismissed all of the defences and counterclaims of the defendants, with the exception of an admitted debt owed to Mr Adamovsky of USD 1,056,558. In doing so, the Court concluded that Adamovsky “…had no right to expropriate the property of others for his own advantage,” and noted that Adamovsky was unable to justify his “unilateral and unannounced appropriation of Oledo Petroleum’s only asset to, in reality, himself.” The Court also found that “Mr Adamovsky simply used the money taken from Oledo [Petroleum] as working capital of Stockman to fund its business.” In the end, the court said that “Mr Adamovsky’s motive in transferring the Oledo [Petroleum] money to Stockman was selfish.”
The Court held that: “One is left, therefore, with the unfair and deliberate destruction of the entirety of the value of the claimants’ shares in Oledo [Petroleum] in order that Mr Adamovsky could use the money for his own commercial purposes.”
The Court found that Mr Adamovsky was liable to pay to his colleague shareholders, Messrs Filipenko and Malitskiy, the sum of USD 35,802,000 (less a USD 1,056,558 set-off right). Stockman was made jointly and severally liable with Adamovsky (but without the benefit of the set-off) to “…compensate the Claimants for the loss of value of their shares as a result of” Stockman’s receipt of USD 35.8 million being beneficially owned by the Claimants – on the basis that “…Stockman joined with Mr Adamovsky in unfairly prejudicing the Claimants as members of Oledo [Petroleum].”
The Court also awarded approximately USD 1.3 million of prejudgment interest against the Defendants for the unwarranted deprivation of the Claimants’ funds for 4.7 years. The Defendants were also ordered to make a summary payment of USD 750,000 in costs to the Claimants by October 15, 2014. Approximately USD 1,000,000 of additional costs sought by the Claimants will be assessed by the Court if the parties fail to agree on a figure.
Ten fact witnesses and four experts testified during the trial, which lasted from June 16, to July 16, 2014. Many of the witnesses were cross-examined from Kiev, Vienna, or Moscow by videoconference facilities at the Court.
The case has now moved to its enforcement of judgment phase.
