In a surprising decision to some, the High Court has ruled that a Russian businessman living and working in Russia is domiciled in England and therefore subject to the jurisdiction of the English courts.
In the case of Bestolov v Povarenkin, Mr Bestolov brought proceedings against Mr Povarenkin in England seeking repayment of a debt which arose under a joint venture between them in relation to various mining projects in Russia. Mr Povarenkin argued that the English courts did not have jurisdiction and that the dispute should be determined in Russia. This was on the basis that both parties were Russian citizens who lived in Russia; their business interests were in Russia with neither having any business interests in England; the contract (the subject of the dispute) was concluded in Russia with performance to be affected in Russia; the witnesses were in Russia and all documents would be in Russian. Further, Mr Povarenkin submitted that the parties had not agreed that the English court would have jurisdiction to determine the dispute or that English law would be applied to the contract.
That argument might seem persuasive but the court found that Mr Povarenkin was in fact domiciled in England for the following reasons:-
- His wife and children had, since 2013, resided in London for the majority of the year.
- His children were educated in England and spent the whole of the school year in England.
- The London property was effectively the family home.
- Mr Povarenkin was in England for substantial periods of time to be with his wife and children.
- Mrs Povarenkin had spent a substantial amount of money to satisfy UK visa requirements resulting in her being granted temporary residence with the potential to apply for permanent residence.
Taking all of the above into account it decided that, because of his family connections, Mr Povarenkin was resident in England and as such the English court had jurisdiction to deal with the claim.
It is questionable whether the Russian courts will enforce any judgment that Mr Bestolov may obtain against Mr Povarenkin. Despite that, even if there are difficulties in enforcing a judgment overseas, being able to sue in England is attractive to many because of the powers that the English courts have to freeze assets.
This decision demonstrates that individuals cannot avoid being treated as domiciled in England, and therefore subject to its jurisdiction, by limiting the amount of assets which they own and the time that they spend here. The courts will look at their connection to England when determining residency and jurisdiction. If a party wishes to avoid this then it should ensure that an appropriate jurisdiction clause is included in the contract.
If you are involved in any dispute or require contractual documentation to ensure that the appropriate jurisdiction deals with any dispute arising from a commercial arrangement then Blacks Solicitors can assist. Please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com”