€2bn case ‘in flux’ as lawyers seek to drop Russian clients

Vladamir Putin

30 March 2022

A lawsuit involving claims of corporate raiding by an oligarch with close links to Russian president Vladimir Putin is in “a state of flux” after two Irish law firms indicated they wished to withdraw from representing Russian defendants.

The long-running case involves claims billionaire Dmitri Mazepin led a scheme to defraud four companies of their €2bn interest in Togliattiazot (ToAZ), a Russian ammonia producer in which he is a minority shareholder.

The action is being heard in Ireland as one of the defendants, Eurotoaz Ltd, is registered in Dublin.

Mr Mazepin was added to an EU sanctions list last week over the invasion of Ukraine.

The list described the businessman as “a member of the closest circle” of the Russian president. His son, Formula One driver Nikita Mazepin, has been sacked by the Haas racing team.

The Commercial Court heard that both William Fry, which is representing Mr Mazepin, and Arthur Cox, which is acting for other defendants, wished to withdraw. Mr Justice Denis McDonald suspended directions in the case until next month due to what he described as the “strange”, “unprecedented” and “quite extraordinary circumstances”.

Declan McGrath SC, for Mr Mazepin, said his instructing solicitors had reviewed all its Russian clients. “They are winding down all existing mandates in accordance with their existing obligations and won’t accept any new mandates from entities connected with the current Russian regime,” he said.

“These are very unusual circumstances. I think unprecedented in this jurisdiction.”

Mr McGrath said he was unable to say if court ordered deadlines in the case could be met as there “may very well be a change in representation on the part of the defendants”.

“All I can say to the court at the moment is that matters are in a state of flux,” he said.

The lawsuit, which has been ongoing since 2016, is being taken by four firms, Trafalgar Developments, Instantania Holdings, Kamara and Bairiki Inc, all of which are registered in the Caribbean.

Mr Mazepin is one of 13 defendants. As well as representing the oligarch, William Fry also acts for his firm United Chemical Company Uralchem, Uralchem Holding Plc and a Russian lawyer.

Paul Gardiner SC, representing Eurotoaz Ltd and one of its directors, said his instructing solicitors Arthur Cox had informed his clients they would be withdrawing from representing them. This has been accepted by the clients, he said.

In the action, the plaintiffs allege they are the victims of a conspiracy involving so-called “raider attacks”. These involve a raider buying a minority stake and then using illegal and dishonest means, including improper criminal and civil lawsuits, to devalue and wrest control of the company.

The allegations are denied.

The Law Society has opened an online hub to advise solicitors on how to respond to EU the sanctions against Russia and Belarus.

It said solicitors should make compliance with sanctions “a top priority”. The society told solicitors it is a criminal offence to not comply, punishable by a fine of up to €500,000, and failure to do so could also result in severe reputational damage.

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