Gibraltar Court of Appeal dismisses Otkritie Bank’s appeal in alleged money-laundering case

Brick Court Chambers has recently reported on its website that the Gibraltar Court of Appeal (Sir Maurice Kay P, Sir Mark Potter JA and Sir Colin Rimer JA) has dismissed an appeal in a case alleged to relate to a large-scale $170m fraud carried out by Georgy Urumov and Yulia Balk against Otkritie, the well known Russian financial services provider. The fraud was the subject of an English High Court judgment – see [2014] EWHC 191 (Comm).

In these proceedings, Otkritie contended that certain of the proceeds of the fraud had been laundered by the Defendant (‘Ivory Key’) in order to shield them from execution. They relied upon the alleged facts, in particular, that Ivory Key – or rather the settlor of the Ivory Key Trust, Alexander Kotton –  had (whilst proceedings were on foot) destroyed his server which covered the relevant period of the dispute and that Ivory Key had failed to called certain witnesses whom it ought to have called on the central issues in the case.

Jack J, sitting in the Supreme Court of Gibraltar, had earlier found after a trial that the Claimants had failed to prove that Ivory Key had laundered money for Mr Urumov and Ms Balk. On the contrary, the Judge found that Ivory Key had provided the Court with a paper-trail demonstrating that the funds in question were derived from a legitimate Russian construction project, and were therefore ‘clean’.

The Gibraltar Court of Appeal dismissed Otkritie’s appeal.

The case appears to be of some legal significance in that Sir Colin Rimer, giving the judgment of the Court, analysed the current state of English case law in respect of (i) when the court will draw adverse inferences as a result of the destruction of documents or the failure to call certain witnesses and (ii) when the court will overturn the trial judge’s findings of fact, when the credibility of a witness is in issue.

As a result of the dismissal of Otkritie’s claim there is a pending claim by Ivory Key against it under the cross-undertaking in damages which Otkritie gave when it obtained its original freezing order against Ivory Key.


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