Judgments - Berezovsky v. Michaels and Others Glouchkov v. Michaels and Others (Consolidated Appeals)

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    Hirst L.J. [1999] E.M.L.R. 278, 288 described the fresh evidence as falling into two categories. The first category consisted of affidavits by three persons. First, a solicitor said that after the publication of the article, members of Deloitte and Touche in Manchester and executives of Nomura Bank and Lehmann Brothers in London had "harboured reservations" about dealing with a company having links with Mr. Berezovsky. Secondly, the managing director of a Swiss company with whom Mr. Berezovsky was associated said that in his dealings with financial institutions in London, he found that many (unnamed) individuals expressed concern about Mr. Berezovsky's connections with the company. Thirdly, a Russian businessman on the board of a Russian oil company associated with Mr. Berezovsky said that it was apparent from his dealings in London that Mr. Berezovsky's name was well known there and that he had had "negative feedback" from various unnamed individuals.

    The second category of fresh evidence was a number of press cuttings from English newspapers published after the article appeared which referred to Mr. Berzovsky. Hirst L.J. said, at p. 290, that this evidence showed that he was a "well known figure here."

    Popplewell J. had recorded that Mr. Berezovsky was a frequent visitor to this country on business. It was obvious that the people here with whom he did business must have known him. He and his agent Lord Reading had deposed in some detail to the extent of his business activities. He was a substantial figure in Aeroflot and vice-chairman of a television network which had extensive business contacts in England. I do not think that the judge would have regarded the fresh evidence as adding anything of substance to what he already knew about Mr. Berezovsky's business links with England. Nor would he have been surprised that his activities in Russia had given rise to newspaper publicity in this country. On any view, he was a person close to the centre of power in Russia. In any case, for the reasons I shall give later, I do not think that the judge's decision turned upon whether Mr. Berezovsky could be said to have a reputation in this country or not. The judge said that the plaintiffs' connections with England were tenuous, but that is a different matter. He meant that they were Russians who came here only on business. Their reputation in this country was based entirely on their activities in Russia. One might equally say that President Yeltsin's connections with this country were tenuous or non-existent. But no one would deny that he was, to quote Hirst L.J., "a well-known figure" in this country. Like Mr. Yeltsin, Mr. Berezovsky has a truly international reputation. He has lectured at Princeton, dined with George Soros and attended Rupert Murdoch's wedding. He is in the newspapers and no doubt has media contacts all over the world. His reputation in England is merely an inseparable segment of his reputation worldwide.

    So when Popplewell J. said that the plaintiffs' connections with this country were tenuous, I do not think that he should be construed as having failed to notice what was obvious upon the evidence before him, namely that the plaintiffs must have enjoyed a reputation among their circle of business contacts in England, to say nothing of people who read the newspapers. The judge must have meant what he said; that their connections, their ties, with this country, were tenuous. If I may quote what I said in Piglowski v. Piglowska [1999] 1 W.L.R. 1360, 1372:

    "The exigencies of daily court room life are such that reasons for judgment will always be capable of having been better expressed. This is particularly true of an unreserved judgment such as the judge gave in this case…These reasons should be read on the assumption that, unless he has demonstrated the contrary, the judge knew how he should perform his functions and which matters he should take into account...An appellate court should resist the temptation to subvert the principle that they should not substitute their own discretion for that of the judge by a narrow textual analysis which enables them to claim that he misdirected himself."

    If, as I think, the judge did not misdirect himself on the law and the fresh evidence would have made no difference, then the appellate court cannot interfere with his discretion unless it is so perverse as to lead to the conclusion that although he recited the law correctly, he could not have adhered to the principles he was purporting to apply. But without an absolute rule, as in Shevill v. Presse Alliance S.A. (Case C-68/93) [1995] 2 A.C. 18, that the courts of this country are obliged to take jurisdiction in every case in which there is publication here of a libel on a plaintiff who is known in this country, I do not see why the judge was not entitled to decide that England was not clearly the most appropriate forum for this action between Russian plaintiffs and an American defendant about activities in Russia.

    The respondents say that what makes England the most appropriate forum is that the plaintiffs are claiming damages only for the injury to their English reputations. What better tribunal could there be than an English judge or jury to assess the proper compensation? And they rely on the justification which the European Court of Justice gave in Shevill v. Presse Alliance S.A. (Case C-68/93) [1995] 2 A.C. 18, 62 for the rule of jurisdiction which it laid down:

    "the courts of each contracting state . . . in which the victim claims to have suffered injury to his reputation are territorially the best placed to assess the libel committed in that state and to determine the extent of the corresponding damages."

    My Lords, there may be cases in which this is a relevant consideration and perhaps even an important one, although the decision in Shevill has attracted some adverse comment: see Mr. Peter Carter Q.C. in [1992] BYBIL 519. But the notion that Mr. Berezovsky, a man of enormous wealth, wants to sue in England in order to secure the most precise determination of the damages appropriate to compensate him for being lowered in the esteem of persons in this country who have heard of him is something which would be taken seriously only by a lawyer. An English award of damages would probably not even be enforceable against the defendants in the United States: see The Interaction Between American and Foreign Libel Law by Kyu Ho Youm in (2000) 49 I.C.L.Q. 131. The common sense of the matter is that he wants the verdict of an English court that he has been acquitted of the allegations in the article, for use wherever in the world his business may take him. He does not want to sue in the United States because he considers that New York Times Co. v. Sullivan 376 U.S. 254, (1964) makes it too likely that he will lose. He does not want to sue in Russia for the unusual reason that other people might think it was too likely that he would win. He says that success in the Russian courts would not be adequate to vindicate his reputation because it might be attributed to his corrupt influence over the Russian judiciary.

    My Lords, this in itself is enough to show that Mr. Berezovsky is not particularly concerned with damages. The defendants were willing to undertake to abide by any order of the Russian court as to damages and to accept the jurisdiction of that court to award damages for injury to the plaintiffs' reputation in England as well as anywhere else. But the plaintiffs required and obtained from Popplewell J. a further undertaking by the defendants that they would not "denigrate the integrity competence or justice of the Russian court." The real issue in this case is not about the plaintiffs' reputation in one country rather than another but the general question of whether the defendant's article was actionable defamation. It is this issue which the plaintiffs want tried in England.

    That is why I said earlier that I did not think that the fresh evidence directed to showing that the article had had the effect of lowering the plaintiffs in the esteem of various bankers and accountants in London and Manchester would have affected the judge's decision. Whatever the reputation of the plaintiffs in this country, it was a reputation based on their activities in Russia. Once it is appreciated that the real object of this litigation is to show that they were defamed in respect of those activities rather than to calculate the compensation for damage to their reputations in England, the existence of those reputations is no longer a factor of overwhelming importance.

    The plaintiffs are forum shoppers in the most literal sense. They have weighed up the advantages to them of the various jurisdictions that might be available and decided that England is the best place in which to vindicate their international reputations. They want English law, English judicial integrity and the international publicity which would attend success in an English libel action.

    There was a good deal of interesting discussion at the Bar about whether an internationally disseminated libel constituted a number of separate torts in each country of publication or whether it should, at least for some purposes, be viewed as a "global tort." In this country the point is settled in the former sense by the decision in Duke of Brunswick v. Harmer (1849) 14 Q.B. 185. Dean Prosser has described the rule, which may lead to a multiplicity of suits, as possibly appropriate to "small communities and limited circulations" but "potentially disastrous today": Interstate Publication (1953) 51 Michigan L.Rev. 959, 961. In the context of the present case, this discussion is entirely academic. There is no question here of a multiplicity of suits. It is the plaintiffs who are for practical purposes treating the publication as a "global tort" by calling upon the English court and only the English court to vindicate their reputations.

    My Lords, I would not deny that in some respects an English court would be admirably suitable for this purpose. But that does not mean that we should always put ourselves forward as the most appropriate forum in which any foreign publisher who has distributed copies in this country, or whose publications have been downloaded here from the internet, can be required to answer the complaint of any public figure with an international reputation, however little the dispute has to do with England. In Airbus Industrie G.I.E. v. Patel [1999] 1 A.C. 119 your Lordships' House declined the role of "international policeman" in adjudicating upon jurisdictional disputes between foreign countries. Likewise in this case, the judge was in my view entitled to decide that the English court should not be an international libel tribunal for a dispute between foreigners which had no connection with this country. Speaking for myself, I would have come to the same conclusion. Another judge may have taken a different view but in my opinion it is impossible to say that Popplewell J.'s decision was erroneous in law.

    Finally I must mention that Mr. Robertson Q.C., who appeared for the defendants, invited your Lordships to vary the order of Popplewell J. to delete the undertaking not to denigrate the Russian court. He said that this was too great a restraint on freedom of expression. In my opinion this too was a matter for the judge's discretion. Speaking for myself, I do not think that I would have imposed such an undertaking. But I cannot say that the judge was not entitled to do so. There may never be a trial in Russia, in which case the question will be hypothetical. Or there may be a change of circumstances which entitles the defendants to be discharged from their undertaking. But I would not be inclined now to vary the judge's order.

    I would allow the appeal and restore the order of Popplewell J.


My Lords,

    My noble and learned friend Lord Steyn has identified the principal matters at issue in these appeals. I am in full agreement with the views which he has expressed on issues (1), (2) and (6), and there is nothing which I would wish to add to what he has said about them. Of the three remaining issues, the most important one and the one on which I propose to concentrate is issue (5): were the Court of Appeal entitled to interfere with the exercise by Popplewell J. of his discretion? In considering that matter I shall have to deal with issues (3) and (4), in so far as they are directed to the reasons which the Court of Appeal gave for allowing the appeals and lifting the stay which the judge imposed. But the central and underlying question is that which is raised by issue (5).

    The reason why I regard issue (5) as the central and underlying question is that the decision as to whether or not a stay should be granted is pre-eminently a matter for the exercise of the discretion conferred by R.S.C., Ord. 11, r. 4(2) on the judge of first instance. As in the case of all other matters which are committed to the discretion of the trial judge, it is a decision with which the appellate court should be slow to interfere. If authority is needed for the application of that principle in the present context, it is to be found in the observations in Spiliada Maritime Corporation v. Cansulex Ltd. [1987] A.C. 460, 465 by Lord Templeman. For this reason I believe that an accurate appreciation of the grounds which Popplewell J. gave for his decision to impose a stay is an essential preliminary to a consideration of the question whether the Court of Appeal were entitled to interfere with that decision. The Court of Appeal were not presented in this case with a clean sheet. So the question whether they correctly applied the Spiliada test is not the primary question. Notwithstanding their experience of litigation in this field and the respect which is due to their careful judgment, the fact remains that they were not at liberty to substitute their own views for those of the judge unless it could be demonstrated that he misunderstood the facts or that he failed to exercise his discretion in the right way because of an error in principle.

    At the heart of the dispute in this case there lie two questions. The first is whether the English courts have jurisdiction to try the actions which the plaintiffs have raised in this country against the American publisher. The second is whether the plaintiffs should be allowed to pursue their actions here. These questions must be considered in the light of the following factual background.

    The plaintiffs are Russian citizens who are resident in Russia, not in England. They have no permanent ties of any kind with this country. They are typical of a group of wealthy and powerful Russian businessmen who have made very substantial fortunes as a result of the collapse of communism. Mr. Berezovsky is probably the best known and the best connected member of that group. Their prosperity is due largely to the fact that they have access to financial institutions and major trading companies in Western Europe and in America. They have used these contacts to develop their business interests in Russia. They do business in London with these institutions and companies through the Russian companies with which they are associated. They say that they have reputations in this country as a result of their business activities here. But there is no evidence their reputation as Russian businessmen depends to any material extent on things that they have said or done in London. It is a reputation which they have built up for themselves in Russia. And the defamatory material in the magazine article about which they complain contains allegations about their activities in Russia only, not about anything said or done by them in this country.

    The defendants are the editor and the publishers of the Forbes magazine. They reside and have their registered office in the United States of America. The magazine for which they are responsible is a business magazine. It is well-known and influential both in the United States, where it is widely published, and abroad. We have been told that about 2000 copies are sold here and that about 13 copies are sold in Russia. The magazine is also published world-wide on the internet. It can be assumed that the figures which we have been given understate the hard copies which are in circulation in each country as they are passed from hand to hand or are brought from America in the course of their travels by American and European businessmen.

    The first of the two questions that I have mentioned is not in dispute. Put more precisely, it is whether the English courts have jurisdiction under Ord. 11, r. 1(1)(f) on the ground that the claim is founded on a tort and the damage which is complained of was sustained in this country. It is plain that the tort of libel is committed in England when defamatory material is published here. The plaintiffs say that the effect of the publication was to damage their reputations in the eyes of people with whom they do business in this country. It is also plain that separate causes of action arose in respect of the publication of each copy of the magazine. This principle was established by Duke of Brunswick v. Harmer (1849) 14 Q.B. 185. And it is immaterial for the purpose of establishing jurisdiction in this country that the principal place of its publication was in the United States of America. The principle that each communication is a separate libel, and the application of that principle to issues of jurisdiction within the United Kingdom, has long been recognised. In Longworth v. Hope (1865) 3 M. 1049, in which jurisdiction against the defenders who had no other connection with Scotland was founded solely upon the artificial ground of an arrestment, a woman who was domiciled in England but resident in Scotland sued the proprietors of a London newspaper in the Court of Session for damages for an allegedly libellous article in their newspaper. The newspaper was published in London, but copies were circulated throughout Great Britain including Scotland. As Lord Deas said at p. 1057: "According to our law, the sending of a single copy to any individual in Scotland, even if it were only to the lady herself, would be publication sufficient to found an action for libel, if there were otherwise good grounds of action."

    It is the second question, whether the plaintiffs should be allowed to pursue their actions here, that is the subject of this appeal. To put the matter more precisely in terms of paragraph 4(2) of Ord. 11, the question is whether this is a proper case for service out of the jurisdiction. It is common ground that the principles which must be applied in the determination of that matter are those which were identified by Lord Goff of Chieveley in Spiliada Maritime Corporation v. Cansulex Ltd [1987] A.C. 460. For the reasons which I have already given, I take as my starting point the fact that the issues that had to be resolved in order to answer the second question were primarily for consideration and decision by Popplewell J. as the judge of first instance.

    In the Court of Appeal Hirst L.J. criticised the judge's decision on two grounds. The first was that he found it surprising that he had concluded on the evidence before him that the plaintiffs' connections with England were "tenuous", to which he added that the Court of Appeal had had the advantage of further evidence which to his mind placed the strength of their connections beyond doubt. The second was that, while the judge had given careful consideration to the relevant authorities in his first judgment as to whether it was open to the defendants to apply for a stay, he "erred in principle" in failing to take them into account in his second judgment as to the merits of the application. My initial impression was that it was doubtful whether the Court of Appeal were right on either of these two points and thus whether they ought to have interfered with Popplewell J.'s judgment, as his decision to impose a stay seemed to me to be one which was open to him on the facts upon a correct application of the Spiliada principles. Further consideration of the case has strengthened that impression. I am persuaded that that there is no merit in either of the two points which the Court of Appeal made and that they were wrong to disturb Popplewell J.'s judgment.

The evidence

    The judge had before him evidence in the form of affidavits which described the plaintiffs' connections with this country. Having considered that evidence he concluded that their connection with this country was tenuous. In order to understand this conclusion, which in the Court of Appeal attracted adverse criticism, it is necessary to identify the matters which the judge said he took into account when he was analysing the evidence.

    Of Mr. Berezovsky the judge said that he was a frequent visitor on business to this country, which he had visited on some 31 occasions during the previous three and a half years. He noted that he had kept an apartment in London since 1993 and that he had a wife and children living here, from whom he was divorced. As to the extent of his business activities here, he noted that he was a substantial figure in Aeroflot and had helped to establish a working relationship between that company and a merchant bank based in London. He also noted that he was vice-chairman of a Russian television network which had extensive business contacts in England and that he was involved in a joint venture between an English group and a Russian company in relation to a retail fashion house in St. Petersburg. He quoted a passage from his affidavit in which he said that he also had contacts in England in carrying out his government service and that he had extensive contacts with England in his personal life. As for Mr. Glouchkov, the judge noted that he was currently in a senior position in the management of Aeroflot on whose behalf he had travelled to London to negotiate financing arrangements with various banks. He referred to the fact that he also said that he had maintained a flat in London since 1993 and that he travelled to England and particularly to London frequently.

    For the defendants it was pointed out that the extent of the plaintiffs' business activities in this country was limited to a number of visits relating particularly to Aeroflot, and that their connection with England did not compare with that which other plaintiffs had had such as the fact of being resident here. Their argument was that there really was no reputation which the plaintiffs had which could properly be described as a reputation in this country. Having set out the competing arguments the judge said: "I take the view that the two plaintiffs' connection with this country is tenuous. There is some but it is tenuous."

    What did the judge mean by saying that their connection was tenuous? I think that it is reasonably clear that when he used this expression he had in mind the contrast in outcomes between Kroch v. Rossell [1937] 1 All E.R. 721, where the plaintiff who was domiciled in Germany had come to England only temporarily and recently and had no associations with this country at all, and Schapira v. Ahronson [1999] E.M.L.R. 735, where the proceedings were brought by a resident in London who was also a United Kingdom citizen. He had referred to these two cases in the preliminary judgment which had delivered earlier on the same day. What he was looking for was a sufficiently strong connection to which he could attach significant weight when it came to balancing the competing interests on each side. Clearly there were no permanent connections or ties with this country, such as that provided by residence. Nor were the businesses with which the plaintiffs were connected located in this country. They came here from time to time to advance their business interests in Russia and those of the Russian companies for whom they were acting when they came to do business here. It could be said that their position was really no different from that of the many thousands of businessmen and women from all over Europe and North America who are to be found in the executive lounges in our airports every week of the year as they travel to or from London in the course of their ordinary business activities. They are attracted to London because it is one of the world's great financial and business centres, and they come to this country because many of the people or institutions with whom they wish to make contact are located here. But their connection with this country is ephemeral, and it is not unreasonable to describe it as tenuous.

    What of the further evidence which was admitted by the Court of Appeal? This evidence fell into two categories. There were affidavits from three new witnesses, and there was a further affidavit from Mr. Berezovsky. The three new witnesses were Mr. Langford-Curtis, Mr. Kuppers and Mr. Shvidler. Mr. Langford-Curtis, who was senior partner of a firm of solicitors in London, referred to his experience when advising Mr. Berezovsky about the tax implications of a merger between two Russian oil companies. He mentioned the fact that a firm of accountants in Manchester had had reservations about being involved with a company which had links with Mr. Berezovsky, as had the London branch executives of Nomura Bank and Lehman Brothers. Mr. Kuppers, who was the managing director of a company within a group based in Switzerland with which both Mr. Berezovsky and Mr. Glouchkov were associated, described the role played by the company in identifying sources of funding in the west and negotiating with banks and other financial institutions, many of which are based in or have offices in the United Kingdom. He had had regular dealings with U.K. banks but, as many of the deals involved syndication, he also conducted negotiations here with foreign banks and other financial institutions through their London branch personnel. He referred to problems which he had encountered after the publication of the article in his dealings with those who knew about it. They had expressed concerns about the plaintiffs' connections with his company. Mr. Shvidler was the vice president of one of the largest oil companies in Russia on whose board Mr. Berezovsky had served until October 1996 and with which he tended still to be publicly identified. He also referred to concerns expressed by financial analysts and others connected with banks and financial institutions in London which he said had had a detrimental effect on Mr. Berezovsky's reputation and the reputation of the companies with which he was associated. Mr. Berezovsky referred in his affidavit to a large number of articles published about him after the publication of the defendant's article which tended to bear out his claim that he is a well-known figure in this country.

    It is plain that this additional evidence provided further support for the plaintiffs' claim that they have a reputation among those who work for banks and other financial institutions in this country which was damaged by the publication of the defendants' article. But the feature which strikes me most forcibly about this evidence, so far as the question whether the plaintiffs have connections with this country is concerned, is that it tends to show that the plaintiffs' connections with this country were even more tenuous than that suggested by the evidence which was before the judge. The transactions which are mentioned were said to have been conducted in London with institutions many of which, like companies with which the plaintiffs were associated, have their head offices elsewhere. But neither of the plaintiffs is said to have been involved in any way in any of these transactions. The problems which were encountered were all due to the plaintiffs' links, real or imagined, with the companies on whose behalf the witnesses were attempting to do business. And they were due to the allegations which the article contained about the plaintiffs' activities in Russia, not anything done by them in this country. There is nothing in any of these affidavits to suggest that the problems which were encountered would have been any different if the plaintiffs had never set foot in this country at all.

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