Court blocks IPOC’s legal fight for $1.5b stake
By Scott Neil
A company that claims it was targeted by an alleged James Bond-style corporate espionage mission in Bermuda has lost its appeal to fight through Russian court rooms for a $1.5 billion disputed stake in Russian telecoms company MegaFon.
In a ruling by the Bermuda Court of Appeal IPOC International Growth Fund has been told it can not pursue its claims in Russia relating to a breach of earlier arbitration agreements.
IPOC has been based in Bermuda since 2000 but is currently facing a winding-up order made by Finance Minister Paula Cox that is due to be concluded in a closed court hearing on April 27.
A number of legal actions involving IPOC are ongoing, including one in the US is which the company has claimed its financial details and company secrets were plundered by fake US and UK secret agents sent to Bermuda to secure confidential documents from the offices of audit firm KPMG in Par-La-Ville Road.
IPOC has stated in US court documents that it believes a rival Russian company called Alfa Group was behind the spying mission designed to nullify its claim to a 25 percent stake in the telecoms company MegaFon. That case is ongoing.
However, in a separate but related matter Bermuda’s Court of Appeal has ruled IPOC must not seek court action in Russia against a number of entities it claims are denying it a due right to one-quarter ownership of MegaFon.
Since the various legal skirmishes into the matter began in the summer of 2003 the disputed 25 percent stake in MegaFon has increased in value from $320 million to $1.5bn. IPOC’s claim to the MegaFon stake dates back to 2001 when it made an agreement with CT-Mobile (CTM) a Russian company that owned a 25.1 percent stake in MegaFon. IPOC also entered into two agreements with British Virgin Island-incorporated LV Finance Group which purportedly gave it the right to purchase from it the shares of Bahamas company Transcontinental Mobile Investment, which was said to own the CTM shares.
But IPOC’s attempt to exercise its claimed rights to become the indirect owner of the MegaFon shares through CTM did not happen as LV Finance sold its Transcontinental Mobile Investment shares to companies belonging to the Russian Alfa Group.
The legal cases, which have been held in a number of jurisdictions, started in the summer of 2003 and reached arbitration proceedings in Switzerland and Sweden as IPOC tried to wrestle control of the MegaFon shares it believes are rightfully its own.
Not all the arbitration proceedings had been heard when IPOC last year started legal proceedings in Russia to place the disputed MegaFon shares under the control of a court bailiff and prevent CTM from liquidating or reorganising.
CTM and LV Finance appealed to the Bermuda Supreme Court and an injunction was granted by Puisne Judge Ian Kawaley to order IPOC to desist from the Russian court proceedings — or instigating such proceedings anywhere else in the world — that were in breach of the arbitration agreements.
IPOC challenged that ruling with an appeal, the main question being whether a Bermudian court was entitled to issue an injunction to restrain a breach of arbitration agreement and the second question challenging the width of the injunction.
Court of Appeal President Justice Edward Zacca, Justice Sir Murray Stuart-Smith and Justice Gerald Nazareth dismissed the main question of the appeal noting: “The court can grant an injunction provided it has jurisdiction in personam over the defendant. The clearest possible case of in personam jurisdiction is where the defendant is domiciled within the jurisdiction of the court. There is no dispute that this is so in this case and it is not a tenuous link.”
However, on the question of the wider order that said IPOC should not start, prosecute or assist in any claim, action or proceedings in Russian courts or elsewhere that constitutes a breach of the arbitration agreement, the appeal judges agreed that the wider order should be discharged.
IPOC has stated in a letter to the court that since the appeal court order of last October it has not issued a civil claim against LV Finance or CTM in Russia or elsewhere.
Court stops IPOC’s legal fight
