Irish courts should respect Russian judges’ decisions in “an entirely Russian dispute”, lawyer says

The owners of a Russian company which are suing in Ireland for conspiracy to defraud with several Russian defendants as well as a Dublin-registered firm, have asked the Irish High Court to ignore numerous Russian court hearings and judgments.

Michael Collins SC, representing the defendants, told the court there's no reason Ireland shouldn't respect a Russian court's decision that Sergei Makhlai, a billionaire and former chairman of Togliattiazot (ToAZ, Russia's largest ammonia producer) , along with three other individuals engaged in a "massive fraud" against ToAZ.

ToAZ evaded Russian taxation between 2009 and 2013 by selling ammonia – used to make fertiliser – at a low price to a Swiss company, which sold it at market price, pocketing the profit, he said. These facts of tax evasion were revealed and confirmed by the decisions of 37 Russian judges in seven Russian courts.

Mr. Collins was representing a minority ToAZ shareholder, United Chemical Company Uralchem (UCCU), which saw as hundreds of millions of dollars "syphoned off" and defrauded, leading to court proceedings in Russia.

The 70% majority shareholders in ToAZ, four Caribbean-registered trust firms, have brought proceedings against UCCU and others, including a Dublin-registered firm called Eurotoaz, claiming they were defrauded of their shares through illegal and corrupt "corporate raiding" actions by the defendants.

Mr. Collins said UCCU's actions in Russia were similar to "shareholder oppression" proceedings in the U.S.

Sergei Makhlai and Belarusian-born Russian oligarch Dmitry Mazepin, owner of UCCU, are at the centre of the litigation.

Sergei Makhlai and his father Vladimir, also a former ToAZ chairman, were found guilty in Russia in 2019 of syphoning off $1.4 billion from ToAZ through related-party transactions using Swiss firm Nitrochem Distribution AG, controlled by the Makhlais' Swiss partner Andreas Zivy. Before being sentenced, the Makhlais fled the country.

Four Caribbean-registered companies are suing Mr. Mazepin, UCCU, and other individuals and companies, including Eurotoaz.

UCCU and its co-defendants have already had a number of preliminary hearings in Ireland.

The Caribbean firms want UCCU found in contempt of a High Court undertaking not to enforce a $1.2 billion Russian court judgement against the ToAZ plaintiff companies, including the sale of ToAZ shares, pending the outcome of the main Irish proceedings.

The Caribbean firms claim UCCU broke its promise by attempting to bankrupt Mr. Makhlai in Russia, leading to the sale of ToAZ shares they claim to own.

The plaintiffs said UCCU "egregiously breached" the Dublin undertaking in their contempt petition.

Mr. Collins, representing UCCU, said foreign legal proceedings must be respected.

Counsel said Mr. Makhlai's bankruptcy is separate from the $1.2 billion judgement case. The judgement only affected the Caribbean companies' assets, not the Makhlai bankruptcy.

Defendants' promise not to enforce the Russian judgement was not broken, he said.

Counsel said this was "an entirely Russian dispute" between Russian company owners over a massive fraud. Ireland was "sucked in" because a Dublin-registered company had a shareholding and it was "painted as a broad conspiracy" between UCCU and the other defendants.

On this "very narrow jurisdictional level," the plaintiffs brought these applications to the Irish High Court, which found the case could go forward here to avoid fragmentation. The Court of Appeal will rule on the appealed decision.

Justice Mark Sanfey continues the hybrid hearing.

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