England and Wales High Court (Commercial Court) Decisions

“The Parties have agreed regarding the following goals for the Trading Company (hereinafter referred to as ‘Goals’):

Trading Company’s turnover increase in its cooperation with Graff;

Trading Company’s profit margin increase from its operations with jewelry.

Trading Company’s business expansion, including, but not limited to, establishing relations with other suppliers of precious stones and jewelry, as well as the development of the quantity and the quality of the client base …

In order to achieve the Goals the Trading Company undertakes an obligation to sign with the Investor personally an employment agreement (hereinafter an ‘Employment Agreement’), and the Investor undertakes an obligation to fully assist within his abilities the Trading Company to reach such Goals”.

“Within 3 working days from the date the Present Agreement is signed by all Parties the Investor shall initiate a bank transfer from his personal bank account in the amount of US$10m (the ‘Investment’) to the following bank account of the Trading Company …

An Investment shall be provided for the period of 3 (Three) calendar years without any interest accumulated and shall be returned to the Investor within 10 (Ten) working days from the moment of the mentioned period expiration. An Investment can only be used by the Trading Company for providing Graff the deposit in the amount of the Investment (hereinafter referred to as the ‘Deposit’)”.

 “An Employment Agreement shall include the condition according to which the Investor shall be receiving salary from the account of the Trading Company within 3 (Three) years in the total amount of 16,425,000.00 (Sixteen million Four hundred Twenty-Five thousand) AED (hereinafter referred to as the ‘Total Amount of the Salary’);

In case the Employment Agreement has been terminated by the Trading Company before its expiration the Trading Company undertakes an obligation to repay the Investor immediately the difference between the Total Amount of the Salary and the amount that the Investor has already received by the time of such termination, however the Trading Company reserves an option to cancel at its ultimate discretion the Present Agreement and the Employment Agreement on the 1^st of April 2015, in such case the Trading Company shall repay not later that on the 30^th of April 2015 an Investment in full as well as the difference between an amount of 2,737,500.00 (Two hundred Thirty Seven thousand Five hundred) AED and the amount of salary actually paid out to the Investor by the 1 April 2015”.

i)                    Under Article 1.1 for a period of 3 years, Mr Magdeev was to work for Equix Dubai as “business development manager” at Unit No. 30-01-45, Jewellery & Gemplex 3, Plot No: DMCC-PH2-J&GPlexS, Dubai, which was described as Mr Magdeev’s “normal place of work”. This was in fact simply Equix Dubai’s registered address and was in practice just a post box.

ii)                  Under Article 1.3, Mr Magdeev was not, during the period of his employment to work outside the DMCC Free Zone (described as the “Territory”) or for another person either in the DMCC Free Zone or otherwise, except with the prior written approval from Equix Dubai.

iii)                Under Article 2.1 Mr Magdeev was to receive a basic salary of AED365,000 per month.

iv)                Under Article 2.3, Mr Magdeev was entitled to participate in Equix Dubai’s private medical insurance scheme.

v)                  Under Article 3.1 Mr Magdeev’s working hours were 8 hours per day, save during the month of Ramadan.

vi)                Under Article 3.2, if Mr Magdeev worked overtime (which was not to exceed two hours per day) he became entitled to various additional payments.

vii)              Mr Magdeev had holiday and sick leave entitlements as provided for under Articles 3.3 to 3.6.

viii)             Mr Magdeev had travel tickets entitlements under Article 6.

ix)                Under Article 10.1, the federal law of the UAE governed the Contract, with the Court in Dubai having exclusive jurisdiction to settle any dispute pursuant to Article 10.3.

“in part, yes [it was a sham], and in part, no, in the sense that the money was paid, transfers were made, I did make referrals, the company did make money, it continued in existence, it carried on its trading activity.  So the really depends on your focus and your perspective…

It's not 100% what it purports to be, but I had to get some return and I had to make referrals and introductions.  So in that sense, this is not exactly what it purports to be.”

“The Guarantor shall be fully liable in the favor of the Investor for the responsibilities of the Trading Company as per the terms and conditions of the present Agreement …”.

i)                    Mr Magdeev would invest US$20 million in Equix Cyprus to allow it to obtain the Cyprus franchise and open the Limassol boutique, the return on which investment was to be interest at 9% per annum;

ii)                  Mr Magdeev would waive interest under the US$10 Million Loan to Equix Dubai, would continue to receive payments under the RM Employment Agreement and account for these as repayments of principal. In other words, the payments that Mr Magdeev had received and was due to receive from Equix Dubai under the RM Employment Agreement would thereafter be treated as repayments of the US$10 Million Loan.

iii)                In return for this he would get at least 50% of the profits of Equix Cyprus (and 50% of shares in Equix Cyprus).

i)                    On 4 January 2015 Equix Dubai paid AED456,250 to Mr Magdeev as salary.

ii)                  On 12 January 2015 Equix Dubai paid US$110,000 to Mr Magdeev (“the US$110,000 payment”). There is an issue as to whether this was a repayment of principal under the First Oral Agreement, or of an informal personal loan.

iii)                On 2 February 2015 Equix Dubai paid AED456,250 to Mr Magdeev as salary.

iv)                On 2 March 2015 Equix Dubai paid AED456,250 to Mr Magdeev as salary.

i)                    Mr Magdeev loaned Mr Tsvetkov €5 million and Mr Tsvetkov and his wife then each paid Equix Cyprus €2.5 million on 25 August 2015, while Mr Magdeev and Mr Ernest Magdeev each paid €2.5 million to Equix on the same day.

ii)                  Those funds (or US$10 million of those funds) were used to purchase the Pear-Shaped Diamond from Graff for an amount of US$13.2 million.

“WHEREAS:

[1] Both, the Lender and the Borrower are the beneficiary owners of EK Luxury Goods Limited - a limited liability company registered under the Laws of the Republic of Cyprus;

[2] The Lender has agreed to provide the Borrower with the necessary funding in order for the Borrower and/or his family members to participate in the subscription for new shares in the EK Luxury Goods Limited”.

i)                    Mr Magdeev and Mr Gaynulin would invest additional monies, in Mr Magdeev's case US$20 million, for the purpose of opening a Vienna franchise;

ii)                  The shares in Equix Cyprus were to be split between Mr Magdeev, Mr Gaynulin and Mr Tsvetkov in the proportion 40:40:20;

iii)                The unrepaid portion remaining of the $10 million invested under the October Agreement would be repaid by Equix Dubai to Mr Magdeev and reinvested by him in Equix Cyprus (the parties knowing that Equix Dubai would shortly be able to pay about $3.5 million but not more);

iv)                Payments made and to be made to Mr Magdeev under or in respect of the RM Employment Agreement would, as previously agreed, constitute capital repayments of the US$10 Million Loan. At that time, it was envisaged that the payments would be made pursuant to the RM and EM Employment Agreements, and the US$5 million to be paid by Equix Dubai to Mr Magdeev (which was then to be reinvested in Equix Cyprus).

i)                    Mr Gaynulin and Mr Magdeev would invest US$11.9 million and US$20 million respectively for the purpose of opening the Graff boutique in Vienna;

ii)                  Mr Gaynulin, Mr Magdeev and Mr Tsvetkov would renegotiate the profit distribution and participation in the share capital of Equix Cyprus and Dubai in the ratio 40:40:20; and

iii)                All investments contributed by them would be deemed net equity of Equix Cyprus and Dubai.

i)                    On 1 February 2016 AED456,250 to Mr Magdeev and AED228,125 to Mr Ernest Magdeev.

ii)                  On 24 March 2016 AED456,250 to Mr Magdeev and AED228,125 to Mr Ernest Magdeev.

iii)                On 1 April 2016 AED228,125 to Mr Ernest Magdeev.

iv)                On 2 April 2016 AED456,250 to Mr Magdeev.

v)                  On 1 May 2016 AED456,250 to Mr Magdeev and AED228,125 to Mr Ernest Magdeev.

i)                    In December 2014 (it was submitted that this was a mistake and it should be 2015), Mr Gaynulin, Mr Magdeev and Mr Tsvetkov agreed that:

a)                  Mr Gaynulin would invest US$30 million and Mr Magdeev $20 million for the opening of the Graff boutique in Vienna; and

b)                 They would split the profit 40:40:20.

ii)                  In December 2015, Mr Gaynulin provided US$11.9 million and was expecting Mr Magdeev to perform his obligations by paying the US$20 million by the end of 2015, at which point Mr Gaynulin would pay the remainder, but Mr Magdeev never performed and “as we found later he was stuck with some of his investments in his Russian ventures.”

iii)                When Mr Magdeev insisted on becoming a 50% partner in the Graff Business, Mr Tsvetkov only agreed that on condition that Mr Magdeev’s debt be converted to being interest free; Mr Magdeev would still be repaid his capital at 15% and 9%, but the payments would go from his capital i.e. the principal amount of the loan. While it was put to him in cross-examination that this was not true and he was making it up, which Mr Tsvetkov denied, there was simply no reason for Mr Tsvetkov to have made that up at that time when communicating with Mr Graff.

i)                    On 5 June 2016 AED456,250 to Mr Magdeev and AED228,125 to Mr Ernest Magdeev.

ii)                  On 5 July 2016 AED456,250 to Mr Magdeev and AED228,125 to Mr Ernest Magdeev.

iii)                On 15 August 2016 AED228,125 to Mr Ernest Magdeev.

iv)                On 17 August 2016 AED456,250 to Mr Magdeev.

i)                    Says: “Please find below info regarding RM Balance. Actual capital balance is $40 655 796,95”. Stress was placed by Mr Tsvetkov on the words “Actual Capital Balance”.

ii)                  Includes two “Ilya Sales” payments (Trombachev Payments 1 and 2) of US$1,014,885 and US$760,000 made on 1 May 2016 and 6 October 2016, the US$1.2 million, salary of US$2,750,000 paid to Mr Magdeev and salary of US$562,000 paid to Mr Ernest Magdeev. The total of these amounts was US$6,837,385.

iii)                It referred to Mr Magdeev’s “capital contriburion” (an obvious mistyping of “capital contribution” which however helped to trace which later documents derived from this specific spreadsheet). The issue between the parties was whether this meant “capital repayment” or “capital contribution in relation to a buy-out proposal”.

i)                    Mr Ernest Magdeev's WhatsApp messages, which on their face plainly suggested exchanges with Mr Tsvetkov on 17 August in London. A forensic review of these messages revealed nothing untoward;

ii)                  An email exchange referring to Mr Tsvetkov visiting the Graff store in London on 16 August and collecting items by hand;

iii)                Further flight information including tickets for a flight from Moscow to London on 15 August and from London to Larnaca and Athens on 18 August.

“I, Rustem Magdeev, holder of Cyprus passport No K00188823 issued on 07.08.2014, hereby confirm my resignation from Equix Dubai DMCC (former Equix Dubai DMCC) on 31st July 2016 as its mutually agreed.

I herewith confirm that I have been paid in full and that I do not have, and I hereby forever waive, release and discharge, any financial, non-financial or other claims whatsoever against Equix Dubai DMCC and/or the Company’s management” (emphasis added).

It is Mr Magdeev’s case that his signing of the Resignation Letter was a mistake and that he had not intended to waive claims against Equix Dubai.

“Please find confirmation that document sent to your email on 02/10/2016 12:13 is invalid, legal version would be re-presented the soonest”.

Mr Dovgan received a further phone call from Mr Magdeev who asked him not to upload the First RM Resignation Letter to the DMCC portal and informed him that Mr Slizikov would provide additional wording later that day. Mr Dovgan recalls that Mr Magdeev said the wording of the First RM Resignation Letter was “too general” and that he “wanted the letter specifically to mention his employment contract”.

“I herewith confirm that I have been paid in full and that 1 do not have, and 1 hereby forever waive, release and discharge, any financial, non-financial or other claims whatsoever against Equix Dubai DMCC and/or the Company’s management in respect to my Employment Contract dd October 01, 2014”.

“I herewith confirm that 1 have been paid in full and that 1 do not have, and I hereby forever waive, release and discharge, any financial, nonfinancial or other claims whatsoever against Equix Dubai DMCC and/or the Company’s management in respect to my Employment Contract dd October 01, 2014 during the period from 1st of October 2014 till 31st of July 2016” (emphasis added).

“I, Rustem Magdeev, holder of Cyprus passport No K00188823 issued on 07.08.2014, hereby confirm my resignation from Equix Dubai DMCC (former Equix Dubai DMCC) on 31st July 2016 as its mutually agreed.

I herewith confirm that I have been paid in full and that I do not have, and I hereby forever waive, release and discharge, any financial, nonfinancial or other claims whatsoever against Equix Dubai DMCC and/or the Company’s management in respect to my Employment Contract dd October 01, 2014 for the period October 01, 2014 to July 31,2016”.

i)                    A spreadsheet was prepared by Mr Slizikov, Mr Magdeev’s agent or representative, and provided to Mr Tsvetkov on 11 January 2017. This document (referred to at [88] above) derives from the document created in July 2016, though what that document said is unknown. It treats the “salary” payments received by Mr Magdeev as capital repayments (wrongly described as “contriburion”) to Mr Magdeev (“the Slizikov January Spreadsheet”).

ii)                  On 19 January 2017 a spreadsheet similar to the Slizikov January Spreadsheet was provided by Mr Slizikov to Mr Tsvetkov under cover of an email which stated: “sending the table with the information on the interest”.

iii)                On 13 February 2017, a spreadsheet similar to the Slizikov January Spreadsheet was provided by Mr Slizikov to Mr Skachko (Mr Tsvetkov’s assistant) (“the Slizikov/Skachko Spreadsheet”). This was accompanied by a stocklist, also known as “the Magic Table” later exchanged between Mr Tsvetkov and Mr Slizikov.

i)                    A backdated loan agreement pursuant to which Mr Ernest Magdeev purported to loan US$5 million to Equix Cyprus; and

ii)                  A backdated loan agreement pursuant to which Mr Ernest Magdeev purported to loan €2.5 million to Equix Cyprus.

“Having regard to the removal of the stock last week … it was unanimously decided as follows:

[1] THAT urgent actions shall be taken by the Company for the immediate and secure return of the stock to the shop of the Company in Limassol Marina, under the co-ordination of Harris Kyriakides LLC, the law firm representing the Company (the ‘Firm’).

[2] THAT provided that Mr Emil Gaynulin ensures that the stock is returned intact and without any item missing, none of the shareholders or the director of the Company shall have any complaint against any other shareholder or their representatives named in clause 5 below regarding the removal of the stock.

[3] THAT the Firm, acting pursuant to its engagement letter, shall prepare and circulate to the shareholders for approval:

[3.1] a draft shareholders agreement which shall regulate the rights and obligations of the shareholders;

[3.2] ancillary agreements, under which each shareholder shall enjoy security (charge) rights on the stock by reference to the loan agreements between the Company and each of the shareholders and shall, amongst others:

[3.2.1] with regards to stock security rights, adopt an analogy of 65% for Mr Gaynulin and 35% jointly for Ernest Magdeev and Rustem Magdeev; and

[3.2.2] providing that the one single most expensive item (Ref. No. GP 14923) shall fall within the security rights of Ernest Magdeev and Rustem Magdeev;

[4] THAT the Firm shall set out proper procedures and protocols, which shall be notified to and approved by the Shareholders, so that the Company’s shop operates smoothly and opens the soonest possible and the Director of the Company shall follow these procedures and policies and any other procedures and policies communicated to him by the Firm and ensure that all the personnel of the Company follows these procedures and policies.

[5] THAT in relation to the above matters, the Firm shall act in accordance with joint written instructions of the shareholders, which shall be received in writing (including by email) from the shareholders, either personally or through their authorised representatives, namely Mr Denis Sagura (on behalf of Mr Gaynulin) and Mr Vladislav Slizikov (on behalf of Ernest Magdeev and Rustem Magdeev)”.

i)                    As Mr Magdeev knew, Equix Cyprus would be left with little or no stock - and certainly stock worth less than US$30 million, which would put it in breach of the franchise agreement with Graff;

ii)                  Equix Cyprus would have been left with stock and monetary assets worth only US$16.7 million, some 20% of what it owned originally.

It seems to have been contemplated that the security might well be executed; certainly it was Mr Kyriakides’ impression that Mr Magdeev was keen to get his money out as soon as possible.

“Once a debt is proved to have existed, its continuation is presumed; thus the obligation to repay a loan is presumed to continue to exist unless the borrower proves that the loan has been repaid or otherwise discharged, or such repayment or discharge can properly be inferred from all the circumstances. A receipt is not conclusive but only prima facie evidence that a loan has been repaid”.

“a debt once proved to have existed is presumed to continue unless payment, or some other discharge, be either proved or established from circumstances…”.

i)                    Whether a payment was made or not: burden on Mr Tsvetkov;

ii)                  Whether a payment was made in discharge of principal (absent proof of an agreement for repayment of principal): burden on Mr Tsvetkov;

iii)                Whether a payment was made in discharge of principal (where there is proof of an agreement that principal shall be repaid): burden on Mr Magdeev.

i)                    Mr Magdeev would invest US$20 million in Equix Cyprus to allow it to obtain the Cyprus franchise and open the Limassol boutique, the return on which investment was to be interest at 9% per annum;

ii)                  Mr Magdeev would get at least 50% of the profits of Equix Cyprus (and 50% of shares in) Equix Cyprus.

i)                    He entered into the EM Employment Agreement with Equix backdated to 15 October 2015 at a salary of AED 182,500 per month, i.e. US$600,000 per year (equivalent to interest at 12% per annum on the US$5 million), later amended to provide for a salary of AED 228,125, i.e. US$750,000 per year, equivalent to 15% per annum.

ii)                  He transferred US$5 million to Equix Cyprus. This was initially intended to be a payment made to Equix Dubai, but this was switched to Equix Cyprus for an intended issue of preference shares. The salary was therefore in effect a 15% return on this investment.

“5. The Parties have agreed that RM shall provide the funds mentioned in the p. 1 and p. 2 of the present Agreement … subject to the following terms:

a. Before the 31^st of March 2015 RM and DT shall reach an agreement (to be in writing in the form of shareholders agreement between RM and ELKH and could be directly or between affiliated with them third parties) regarding the participation of RM (or third parties affiliated to him) in the business of [Equix Cyprus] …

b. As soon as the agreement between RM and DT is reached which is determined by p. 5.a of the present Agreement, the Loan or an Investment agreement shall be signed between RM and [Equix Cyprus] which should stipulate the conversion of funds in the total amount of 20 (twenty) million US Dollars stipulated by p. 1 and p. 2 of the present Agreement into a Loan for 3 (three) years plus validity and the interest rate not exceeding 9.00 (nine) %. Which should be accumulated in arrears starting from the 1^st of May 2015;

6. Should by any reason RM and DT fail to reach an agreement stipulated by the p. 5 of the present Agreement, [Equix Cyprus] shall undertake an obligation to repay on or before the 1^st of May 2015 full amount received from RM in the total amount of 20 (twenty) million US Dollars and to pay the penalty of 0.04 (4/100) % per each day that [Equix Cyprus] actually had the possession of the funds stipulated by p. 1 and p. 2 of the present Agreement”.

i)                    There had been discussions in December as noted above, and the question of further investment by Mr Magdeev had been discussed;

ii)                  However, he was having cash flow issues, which he mentioned. The repayment of the US$10 Million Loan was discussed. He also complained about what he saw as the lack of interest payments for the Cyprus US$20 million loan;

iii)                The parties arranged the EM Employment Agreement as one way of increasing the repayments to Mr Magdeev of principal.

iv)                Mr Tsvetkov arranged the US$3.5 million payment of principal.

v)                  Mr Tsvetkov then found he could spare another US$1.2 million a few weeks later, and paid it to Mr Magdeev (this echoes Mr Magdeev’s evidence as to what Mr Tsvetkov said). There was no prior agreement about this payment. It was simply a payment against that background. Given the situation, both parties regarded it as having the potential to be characterised in a number of ways, depending on how the situation developed. Mr Magdeev may well at later stages have regarded it as capable of being thought of as payment in respect of interest under the Equix Cyprus Loan, or as compensation for early termination of the RM Employment Agreement. That does not however mean that that is what the payment was - at the time it was made.

“An Employment Agreement shall include the condition according to which the Investor shall be receiving salary from the account of the Trading Company within 3 (Three) years in the total amount of 16,425 … AED …

In case the Employment Agreement has been terminated by the Trading Company before its expiration the Trading Company undertakes an obligation to repay the Investor immediately the difference between the Total Amount of the Salary and the amount that the Investor has received by the time of such termination…”

i)                    “Trombachev Payment 3”, a payment of US$432,000 noted in one of Mr Slizikov’s spreadsheets (Slizikov/Skachko, sent 9 August 2016);

ii)                  Payments of US$30,000 and US$500,000 noted as capital repayments in a later iteration of the same spreadsheet (Slizikov/Sagura, metadata October 2018);

iii)                “End of Service Entitlements”: Mr Magdeev and Mr Ernest Magdeev each signed a document to be submitted to the UAE authorities which stated that they had been paid AED577,356 and AED125,137 (equivalent to US$153,961.60 and US$33,269.87) as end of service entitlements.

i)                    Mr Magdeev had received very nearly all of the US$10 million based on the accepted payments (and all, if Trombachev Payment 3 is included), and was expected to receive a further AED577,356, which would take him to being (at worst) very nearly fully reimbursed;

ii)                  Those payments had been received in a somewhat messy fashion and under labels which might lead (as they have done) to argument and confusion;

iii)                Mr Gaynulin was now effectively in charge of Equix Dubai with Mr Magdeev, and seems to have wanted to get the position clear. In this context the investigation as to Mr Tsvetkov’s dealings, the Note for Emil, and the spreadsheets all have a significance.

i)                    Nearly all of the US$10 Million Loan was repaid to Mr Magdeev on the basis of the “accepted” payments;

ii)                  Once “disputed” payments are taken  into account the full US$10 million was repaid; and

iii)                If and to the limited extent it was not, Mr Magdeev waived payment of the remainder.

i)                    Illegality;

ii)                  The Pear-Shaped Diamond Counterclaim;

iii)                The Conspiracy Counterclaim.

The former would be relevant to any live obligation to repay. The latter are advanced as counterclaims to extinguish any live obligation to repay.

“Article 216. Forgery of a document is the alteration of truth in which the following outlined means resulting in a damage with intention to use it as a genuine document.

The following are considered means of forgery:

1. ….

7. Alteration of truth in an instrument, upon its execution, in connection with what it was designed/intended to establish.

Article 217. Forgery of an official written instrument shall be punished with imprisonment for a period not exceeding ten years, and forgery of a non-official instrument shall be punished with confinement.

Article 218. An official instrument is that which a public officer has the competence to prepare or to interfere in its making or to grant it an official quality. Any other instrument shall be considered as non-official writing. ...

Article 222. Whoever knowingly uses a forged instrument shall be punished by the penalty prescribed for the crime of forgery as the case may be.”

i)                    Article 216 sets out what constitutes forgery, Article 217 makes forgery an offence and Article 222 makes knowingly using a forged document an offence.

ii)                  The three elements which must be established to make out the commission of the offence of forgery are that:

a)                  The defendant must produce or alter a document by one of the means set out in Sub-articles 216(1) to (7). The relevant provision in this case is Article 216(7).

b)                 The production or alteration of the document by that means must result in harm or damage.

c)                  The defendant must produce or alter the document in that way with the intention of using it as a genuine document.

iii)                Where what is forged is an official instrument within the meaning of Article 218 harm or damage will be presumed because forgery of official instruments reduces confidence in such documents, which are relied on to prove their contents.

iv)                Where what is forged is not an official instrument, damage must be proved but the requirement is simply that at the time the forgery took place it can be shown that there was the possibility of harm or damage resulting in the future.

v)                  Use of a forged document knowing it is forged is an offence under Article 222. It is not necessary to prove damage or the risk of damage arising from such use under Article 222.

i)                    Article 216 of the UAE Penal Code creates an offence in relation to the forging of documents.

ii)                  Article 216(7) provides that there is a forgery if there an “alteration of the truth in an instrument, upon its execution, in connection with what it was designed/intended to establish”.

iii)                For there to be a forgery, it does not matter that both parties had knowledge of, or agreed to, such alteration.

“While I should like to arrive at the same result, I think that on legal principles, as the adventure could be carried out lawfully or unlawfully, and the parties have not agreed how to carry it out, the Courts can deal with the legal results as if it were carried out lawfully.”

“The adventure, it appears to me, could be carried out in a legal way and could be carried out in an illegal way, and the adventurers had not bound themselves to either way. In my opinion the law is correctly stated by the late Mr. Dicey in his work on the Conflict of Laws, 4th ed. (1927), p. 620: ‘It must, however, be noted that if a contract is an English contract, it will only be held invalid on account of illegality if it actually necessitates the performance in a foreign and friendly country of some act which is illegal by the law of such country’”

“An English contract should and will be held invalid on account of illegality if the real object and intention of the parties necessitates them joining in an endeavour to perform in a foreign and friendly country some act which is illegal by the law of such country notwithstanding the fact that there may be, in a certain event, alternative modes or places of performing which permit the contract to be performed legally”.

i)                    Lawrence LJ: “the documents in respect of which relief is sought were documents drawn up for the purpose of dressing up in a legal garb such of the terms of an illegal joint adventure as the parties deemed it prudent to record in writing”. He also noted that while in theory the contract could have been performed legally, the real object of the parties (to get the enormous profit from selling in the US) could only be obtained by a performance which involved illegality.

ii)                  Lawrence LJ:

“ I am clearly of opinion that a partnership formed for the main purpose of deriving profit from the commission of a criminal offence in a foreign and friendly country is illegal, even although the parties have not succeeded in carrying out their enterprise, and no such criminal offence has in fact been committed; .... The ground upon which I rest my judgment that such a partnership is illegal is that its recognition by our Courts would furnish a just cause for complaint by the United States Government against our Government (of which the partners are subjects), and would be contrary to our obligation of international comity as now understood and recognized, and therefore would offend against our notions of public morality…. am of opinion that, in view of the main object of the Contract of Partnership between the parties in the present case, it is not saved from illegality merely because the partners may have contemplated the event of not being able themselves to import the whisky into the United States, and may have considered the possibility of having to deliver the whisky to the illicit buyers on the high seas or at such other convenient place as might be arranged between themselves and their buyer consistently with their being able to obtain the high price ruling on the illicit market in which they intended to sell the whisky.”

iii)                Sankey LJ:

“I have come to a conclusion on the evidence that all the parties concerned were actively engaged in an enterprise to import whisky into the United States of America. It is not a case where one or other of them merely knew that the whisky was going to the States; they were all working to get it there.”

iv)                Sankey LJ:

“ Here the adventure was for the express purpose of violating the law of the United States of America. I cannot think that where parties intend to deliver in America, if possible, and take all steps to enable them to do so, that the contract is rendered less obnoxious because they have provided that in a certain event, which by the way has not happened, they will sell the cargo to persons in Canada who may be able to do what they themselves cannot effectuate.”

“It is … nothing else than comity which has influenced our courts to refuse as a matter of public policy to enforce, or to award damage for the breach of, a contract which involves the violation of foreign law on foreign soil.…Just as public policy avoids contracts which offend against our own law, so it will avoid at least some contracts which violate the laws of a foreign state, and it will do so because public policy demands that deference to international comity.”

“… to recognise the contract between the appellant and the respondent as an enforceable contract would give a just cause for complaint by the Government of India and should be regarded as contrary to conceptions of international comity. On grounds of public policy, therefore, this is a contract which our courts ought not to recognize.”

 “The real question is one of public policy in English law: but in considering this question we must have in mind the background of international law and international relationships often referred to as the comity of nations. This is not a case of a contract being made in good faith but one party thereafter finding that he cannot perform his part of the contract without committing a breach of foreign law in the territory of the foreign country. If this contract is held to be unenforceable, it should, in my opinion, be because from the beginning the contract was tainted so that the courts of this country will not assist either party to enforce it.”

“No principle can be derived from [Servier] (or the Lilly Icos case) which is relevant to the present case, or which suggests that purely domestic rules of illegality can be applied to the consequences of the illegal performance of a contract in a foreign country.”

“So how is the court to determine the matter if not by some mechanistic process? In answer to that question I would say that one cannot judge whether allowing a claim which is in some way tainted by illegality would be contrary to the public interest, because it would be harmful to the integrity of the legal system, without (a) considering the underlying purpose of the prohibition which has been transgressed, (b) considering conversely any other relevant public policies which may be rendered ineffective or less effective by denial of the claim, and (c) keeping in mind the possibility of overkill unless the law is applied with a due sense of proportionality. We are, after all, in the area of public policy.”

i)                    Does the existence in a contract of a term which can only be performed in a manner which is unlawful in the place of performance render unenforceable a different obligation, the fulfilment of which would not necessarily be unlawful in the place of performance?

ii)                  How is the principle in Foster v Driscoll to be applied where the parties have more than one object and intention in reaching their arrangement, one of which objects necessitates the performance of an act unlawful by the place of performance and one of which does not?

“...in UAE, as you know, this is attracting a lot of expatriate employees from different parts of the world, okay, and there is a restriction under the immigration law or labour law, people from -- trading in -- somebody creating fictitious companies to hire people and they are getting money for them and issuing them fictitious contracts, then this is definitely falling under the certain sanction imposed immigration law.”

“… in an age in which commercial fraud is increasing, it seems imperative that the Court should refuse to allow a party to rely on a contract which was drafted or structured to deceive third parties. And the fact that what is alleged to have happened in this case is by no means unknown in the shipbuilding trade makes the stringent application of that public policy in this area a matter of the first importance …”.

“It is settled law that an agreement to do an act that is illegal or immoral or contrary to public policy, or to do any act for a consideration that is illegal,  immoral or contrary to public policy, is unlawful and therefore void.  But it often happens that an agreement which in itself is not unlawful is made with the intention of one or both parties to make use of the subject matter for an unlawful purpose, that is to say a purpose that is illegal, immoral or contrary to public policy.”

“the documents themselves were dangerous in the sense that they could be and were intended to be used for a fraudulent purpose, without alteration, and the splitting of the transaction into the two documents was an overt step in carrying out the fraud. We cannot think that the plaintiff is entitled to bring these documents into a court of justice and ask the Court to assist him in carrying them into effect.”

“It is … nothing else than comity which has influenced our courts to refuse as a matter of public policy to enforce, or to award damage for the breach of, a contract which involves the violation of foreign law on foreign soil.…Just as public policy avoids contracts which offend against our own law, so it will avoid at least some contracts which violate the laws of a foreign state, and it will do so because public policy demands that deference to international comity.”

i)                    Mr Magdeev loaned Mr Tsvetkov €5 million and he and his wife then each paid Equix Cyprus €2.5 million on 25 August 2015;

ii)                  Mr Magdeev and Mr Ernest Magdeev each paid €2.5 million to Equix on 25 August 2015.

“you could see that in our correspondence and in Tsvetkov letters, that Magdeev’s money has to be used to purchase inexpensive stock that has high turnover. That was enshrined in the documents and in the letters. And Gaynulin’s investments, Emil Gaynulin’s investments will be used for expensive items that have some investment nature that might be bought by wealthy people and maybe to store it, not even to wear it, that type of jewellery, and that was enshrined in our correspondence and documents.”

“(1) there must be a combination; (2) the combination must be to use unlawful means; (3) there must be an intention to injure a claimant by the use of those unlawful means; and (4) the use of the unlawful means must cause a claimant to suffer loss or damage as a result.”

i)                    the “procuring [of] charges over [ELG’s] stock” was agreed in the Shareholders’ Resolution on 26 June 2017 of which first drafts were circulated on 7 June 2016;

ii)                  the “removing [of] stock from the possession of [ELG]” by Mr Magdeev occurred pursuant to the charge in his favour, which was agreed in the Shareholders’ Resolution on 26 June 2017;

iii)                the “running down the Graff Business” is said to have involved the closure of Equix Cyprus' boutique in Limassol, which Mr Tsvetkov says occurred in April 2017; and

iv)                the “withdrawing [of] funds from [Equix] Diamonds’ bank accounts” is said to have taken place at the end of May 2017: Mr Tsvetkov alleged that “Mr Gaynulin was in effective control of the bank account of EK Diamonds” and that “[at] the end of May 2017 he … procured the withdrawal of US$4.5 million, which represented almost all the funds then in EK Diamonds’ account, leaving EK Diamonds with only a token balance”. In addition this did not find any support in the evidence.

“Such court shall judge depending on the submitted exhibits without detailing the validity of the debt or searching and explaining, in depth, the exhibits upon which the attachment applicant relies since the court judgment is [temporary] and does not affect the essence of the disputed right which shall be reserved to be disputed over by the litigants before the Court of Trial.”