It promises to be one of the most expensive cases ever heard in a British courtroom — involving three oligarchs who have fallen out in spectacular fashion.
At its heart is a £2 billion lawsuit being brought by a flamboyant businessman who bought London’s most expensive house and counts Tony Blair, Bill Clinton, Sir Elton John and Damien Hirst among his close friends.
On the other side of the court will be two fellow oligarchs, one with a town house in one of London’s smartest squares, the other who lives on the shores of Lake Geneva.
The legal fees alone are likely to exceed £50 million.
The case being brought by Victor Pinchuk against Igor Kolomoisky and Gennady Bogolyubov is the latest court battle between oligarchs to play out in London, even though it revolves around the sale of state industries in Ukraine following the collapse of the Soviet Union.
It comes after another so-called mega-case last year, in which Boris Berezovsky, an oligarch who had fallen out with the Kremlin in the Nineties, sued Roman Abramovich, the Chelsea Football Club owner, seeking £3 billion in damages. Berezovsky was humiliated in court, lost the case and was found hanged at his home in Berkshire in March.
The latest High Court case, which will begin next year and will last for several months, will cast a spotlight on the murky, cut-throat world of Ukrainian business dealings.
Mr Pinchuk, 52, made his fortune through a series of deals, many of them struck when his father-in-law, Leonid Kuchma, was president of Ukraine. Mr Pinchuk began a relationship with Mr Kuchma’s glamorous daughter, Elena — 10 years his junior — in 1997 and married her in 2002.
The couple have worked hard to build their reputation on the world stage, spending large sums on philanthropy but also on one of London’s finest houses and an expensive art collection.
Mr Pinchuk, worth between £1 billion and £2.5 billion, has befriended both Mr Blair and Mr Clinton, helping to bankroll the Tony Blair Faith Foundation with a donation of £320,000 while giving a further £700,000 to the Clinton Foundation in 2011.
A year earlier the Pinchuks received “an Enduring Vision” award from the Elton John Aids Foundation at a ceremony in New York. Sir Elton played a concert in Kiev last year in aid of the Elena Pinchuk Anti-Aids Foundation.
The couple bought a house in Kensington, west London, for £80 million in 2008, a record price at the time. It has an underground swimming pool, gym, sauna and cinema, and houses some of Mr Pinchuk’s collection of contemporary art, thought to be one of the finest in private hands, including several works by Damien Hirst and Jeff Koons. An Antony Gormley statue adorns his London garden.
In 2006, Mr Pinchuk opened the Pinchuk Art Centre in Kiev where some of his collection is kept. His 50th birthday party in the French ski resort of Courchevel was said to have cost £4 million. “To spend money is much more exciting than to make it,” he once said.
His opponents — Mr Kolomoisky, 50, and Mr Bogolyubov, 50 — are reckoned to be richer and more discreet than their rival. Mr Kolomoisky lives in Switzerland, and Mr Bogolyubov lives in Belgravia, central London. Both men, with a net wealth of about £5 billion, have given large amounts to charities, many related to their Jewish faith.
The case revolves around the ownership of an iron ore mining business in Ukraine, dating back to a deal done — or possibly not done — in 2004.
Mr Pinchuk alleges that he gave his former business partners £90 million to buy Krivorozhskiy Zhelezorudnyy Kombinat (KZhRK), but that Mr Kolomoisky and Mr Bogolyubov kept the money and never delivered the mine.
Mr Pinchuk wants between £1.5 billion and £2 billion in damages — a figure based on the present worth of KZhRK, nine years of profits and interest — as well as his original £90 million which he claims was paid into an offshore shell company which owned nothing. The men agree they received the money but say it was unconnected to the mine and instead was owed to them from a separate deal.
Mr Pinchuk is bringing the case in London because not only does Mr Bogolyubov live in the capital, but, according to Mr Pinchuk, the oligarchs agreed verbally in 2006 that any disputes should be resolved in English courts. His opponents deny this and counter that it is only being fought in London because the legal claim would be ruled out of time in Ukraine.
In Mr Kolomoisky’s defence papers lodged in the High Court, Mr Pinchuk’s claim of a verbal agreement is described as “unworthy of belief”.
The defence adds: “In reality, the claimant’s decision to issue these proceedings stems, not from any contractual right, but from the claimant’s unjustified belief that, as the son-in-law of Mr Leonid Kuchma, he was entitled … to demand that the KZhRK stake be purchased by the defendants and transferred to him.”
According to the defence, Mr Pinchuk “repeatedly exploited his relationship with President Kuchma … to achieve his own financial and commercial objectives”. It accuses the Kuchma regime, which lasted from 1994 to 2005, of being characterised by “corruption, nepotism and ties to organised crime”. Mr Pinchuk has always denied benefiting from favouritism, once saying: “The only gift I get from Kuchma is my wife.”
The hearing of the case in London cements the city’s position as the world’s legal capital. “The oligarchs love the English court system because it is transparent, incorruptible and they have access to many of the best lawyers in the world,” said Catrin Griffiths, editor of The Lawyer magazine.
Mr Pinchuk’s lawyer, David Goldberg, of White & Case, said: “Mr Pinchuk is confident that his claims are well founded. The defences are replete with scurrilous and irrelevant allegations. Mr Pinchuk looks forward to having his rights vindicated at trial.”
Ian Terry, a partner at Freshfields Bruckhaus Deringer, the law firm representing Mr Kolomoisky, said: “He [Mr Pinchuk] had no legal basis for his claim then, and he now seeks to pursue it in the English courts some nine years later. His claim lacks all credibility. He has no written agreement to support it, so he asserts a separate oral agreement allegedly governed by English law.
“He has to prove this if he is to avoid Ukrainian law provisions which would have precluded him from bringing his claims years ago. Berezovsky tried something similar in his case against Abramovich, but the English court threw it out.”
Mr Bogolyubov’s lawyer, David Kavanagh, a senior partner at Skadden Arps and who acted for Mr Abramovich, said: “Igor Kolomoisky and Gennady Bogolyubov have filed very full defences and have shown that they are not afraid of the claim and quite prepared to go through to trial”.