Sergei Pugachev hides behind arbitration from the Russian Federation
The Hague tribunal requests to suspend the extradition of the former head of Mezhprombank.
International arbitration in the Hague, considering the claim of the former owner of Mezhprombank Sergei Pugachev against Russia for $12 billion, ordered the Russian Federation to suspend his extradition from France in criminal cases. Russia, probably, will refuse to the court, referring to the fact that such a mechanism "simply does not exist". In any case, the Prosecutor General's Office insists on the relevance of its request.
The Permanent Court of Arbitration (PCA) in the Hague, where the lawsuit of the former owner of the bankrupt Mezhprombank (MPB) Sergei Pugachev against Russia, has passed an interim decision on a number of petitions of the ex-banker. According to Global Arbitration Review, the arbitration ordered Russia to take all necessary actions to suspend the extradition of Mr. Pugachev from France. According to Kommersant, this is the only petition of the plaintiff, granted by the arbitration. Other requests of the ex-banker, including the suspension of civil and criminal cases against him, were rejected by the court.
Sergei Pugachev's claim against Russia was filed in the PCA in September 2015. In it, he demands to recover $12 billion from the Russian Federation in compensation for damage caused as a result of the expropriation of his assets, including the Yenisei industrial company, OPK Development and others. The consideration of the case in arbitration was suspended due to the fact that the Russian Federation did not appoint its own arbitrator, and was resumed only in November 2016. Since January, the interests of Sergei Pugachev in the Hague arbitration have been represented by French law firm Betto Seraglini, which could not answer the request of Kommersant.
Sergei Pugachev is a defendant of several arbitration and criminal cases - the Investigative Committee of Russia (ICR) accuses him of embezzling the money of MPB and Central Bank's funds allocated for the rescue of the bank (Art. 160 of the Criminal Code), as well as of the deliberate bankruptcy of the MPB (Art. 196 of the Criminal Code). Recently, the Basmanny District Court has arrested a dozen assets of the runaway banker within the framework of these cases.
Under the suit of the Deposit Insurance Agency (DIA, bankruptcy administrator of MPB), in 2015 the Moscow Arbitration Court decided to bring Mr. Pugachev to subsidiary liability for the bank's debts in the amount of 75.6 billion rubles ($1.3bn). This decision was upheld by higher authorities. In the case of the DIA suit, in February 2016 the High Court of London arrested the assets of the ex-banker for £1.2 billion and banned him from leaving the country. But by this time Sergei Pugachev had already left for France (in 2009 he received French citizenship), and in the UK he was sentenced to two years for contempt of court.
In March this year the Prosecutor General's Office of the Russian Federation reported that it had sent a request for the extradition of Mr. Pugachev from France. It is this request that the Hague arbitration asks to suspend.
A competent source told Kommersant that Russia could not suspend the request, since such a mechanism "simply does not exist." According to the source of Kommersant, it is more logical for arbitration to address not the Russian authorities, but France, from which Russia seeks extradition of Mr. Pugachev. The Prosecutor General's Office of the Russian Federation, in turn, told Kommersant that the request for the extradition of the ex-head of MPB remained relevant: France did not reject it, continuing to consider.
"Usually, tribunals in investment disputes try not to interfere in criminal investigations, recognizing their importance and the sovereign right of states to carry them out," said Sergei Usoskin, a lawyer at Double Bridge Law. According to Andrei Panov, Senior Lawyer of Norton Rose Fulbright, the arbitration takes such measures if the "plaintiff manages to prove that the state can use the criminal case as an instrument of pressure" against him, his business or those associated with him. "Or if arrest or extradition make it impossible or exceptionally difficult to continue the proceedings in arbitration, for example, the plaintiff can not manage the case from the detention center, and the witness - to give testimony. In these cases, the arbitration tribunals recognized that they had the right to demand the suspension of corresponding actions in criminal cases," adds Sergei Usoskin.
Andrei Panov noted that such regulations were taken by international arbitration quite often, "especially with regard to African countries, when it comes to Russia, I do not remember that." However, he remarks, in most cases, states do not comply with such arbitration rulings, referring to sovereignty, or simply ignore them. "This is designed for voluntary execution, there is no mechanism for enforcing such a requirement," Mr. Panov stated.
The Hague arbitration, lawyers believe, cannot direct such a prescription of France, since it is not a participant of the investment dispute with Sergei Pugachev. However, a similar situation was in the case of Hydro S.r.l. with Albania in 2016, then the International Center for the Settlement of Investment Disputes (ISCID) instructed the state to refrain from the demands for the extradition of certain plaintiffs. "Albania still sent a request to the UK, but the English judge suspended the extradition process with reference to the arbitration order. After that the Albanian government refused its request. Probably, concerning Sergei Pugachev, they also count on the same reaction of the French side," believes Andrei Panov.
The court believes that Anzhela Maria Tsapok could have made the money to buy the house and the expensive car by legal means, since she owned a firm. The court still refused to lift the attachment from her 6 million dollars.