National Bank Trust v Yurov & Ors [2020] EWHC 100 (Comm) (23 January 2020)

National Bank Trust v Yurov & Ors [2020] EWHC 100 (Comm) (23 January 2020)

The Shareholders, as directors and controlling persons, breached their duties under Russian law by orchestrating and implementing a dishonest scheme of balance sheet management, involving related-party lending, falsification of accounts, and concealment of losses. Their actions were not in the Bank's best interests, were unreasonable, and caused substantial loss to the Bank. The evidence established bad faith, personal benefit, and direct causation of damages. Liability is not excluded by limitation or time bar arguments.

Citation
[2020] EWHC 100 (Comm)
Parties
Claimant: National Bank Trust; First Defendant: Ilya Yurov; Second Defendant: Sergey Belyaev; Third Defendant: Nikolay Fetisov; Fourth Defendant: Nataliya Yurova; Fifth Defendant: Irina Belyaeva; Sixth Defendant: Elena Pischulina
Jurisdiction
England and Wales
Judgment Date
23 January 2020
Procedural Posture
Commercial Court Trial / Final Judgment
Outcome
Claim upheld against the Shareholders; Defendants found liable for breach of duty and fraud under Russian law.
Legal Topics
Directors' Duties, Breach of Fiduciary Duty, Fraudulent Trading, Balance Sheet Management, Liability Under Russian Civil Code, Liability Under Joint Stock Companies Law, Personal Benefit From Corporate Transactions, Regulatory Compliance, Limitation of Liability, Causation and Quantum
Company Law Banking Law Civil Fraud Russian Law Directors' Duties Breach of Fiduciary Duty Fraudulent Trading Balance Sheet Management +6 more

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Parties

National Bank Trust

Claimant

Ilya Yurov

First Defendant

Sergey Belyaev

Second Defendant

Nikolay Fetisov

Third Defendant

Nataliya Yurova

Fourth Defendant

Irina Belyaeva

Fifth Defendant

Elena Pischulina

Sixth Defendant

Procedural Posture

Commercial Court Trial / Final Judgment

Legal Issues

  1. 1 Were the Shareholders in breach of Article 71 of the JSC Law and/or Article 53 of the Russian Civil Code in respect of the Loans and Transactions?
  2. 2 Did the Shareholders orchestrate a fraudulent scheme involving balance sheet management and related-party lending?
  3. 3 Did the Shareholders personally benefit from the scheme?

Ratio Decidendi

The Shareholders, as directors and controlling persons, breached their duties under Russian law by orchestrating and implementing a dishonest scheme of balance sheet management, involving related-party lending, falsification of accounts, and concealment of losses. Their actions were not in the Bank's best interests, were unreasonable, and caused substantial loss to the Bank. The evidence established bad faith, personal benefit, and direct causation of damages. Liability is not excluded by limitation or time bar arguments.

Court Disposition

Claim upheld against the Shareholders; Defendants found liable for breach of duty and fraud under Russian law.

Orders

  • Defendants to pay damages to National Bank Trust in respect of losses caused by the fraudulent scheme.
  • Defendants' assets remain subject to Worldwide Freezing Order.