£2.5bn claim on Roman Abramovich fails because he stays in UK too little

Roman Abramovich has fought off a £2.5 billion claim brought by a Russian oil company after a High Court judge ruled that he was neither “resident” nor “domiciled” in Britain. 

The owner of Chelsea Football Club faced claims by Yugraneft, the biggest company on the AIM market, that it was cheated out of its 50 per cent stake in a huge oilfield in Siberia. 

But in a long-running case that will be studied keenly by other Russian oligarchs, Mr Justice Christopher Clarke granted judgment in favour of Mr Abramovich and Millhouse Capital UK, the Russian billionaire's London-based investment company. 

He said that the claim should have been served in Russia, not in England, and that Mr Abramovich, a Russian citizen and Russian taxpayer who enters the United Kingdom on a business visa, was not resident in the UK for tax purposes or domiciled here.  

The Russian magnate, the judge said, spoke Russian and was “not fluent” in English. At the time the claim was served, he was Governor of the “windswept and inhospitable” Chukotka province. 

The judge said: “He spends more time in Russia than anywhere else and his business and personal interests are focused on Russia. Virtually all of the business associates with whom he is said to have dealt in these proceedings are Russian. Prior to 2004 he spent virtually no time in England. In 2007 he spent only 57 full days here, virtually all in connection with football matches.” 

The practice of the Revenue was to regard people as resident in Britain if they are here for 183 days or more in any tax year, the judge said. In its terms, Mr Abramovich would not be regarded as resident. 

The judge said: “Mr Abramovich is a billionaire. His overall wealth is said to be such that the £30million that he has spent on the only property he now owns in England, Lowndes Square, represents less than 0.5 per cent of his estimated worth. 

“He has spent considerably larger sums on yachts and properties outside England. His houses, yachts and so on are in no sense his principal assets.” 

In 2007, the year of the claim, he spent an average stay of 1.47 days and a longest stay of 11 full days, during which he attended four football matches. “Such visits are not the sort that suggest an intention to make England one's usual or settled place of abode.” 

The ruling comes after a five-year dispute between Sibir Energy and Mr Abramovich arising from a joint venture, SibneftYugra, the company developing a 1.8billion-barrel oilfield in Siberia. Sibir held its shares in the joint venture through Yugraneft; and Mr Abramovich held his through Sibneft. Sibir's 50 per cent stake was diluted to less than 1 per cent in a manoeuvre in which Sibneft maintained its 50 per cent interest, with the rest transferred to three offshore companies later revealed to be controlled by Sibneft. Mr Abramovich maintained that the transfers were shareholder-approved. He sold Sibneft to the Russian gas giant Gazprom three years ago. 

Sibir initially took the case to a court in the British Virgin Islands, where the offshore companies are believed to be registered. But the claims were dismissed for lack of jurisdiction. 

Liquidators on behalf of Yugraneft then lodged the claims in the Commercial Court in London, alleging that Mr Abramovich was liable for “dishonest assistance, knowing receipt and/or unjust enrichment” arising out of the issue of “participation interests” in a joint venture company.  continues here

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