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Lago Agrio: Donziger’s Reply Brief

Day two of this week’s Lago Agrio coverage: Steven Donziger has filed his reply brief in the Second Circuit RICO case. I’m not sure why the due date for this brief was later than the due date than the LAP reply brief—I haven’t studied the case calendar. But in any event, it’s another strong brief from Deepak Gupta’s office.
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Case of the Day: Karpov v. Browder

The case of the day is Karpov v. Browder, [2013] EWHC 3071 (QB). The case arose out of the death of Sergei Magnitsky in a Russian prison in 2009. Magnitsky had been investigating a tax fraud committed in Russia. His death in custody was widely condemned, and in fact, the US enacted a new statute, the Sergei Magnitsky Rule of Law Accountability Act of 2012, which prohibits those Russian officials the US government considered to be responsible for Magnitsky’s abuse and death from entering the United States or accessing the banking system.

The defendants in the case were Hermitage Capital Management Ltd., its CEO, William F. Browder, a UK affiliate of the Fund, and a Russian law firm, Firestone Duncan (CIS) Ltd. Magnitsky, before his death, had worked for Firestone Duncan. He was investigating an allegation that the Klyuev Gang, apparently an organized crime group, had conspired to take control of some Hermitage Fund subsidiaries and thus to procure an illegal $230 million tax refund from the Russian government, which went to the conspirators. After Magnitsky’s death, the defendants pushed for accountability. Their efforts included, notably, English- and Russian-language websites that featured videos. Mr. Browder also gave an interview to the BBC and wrote an article in Foreign Policy. In all of these materials, Pavel Karpov, a Russian investigator, was named. Karpov claimed that the materials were defamatory insofar as they implied that he was guilty of Magnitsky’s murder, that he was party to the tax fraud, and that he had previously trumped up charges against another, Fedor Mikheev, in order to cover up the fact that he (Karpov) had kidnapped Mikheev in an attempt to extort money from him.

Karpov unusuccessfully sought to have the Russian authorities bring criminal charges on account of the supposed defamation. He later brought a civil suit for defamation against the authors of a report published by President Medvedev’s Human Rights Council, which, he claimed, was based “almost entirely on allegations and materials provided by the Defendants.” The case was dismissed by the Presnensky Regional Court in Moscow, and Karpov did not appeal. Karpov then sued for libel in England.

The main issue of interest was whether the case should be stricken as an abuse of process. Mr. Justice Simon held that there was no absolute requirement that the plaintiff be able to show a real and substantial tort within the jurisdiction, but that it was an important consideration. Usually a plaintiff can make such a showing by showing that he had a reputation in England to protect. There was no question that Karpov had no reputation one way or the other in England prior to the supposedly defamatory publications. But the judge held that this was not an absolute bar to the claim. A claim that arises out of a publication that both “created and destroyed” the plaintiff’s reputation can sometimes proceed, but such cases usually arise where the plaintiff “has some form of prior or imminent connection with the jurisdiction.” On the evidence, the judge found that Karpov could not show a real and substantial tort within the jurisdiction. But that alone was not dispositive, as we have just seen.

The judge considered whether the English court should allow the claim to proceed in light of the fact that the Russian courts, the “natural forum,” had rejected them. As the judge noted:

Russia is plainly the natural forum for bringing proceedings intended to vindicate the Claimant’s reputation. He is a Russian citizen, who was employed to carry out public duties in Russia. All the relevant events took place in Russia, involved other Russian citizens; and much of the relevant underlying material on which a trial would be based is in Russia.

The judge rejected the view that the Russian decision precluded the English litigation, but he held that the outcome of the case in the “natural forum” was relevant because it threw light on the main issue, i.e., the issue whether Karpov had to, and could, show a real and substantial tort in the jurisdiction.

Interestingly, the judge seemed to side with Karpov on the question whether the defendants could justify their supposedly defamatory statements:

… [T]he Claimant has achieved a measure of vindication as a result of the views I have expressed on his application. The Defendants are not in a position to justify the allegations that he caused, or was party to, the torture and death of Sergei Magnitsky, or would continue to commit, or be party to, covering up crimes.

This conclusion makes the ultimate decision all the more interesting. The judge, weighing all the factors he had considered, held that the claim should be stricken as an abuse of process.

Is this case the end for libel tourism, as one advocate has suggested? I’ll leave that for the English lawyers to decide. It is interesting, though, to consider the jurisdictional modesty in the decision in the context of similarly modest statements from the US courts recently. I’m not talking about similarities at the doctrinal or technical level, but rather a similar mood.