Creditanstalt (the plaintiff is CAIB) involved claims
of breach of contract by an investment bank operating in Russian in
the 1990s. CAIB engaged the defendants here as legal counsel
"for due diligence and proposed acquisition of the Moscow
based securities house" "Active". Other work was
apparently also done by HRO, and the issue in the case was the
liability of HRO with respect to whether warnings were properly
given by HRO to CAIB in connection with a transaction with Gazprom,
a large oil and gas company originally owned by the Soveit Union
with "a very close cooperation between Gazprom and the
Kremlin". The claims tried related to alleged bad or
incomplete advice by the law firm, HRO, which allegedly damaged
CAIB when various significant problems arose relating to
Noteworthy aspects of the trial court's decision
First, the trial court applied Russian law, relying on experts
on non-U.S. who apparently came and testified.
Second, in describing the Russian legal system, the court
Russia was an emerging market and its legal system was
imperfect, ambiguous, and constantly in flux. Plaintiffs'
expert on Russian law, Professor Alexander Makovsky, agreed that,
in Russia, the rules were made as they went along. . . . Certain
practices that would be illegal or unethical in other countries
'flourish and are considered appropriate business practice'
in Russia' . . . Corruption was widespread in Russia at the
time and was well-known in the business community"
In a remarkable finding, the Court relied on a provision in a
contract "contemplating the need to pay bribes to the extent
they were required in the 'ordainary course of business and/or
customary practice in Russia'". The Court concluded that
"Plaintiffs were aware that operating in Russia involved many
risks, including arbitrary and corrupt actions by the Russian
The Court did not discuss whether knowledge of such risks should
or should not have been an appropriate phenomenon on which to base
the Court's rulings. That is, on whom should the risk of loss
be placed in an instance where a client relies on the rule of law
in a non-U.S. jurisdiction, or whether a U.S. court can, by taking
evidence, conclude that a non-U.S. jurisdition's laws are
In a judgment harking back to the principles in Donoghue v Stevenson, the Court of Appeal has upheld the High Court's decision that the manufacturer of a defective product installed to prevent fire was not liable...
A year-long arbitration pilot scheme to provide a cost-effective, straightforward and quick method of solving legal disputes between claimants and participating members of the press commenced on the 26th July 2016.
Welcome to the Summer edition of Scots Law In Practice. The first three cases contain a common thread – the pursuer in each had a valid claim on the face of things, but in each one, faced legal difficulties in obtaining a remedy.
Each year businesses around the world face a growing number of risks that could potentially jeopardize hundreds of billions of euros.
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