The claim raised a number of issues relating to an investment agreement between the parties entered into in December 2015 pursuant to which Harbour provided litigation funding for Kagazy’s large fraud claim against its former management. That fraud claim resulted in Kagazy and its group companies obtaining a judgment for US $300m against its former managers in 2018. Amongst the issues dealt with in the current proceedings was the validity of variation agreements which Harbour claimed had been entered into in respect of the investment agreement which variations, if valid, would have provided Harbour with enhanced returns in exchange for additional funding. This issue turned on whether Kagazy’s former CEO/Rehabilitation Manager had actual or ostensible authority to enter into the variations.
Harbour also claimed restitution in unjust enrichment of sums provided by way of additional funding and damages for breach of contract. Issues also arose as to the interpretation of the investment agreement relating to whether additional funding provided by Harbour fell within the definition of “Claimants’ Legal Costs” thus attracting multiple or percentage returns under the investment agreement.
Having heard expert evidence on Kazakhstan law and witness evidence from Harbour’s Chief Investment Officer and one of Harbour’s Senior Directors of Litigation Funding, Mrs Justice Moulder found in favour of Kagazy on all issues in her 110-page judgment handed down on 5 May 2021.
Tamar Halevy, partner at Marriott Harrison LLP, commented: “This is a significant victory for Kazakhstan Kagazy JSC in a long running dispute with Harbour. Had Harbour succeeded in its claims, Kagazy and its group companies might receive nothing from the expected proceeds of the fraud claim following conclusion of the enforcement proceedings in that claim. This judgment is therefore an important step in protecting Kagazy’s entitlement to its share of those recoveries.”
While Harbour’s claim was brought against Kagazy and three other defendants, the other defendants took no part in the trial. Kagazy owns one of Central Asia’s largest paper and packaging manufacturers.
Marriott Harrison LLP instructed Rupert D’Cruz QC of Littleton Chambers and James Egan of Ten Old Square.
Please follow this link to access the judgment
Articles by Tamar Halevy
Marriott Harrison LLP has successfully defended its client, Kazakhstan Kagazy JSC, in a claim brought against it in the Commercial Court by Harbour Litigation Fund regarding the parties’ respective entitlements under an investment agreement to the proceeds of a US $300m judgment obtained by Kagazy in 2018
5th May, 2021