The court has set aside orders permitting service outside England and Wales on a number of Georgian defendants including Mr Ivanishvili.

Okuashvili and ors v Ivanishvili and ors [2025] EWHC 829 (Ch) is a cautionary story that highlights how important it is (1) to be scrupulously honest and open with the court and (2) to ensure that, early on in the case, applicable law has been fully considered.

Background

Zaza Okuashvili is a Georgian businessman, the founder of Omega Group, which includes a tobacco business. Around 20 years ago he moved to the UK after government action against his business following the Rose Revolution. He has lived here ever since, but for some time retained business interests in Georgia.

In 2012 Bidzina Ivanishvili (an influential Georgian politician now subject to US sanctions for undermining Georgian democracy and advancing Russia’s interests) and his Georgian Dream political party came to power in Georgia. According to Mr Okuashvili, in 2015 Mr Ivanishvili extorted approximately USD1.8m from him with threats of personal harm to him, his family and employees, and harm to Mr Okuashvili’s businesses. Mr Okuashvili also says that a business friendly to the government infringed a patent belonging to his company for a non-filter cigarette subject to a lower rate of tax, after a failed attempt to intimidate Mr Okuashvili into merging the two businesses and paying “tugriks” (Mongolian currency, Russian slang for “money”) to the Georgian government for using the patent.

Mr Okuashvili brought claims against Mr Ivanishvili and other parties (mostly resident/established in Georgia) said to be involved in the extortion of the USD1.8m (Claim 1) and infringement of the patent following intimidation into a merger (Claim 2) in 2022 and 2023 respectively.

The key claim of most interest to us is Claim 1, a claim for breach of contract, tort and unjust enrichment which was initially pleaded only under Georgian law. The “anchor defendant” was a Mr Levan Kipiani, alleged to have taken part in the extortion in breach of a contract that provided for the jurisdiction of England and Wales (it was silent as to governing law). It was on the validity of claims against Mr Kipiani that jurisdiction over his co-defendants depended.

Mr Okuashvili obtained permission to serve Claim 1 on the defendants outside England and Wales following an application to the court, and served accordingly. The defendants then applied to set aside the court’s permission to serve them.

Without notice applications: full and frank disclosure

The application for permission to serve Claim 1 outside England and Wales was made without notice to the defendants, as is usual. The defendants, after being served with the order giving permission, had the opportunity to apply to set it aside.

Because the defendants could not be heard before the initial order is made, Mr Okuashvili was subject to a duty to disclose, fully and frankly, all facts which might reasonably be taken into account by the judge in deciding whether to grant the application. If there were material facts outside his knowledge, he was under a duty to make enquiries to establish them. The material before the judge had to be presented fairly in all material respects.

The court regards a failure to make full and frank disclosure on without notice applications to serve out as very serious, since an order for service out exposes a defendant to claims and costs. The court will set aside the order it has made if full disclosure has not been made, frequently even where failure to disclose is innocent.

Limitation under Georgian law

One of the requirements for obtaining permission to serve a claim outside England and Wales is that, on the assumption what it alleges is true, the claim has a real prospect of success.

A fact obviously material to the prospects of success is the applicable limitation period. Georgian law, under which Claim 1 was issued (on the basis that Mr Kipiani’s contract was governed by Georgian law despite having an English jurisdiction clause), has a limitation period of three years for breach of contract claims.

In his witness statement supporting the application, Mr Okuashvili’s then solicitor noted that under Georgian law tort claims became time-barred after three years. However, he said that he was not aware of the limitation period in Georgia in respect of a breach of contract. He also said that Mr Okuashvili and his co-claimants believed all the claims to have reasonable prospects of success.

In 2023 Mr Okuashvili applied to amend Claim 1 to include an alternative claim that English law applied to Mr Kipiani’s contract. English law has a limitation period of six years for breach of contract claims. This application had not been determined when the court came to consider the defendants’ application to set aside service on them.

Decision

After a careful analysis, the court held that (assuming the defendants’ proposed amendments to Claim 1 to include English law were permitted) the claims for breach of contract/fiduciary duty against Mr Kipiani and unjust enrichment against Mr Ivanishvili had reasonable prospects of success.

However, as originally pleaded, Claim 1 had been seriously flawed, because under Georgian law, the claims against Mr Kipiani had been time-barred. The application for permission to serve out had not made this clear. Mr Okuashvili and/or his solicitor could easily have established the Georgian limitation period for breach of contract, if indeed they did not know it. The court said it found the way the evidence had been presented “deeply troubling” and that it did not understand how the Mr Okuashvili’s solicitor could have said that Mr Okuashvili believed the claims had reasonable prospects of success.

The English court’s jurisdiction over the claim against Mr Ivanishvili for unjust enrichment depended entirely on a viable claim against Mr Kipiani as the anchor defendant. Without such a claim, there could be no basis for Mr Ivanishvili to be brought before the English court.

The order for service out of Claim 1 on Mr Ivanishvili and other Georgian defendants was accordingly set aside. The claim against Mr Kipiani (as amended to be pleaded under English law) survived, since he had expressly agreed to English jurisdiction.

Comment

When first analysing the facts of a potential claim, it is vital to consider which law, of those that might apply to them, is most advantageous. English law should always be at the forefront of a practitioner’s mind, since it provides a longer limitation period than many others, and since it can offer a way forward where the substance is favourable, but formalities have not been observed.

If Claim 1 had originally been pleaded on the basis that English law applied to Mr Kipiani’s contract, then viable claims would have existed against Mr Kipiani, and the other Georgian defendants, including Mr Ivanishvili, could validly have been brought before the English court on that basis. If the evidence in support of the application to serve the Georgian defendants had given full and frank disclosure of the contractual limitation period, the application would have failed, but Mr Okuashvili would at least have saved significant costs. As it is, years after issuing the claims he has lost the chance to sue several significant defendants.