Russian law applied in bribery case

Posted: 3rd April 2013

A Court of Appeal decision has highlighted the differences between draconian English anti-bribery laws and the much less severe corresponding provisions in Russia. Whilst in England there is a presumption that bribery causes loss and that wrong-doers are liable not only for the value of the bribes but also for any profits that flow from them, Russian law requires proof of loss for a successful claim.RCJ

Various shipping companies (the claimants) had pursued High Court bribery claims against a former senior employee, a Russian businessman and companies that he controlled (the defendants). It was argued that a number of highly profitable contracts had been entered into on the basis of bribery.

At first instance, the High Court found that there had indeed been instances of bribery, in the form of free holidays and payment of sums due on credit cards but the court ruled that the case should be decided under Russian law and, as the claimants had not proved that they had suffered actual loss as a result of the bribes, their claims for compensation were dismissed.

Had the case been decided under the more rigorous provisions of English law – which is founded on the principle that bribery is ‘an evil practice which threatens the foundations of any civilised society’ - the value of the bribes would have been recoverable from both the person bribed and the briber as well as any profits they had made from the contracts, regardless of any loss being established.

In dismissing the claimants’ appeal, the Court of Appeal ruled that, although the contracts contained English jurisdiction clauses, the first instance court had been entitled to find on the evidence that Russian law applied, that the various transactions had not been entered into as a result of the bribes and that, therefore, the claimants had failed to establish any actual loss.