We saw this headline in The Times just after Christmas. What on earth is it all about?
We’ve read and re-read it and to be frank, we’re still not completely sure.
The ‘oligarch divorce’ in question is that of Farkhad Akhmedov and his ex wife Tatiana Akhmedova, which involved vast amounts of money, lots of lengthy contentious litigation and numerous published judgments (15). Akhmedova was originally awarded £453m by a judge in 2016, but spent the subsequent years trying to actually enforce that award against her ex-husband who had failed to pay what was due and was ultimately found in contempt of court. Proceedings were then commenced against one of the parties’ sons, broadly summarised as relating to his attempts to help his father keep the assets from the wife (hence the numerous judgments). Subsequently (as reported by the Times in July of 2021), the couple reached a different settlement out of court, which would see a substantially lower award being made to Akhmedova than the one originally ordered by the judge. As noted in July, that settlement would still need to be approved by the court at some point (we don’t know if it has been), and the court will probably need to decide what to do with the outstanding contempt of court issue (which Tatiana Akhmedova presumably no longer has any interest in pursuing).
It’s difficult to know how the court will deal with the contempt issue – whilst it’s reasonable to assume that part of the parties’ agreement includes a dropping of hands on the contempt issue since it no longer serves any purposes as between them, the court is in control of its own process and Mr Akhmedov has still been found to have breached a the court order, and arguably such a breach should not be just ignored. Contempt of court proceedings serve two primary purposes – partly to enforce an order for the benefit of a beneficiary party, and partly to ensure that respect for the orders of the court is maintained – here, whilst the first purpose has fallen away the second arguably hasn’t.
This more recent news item is based upon The Times having apparently seen some ‘correspondence’ which ‘suggests that judges are so concerned about perceptions surrounding the [Oligarch] case […] that they planned an unprecedented statement to make clear that the judiciary was still overseeing the case despite Akhmedova accepting a settlement significantly lower than the award ordered by the court’.
News of the settlement, so it is said, led to:
‘concern over the status of high court orders in the wake of private agreements, with some speculating that it appeared that the mega-rich could simply sidestep freezing and contempt orders. Family lawyers have also said it would bolster public confidence in the system if judges confirmed they were satisfied that Akhmedova was happy to accept significantly less than the award ordered by the court.’
We’re not clear who The Times have in mind here as expressing these concerns or who the family lawyers cited are, and the ‘legal experts’ who were cited in the article in July, saying that ‘the court would have to approve the deal struck by the couple and that [Akhmedov] remained in contempt of the High Court’, were also unidentified. But the general sentiments are unsurprising given the background of lengthy and very costly proceedings (costly both to the parties and the public purse), in respect of which the fabulously wealthy husband has simply played the long game, ignoring court orders, allowing more and more costs and energy to be expended until, eventually, he has got his way.
The article goes on to tell us that the parties had objected to the statement being issued by the judges, insisting that most of the terms of their deal remain secret. That’s a bit perplexing because the main terms of the deal aren’t a secret and haven’t been since July – they were summarised by The Times as follows :
‘[Akhmedova] received £100 million cash and artworks valued at £50 million. It emerged that much of the settlement would be dissipated by legal costs and payments to the company that funded Akhmedova’s case. ‘
However, we don’t know everything. What isn’t known is whether the court has been prepared to approve this settlement, effectively swapping out one award for another, or whether it is going to wipe the slate clean on the contempt as part of the resolution of the case – and if the court were to decide it wanted to proceed with the contempt what effect would that have on the deal struck between the parties, which might have been contingent upon making the contempt issue go away?
The reference to the parties’ objections to a statement being issued is also perplexing, because it suggests that the ‘correspondence’ the piece is based on has not come from the parties or their lawyers. Is the ‘correspondence’ material written by a judge or judges to the parties in the course of the case (the article says that ‘In the correspondence senior judges point out…’ before apparently going on to quote unnamed judges)? If so, who on earth has leaked it to The Times? Or, is what is being quoted actually correspondence between journalists and the Judicial Press Office, as journalists enquire if and when anything further is going to come into the public domain, perhaps as and when the ‘settlement’ is approved by the court. In the ordinary run of events, approval of a consent order would not give rise to the need for a judgment, which would be the usual vehicle for an explanation of what has happened. It is possible that the press were enquiring what the hold-up was, keen for the next instalment of the saga, and that references to the 15 judgments were made by the Press Office (or by judges via them) in that context – and that the Press Office’s suggestion that ‘Should parties wish to raise any issue with the court, it is a matter for them to take legal advice and make a formal application’ relates to the press indicating they intended to quote the correspondence. Frankly, we don’t know which (if any) of these hypotheses is true, but we tend towards the latter, because it seems quite likely that the former might amount to a contempt of court.
What we think is interesting, albeit not particularly drawn out in the recent Times article, is the question of whether Ms Akhmedova may have agreed to this far less advantageous settlement than she was legally entitled to, at least partly because of her substantial indebtedness to a litigation funding company, who it appears would be the main beneficiaries of the award rather than Akhmedova herself (who could be forgiven for saying she has just had enough of it all and wants out on any terms).
This is the second case we’ve seen in the last couple of weeks which highlights the potential perils and distorting effect of litigation funding on the behaviour of parties when reaching settlements in high value financial remedies proceedings. The other is LS v PS [2021] EWHC 3508 (Fam), published just before Christmas, in which a (strangely, anonymised) litigation funding company, ‘Q’, sought to rely on privileged material produced in family proceedings for the purposes of a civil claim against a wife who, it is said, defrauded the funding company by agreeing a settlement which would mean she was unable to pay her debt to them. That company are now trying to unpick the settlement reached. Both of those cases involved a lot of money, a lot of litigation funding, and a settlement reached out of court. In the LS v PS case, this settlement was via a ‘private FDR’ which is a process set up to mirror a stage of the court process now often used by parties who are able to afford it and who prefer to avoid the interminable delay now endemic in the family courts, but which does still need to be approved by a court to be finalised. It is likely that the Akhmedov case was also settled through this or a similar private process (or through old fashioned negotiation between lawyers).
We predict these issues of litigation funding will become more prominent in coming years, as more and more of the parties who are the financially vulnerable spouse in a separating couple (at the more wealthy end of the spectrum) rely heavily on litigation funding, and borrow eye-watering amounts of money, to be repaid at the end of the day out of any award or settlement. Such litigation is high risk, it seems, for all concerned. The financial stresses of divorce for most of us are far more mundane, but the divorces of those of us without yachts and international assets make less attractive news items.
Feature pic : secret by Melanie Innis on Flickr – thanks!
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