Ukraine's PrivatBank to appeal London court decision against jurisdiction

KIEV/LONDON (Reuters) - PrivatBank said on Friday it would appeal a London court’s decision that it had no jurisdiction in a case pitting Ukraine’s largest lender against its two former main shareholders.

The logo of PrivatBank is pictured outside its branch in central Kiev, Ukraine July 10, 2018. REUTERS/Valentyn Ogirenko

PrivatBank launched a case against Ihor Kolomoisky and Gennadiy Bogolyubov, alleging it lost hundreds of millions of dollars to fraud. The former owners strongly deny wrongdoing.

The High Court has not yet handed down its final judgement, and said a draft could not be circulated.

The case is part of a protracted legal battle between the Ukrainian government and the former owners after PrivatBank was forcibly nationalised in December 2016 as part of an donor-backed clean-up of the country’s banking system.

Kolomoisky has also launched a number of lawsuits and wants to regain control of the bank.

“This judgment is just the first stage of the process and the Bank intends to appeal the decision and is confident that it will ultimately succeed in bringing its claims to trial in London,” PrivatBank said in a statement on Friday.

A worldwide freeze of the former owners’ assets remained in place while the case continued, it added.

Justice Timothy Miles Fancourt said on Friday that he had come to the conclusion that the court had no jurisdiction, although he added: “I have given the right of appeal and I recognise the Court of Appeal may reach a different conclusion.”

Andrew Lafferty, a partner at Fieldfisher who represents Kolomoisky, welcomed the judge’s decision on jurisdiction.

“London is an important legal and litigation centre and, understandably, many wish to litigate here,” Lafferty said in an emailed statement. “However, what the claimant attempted to do was to artificially construct a case so as to procure that it be heard in London.”

Lawyers for Bogolyubov did not immediately comment.

The Ukrainian authorities say they have spent nearly $6 billion to plug a hole in PrivatBank’s balance sheet since 2016, caused by what the government alleges were fraudulent lending practices and money laundering.

Kolomoisky and Bogolyubov have long disputed the assessment by the central bank and the government of PrivatBank’s finances and say the lender was nationalised for political reasons. Kolomoisky has referred to the assessment as “nonsense”.

The government has previously described the saga as a litmus test for its ability to fight corruption, nearly five years after pro-Western politicians came to power following the Maidan 2014 street protests promising to deliver change.

Recovering some of the PrivatBank money the government claims was lost would help shore up Ukraine’s finances as it enters into a choppy election period next year.

Reporting by Natalia Zinets in Kiev and Karin Strohecker in London, Writing by Matthias Williams; Editing by Mark Potter and Alexander Smith