ogier vtb

Have fun working for a client which knows you think it's morally repugnant.


Ogier is set for some awkward client meetings after it was forced to continue acting for a sanctioned Russian bank.

The offshore firm applied to stop working for VTB Bank in its pursuit of a company owned by Sergey Taruta, a Ukrainian oligarch and the governor of the Donbas region of Ukraine. Ogier has been acting for VTB in its £30 million claim against the company in the British Virgin Islands High Court.

In its application to drop VTB, Ogier said that Russia "invaded Ukraine in an entirely unprovoked way in circumstances which most of the world, including Ogier, regard as unjustified and unacceptable". Since VTB "is a majority state owned Russian bank", it was now "against Ogier’s ethics and code of practice to act for a company so closely associated with the Russian state". The firm, which recently opened up shop in Beijing, also cited a "reputational concern".

As well as being ethically beyond the pale, Ogier said acting for VTB meant its lawyers risked breaching the sanctions regime, and it "will not place its employees in that sort of jeopardy".

There was also the small matter of bills. Thanks to the sanctions, "Nor could VTB pay", complained Ogier. That wasn't an issue for Justice Adrian Jack, who has previously blasted KWM's ex-senior partner and Latham & Watkins and Kirkland & Ellis, and who rejected all of Ogier's arguments. 

He determined that a licence would exempt Ogier's lawyers from criminal liability related to sanctions, like the one initially sought by Freshfields of its own volition so that it could keep acting in the UK for VTB. Ogier told RollOnFriday a month ago it would not seek such a licence, but now it has been compelled to obtain one. 

In the interim, Ogier's lawyers will be able to avoid criminal liability by working for VTB for free, said the judge. "Given the large amount of work Ogier have done for VTB, a short period where they cannot bill whilst a licence is being obtained is not onerous", said the judge.

When the firm is allowed to be paid without its lawyers risking prison, the impact of sanctions won't be a problem, said the judge. Or, it will, but Ogier can suck it up. "It is true that VTB, with other Russian banks, has been ejected from the SWIFT bank transfer system", he said. Ogier's fees will therefore "need to be routed by other means", such as carrier pigeon, "through countries, like China or India, which have not imposed sanctions on Russian entities".

The judge said Ogier's counsel, David Alexander QC, accepted it would be "potentially disastrous" for VTB's case if Ogier dropped out. "Far from being a problem, this, he submitted, was a good thing", said the judge: "Reprehensible entities such as state-owned Russian banks should forfeit their rights by being denied the right to litigate".

However, said the judge, "Even pariahs have rights", and "It is precisely when VTB are stigmatised as a pariah that VTB need the best endeavours of their legal representatives to advise them...however uncomfortable it may be for Ogier".

The judge said any obstacles faced by Ogier (working for a PR disaster, being unpaid, navigating the world's grey money markets, being unable to sleep at night) were outweighed by the requirement to uphold the rule of law, and its lawyers were "obliged to continue to represent VTB to the best of their skill and ability".

He said he was making the judgment public "so that it will be known that Ogier are continuing to act for VTB not out of personal choice, but because this Court has refused to allow them to stop".

Ogier told RollOnFriday, "The judgment shows that Ogier has made every effort within the bounds of its professional obligations to come off the record in this matter, including instructing a leading London silk to argue the case before the Court. Ultimately, however, the Court has made a detailed, reasoned judgment, which we respect and, as officers of the court, will of course abide by".

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Comments

Off Shore 01 April 22 09:39

The whole off-shore industry exists for the sole purpose of facilitating tax avoidance and/or obscuring ownership of companies and their assets.

On that basis I don’t think anyone in that sphere should be piping up with moral judgements.

Pigeon 01 April 22 10:06

@Off Shore 01 April 22 09:39

This statement is incorrect and your lack knowledge of OFCs is betrayed by your misspelling of "offshore".

False equivalence 01 April 22 10:18

@Off Shore

So tax avoidance and business secrecy are as immoral as invasion of a sovereign nation and mass murder (which is the logical implication of your comment)? Pray tell how...

@Pigeon 01 April 22 10:22

@Pigeon I am genuinely interested, if Off Shore is wrong, then what else does the offshore industry do?

Why would companies with no material business in offshore jurisdictions choose to base their corporate entities (at least in their holdco stack) there? The only reason I can see is their "favourable" legal regimes.

Captain crabby 01 April 22 10:43

Ok I’ll bite.

A big part of offshore is funds.  Investors from different jurisdictions pool assets for investing in (eg) real estate in another jurisdiction.  They pay tax in the jurisdiction where they invest and in their home jurisdictions but using an offshore vehicle means there’s no third layer.

Another part is private client structuring.  Many clients come from low tax onshore jurisdictions (most of the Middle East for example) so the structuring isn’t about tax avoidance but succession planning (stopping the next gen frittering it away) or asset protection (segregation from business assets).

I don’t see “brass plate” Apple/google corporate type stuff where I am - I thought that was done in places like Ireland and Lux which are not offshore - and agree that seems difficult to justify.

Missive 01 April 22 10:49

@Off Shore 01 April 22 09:39

I think you meant to say tax evasion? Tax avoidance is perfectly legal and is what every mum and dad wage earner does when claiming a tax deduction and lodging a tax return. 

Or in the words of the great Kerry Packer:

'Now, of course, I am minimising my tax, and if anybody in this country doesn't minimise their tax, they want their head read. Because, as a government, I can tell you, you're not spending it that well that we should be donating extra.' 

It's easy to have a crack at offshore, but at least get the basics right. 

As an aside, if one wanted to evade tax, there are far better ways to do that than through an offshore structure. 

Anon 01 April 22 11:22

Off Shore 01 April 22 09:39: and offshore lawyers are all third rate. It is tiresome having to deal with them. The best way is to treat them as a post box and get London counsel instructed. 

Gobblepig 01 April 22 11:25

@Off Shore

 

The whole ISA and pensions industry exists for the sole purpose of facilitating tax avoidance.

On that basis I don’t think anyone in that sphere should be piping up with moral judgements.

Anonymous 01 April 22 11:37

"Offshore is the pits. It’s where you go when you have failed."

Fair comment.

But don't expect a warm welcome from them next St Patrick's Day.

Off Shore 01 April 22 12:05

@Missive it feels like you are the one who misunderstands. I correctly said tax avoidance because what offshore centres do is (largely) legal.

If you are equating individuals paying into a pension (which is subject to strict limits and at least arguably fulfils a legitimate objective by encouraging people to save for their retirement) with corporate profit shifting which does nothing other than reduce the tax burden of multi-nationals, then that’s a clear false equivalence.

As for investment funds, it is perfectly possible to achieve the same mitigation of double taxation by establishing funds in onshore jurisdictions, so I don’t buy that argument.

Regarding succession planning, it should be a matter for a person’s true home jurisdiction. If your home jurisdiction lacks rules on asset protection or has onerous mandatory succession requirements then use your wealth and power to lobby for a change in law, it can’t be right that instead the wealthiest can just structure around their domestic laws.

When there aren’t billions of misappropriated funds from developing nations sloshing around in the Channel Islands and the Caribbean, I’ll be more receptive to the argument that offshore mostly provides legitimate succession planning options.

Anonymous 01 April 22 13:55

Does a firm have to continue to act even if it isn't being paid? What happens if Ogier submits an invoice, waits until it's not paid and then brings insolvency proceedings against VTB?  Wouldn't the conflict knock them out from continuing to act?

SecularJurist 01 April 22 16:02

This is a poisson d'avril.

No HHJ would deliberately would force solicitors to work pro bono for sanctioned clients.

Firms are entitled to blue pencil dodgy clients and no longer act for them.

Being told to abandon DX and use carrier pigeon and use third party comms via India and China; unprofessional, unjudicial  comments by alleged judge, with no proper reasoning for reaching their decision seems somewhat fantastic.

Furthermore, HHJ deliberately making their ruling liable to be overturned on appeal doesn't happen!

 

Anonymous 01 April 22 16:44

False equivalence 01 April 22 10:18

 

So tax avoidance and business secrecy are as immoral as invasion of a sovereign nation and mass murder (which is the logical implication of your comment)? Pray tell how...

 

It is designed to hurt average joe.

Anonymous 02 April 22 17:48

A lot of insecure lawyers on here blasting ‘offshore lawyers’ as third rate with clearly no understanding or experience of their practices. Yawn.

Anon 03 April 22 05:08

Anonymous 02 April 22 17:48: it’s because we do understand and have worked with them that we know they are third rate and there is no dignity in their role - which is to act as a post box for onshore legal teams.

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