“Not Gonna Cancel Us: Wealthy Spouses Continue to Divide Assets in Foreign Courts”.

5 April 2023

Big divorce proceedings involving persons from the countries of the post-Soviet space having not been coming off the first pages of foreign tabloids for a long time. And last December was marked by an HNWI divorce-related news rarely observed in the Russian legal market: NewLF LEVEL Legal Services and Philipp Ryabchenko’s law firm BIEL announced a strategic alliance in the sphere of transborder family and inheritance disputes. Denis Almakaev, head of the practice of international judicial disputes of LEVEL Legal Services, and Philipp Ryabchenko, managing partner of BIEL, tell us whether it is risky to litigate in the West for private clients today, why they should hire lawyers with the knowledge of international law and where they can find funds to pay for an expensive foreign trial.

Denis Almakaev (on the right) and Philipp Ryabchenko

— You announced a strategic alliance in the sphere of transborder family and inheritance disputes in December 2022. Please tell us what causes the demand for such a legal product?

—Denis Almakaev: Let’s discuss what in general transborder family disputes are, to begin with. In very simple terms, wealthy Russians (the high net worth individuals) often have assets abroad and husbands or wives whom they sometimes divorce. And while a regular person can go to a district court for dividing the marital property and divide a provisional apartment, car, garage in it, and that’s about it, it is extremely difficult to divide in a district court what rich and super-rich people own: a Cote d'-Azur villa registered for a nominee holder, corporate structures established somewhere in the Caribbeans, trusts and funds in Liechtenstein with millions of dollars in accounts. Therefore, trying to get at hidden foreign assets, our clients sooner or later find themselves in a foreign court where they begin to need Russian lawyers who have international qualifications and international experience.

—Philipp Ryabchenko: Strictly speaking, such lawyers become needed as early as in the pre-trial period when relations between spouses are peaceful and smooth. It would be extremely precautious to find a family lawyer with a transborder expertise at this stage because such a lawyer can help correctly structure and safeguard the client’s foreign property against divorce consequences or unexpected sanctions.

— Do people really think about divorces and division of property against the background of last year’s global problems?

—D. A.: Good question! Some conflicts arise exactly against the background of global problems. On the other hand, we have seen at least one instance where geopolitical problems pushed the spouses to peace. As a result, instead of a trial, we are now helping the client to preserve the received assets and get restructured for a life in new conditions.

—Ph. R.: Some people try to use the divorce or division of property to circumvent the sanctions. We warn our clients against such thoughtless steps because one shouldn’t think that regulators can easily be misled. Meanwhile, some documents drawn up before the sanctions were imposed can sparkle with new colors and open some opportunities in the light of the current political situation.

— Still your unique alliance has become a surprise for the market because you have different areas of expertise. Philipp has been long known in the Russian market as a leading expert in the family and inheritance law. But how international lawyers fit in family disputes?

—D. A.: The judicial practice of LEVEL Legal Services (ex-team of Hogan Lovells, a major international law firm – Kommersant’s note) has traditionally represented and is representing big institutional creditors when execution is levied on the foreign assets of their debtors. Those are the cases that our family law expertise grew from: banks often have to get into the details of division of the spouses’ property when the spouses try to play a “fixed match” between themselves. For example, spouses can divide assets in a way that the debtor spouse has nothing and the other spouse receives the assets that the creditors persistently pursued for a long time.

—Ph. R.: If we talk about our areas of expertise, I mainly specialize in Russian law, including the one applied abroad. And Denis and his colleagues at LEVEL Legal Services are international-level experts with a first-class knowledge of both Russian and foreign law.
Client’s requests are diverse: a client can seek for moving abroad permanently or want to safeguard his foreign and Russian assets against sanction risks, and it is necessary to put together the Russian and international law to do it correctly. Such requests become increasingly relevant every day because wealthy people who had a branched network of property and companies are now doomed for adapting to an ever-changing situation and for looking for a permanent lawyer to help them. The professional synergy that Denis and I have helps us resolve such issues.
We worked separately earlier — when Denis’s clients had family law issues, he had to look for experts in the Russian market and I, in turn, looked for them abroad. And then, by a lucky chance, we met, completed several joint projects, saw a good job — an incredibly good job! — we made (laughing), and understood at a certain point that it was time to stop looking for necessary colleagues outside and just combine our efforts presenting a united front. As a result of our alliance, the client receives a finished product, and this is convenient to everybody.

— Philipp mentioned “a lucky chance.” How did you meet?

—D. A.: We have been working together for three years now and we met five years ago, acting on the opposite sides of the barricades in an action for searching for the assets of the beneficiary of Sergey Pugachev’s Mezhprombank. At that time, a case for arresting his assets for €1.2 billion was considered in London in support of Russian proceedings for the subsidiary liability of the banker. He hid part of his property into New Zealand trusts and we succeeded to prove in the High Court of London that execution can be levied on the trust assets similarly to the personal assets. Sergey Pugachev’s London mansion was also part of the trust property. When we got prepared to sell it by auction, the ex-banker’s former wife Galina Arkhipova appeared in the case stating that the trust assets were a jointly acquired (marital) property. Her interests were represented by English lawyers and they needed a Russian law expert who would explain to the English court how the Russian family law works. Can you guess who that expert was? Of course, Philipp.
When I read the legal opinion prepared by him, I thought, “God damn it, we could have won quickly and we shall now be wining laboriously and difficultly.” My colleagues and I studied that virtuosic opinion by paragraphs because each line had something interesting to think about. And, of course, we had to get prepared fundamentally for such a serious battle.
After that dispute ended, I met Philipp at a legal conference on family law and we begun to argue behind the scenes who was right in that case. As a result, each of us remained unconvinced, but several months later Philipp came to me, saying, “Listen, I have a very difficult dispute, it has to do with intellectual property and includes several jurisdictions, from Holland to Cyprus, we need international law experts here. Let’s work together.” We have been working together since then, and I give credit to Philipp: he asked for help in a new case from his former litigation opponent, which not every lawyer is able to do.

—Ph. R.: When I wrote my objections to the case of the party represented by Denis, in the action between Sergey Pugachev and his wife, I was in turn pleasantly surprised by the clarity of the opponent’s case ànd a detailed consideration of each point. I had a chance to see such a professionalism from some English lawyers but not from Russian colleagues. Becoming interested, I began to find out who worked against us. Unconditionally, Denis played one of the leading roles in that project and I couldn’t help noticing it. After the project ended, we began our cooperation and I don’t regret it a single second.

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