Pipia vs BGEO: Additional Disclosure Granted

Pipia vs BGEO: Additional Disclosure Granted

Translated by Ana Dumbadze

Following a public hearing held on 12 January 2021, regarding an application by Roman Pipia for additional disclosure from BGEO Group Limited (formerly BGEO GROUP PLC), in the legal proceedings brought by Mr. Pipia against BGEO in the Commercial Court of the English High Court, the Court has issued its judgment, obliging the Defendant to give additional disclosure. BGEO had resisted disclosure of the mobile phone used by its former CEO, Iralki Gilauri, but the Court said the device had to be delivered up to be searched.

It is Mr. Pipia's case that the actions of BGEO in relation to Rustavi Azot LLC have caused him significant damages. The amount claimed by Mr. Pipia in his amended claim, is minimum USD393 million.

The above information regarding the case, due to its high importance, was published on the official website of the London Stock Exchange.

The Court’s decision following a public hearing on 12 January 2021 represents a crucial and decisive moment in the dispute which started four years ago, as the recent judgment regarding the disclosure of the mobile phone used by BGEO former CEO Iralki Gilauri, in favor of Roman Pipia, is expected to play significant role at the final trial scheduled for April, when the judge of the English High Court will make the final decision.

Accordingly, the above ruling by the Court can be considered a crucial process for the final result.

Georgian businessman Roman Pipia claims that through a series of cunning transactions orchestrated by the Defendant ("BG UK"), he was unlawfully deprived of a Georgian fertilizer plant worth hundreds of millions of dollars. BG UK denies any wrongdoing, indeed, any involvement in the events subject to this dispute.

The judgement published on the official website of the English High Court reads:

Factual background

Mr. Pipia is a Georgian businessman who claims that at the times material to this claim, he held and managed various business interests through a number of corporate vehicles of which he was the ultimate beneficial owner, including Rustavi Azot LLC ("Rustavi Azot"), Agrochim SA ("Agrochim"), and Loyal Capital Group SA ("Loyal").

Rustavi Azot, a company registered in Georgia, is at the center of this claim. Mr. Pipia's case is that until August 2016, it owned and successfully operated a production plant producing nitrogen based fertilizers, and that the production plant was one of the largest industrialized businesses and employers in Georgia.

BG UK is a company incorporated in England and Wales, and the parent holding company of JSC BGEO Group ("BGEO Georgia"), a company incorporated under the laws of Georgia. BGEO Georgia in turn is the parent holding company of JSC Bank of Georgia ("BoG"), also a Georgian registered company.

In summary, the events giving rise to the disputes between the parties arise out of the following transactions entered into between 2011 and 2016.

In 2011, Rustavi Azot and Agrochim entered into a USD 100 million general credit line agreement (the "GCLA") with BoG. The loans advanced by BoG under the GCLA were secured by a series of mortgages and pledges over Rustavi Azot's property.

On 27 June 2014, Loyal entered into a USD 100 million facility agreement (the "EWB Facility") with East West United Bank of Luxembourg ("EWB"). The EWB Facility was secured by various pledges over the issued shares in Agrochim and other companies controlled by Mr Pipia, and their respective dividend accounts.

In 2015 and 2016, Mr Pipia sought to restructure the GCLA and the EWB Facility. His case is that a "Fixed Asset Valuation Report" of Grant Thornton Akhvlediani LLC, prepared in connection with that proposed restructuring and dated 31 December 2015, valued the "Fixed Assets" of Rustavi Azot at approximately USD 388,488,000 or GEL (Georgian lari) 930,390,000.

On 22 August 2016, BoG appointed Tbilisi Auction House Limited (the "Auction House") to sell the assets of Rustavi Azot by auction. The appointment of the Auction House purported to be an appointment of a "Specialist".

On 24 August 2016, EWB exercised its pledge over Agrochim's shares by serving a Default Notice and Voting Rights Suspension Notification pursuant to the terms of the EWB Facility. Mr Pipia says that he thus lost control of Agrochim and Rustavi Azot.

On 1 September 2016, an auction was held of the property and assets of Rustavi Azot (the "Auction"). The starting price was GEL 199,328,134.40. There were two bidders: BoG and JSC EU Investments Limited ("EUI"). EUI's bid of GEL 235,078,134.40 was declared winning. The Auction is currently the subject matter of litigation before the Georgian courts.

Following the Auction, EUI entered into an option agreement with Rustavi Carbomide Limited (another company that Mr Pipia claims is ultimately owned and controlled by him), and a lease agreement with Rustavi Azot. Both of those agreements were terminated by EUI in November and December 2016 respectively.

Thus as the situation stands at present, the fertilizer plant is now under the control of EUI, and Mr. Pipia's companies appear to have no contractual or other rights in respect of it. Mr. Pipia says that these events entitle him to various delictual causes of action against BG UK under the Civil Code of Georgia. BG UK denies any wrongdoing of its Re-Amended Defense and Counterclaim denies any "involvement in the GCLA, the Auction, or the dispute that has arisen from it"), and advances a number of factual and legal defenses, as well as a counterclaim under two Release and Indemnity Agreements which it alleges preclude Mr. Pipia from bringing this claim.

Mr. Pipia says that two particular individuals are central to the events in issue: Irakli Gilauri ("Mr. Gilauri") and Avtandil (or Avto) Namicheishvili ("Mr. Namicheishvili").

On 23 October 2020, Mr. Pipia issued this application. The Application Notice seeks an "Order for additional Extended Disclosure from the Defendant."

The full text of the judgement can be viewed at: https://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Comm/2021/86.html&query=(Pipia)

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