Credit Suisse Life (Bermuda) Ltd (Appellant) v Bidzina Ivanishvili and 6 others (Respondents) (Bermuda)

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Case summary

Case ID

JCPC/2024/0022

Jurisdiction

Bermuda

Parties

Appellant(s)

Credit Suisse Life (Bermuda) Ltd

Respondent(s)

(1) Bidzina Ivanishvili,

(2) Ekaterine Khvededidze,

(3) Tsotne Ivanishvili,

(4) Gvantsa Ivanishvili,

(5) Bera Ivanishvili,

(6) Meadowsweet Assets Ltd,

(7) Sandcay Investments Ltd

Issue

CS Life advances six grounds of appeal. In summary, it argues that judgment on the contractual claims is inconsistent with the contractual documentation and that there is no scope for any fiduciary duties. In the alternative, CS Life appeals on three grounds relating to quantum. It contends that damages (i) should be assessed on the basis of the specific transactions identified as objectionable by the experts, rather than on the basis that the entire portfolio should be replaced with an alternative medium risk portfolio from the outset (Ground 4); (ii) should have been calculated from the dates the LPI Policies were entered into rather than the date the Policy Assets were transferred into the name of CS Life (Ground 5); and (iii) should only have been calculated to August 2017 (Ground 6).

Facts

CS Life is a Bermuda insurance company and was a subsidiary of Credit Suisse AG (the “Bank”). The 1st Respondent, Mr Ivanishvili, is a successful businessman and a former Prime Minister of Georgia. Respondents 2-5 are members of Mr Ivanishvili’s family. The 6th and 7th Respondents (“Meadowsweet” and “Sandcay”) at all material times were investment companies forming part of trust structures for the benefit of Mr Ivanishvili and his family, and they hold the relevant insurance policies (the “LPI Policies”) that are the subject of this litigation. Mr Ivanishvili, Meadowsweet and Sandcay are also 1st, 2nd and 3rd Cross-Appellants respectively in the Cross-Appeal. From around 2005, Mr Ivanishvili invested substantial sums with the Bank. From 2006 Mr Lescaudron, a Bank employee, was Mr Ivanishvili’s relationship manager for the Bank and, in due course, for CS Life (which had no operational employees of its own) to discharge certain functions as well. From 2011, Mr Ivanishvili restructured some of his investments with the Bank into the LPI Policies. Meadowsweet entered into an LPI Policy with CS Life on 25 October 2011, and Sandcay did so on 27 November 2012. The policy contracts comprise the application forms and documentation, the life policies issued and the general policy conditions. In 2018 Mr Lescaudron was convicted in Switzerland of fraud (among other related offences) in relation to Mr Ivanishvili’s accounts. The Supreme Court of Bermuda found that Mr Lescaudron’s fraud extended to the Meadowsweet and Sandcay policy accounts. At trial, the Respondents obtained judgment for US$607m on claims for breach of contract, breach of fiduciary duty and fraudulent misrepresentation. The claims for breach of contract concerned CS Life’s failure to invest the policy assets in accordance with the investment alternative selected by Meadowsweet and Sandcay; its failure to exercise reasonable care and skill when appointing or retaining Mr Lescaudron to manage, hold or invest the Policy Assets; its failure to monitor the investment of the policy assets for fraud and/or to assess whether the investment alternative was being complied with; and its failure to ensure that certain reports stating the value of the Policy Accounts were accurate. The claims for breach of fiduciary duty were based on similar findings. The misrepresentation claims concerned an implied representation made by Mr Lescaudron to the effect that the policy assets would not be managed fraudulently. The Court of Appeal upheld the breach of contract and fiduciary duty claims but allowed the appeal in respect of the misrepresentation claim. It also upheld the US$607m judgment quantum.