Credit Suisse Life (Bermuda) Ltd (Respondent) v Bidzina Ivanishvili and 6 others (Appellants) No 2 (Bermuda)

Hearing listed

Case summary
Linked cases
Appeal
Change log

Case summary

Case ID

JCPC/2024/0035

Jurisdiction

Bermuda

Parties

Appellant(s)

(1) Bidzina Ivanishvili

(2) Meadowsweet Assets Ltd

(3) Sandcay Investments Ltd

Respondent(s)

Credit Suisse Life (Bermuda) Ltd

Issue

The Cross-Appeal is advanced on four grounds. In summary, the Cross-Appellants contend that the misrepresentation claim should be governed by Bermuda law, with the result that the 3-year Georgian law limitation period should not apply, because either: (i) the Imanagement exception to the double actionability rule applies (Ground 1); or (ii) if Georgian law is to be taken into account pursuant to the double actionability rule, that should include Georgia’s choice of law rules which the Cross-Appellants contend refer actionability back to Bermudian law (Ground 2). The Cross-Appellants also contend that the misrepresentation claim was based on the same or substantially the same facts so that it was appropriate for the Chief Justice to give leave to amend the original Statement of Claim (and so defeat any Georgian law limitation defence) (Ground 3). Finally, the Cross-Appellants contend that this is an appropriate case for finding that the Cross-Appellants were induced by the fraudulent misrepresentations, notwithstanding that they may not have contemporaneously and consciously turned their minds to the specific misrepresentations that were conveyed (Ground 4).

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.