JSC Commercial Bank Privatbank v Kolomosiky & Anor

Factual and Procedural Background

The Plaintiff, at the time described in the opinion the largest bank in the State, was declared insolvent and nationalised in December 2016. The Plaintiff commenced proceedings in December 2017 against two founding shareholders (the First Appellant and the Second Appellant) and six companies they owned or controlled (the Corporate Defendants), seeking compensation for loss said to have arisen from a prior fraudulent scheme. Between 2010 and nationalisation the Appellants held a controlling stake and sat on the bank's supervisory board. The English courts' jurisdiction to hear the claims was contested and previously upheld by the appellate court in 2019.

Following a 43-day trial, the trial judge (Judge Trower) in a judgment dated 30 July 2025 held the Appellants jointly and severally liable for US$1,911,877,385 less agreed asset value of US$149,919,593, leaving a principal liability of US$1,761,957,792. The liability was based on a finding that the Appellants procured misappropriations (the Misappropriation) between November 2013 and September 2014 using control of the Plaintiff and a network of shell companies, effecting 270 fraudulent drawdowns to numerous borrowers which were then transmitted to the Corporate Defendants under sham documentation. The judge found that, as a matter of the State's law, each fraudulent drawdown constituted harm to the Plaintiff under Article 1166 of the Civil Code of the State (the UCC) and that the Appellants were the ultimate beneficiaries of the scheme.

The Appellants appealed, with permission, on a narrow issue: the judge's rejection of the "Repayment Defence" advanced by the First Appellant and adopted by the Second Appellant. The Repayment Defence contended that the Relevant Loans were largely repaid (by cash repayments and transfers of assets) and therefore the Plaintiff suffered no loss recoverable in tort.

Legal Issues Presented

1. Whether, as a matter of the State's law (Article 1166 UCC and related provisions), repayments of the Relevant Drawdowns extinguished the Plaintiff's loss for which the Appellants could be held liable (Ground 1).
2. Whether the factual premise of the Repayment Defence was established — in particular whether the case advanced at trial that the Plaintiff had made a choice to treat repayments as discharging restitutionary liabilities had been pleaded and was supported by evidence (Ground 2).

Arguments of the Parties

Appellants' Arguments

• The Appellants asserted the Repayment Defence: the Relevant Loans had been repaid, by Cash Repayments (from Intermediary/New Loans) and by Asset Transfers, so any loss attributable to the Relevant Drawdowns had been extinguished.
• If repayments extinguished the Relevant Borrowers' liabilities, the Plaintiff's claim in tort under Article 1166 could not succeed in respect of that loss; any claims in respect of intermediary or later loans were separate and the Plaintiff had chosen not to pursue them.
• The Appellants argued that the judge erred in concluding that the Appellants' trial concession (abandoning automatic extinction) meant they could not rely on a factual case of the Plaintiff's post-nationalisation choice, and that the evidence established such a choice.

Plaintiff's Arguments

• The Plaintiff maintained the Relevant Loans were void and that alleged repayments were procured by the Appellants and derived from further misappropriations; accordingly the alleged repayments should be disregarded.
• The Plaintiff contended the Appellants had pleaded an automatic-extinction case; the new case based on a post-nationalisation choice to treat repayments as discharging restitutionary liabilities was unpleaded, late and unsupported by evidence and would have caused prejudice if permitted.
• The Plaintiff relied on expert evidence and ledger entries interpreted in context to show there was no factual basis for the Appellants' asserted choice.

Table of Precedents Cited

Court's Reasoning and Analysis

The court reviewed the narrow issues on appeal and applied the following analytical steps.

1. The court summarised the trial judge's factual findings: extensive fraudulent drawdowns (270 Relevant Drawdowns) leading to misappropriation of US$1,911,877,385, the creation of sham documentation, and the Appellants as ultimate beneficiaries; the judge treated each fraudulent drawdown as harm under Article 1166 of the UCC.
2. The court identified the two grounds of appeal and emphasised Ground 2 (factual premise) logically precedes Ground 1 (legal effect under State law).
3. The court examined procedural history and pleadings to determine what case the Appellants had actually pleaded: the Appellants' pleaded case was of automatic extinction of loss by reason of repayment; in closing they advanced a different, unpleaded case that the Plaintiff had chosen to apply repayments to discharge restitutionary liabilities.
4. The court accepted the trial judge's conclusion that the new closing-submissions case was unpleaded and that permission to amend would have been refused as late and prejudicial. The court relied on particular pleaded paragraphs and written opening passages to show the pleaded position was automatic extinction.
5. The court considered the alternative contention that, even if unpleaded, the factual basis (that the Plaintiff had chosen to treat repayments as discharging restitutionary liabilities) was established by the evidence. It reviewed the judge's detailed factual analysis of ledger entries, witness testimony and experts and concluded the judge rationally rejected that factual premise for both Cash Repayments and Asset Transfers.
6. The court addressed the trial judgment's delay: it acknowledged the delay was serious, cited authorities on timing and appellate caution, but concluded the delay did not undermine the judge's reasoning on the narrow appealed issue because most findings were unchallenged and the Appellants had not shown the delay adversely affected quality of reasoning on the Repayment Defence.
7. Because Ground 2 failed (the factual premise was not made out and was unpleaded), the court did not need to decide Ground 1 on the State's law. The court added that it would not in any event have been justified in interfering with the judge's Ukrainian-law finding for reasons including the civil-law context, lack of apex authority on the issue, the judge's advantageous exposure to expert evidence, and the judge's assessment of competing experts.

Holding and Implications

DISMISSED

Holding: The appeal was dismissed. The appellate court upheld the trial judge's rejection of the Repayment Defence and his liability findings as to the Misappropriation and the resulting monetary liability.

Implications: The direct effect is that the trial judgment and order remain in force, leaving the Appellants jointly and severally liable for the sum determined by the trial judge (subject to any other procedural steps not covered in this opinion). The opinion does not purport to establish a new legal precedent beyond affirming the trial judge's factual and legal approach in the circumstances of this case.