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	England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Magomedov & Ors v TPG Group Holdings (SBS), LP & Ors [2025] EWHC 1996 (Comm) (03 July 2025) URL: https://www.bailii.org/ew/cases/EWHC/Comm/2025/1996.html Cite as: [2025] EWHC 1996 (Comm)

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IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (KBD)

		Royal Courts of Justice, Rolls Building Fetter Lane, London, EC4A 1NL
		3 July 2025

MR JUSTICE BRYAN:

A. INTRODUCTION

1. There is before me today an application by the Defendants (save for D10, D13, D16 and D17), for the disclosure of details as to the Claimants' litigation funding arrangements (the "Applications"), which if I am minded to grant them, also raises (per the Claimants) an issue as to whether I should make an associated "Confidentiality Club" and if so on what terms.

2. By way of procedural background, PJSC Far-Eastern Shipping Company ("FESCO") (D19) was the first of the Defendants to make an application on 15 February 2025. The first part of this application sought to freeze what had been defined as the "Fortification Sum" before the Claimants had the opportunity to redesignate it, and enable Seladore, the Claimants' legal representative, to assert a lien over it.

3. An urgent hearing was listed for 27 February 2025, but shortly before that, the Claimants and Seladore offered undertakings that conceded the substance of the relief sought and froze the fortification sum until further order. The only aspect of that application that remains relates to costs.

4. Following FESCO's application, a large number of other Defendants made similar applications for disclosure of the Claimants' funding arrangements. In this regard:

(1) D1 – D7 brought their application on 20 February 2025;

(2) D8 & D15 brought their application on 25 February 2025;

(3) D11, D12 & D14 brought their application on 20 February 2025;

(4) D18 brought their application on 24 February 2025;

(5) D20 brought their application on 19 February 2025;

(6) D21-D22 brought their application on 26 February 2025; and

(7) D9 brought their application on 23 May 2025.

5. A very large amount of factual evidence was served by the various parties, either in support of the Applications or in opposition to the same.

6. In this regard, there is the following evidence before me in relation to the Applications relied on by the Defendants (who are the applicants on the Application):

(1) An Affidavit of Mark Richard Hastings, dated 14 February 2025 (for D19);

(2) The Affidavit of William Hampson dated 19 February 2025 (for Ds 1-7);

(3) The first Affidavit of Nathaniel Capone, dated 20 February 2025 (for Ds 11, 12 and 14);

(4) The first Affidavit of Alan Thompson Watts dated 20 February 2025 (for Ds 1-7);

(5) The first Affidavit of Lydia Miriam Danon dated 25 February 2025 (for Ds 8 and 15);

(6) The first Affidavit of Edward Patrick Greeno of 20 February 2025 (for D18);

(7) The Affidavit of Marcus Edward McConnell of 26 February 2025 (for Ds 21 and 22); and

(8) The second Witness Statement of Yuri Botiuk dated 23 May 2025 (for D9).

7. The Claimants, in turn, rely on the following evidence in response to the Application.

(1) First Witness Statement of Daniyal Magomedov, dated 11 April 2025;

(2) Twelfth Witness Statement of Gareth James Keillor, dated 11 April 2025;

(3) Thirteenth Witness Statement of Gareth James Keillor, dated 9 may 2025; and

(4) Fourteenth Witness Statement of Gareth James Keillor dated 20 June 2025.

8. In addition, the Defendants rely on the following evidence in reply to the Applications:

(1) Third Witness Statement of Mark Richard Hastings, dated 30 May 2025;

(2) Third Witness Statement of William Hampson, dated 30 May 2025 (for D20);

(3) Fifth Witness Statement of Lydia Miriam Danon, dated 30 May 2025 (for Ds 8 and 15);

(4) Second Witness Statement of Nathaniel Capone, dated 30 May 2025 (for Ds 11, 12 and 14);

(5) Fourth Witness Statement of Alan Thomas Watts, dated 30 May 2025 (for Ds 1-7); and

(6) Third Witness Statement of Yuri Botiuk, dated 24 June 2025 (for D3).

9. I have also been referred to, amongst other matters, the following additional evidence:

(1) The Eighth Witness Statement of Gareth James Keillor, dated 17 Mary 2024;

(2) The Tenth Witness Statement of Gareth James Keillor, dated 3 February 2025;

(3) Bright J's Judgment on Interim Payments, dated 17 February 2025;

10. I have also been provided with an open offer letter from the Claimants' solicitors dated 26 June 2025, and a further open offer letter from the Claimants' solicitors dated 2 July 2025 (but provided to the Court on the day of the hearing).

11. I have received no fewer than nine Skeleton Arguments;

(1) Skeleton Argument on behalf of the Claimants;

(2) Skeleton Argument on behalf of the Nineteenth Defendant (PJSC Far-Eastern Shipping Company (FESCO) whose general points on the Applications were adopted by al other Defendants.

(3) Skeleton Argument on behalf of D1 to D7;

(4) Skeleton Argument on behalf of D8 and D15;

(5) Skeleton Argument on behalf of D9 (Halimeda);

(6) Skeleton Argument on behalf D11. D12w and D14 (Rabinovich family);

(7) Skeleton Argument on behalf of D18 (DP World Russia FZCO);

(8) Skeleton Argument on behalf of D20 (PJSC Transneft);

(9) Skeleton Argument on behalf of D21 (Mark Garber) and D22 (Garber Hannam & Partners LLC)

12. I also have the parties' statements of costs on summary assessment. In relation to the Defendants, these total no less than £985,056.53 in relation to the Disclosure Applications. For its part, the Claimants' statement of costs on summary assessment amount to £320,526.50.

13. I confirm that I have read and given careful consideration to all the witness statements that have been served together with the covering materials and the Skeleton Arguments before me.

14. The Applicants' Applications arise in circumstances where, throughout the course of proceedings, the Claimants have been funded by unidentified third parties, it appears from outside the jurisdiction (as addressed further below). Some cost payments have been made belatedly by the Defendants. The Defendants submit that, on the evidence, it appears that the Claimants do not themselves have the funds to pay further costs that the Defendants say will be payable following detailed assessment, the action being to almost all intents and purposes at an end; subject to any application by the Claimants to re-open a refusal of permission to appeal by Males LJ under CPR52.30.

15. In such circumstances, the Defendants wish to know the identity of the litigation funders so that they can consider seeking third party costs orders against them and possibly joining them to the proceedings before detailed assessments. The Applications are opposed by the Claimants who say that they will pay any outstanding costs following detailed assessment.

16. It is not suggested by the Claimants, however, that such funds will come other than from third party funders. The Defendants also submit that it is difficult to see what incentive there would be for the Claimants to pay such outstanding costs and potentially incur liabilities to third party funders, in circumstances where there is no evidence that they have any monies of their own.

B. BACKGROUND

17. Turning to the background to the Applications. These stem from proceedings commenced in July 2023 by the Claimants against the Defendants in relation to two alleged unlawful means conspiracies: the so-called "FESCO Conspiracy" relating to the Claimants' previous interests as direct and indirect shareholders of FESCO, and the "NCSP Conspiracy" relating to the Claimants' previous direct and indirect interests in PJSC Novorossiysk Commercial Sea Port.

18. In short, the Claimants alleged that their assets, including the two ports which are said to be of strategic importance to the Russian Federation, were unlawfully taken from them. The claim was pleaded at US$13.8 billion. All the Defendants making the Disclosure Application (save D20, Transneft) were only alleged to be party to the FESCO Conspiracy, while D20, Transneft, was alleged to be party to the NCSP Conspiracy only.

19. Every Defendant either challenged the jurisdiction of this Court, or sought to strike out the claim and/or obtain reverse summary judgment. After two hearings, lasting a total of no less than 13 days, Bright J in his judgment (the "Jurisdiction Judgment"), determined there were no viable claims which could proceed in this jurisdiction. The Claimants, as I foreshadowed, sought to appeal the order. The application for permission to appeal was dismissed in favour of all the Defendants by Males LJ on 3 June 2025. Subject to the possibility of the Court of Appeal revisiting such refusal (the possibility of which has been foreshadowed by the Claimants) the proceedings are now at an end, save for detailed assessment of the costs ordered against the Claimants (variously on the indemnity and standard bases) which will have to be subject to detailed assessment if not agreed.

20. In the circumstances in which the Defendants say that very substantial further costs sums are recoverable, in addition to the interim payments on account ordered by Bright J, but the Claimants submit that no further costs will be recovered on detailed assessment, it seems inevitable that matters will proceed to detailed assessment.

21. In this regard, it is relevant to summarise the relevant cost orders that the Defendants have the benefit of in connection with these proceedings.

B.1 Overview of costs orders benefiting the Defendants

22. On 7 December 2023, Butcher J dismissed the Claimants' injunction applications against Halimeda, D9; Mr Rabinovich, D11; Ermenossa, D12; Mr Kuzovkov, D13; Mr Severilov, D15; Rosatom, D17; FESCO, D19; Mr Garber, D21; and GHP, D22, with costs to be subject to detailed assessment and payments on account totalling over £1.6 million being ordered, the "Injunction Costs Order". This followed and varied an earlier costs order made by HHJ Pelling KC dated 15 September 2023 (the "Pelling Costs Order").

23. On 18 December 2023, Butcher J granted the Claimants a notification order against Transneft (D20) in relation to the NCSP Conspiracy (the "Notification Order") with costs but required them to provide fortification for the cross-undertaking in the sum of US$5 million (the "Fortification Sum"). The provisions of asset information by Transneft pursuant to the Notification Order was subject to a "Confidentiality Club".

24. The Claimants provided the Fortification Sum by payment into a client account held by the solicitors, Seladore.

25. During the early part of 2024, the majority of the Defendants sought security for costs against the Claimants pending their jurisdiction and other challenges to the continuation of the proceedings (the "Jurisdiction Challenges") listed for hearings in September and November 2024.

26. On 3 May 2024, Bright J gave judgment quantifying the amounts of security (the "Security Judgment") and ordered the Claimants to provide security in total sum of just over 9.5 million (the "Security Sum") by 17 May 2024, again by payment into a client account held by Seladore, together with costs of £422,350. The judge's methodology was to:

(1) First strip out in relation to each Defendant some elements or some parts of some elements which (at least at that point) he considered were "obviously unreasonable" (at [1]).

(2) Apply a common percentage of 70% on the basis that it was "approximately at the upper reaches of what is normally recovered on a standard basis" (at [5]).

(3) Approach the hourly rates on the basis that upon detailed assessment, "it will be very difficult if not impossible to justify rates that exceed the guideline rates by more than one-third..." (at [7]).

27. In his Order dated 17 January 2025, Bright J discharged the Notification Order, but required the Fortification Sum to remain in place until 7 March 2025, pending Transneft's (D20's) decision (by 28 February 2025) whether or not to apply for permission to pursue an enquiry as to compensation under the cross-undertaking. The judge also made costs orders against the Claimants on a mixture of standard and indemnity bases (the "Jurisdiction Costs Order").

28. On 14 January 2025, Bright J handed down judgment in relation to the amounts of the interim payments. The methodology he adopted was to:

(1) "[E]stimate the likely level of recovery subject to an appropriate margin for error" (at [4]), which he later described as a "healthy margin of error" (at [11]).

(2) Not regard the fixing of the Security Sum as akin to costs budgeting, but that estimates previously provided by the Defendants for security for costs did provide "at least a rudimentary cross-check" (at [8]).

(3) Begin with the costs actually incurred by each Defendant and consider these by reference to a number of factors. Then to apply 70% if awarded costs on the indemnity basis and 60% if on the standard basis (at [10]).

(4) Take an "inevitably broadbrush" overall approach (at [11]).

29. On 17 February 2025, Bright J made a consequential interim payment order in favour of the Defendants in respect of the cost of the Jurisdiction Challenges in the total sum of around £12.5 million (the "Jurisdiction Interim Payments") and directed payments out of the Security Sum.

C. APPLICABLE LEGAL PRINCIPLES

30. There was little, if any, disagreement between the parties about applicable principles in relation to the disclosure of funding arrangements.

C.1 Disclosure in relation to Funding Arrangements

31. The Court has power to make costs orders against non-parties to proceedings pursuant to section 51 of the Senior Courts Act 1981. It is well established that the Court also has jurisdiction to make ancillary orders (including disclosure orders) to give efficacy to that primary power (see Topalsson GmbH v Rolls Royce Motor Cars [2024] EWHC 297 (TCC) at [10] - [11].

32. At the disclosure stage, the merits of any putative application for non-party costs order have a limited role. The test for disclosure is not whether a non-party costs order is "likely to succeed". Unless a putative application is "weak or fanciful", the Court is slow to undertake any further assessment on the merits. Further, where the purpose of the Disclosure Application is to "determine the existence, identity and potential relevance of funders", it would "generally be premature to consider whether there is a real prospect that any such application under s.51 would succeed" (see Topalsson at [4] to [15]).

33. The ultimate question at the stage of a non-party costs application is whether "in all the circumstances it is just to make the order": Dymocks Franchise Systems (NSW) Pty Limited v Todd [2004] 1 WLR 2807 at [25]. In that case, Lord Brown identified a number of scenarios where that discretion may or may not be exercised, but such examples are not to be treated as if they were the words of a statute, given the ultimate question for the Court (see Systemcare (UK) Limited v Services Design Technology Limited [2011] EWCA Civ 546 at [26]).

34. Accordingly, while so-called "pure funders" (i.e. those with no personal interest in the litigation who do not stand to benefit from the litigation, are not funding it by way of business and do not seek to control it) may sometimes avoid being made subject to a non-party costs order, this is not an invariable rule and in each case "it is always necessary to look at the particular facts in order to deal with the case justly" (see Kazakhstan Kagazy v Zhunus [2019] EWHC 2630 Comm at [30]-[34]). Further, if loans are made on "non-commercial terms for ulterior purposes", this may also justify a non-party order (see Vaughan v Jones [2006] EWHC 2123 (Ch), at [23].

35. There is no principle of law that a non-party can only be joined for costs purposes when costs liabilities have been finally determined. Indeed, it can be beneficial if they are joined beforehand, such that they can make submissions at the detailed assessment hearing.

36. Nor is there any principle that a third party can only be joined when a costs liability has gone unpaid (see Oak Park Capital Maestro Fund Limited v Old Park Capital Limited [2024] EWHC 1482 (Ch) at [9]-[12]) (a decision of Richards J). While Richards J made those observations in his assessment of an application to join a non-party for costs purposes, he identified that much the same reasoning applied to his consideration of the disclosure application before him (at [31]). It is clear that disclosure can be ordered before a cost liability has been assessed or gone unpaid.

37. In deciding whether to exercise the discretion to order disclosure, the Court should consider the likely value of the documents if funding arrangements are sought, and whether there are reasons why documents cannot or should not be provided, and proportionality (see Topalsson at [16]).

C.2 Confidentiality Club Principles

38. Where disclosure is ordered, the Court may grant it on the terms of a "Confidentiality Club". Such an order is an exception, not the rule. It requires substantial justification.

39. The starting point is the open justice principle: parties should have unrestricted access to the other side's disclosure (see Cavallari v Mercedes-Benz Group AG [2024] EWHC 190 at [22]-[24]). However, CPR r. 31.22 restricts the use of disclosed documents to the purposes of the proceedings.

40. A departure from the principle of open justice must be justified on clear and cogent evidence of "a real risk, either deliberate or inadvertent, of a party using its right of inspection for a collateral purpose" (see Libyan Investment Authority v Société Générale SA [2015] EWHC 550 (QB) at [21]). This is a question of necessity (see Cavallari at [27]).

41. If there is to be any restriction, it should go no further than is necessary for the protection of the rights in question (see Libyan Investment Authority at [22]).

42. While confidentiality regimes can be restricted to party's lawyers (external eyes) only, that is exceptional and requires exceptional circumstances. A blanket exclusion of party representatives from seeing relevant parts of key documents would be incompatible with Article 6 of the European Convention on Human Rights (see TQ Delta LLC v ZyXEL Communications UK Limited [2018] Bus LR 1544 at [22]-[24].

43. Ultimately, the imposition of a confidentiality club (once the real risk has been evidenced) is a balancing exercise, with relevant facts including (per Libyan Investment Authority at [34]:

(a) The assessment of degree and severity of identified risk;

(b) The inherent desirability of at least one duly appointed representative of each party being within the club;

(c) The importance of the confidential information to the issues in the case;

(d) The nature of the confidential information, and whether it needs to be considered by people with access to technical or expert knowledge; and

(e) Practical considerations such as degree of disruption if only part of the legal team is entitled to review, discuss and act upon the information.

C.3 Evidence as to funding arrangements.

44. Bright J noted in [23] and [24] of his judgment, dated 14 February 2025, that "the secrecy upon which the Claimants insist makes it impossible for the court to gauge ... the reality of the Claimants' asserted inability to pay promptly" and also means that there is "no ready way of enforcing against the funding entities whose details are being withheld".

45. I agree. What information there currently is as to the Claimants' funding arrangements is opaque, at very high level, unparticularised, and inconsistent over time.

46. In this regard, Daniyal Magomedov's evidence (who is C1's son), is that the cost of the proceedings were paid by one company ("Company A"). He explains that Company A initially used its own resources to do this, but subsequently raised money from other parties by way of gift or loan (with some of those subsequent sources being "family sources" allegedly not beneficially owned by C1). He states that "the vast majority [of financing] has been provided either absolutely (by transfer without any expectation of repayment) or by way of a simple loan on an interest free basis". It is unclear if Mr Magomedov is referring to financing provided to Company A, or the financing that Company A has provided to C in funding the litigation. Mr Magomedov confirms that Company A was the company mentioned in Bushell 1 at paragraph 186.

47. However, this evidence raises more questions than it answers:

(1) First, it is difficult to reconcile the difference between the evidence of Mr Bushell and Mr Magomedov. Mr Bushell had stated that Company A is "in turn funded from a number of other sources of funding controlled by [C1]". Mr Magomedov's evidence, in contrast, is that "initially" Company A used only its own resources. In addition, Mr Bushell states that "ultimately the Claimants are liable for the funding entity for the costs incurred in resisting the Conspiracies". However, Mr Magomedov appears to suggest that the majority of funding to the Claimants was provided absolutely without expectation of repayment.

(2) Secondly, there is a degree of inconsistency as to the funding of Company A by "family sources". Mr Bushell refers to the funding being from sources "controlled by [C1]". In contrast, Mr Keillor's eighth witness statement from May 2024 referred to the funding being provided by "other Magomedov family entities" (at paragraph 17) and that "family companies have been supporting these proceedings" (at paragraph 25).

(3) Mr Magomedov has also contended that two real estate assets and private equity investments will be used to raise any funds required to pay future costs. However, without more, it is difficult for the Courts to assess the equity in those assets (or their ownership).

(4) The Claimants have indicated in a letter on 26 June 2025 that they proposed to procure the payment of additional security totalling US$2 million from "someone who is not a party to these proceedings" and which required "an asset disposal (which has been recently completed)".

(5) I was provided with a further letter dated 2 July 2025 (though only provided to the Court this morning), increasing the figure to US$3.5 million, though the source of such money remain as opaque as ever.

D. DISCUSSION

D.1 Disclosure application

48. The Claimants submitted in their Skeleton Argument that the Defendants could not succeed on their applications for disclosure if they could not individually demonstrate that they have a real prospect of recovering more costs from the Claimants than already provided for by one means or another. The Claimants' Skeleton Argument set out in great detail why it was said to be fanciful to suggest that costs, on detailed assessment, would exceed amount of costs already paid in relation to each individual Defendant.

49. In the event, during the course of the hearing, Mr Morgan KC, on behalf of the Claimants, accepted that he was not in a position to pursue that line of submission. I am satisfied that the Claimants' original approach was, and remains, inappropriate and did not bear examination for any number of reasons:

(1) First, it is inappropriate and impractical for the Court to conduct (in effect) a "mini-detailed assessment" at this hearing. That would be wasteful of time and cost and would not demonstrate that which the Claimants seek to demonstrate in any event.

(2) Secondly, the test in an application for disclosure of funding arrangements is not whether a future non-party costs order is "likely to succeed", and the Court is slow to undertake an assessment of the merits (which would include logically whether there will be outstanding costs to recover from the third party), unless a putative application is "weak or fanciful". That is most certainly not this case.

(3) Thirdly, it is not a prerequisite for the purpose of joining parties to proceedings that a final assessment of costs must be completed. As I foreshadowed, the authorities note that joinder may be beneficial for the conduct of detailed assessment proceedings. It is accordingly inappropriate, on a disclosure application such as this, to consider the likelihood of particular amounts of costs becoming payable, following detailed assessment. There is a benefit to third party funders being joined before detailed assessment so that they can (if they wish and have the material to establish) that the cost claimed on detailed assessment should be reduced (even to the point of no further recovery).

(4) Fourthly, and fundamentally, as Bright J noted in his judgment, in determining the quantum of interim payments, he considered what the Defendants were likely ultimately to recover upon detailed assessment, and then applied a "healthy margin of error" in the Claimants' favour. In such circumstances (and adopting Bright J's methodology), Bright J was very well placed to assess whether there was a "healthy margin of error" in the Claimants' favour and, based on such methodology, I consider it inherently unlikely that the Defendants would have anything other than a real prospect of further payments in respect of costs from the Claimants upon detailed assessment.

(5) Fifthly, and fatally to the Claimants' stance on likely quantum of further costs, even putting to one side the "healthy margin of error" point, I am satisfied that there is every prospect (very much more than a real prospect) of the Defendants recovering very substantial additional sums by way of additional costs including:

a) The costs of today's Applications (which are likely to follow the event in whole or in part) which are, as appears from the costs schedules for summary assessment, very substantial, amounting in and of themselves to just under £1,000,000).

b) Costs reserved relating to the freezing of the Fortification Sum (claimed at £400,000).

c) Further costs recoverable on the individual detailed assessments (as further addressed below).

d) Interest on costs pre- and post-judgment.

e) Cost being awarded on an indemnity basis with the result that any uncertainty about reasonableness or proportionality of costs incurred by the Defendants at detailed assessment being resolved in their favour.

50. In the above circumstances, I am in no doubt whatsoever that there is every prospect (very much more than a real prospect/no more than a fanciful prospect) of the Defendants recovering very substantial additional sums by way of additional costs.

51. I would only add that I have also given very careful consideration to all the matters raised in the Claimants' evidence, and the Defendants' evidence in rebuttal, and the associated submissions in all the parties' Skeleton Arguments, about the existing interim payments and the likelihood of further recovery.

52. Whilst I agree with the submission of each of the Defendants that such an exercise is inappropriate on an application for disclosure of funding arrangements (for the reasons I have given), I am satisfied that upon such detailed examination, there is a real prospect of further payments in relation to costs being required from the Claimants in relation to each Defendant. Ultimately, as I have foreshadowed, Mr Morgan KC on behalf of the Claimants accepted the same. It would, however, be wasteful of time and costs to set out such an exercise which I consider to be wrong in principle and would in any event serve only to reinforce all the reasons I have given above as to why there is no necessity for such an exercise to be undertaken.

53. Turning then to the offer contained in Seladore's letter of 26 June 2025, on which the Claimants placed so much reliance in their Skeleton Argument. I am satisfied on the material before me, that such letter does not amount to a reason why I should not accede to the Applications.

54. First and fundamentally, and even if the offer were to come good in the future (which is inherently uncertain at this time), I am satisfied that the costs that the Defendants are likely to recover would exceed (and by some margin) the amounts offered in Seladore's letter of 26 June 2025 (for the reasons given by the Defendants in their evidence and their Skeleton Arguments), though, again, I do not consider that to be an appropriate exercise to be undertaken for the reasons already given.

55. Secondly, and equally fundamentally, I do not consider that any weight can be attached to such offer in the circumstances that currently pertain:

(1) The source of funds is "someone who is not party to these proceedings" (as opaque and unsatisfactory an explanation of the identity of the source of the funds as all that has gone before).

(2) It is said that it "required an asset disposal", and it is said that such asset disposal "has recently been completed" (an equally opaque and unsatisfactory explanation as to what the asset was and how it has been disposed of and when).

(3) No sums have yet been brought into the jurisdiction.

(4) There is no certainty that the sums will be brought into the jurisdiction.

(5) There is an envisaged significant delay in that letter on 26 June of 35 days which would not be needed for already liquidated assets. It seems that an alternative of bank guarantee is also floated (a guarantee which has not been obtained which begs the question of who would provide it, and on what terms, and within what timescale).

(6) The alternative of a bank guarantee also begs the question of why that would be needed if the asset has been liquidated and is money that could be brought into the jurisdiction and held by Seladore.

(7) There would then be further delay before any disclosure of funding arrangements in default.

(8) There can be no guarantee that that promise would be fulfilled and there would be further delay if the intervention of the Court was required to police such offer.

56. The same is true of the latest offer dated 2 July 2025 for the same reasons. This is reinforced by the fact that it has transpired that the Defendants' costs on the Application are themselves almost £1 million, and yet again, the source of the funds to meet all the costs orders is entirely opaque.

57. The reality is that all such offered monies are not in the jurisdiction, and I do not consider it can be assumed that the Claimants would come good in bringing them into the jurisdiction. However, even if the offer were to come good in the future (which is inherently uncertain at this time) I am satisfied that the costs the Defendants are likely to recover still exceeds the amounts offered in Seladore's letter of 2 July 2025, and by a significant margin. So again, I do not consider that to be an appropriate exercise to be undertaken for the reasons already given.

58. However, as already foreshadowed, the point is effectively academic, given the concession made by Mr Morgan KC during the course of his oral submissions.

59. So far as seeking non-party costs orders are concerned, I do not consider, and it is not suggested, that any potential application for non-party costs orders against some or all of the funding entities would be inherently weak or fanciful. The current position is that their identities are unknown.

60. In this regard, and as submitted by FESCO:

(1) The Defendants do not even know who the funders are and there is no information about the precise terms on which funding has been provided, by whom and in what amounts. It would, therefore, be premature to consider the prospects of any non-party costs application on this application for disclosure.

(2) Further, what information is available is extremely vague. The disclosure is likely to paint a clearer and quite possibly materially different picture.

(3) Further, and insofar as it is appropriate to get into the point at all, in cases where complex corporate structures are set up to hold the litigant's assets, and funding is provided from those structures (under the control of the litigant), it would be wrong in principle to treat sources as being "pure funders". That would only serve to facilitate the avoidance by the litigant of its costs liabilities.

61. I would also echo the sentiments expressed by Bright J (that I have already quoted) that "the secrecy upon which the Claimants insist makes it impossible for the court to gauge ... the reality of the claimants' asserted inability to pay promptly"; and also means there is "no ready way of enforcing against the funding entities whose details are being withheld".

62. I would only add that in the absence of information as to third party funding, little if any weight can be given to what were repeated assertions in the Claimants' evidence (and in the 26 June offer letter) that "any costs orders made in the [Defendants'] favour would be paid when due" in circumstances where:

(1) There is no suggestion the Claimants have any assets, still less sufficient to meet the likely costs orders;

(2) It is difficult to see why the Claimants would wish to indebt themselves (in financial terms or otherwise) to such funders when litigation is to all intents and purposes at an end, and there is no real incentive for them to do so; and

(3) It is difficult to see why funders would themselves provide the funds.

63. I can deal shortly with the Claimants' submission that disclosure would be unfair or disproportionate, because I am satisfied that any concern that they may have about privacy can be addressed by placing the documentation to a confidentiality club which I consider appropriate for the reasons given in the next section of this judgment. I am satisfied that with such a confidentiality club, the suggestion of unfairness and disproportionality fall away.

64. I would again only add that I can see nothing unfair or disproportionate in the orders I propose to make. The Defendants need to know who is funding the Claimants, so that they can consider joining such funders or seeking non-party costs orders against them, set against the backdrop of the Claimants' refusal to provide such information, and the information sought is proportionate having regard to previous authorities and what has been ordered in such previous authorities. To the extent that the Claimants have any legitimate concerns (and I regard the evidence as weak and indeed even totally inapplicable in relation to certain of the Defendants) any such concerns can be met by the confidentiality club.

65. Accordingly, and in all the circumstances, I am satisfied that it is just to make the order for disclosure of funders in the terms sought, and I make an order to such effect.

E. CONFIDENTIALITY CLUB

66. Confidentiality clubs are an exception rather than the norm to the principle of open justice. However, in my judgment, a departure from the principle is justified on the facts.

67. First and foremost, the information is by its very nature confidential, and as such, I consider that such confidence should be maintained so far as possible, consistent with the need for the Defendants to be provided with the information they require to consider, and if appropriate, make third party costs orders. An appropriate confidentiality club would achieve that aim.

68. The confidentiality of funding arrangements have been found to be an appropriate reason to make a confidentiality order (see the decision In the Matter of Hellas Telecommunications (Luxembourg) [2017] EWHC 3465 Ch at [9] where Snowden J (as he then was), said as follows:

"9. It also seems to me that in exercising any such inherent or implied power, the court can and should craft its disclosure order so as to ensure that the legitimate interest of claimants in protecting the confidentiality attaching to both the identity of their funders and the terms of the funding arrangements are preserved so far as is possible..." (See also [15] of that judgment).

69. Secondly, I consider that there are also good reasons as to why there should not be wider dissemination of such confidential information and it is strictly necessary for such purposes in the present case. In this regard I bear in mind the following points (and in doing so I would stress that I have taken previous findings into account, and also the Claimants' assertions at face value, and accordingly I do not make, and do not intend to make, any aspersions about any of the defendants in what follows):

(1) This is a case that was based on alleged unlawful means conspiracies, leading to the confiscation of the Claimants' assets at around the same time that Mr Magomedov was imprisoned in Russia.

(2) Whilst Bright J allowed the Jurisdictional Challenges, he found that (i) there was a serious issue to be tried that Transneft unlawfully combined with others with the objective of wrestling control of NCSP59; and (ii) in relation to the FESCO conspiracy there are serious issues to be tried against seven Defendants. Both of these findings involve Russian State-owned entities.

(3) Mr Magomedov has not identified in any detail where the assets are located. Insofar as they are in Russia, they would be exposed to any action from the Russian State. Insofar as they are located elsewhere, this does not make them immune from any risk of being targeted. There is evidence that the Russian State has previously tried to take action outside Russia, in particular, Magomedov 1 at paragraph 12 describes attempts of the Russian State to freeze Mr Magomedov's assets in other jurisdictions, including Switzerland.

(4) I cannot dismiss out of hand the Claimants' concern that the release of this information (without the confidentiality club that I envisage) would be potentially damaging to them (or their funders), or of advantage to those who have sought to act against their interests. Equally, I cannot reject as fanciful the assertion that anyone seen to be helping Mr Magomedov might be targeted by the Russian Federation (though at the same time I am not in a position to conclude as to the likelihood of any such targeting).

(5) It is no answer for some of the Defendants to say they have been acquitted of any involvement in the conspiracies or that there is a general restriction on the use of witness statements in CPR 35.12. If there is no confidentiality club then applicants against whom findings have not been made could share information with the other Defendants in any event (given that they too wish to seek non-party costs orders) and the implied undertaking would be unlikely to prevent those entities against whom findings have been made from disseminating the information.

(6) It is not realistic, and not practicable, to suggest that some of the Defendants should be subject to a confidentiality club but not the others.

70. In imposing a confidentiality club, I am mindful of the fact that it should go no further than is necessary for the protection of the rights in question. I am satisfied that the confidentiality club that I intend to impose, which is broadly modelled on that which has been supplied to me in draft at the hearing today, imposes those terms which are strictly necessary.

F. CONCLUSION

71. Accordingly, I order the disclosure of the Claimants' litigation funders in the terms sought in the Draft Order and I will impose a confidentiality club in terms which I will now finalise with the assistance of Counsel.