Alimov v Mirakhmedov & ors [2024] EWHC 3322 (Comm)

In an extensive and detailed judgment, the Commercial Court today found decisively that a claim to a significant stake in Genesis Digital Assets Ltd (GDA), said to be one of the world’s largest bitcoin-mining companies, should be heard in Kazakhstan rather than England.  Edward Cumming KC appeared for the lead defendants who successfully challenged the jurisdiction of the Commercial Court in England to hear a claim that they described as a fabricated “shake down.

The claim had at its heart a particular bitcoin-mining project in Kazakhstan.

The first to third defendants, Abdumalik Mirakhmedov, Rashit Makhat, and Andrey Kim, were the founders of GDA.  Mr Mirakhmedov is GDA’s Executive President, and Mr Kim is GDA’s CEO.

They began to pursue the bitcoin-mining project in Kazakhstan in around 2017 as part of a wider joint venture between the three of them and Genesis Mining Limited (Genesis)  Genesis was, at that time, the largest cloud bitcoin-mining company in the world.  Matters evolved such that GDA became the ultimate owner of various projects comprising the wider joint venture, including the particular project in Kazakhstan.  The claimant, Yermek Alimov, who claimed to be a leading specialist in the energy sector in Kazakhstan before moving to England, pleaded that, as of 30 September 2020, (i) Genesis controlled 50% of the shares in GDA, and (ii) the first to third defendants, together, held 50% of the shares in GDA.

By his widely-publicised claim, Mr Alimov sought to claim 35% of the first to third defendants’ interests in GDA on the basis of an alleged – but vigorously disputed – oral contract said to have been concluded through the first defendant alone during “a relatively short discussion over around 1 hour and 10 minutes in total” alleged to have taken place in two parts around an Iftar dinner in London on 10 June 2017.

The defendants described Mr Alimov’s claims as fabricated and a “shake-down” – claims contrived simply to try to extract a settlement in circumstances where he believed that GDA was considering an IPO such that it was a good period during which to seek to bring pressure to bear – particularly in the context of what they described as Mr Alimov’s parallel campaign in the media and through a website: www.gdascandal.com.

Over three days in October 2024, the defendants challenged the jurisdiction of the Commercial Court to hear the claims – arguing that Mr Alimov should, instead, have pursued his Kazakhstani-centric claims brought under Kazakhstani law in Kazakhstan – and sought to set aside an order made without notice and on paper granting Mr Alimov permission to serve them outside the jurisdiction in the UAE and by alternative means to those required under the UK/UAE service treaty.

Simon Birt KC, sitting as a deputy judge of the High Court, determined the jurisdiction battle in favour of the defendants, finding that Kazakhstan was clearly and distinctly the most appropriate forum to hear the claim these claims, observing that it was “plainly a more appropriate forum than England”, and dismissing arguments that the claimant would not be able to obtain substantial justice in Kazakhstan.

The judge also set aside the order permitting service outside the jurisdiction on the grounds of Mr Alimov’s serious material failures to discharge his duty of full and frank disclosure where Mr Alimov had demonstrated “a highly cavalier attitude to the obligations upon a party making a without notice application”.

The judgment – which contains further insightful analysis of the proper approach to jurisdiction challenges, and allegations that a party may not obtain substantial justice abroad, as well as salutary guidance on (i) the scope and importance of full and frank disclosure when seeking permission to serve a defendant outside the jurisdiction or seeking permission for alternative service, and (ii) the limits to the court’s jurisdiction to make an order for alternative service where there is a service treaty in place between the UK and the other jurisdiction (in this case the UAE) – can be found here: Alimov v Mirakhmedov & ors [2024] EWHC 3322 (Comm).

A copy of the full judgment can be found here.

Edward Cumming KC, instructed by Withers LLP, appeared for the successful lead defendants, Abdumalik Mirakhmedov (Executive President and Founder of GDA) and Andrey Kim (CEO of GDA).