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Multiple legal systems in focus as Credit Suisse case adjourned

The legal system of the nation of Georgia was under the spotlight in the Bermuda Supreme Court yesterday as law experts crossed swords in the $400-million lawsuit pitting former Georgian Prime Minister Bidzina Ivanishvili against Credit Suisse Life (Bermuda).

Legal expert Rolf Kneiper, testifying remotely from Frankfurt in Germany before Chief Justice Narinder Hargun, answered questions posed by Stephen Moverley Smith, QC, for Credit Suisse.

The case involves two Credit Suisse Life (Bermuda) insurance policies that Mr Ivanishvili claims were mismanaged by a Credit Suisse relationship manager, resulting in a $400-million call to pay for leveraged shares held in the policy accounts.

Mr Kneiper explained the differences in damages between the law of tort and the law of contract. “You cannot sit in a car and say, “The person there looks poor — if I injure him, it cannot cost me a lot’.”

He said: “A person, before they commit a tort, they do not calculate the cost.

“If a judge said, ‘He didn’t foresee he would injure 20 people, he foresaw he would injure only ten, so we will compensate for only ten.’ That would lead to immoral and reckless behaviour.

“So, the contractual claim cannot be translated to a tort claim.”

The legal subject of misrepresentation was also explored. Mr Kneiper said that under Georgian law even implied misrepresentation would be characterised as deceit.

Silence can be interpreted as misrepresentation if something that should have been said was not said. Mr Kneiper said that for a person to be deceived he must have been aware of the misrepresentation, thought about it and relied on it.

Mr Kneiper also explained that the nature of the person who is entering into a transaction amounts to a representation by that individual. “If you go to a bakery and the baker is there, it implied that the baker is baking the bread,” he said.

Mr Ivanishvili has brought a lawsuit against Credit Suisse, contending it bears responsibility in the loss of $400 million of his money, a part of the fortune he acquired after the fall of the Soviet Union.

He received a call for the money because of over-leveraged shares in drug developer Raptor Pharmaceuticals, shares held in his Credit Suisse Life (Bermuda) insurance policy accounts since 2011-12.

Mr Ivanishvili denies authorising the purchase of the position in the stock that led to the 2015 call, and the case has focused on this question as one of the key points.

Mr Ivanishvili’s main contact at Credit Suisse was his relationship manager, French national Patrice Lescaudron, later convicted of unrelated fraud, and who was released from prison early before taking his own life.

The court has heard that Lescaudron was behind the purchase of such large positions in the pharmaceutical stock, and that even before the extent of his misdeeds were known, it drove Credit Suisse compliance personnel to escalate their concerns to higher-level executives in the company.

Lescaudron admitted multiple financial breaches.

The complex case involves several legal systems including the law of Georgia and Switzerland as well as Bermuda, and Mr Ivanishvili is fighting his case on multiple continents.

The case continues on Monday.

Bidzina Ivanishvili, the Georgian tycoon who is in a $400 million legal battle with Credit Suisse