Ukrainian Bank's Lawsuit Against Del. Company Dismissed

By Michael Greene

Jan. 4 — Ukrainian-based VTB Bank's fraudulent transfer and unjust enrichment claims against a Delaware limited liability company were dismissed, after the Delaware Chancery Court Dec. 29 ruled that defendant Development Max LLC would suffer “overwhelming hardship” if the lawsuit proceeded in Delaware.

In a letter opinion, Vice Chancellor John W. Noble concluded that dismissal under the forum non conveniens doctrine was appropriate, even though the court earlier had allowed the case to proceed.

“Given the civil law structure of the Ukrainian legal system (reducing the precedential value of Ukrainian court decisions), the absence of a direct counterpart under Ukrainian law to Delaware's fraudulent transfer and unjust enrichment causes of action, and the experts’ starkly divergent opinions regarding the applicability of the Civil Code of Ukraine to the facts of this case—indicating unsettled foreign law and its uncertain application to the facts—the Court holds that Ukraine, as opposed to Delaware, is the proper forum in which to litigate this dispute,” Noble wrote.

Unsettled Foreign Law

The chancery court in a 2014 decision had declined to dismiss the lawsuit. At the time, it reasoned that VTB may have properly stated a claim for improper transfers of property under Ukrainian law, thus necessitating the appointment of a receiver for Development Max and implicating the Delaware courts' fundamental role of overseeing the conduct of Delaware entities.

After the parties presented expert testimony, the court Dec. 29 ruled that dismissal was warranted.

The court observed that appointing a receiver to a solvent corporation is an “extraordinary remedy” that requires a showing of misconduct. The court found that it was unclear whether the plaintiff was entitled to such relief given that the case involved the application of complex, unresolved Ukrainian law. Accordingly, the court found that its earlier reasoning was no longer controlling.

The court also concluded that Delaware was an improper forum for the dispute because VTB didn't have a substantial interest in having its claims adjudicated in the state.

“Here, VTB is a Ukrainian bank whose injuries occurred in Ukraine and whose claims are governed by the laws of Ukraine,” Noble said. “It therefore has a ‘less substantial’ interest in adjudicating its claims in Delaware.”

To contact the reporter on this story: Michael Greene in Washington at

To contact the editor responsible for this story: Yin Wilczek at