Forsters is defending a £70m professional negligence claim filed by businessman Rupert Galliers-Pratt in which he alleges the firm failed to execute a deal for three oil blocks in Russia.

A member of the Cayzer investment banking family, Galliers-Pratt alleges that Forsters acted ‘negligently and in breach of its contractual duties’ after finding ‘defects in the share purchase agreement’ used to buy stakes in three Russian oil companies. In court filings seen by Legal Business, the businessman is claiming damages of between $110m and $211m after instructing Forsters to execute a deal for the 49% stake in Yugra Balt Invest owned by Interguarantee in 2010.

However, Clifford Chance discovered in February 2013 that Galliers-Pratt and fellow shareholders in the investment vehicle, Irtysh Petroleum, hadn’t executed the deal under Russian law. The claim is around double the revenue of Forsters, which in the 12 months to 30 April 2015 saw income rise 14% to £41.4m.

Bringing the damages claim through Khanty-Mansiysk Recoveries, of which Galliers-Pratt is director and sole shareholder, the company argues that Irtysh Petroleum ‘lost the opportunity to develop and sell recoverable oil reserves of 70 million barrels and prospective and possible reserves of a further 112 million barrels’ as a result of having ‘lost its interest in the licence holders’ of the three Siberian oil blocks.

Jeremy Whiteson, Forsters’ former head of corporate who is now at Fladgate, had been instructed by Irtysh Petroleum to handle the transfer of Interguarantee’s 49% stake in Yugra Balt Invest in May 2010. Interguarantee was to be allotted 200,000 shares in Irtysh Petroleum in the exchange.

Whiteson informed Galliers-Pratt on 20 May that the share purchase had been completed and Irtysh Petroleum now owned Yugra Balt Invest. However, Galliers-Pratt argues that the deal was never completed as Interguarantee ‘had not entered a change in Yugra Balt Invest’s list of shareholders…to record that Irtysh was now the owner of the shares’ and ‘had not signed and completed a notarised application to the Unified State Register of Legal Entities (USRLE)’. It was upon checking the USRLE database that Clifford Chance discovered the error.

Galliers-Pratt also alleges that the share purchase agreement crafted by Whiteson was also ‘ineffective to impose an enforceable obligation on Interguarantee’.

The filing alleges that Forsters breached its contractual duty to Irtysh Petroleum on 13 occasions, including having ‘failed to ascertain what was required by Russian law to effect the transfer of shares in a Russian company…failed to recognise that it needed specialist advice from Russian lawyers…failed to appreciate that Interguarantee had not transferred the shares in Yugra Balt Invest to Irtysh’. It also rejected Forsters’ position that an earlier fee settlement in 2012 precluded Galliers-Pratt from any claims against it.

The filing, received by the High Court last Friday (23 October), lists London litigation boutique Humphries Kerstetter as counsel for the claimant. Former Linklaters duo, Mark Humphries and Kristopher Kerstetter, has been instructed, and has retained Simon Davenport QC of 3 Hare Court to act as counsel.

Forsters partner Guy Jordan said: ‘We maintain this is a speculative claim that we will defend robustly. The claim is at an early stage and we are not currently in a position to comment further.’

tom.moore@legalease.co.uk