Russian businessman challenges WRC ruling on fund access

Russian-born billionaire businessman Dr Alexander Gerko has asked a judge to overturn a finding of the Workplace Relations Commission (WRC) refusing his company XTX Markets Technologies access to an Irish investment management fund.

Judge John O’Connor heard in the Circuit Civil Court that Gerko’s XTX company had been discriminated against by Aviva Investors Liquidity Funds Plc (Aviva) on the ground of race contrary to the Equal Status Act.

Ms Lorna Lynch SC, who appeared with Owen Keany and Ledwith Solicitors for XTX, told the court it had been asserted that Aviva had refused to provide XTX with an investment service on the basis both Dr Gerko and XTX were the subject of economic sanctions following Russia’s invasion of Ukraine.

Ms Lynch told Judge O’Connor that XTX had made a complaint to the Workplace Relations Commission under the Equal Status Act and, following the hearing of a preliminary issue, the WRC had ruled the UK company, of which Dr Gerko was the ultimate beneficial owner, was subject to sanctions and did not have sufficient standing to claim discrimination under the Act.

She said it was this decision that was under appeal and she was asking the court to overturn the WRC finding and allow the company’s complaint to go to full trial.

Aviva, she submitted, had discriminated against her client on the basis of its imputed nationality and that of its Chief Executive Officer.

Ms Lynch said XTX’s preliminary point had been heard by WRC Adjudication Officer Valerie Murtagh who had dismissed the company’s claim on her preliminary finding that XTX, as a private limited company, had no standing to a claim under the Equal Status Act and her ruling that she did not have the jurisdiction to investigate the complaint.

Ms Lynch, quoting lengthy legal authorities to substantiate the appeal, submitted that Ms Murtagh had erred in law and in fact in finding the company “was not a person” in terms of the Act and lacked standing.

Counsel for Aviva Investors Liquidity Funds told Judge O’Connor that Aviva’s decision had been reached as a result of the imposition of sanctions by the EU following the Russian invasion of Ukraine and the serious material administrative challenges associated with Aviva’s acceptance of XTX’s subscription application.

Article 5 of the EU Regulation had prohibited the sale of securities denominated in any official currency of a member state issued after April 2022 to any Russian national, natural persons residing in Russia or legal entities or bodies established in Russia.

The court heard that during the due diligence process it had become apparent that XTX’s subscription application would violate Article 5, reflecting guidance from the European commission and the Central Bank of Ireland.

In order to have allowed XTX to subscribe for shares in relevant funds, Aviva would have had to substantially change its internal and oversight processes just for XTX, which Aviva did not have the commercial or risk appetite to do.

Judge O’Connor was told that the WRC had been asked to break new legal ground in reading into the word “person” the possibility of a legal person, as opposed to a natural person, in breach of the submitted clear intention of the Oireachtas.

No legal authority, it was submitted, existed for such an approach where the plain language of the Statute was clear and was unambiguous in excluding such an interpretation.

Judge O’Connor reserved his judgment on the appeal.