Akcine Bendrove Bankas Snoras (a company incorporated pursuant to the laws of the Republic of Lithuania) v Vladimir Antonov
| Jurisdiction | England & Wales |
| Judge | Mr Peter MacDonald Eggers |
| Judgment Date | 20 April 2018 |
| Neutral Citation | [2018] EWHC 887 (Comm) |
| Date | 20 April 2018 |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2012-000656 |
[2018] EWHC 887 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice
Strand, London, WC2A 2LL
Peter MacDonald Eggers QC (Sitting as a Deputy High Court Judge)
Case No: CL-2012-000656
Robert Amey (instructed by Linklaters LLP) for the Claimant
Leigh-Ann Mulcahy QC and Ben Lynch (instructed by The Khan Partnership LLP) for the Third Respondent
The First and Second Defendants were not represented
Hearing dates: 26th March 2018
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Peter MacDonald Eggers QC
Mr Peter MacDonald Eggers QC:
Introduction
Until 2011, the Claimant (“Snoras”) operated as a retail bank in Lithuania. The First Defendant (“Mr Antonov”) owned 68.1% of the shares in Snoras and was the chairman of the Supervisory Board of Snoras. The Second Defendant (Mr Baranauskas) owned 25.31% of the shares in Snoras and was the chairman of the board and head of administration of Snoras.
In December 2011, the Vilnius Regional Court made a bankruptcy order in respect of Snoras and appointed Mr Neil Cooper, of Zolfo Cooper in London, as Bankruptcy Administrator.
Snoras alleges that Mr Antonov and Mr Baranauskas misused or misappropriated some €492 million of Snoras's assets.
In late 2011, the prosecution authorities in Lithuania, Switzerland and Latvia imposed criminal provisional restraint orders in respect of Mr Antonov's assets situated in Lithuania, England, Guernsey, Austria, Latvia, Switzerland, Costa Rica and Ukraine.
On 24th November 2011, at the request of the Lithuanian prosecution authorities, Mr Antonov and Mr Baranauskas were arrested by the Metropolitan Police in London in connection with the alleged fraud affecting Snoras. The Lithuanian prosecution authorities sought the extradition of both men. On 20th January 2014, the Westminster Magistrates Court ordered their extradition. I have been informed that, in breach of their bail conditions, Mr Antonov and Mr Baranauskas left the jurisdiction.
In January 2012, the Crown Court granted a criminal restraint order against various English assets of Mr Antonov. I understand that this restraint order is no longer in effect.
In May 2012, Snoras commenced proceedings against Mr Antonov and Mr Baranauskas seeking relief for alleged breaches of the Defendants' duties as directors, officers or shareholders, and applied for a worldwide freezing order against Mr Antonov (“the Freezing Order”). That application was granted by Teare, J. The Freezing Order referred to a number of undertakings given by Snoras, including that Snoras “ will not without the permission of the court seek to enforce this order in any country outside England and Wales or seek an order of a similar nature including orders conferring a charge or other security against the Respondent or the Respondent's assets”.
The proceedings commenced by Snoras against the Defendants were stayed by consent at the end of 2013, without prejudice to the Freezing Order.
In 2017, Snoras commenced civil proceedings against Mr Antonov and Mr Baranauskas in Lithuania. In support of those proceedings, Snoras obtained orders against Mr Antonov in both Lithuania and Switzerland restricting the use of or attaching Mr Antonov's assets (or some of his assets) in those countries. The question which arises upon Snoras's application at this hearing is whether or not Snoras's obtaining of those orders in Lithuania and Switzerland constituted a breach of the above-quoted undertaking.
Snoras's English Civil Claim
On 18th May 2012, Snoras issued a claim form against Mr Antonov and Mr Baranauskas (“the English Civil Claim”) seeking relief alleging that the Defendants were guilty of breaches of their duties as directors, officers or shareholders of Snoras, under Lithuanian law, in connection with four groups of transactions which, Snoras alleges, had no commercial justification, namely:
(1) The Julius Baer Transactions (with an approximate value of €290 million), constituted by the transfer of securities to accounts at the Swiss bank, Julius Baer & Co (“Julius Baer”), beneficially owned by Mr Antonov and/or Mr Baranauskas, and their use as collateral for loans by Julius Baer to Mr Antonov and/or Mr Baranauskas.
(2) The HSBC Transactions (with an approximate value of €57 million), constituted by the transfer of securities and cash held in Snoras's name with HSBC Private Bank (Suisse) SA, Zurich to accounts controlled by Mr Antonov, and their use as collateral for loans to third parties controlled by Mr Antonov.
(3) The Time Deposit Transactions (with an approximate value of €128 million), constituted by the transfer of Snoras's assets (cash and securities) to third party institutions and, though recorded as time deposits, their use as collateral for loans by those institutions to other entities, many of which were connected to Mr Antonov.
(4) The Overvalue Transactions, whereby Snoras paid for real property from companies connected to Mr Antonov, at a price which was substantially over the market value.
Even though these claims were formulated as a matter of Lithuanian law, the English Court has jurisdiction because, as I understand it, the Defendants were resident or domiciled in England.
The Freezing Order
On 18th May 2012, the same day that the English Civil Claim was commenced against Mr Antonov and Mr Baranauskas, Snoras applied for and obtained the Freezing Order against Mr Antonov in respect of his assets up to a value of €492 million. Included within the Freezing Order was an order that Mr Antonov disclose his assets worldwide. The Freezing Order was made by Teare, J upon various standard undertakings being made by Snoras, including that it would not use any information obtained as a result of the Freezing Order for the purposes of civil or criminal proceedings in England or any other jurisdiction other than the claim (undertaking (6)). In addition, Snoras gave an undertaking to the Court in the following terms:
“(7) The Applicant will not without the permission of the court seek to enforce this order in any country outside England and Wales or seek an order of a similar nature including orders conferring a charge or other security against the Respondent or the Respondent's assets”
I shall refer to undertaking (7) as “the Undertaking”.
On 4th July 2012, Mr Antonov applied to the Court for the discharge of the Freezing Order on the grounds of material non-disclosure or misrepresentation by Snoras as to the various criminal provisional restraint orders restricting the transfer of Mr Antonov's assets, the absence of a risk of dissipation of assets, and delay in the making of the application for the Freezing Order. On 4th February 2013, in a detailed judgment ( [2013] EWHC 131 (Comm)), Gloster, J dismissed the application to discharge the Freezing Order. Gloster, J found that there had been a non-disclosure of the criminal restraint order made by the Crown Court, but held that the non-disclosure had been inadvertent and that it would have had “ no material effect on the judge's decision that there was a risk of dissipation, which required the imposition of a WWFO” (paragraph 64(ix)).
It was argued before Gloster, J that there was no risk of dissipation of assets, given the various provisional restraint orders which had been made, given the existence of criminal proceedings commenced against Mr Antonov in Lithuania, and given Mr Antonov's then presence within the jurisdiction. Gloster, J rejected this argument and held (at paragraph 67) that:
“Having read the entirety of the evidence in this matter, I have no doubt that a risk of dissipation remains, notwithstanding Mr. Antonov's presence within this jurisdiction and the restraint orders which have been made. He is a sophisticated operator who remains clearly able to give instructions in relation to transactions affecting his worldwide assets.”
Mr Antonov also applied for an order varying the Freezing Order, in particular in connection with the disclosure of assets, arising out of a concern that disclosed information might find its way into the hands of the Lithuanian prosecution authorities in breach of Mr Antonov's privilege against self-incrimination. Gloster, J refused the application to vary the Freezing Order, but included a number of safeguards to provide protection against the use of such disclosed information in any criminal proceedings against Mr Antonov (paragraphs 46 and 77(viii)). In addition, having identified the various safeguards, Gloster, J added (at paragraph 47) that:
“The above is no more than an outline of the regime which I intend to impose. I shall hear argument from counsel as to the precise drafting of the proposed safeguards; in particular it may be appropriate to give sanction in advance to the Bank to enable it to use the relevant materials in freezing applications intended to [be] made in other jurisdictions.”
The order made by Gloster, J provided that “ the Relevant Defence Documents” (including Mr Antonov's defence or any document setting out the grounds of his defence) or “ Mr Antonov's Disclosed Documents” (meaning documents disclosed by Mr Antonov) should not be disseminated beyond the persons defined in “ the Restricted Group” (including specified individuals who constitute Snoras's legal team and representatives of the Bankruptcy Administrator).
Pursuant to the order made by...
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