JSC BTA Bank (Claimant) Mukhtar Ablyazov and Others (Defendants) Mukhtar Ablyazov and Others (Respondents)

JurisdictionEngland & Wales
JudgeThe Hon. Mr Justice Popplewell
Judgment Date08 August 2014
Neutral Citation[2014] EWHC 2788 (Comm)
Docket NumberFolio 2009-1099
CourtQueen's Bench Division (Commercial Court)
Date08 August 2014
Between:
JSC BTA Bank
Claimant
and
Mukhtar Ablyazov and others
Defendants
and
(1) Mukhtar Ablyazov
(2) Syrym Shalabayev
(3) Clyde & Co Llp
(4) Stephenson Harwood Llp
(5) Addleshaw Goddard Llp
Respondents

2014 EWHC 2788 (Comm)

Before:

The Hon. Mr Justice Popplewell

Folio 2009-1099

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

7 Rolls Building, Fetter Lane

London, EC4A 1NL

Stephen Smith QC, Tim Akkouh and Chris Lloyd (instructed by Hogan Lovells International LLP) for the Claimant

Charles Béar QC and Giles Robertson (instructed by Addleshaw Goddard LLP) for the First Defendant and First Respondent

Alain Choo Choy QC and Anna Boase (instructed by Clyde & Co LLP) for the Third Respondent

Jeffrey Gruder QC (instructed by Stephenson Harwood LLP) for the Fourth Respondent

Hearing dates: 28, 29, 30 July 2014

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.

The Hon. Mr Justice Popplewell The Hon. Mr Justice Popplewell

Introduction

1

The main application before the Court is that of the Claimant ("the Bank") seeking disclosure from the First and Second Respondents ("Mr Ablyazov" and "Mr Shalabayev") of documents relating to their assets which would attract legal professional privilege unless falling within the iniquity exception to such privilege, and which are currently held by the Third to Fifth Respondents ("Clyde & Co", "Stephenson Harwood" and "Addleshaw Goddard" respectively) as their solicitors or former solicitors.

2

The disclosure sought is of "all documents provided to or produced for or by Clyde & Co LLP, Stephenson Harwood LLP and/or Addleshaw Goddard LLP as remain within their sole or joint control which (in whole or in part) concern or contain information about (i) the current and/or former assets of Messrs Ablyazov and/or Shalabayev and/or (ii) any prospective or actual injunction [in respect of such assets] against Messrs Ablyazov and/or Shalabayev."

3

There are ancillary applications by the Bank for declaratory and preservation relief. There are cross applications by Mr Ablyazov concerning evidence in the Bank's applications.

The Proceedings

4

The proceedings by the Bank against Mr Ablyazov have occupied the Courts in England extensively over the last five years. For present purposes the following summary is sufficient.

5

The Bank is a bank in Kazakhstan, of which Mr Ablyazov was Chairman from May 2005 until early February 2009. On 2 February 2009 the State of Kazakhstan, through a sovereign wealth fund, effectively took control of the Bank when, according to the evidence of the Bank, there was significant concern as to the ability of the Bank to continue as a going concern. Mr Ablyazov was removed from his position and fled to London. The Bank has remained majority owned by the State of Kazakhstan throughout the relevant subsequent period although Mr Ablyazov alleges that a sale to private interests closely associated with the government has recently been agreed.

6

Shortly after nationalisation of the Bank, in early February 2009, Mr Ablyazov and Mr Shalabayev (together with others) instructed Clyde & Co.

7

On 13 August 2009 the Bank commenced these proceedings against Mr Ablyazov and others, claiming that he had misappropriated US$295 million pursuant to a fraudulent scheme. Other proceedings followed in this Court and the Chancery Division. It was alleged that Mr Ablyazov had treated the Bank as if it were his own private source of funds. In all 11 sets of proceedings have been commenced by the Bank against Mr Ablyazov and others for defrauding the Bank of in excess of US$6 billion. Mr Ablyazov denied these claims, alleging that they are an attempt by the President of Kazakhstan, Nursultan Nazarbayev, to take control of his assets to support a politically motivated campaign designed to eliminate him as a political opponent of the regime. The Bank has obtained judgment against Mr Ablyazov for some US$4.6 billion in four of the actions and judgment for damages to be assessed (estimated at about US$120m) in another. The six further actions are in abeyance. In the Chancery Division claim which has been determined ("the AAA proceedings"), the judgment was given after rejecting Mr Ablyazov's defence on the merits. In the three actions in the Commercial Court judgment was given following Mr Ablyazov being debarred from defending the proceedings by reason of his contempt of court in lying about and concealing his assets pursuant to freezing and disclosure orders, for which he was sentenced by Teare J to 22 months imprisonment. Mr Ablyazov's conduct in concealing and lying about his assets, and dealing with them in breach of freezing orders, lies at the heart of the present application.

8

On 13 August 2009, Blair J granted a worldwide freezing order against Mr Ablyazov limited to assets with a value of £175 million, with the usual provision for disclosure of assets on affidavit. It was subsequently amended from time to time, which amongst other things involved ultimately removing any limit on the value of assets frozen, and was on 23 November 2012 replaced by a post judgment freezing order made by Teare J which was also subsequently amended from time to time. I shall refer to the order as amended from time to time and replaced post judgment simply as "the Freezing Order".

9

Clyde & Co came on the record for Mr Ablyazov who swore his second affidavit dated 27 August 2009 purporting to give the asset disclosure required by the Freezing Order. It listed indirect interests in 25 offshore companies having assets estimated as reaching several billion dollars and two bank accounts. It was not served immediately, but following unsuccessful challenges, it was served on 30 September 2009 under cover of a letter from Clyde & Co correcting what were euphemistically described as "minor inaccuracies", which included reducing the value of three of the companies from "approximately US$250m to US$1.2 billion" each down to US$38,000 in total, deleting two of the companies from the list on the grounds that Mr Ablyazov had no beneficial interest, and identifying five additional companies in which he allegedly held an indirect interest, each of which was said to have an approximate value of US$250m to US$1.2 billion.

10

On 16 October 2009 Teare J ordered Mr Ablyazov to attend for cross examination on his asset disclosure, describing it as "extraordinarily inadequate": see [2009] EWHC 2833 (QB), at [5]. Mr Ablyazov was cross examined over two days on 27 October 2009 and 18 November 2009 in the course of which he told lies about his assets in an attempt to keep them from the Bank's reach. One such lie concerned his previous interest in Eurasia Logistics which owned a valuable storage and distribution park in North Domodedovo near the airport in Moscow, whose value is currently estimated at something between US$300 million and US$700 million. He said he had transferred his 75% interest in Eurasia Logistics to "management" meaning "mostly" Mr Volkov, pursuant to a written agreement in July 2009. When the Bank sought a copy of the agreement, Clyde & Co refused to provide it stating in a letter of 17 November 2009 that the document evidencing the "gift to Mr Volkov" of the 75% interest in Eurasia Logistics would not be provided because it was not an asset owned by Mr Ablyazov at the date of the Freezing Order. Clyde & Co were retained to advise on the transaction involving transferring the controlling interests, which involved Eurohypo as the lending institution. Documents subsequently obtained show that this occurred in November 2009; that the transaction was expected to close following an opinion letter written by Clyde & Co on 2 December 2009; that the transfer of interests was purportedly effected by a sale to a company called Keppel Land Ltd by Stepan Investments Ltd for $100 million, not a gift; and that the transfer documentation was falsely backdated to 31 July 2009 in order to support the lie told by Mr Ablyazov during cross examination oo his assets. It appears that Clyde & Co acted on behalf of Mr Ablyazov in relation to closing the transaction between March and July 2010, after they had come off the record in these proceedings. It is not suggested that Clyde & Co were aware of the fraudulent backdating, and there was room for uncertainty and confusion as to whether the transaction was itself a breach of the terms of the Freezing Order (which Clyde & Co advised it was not), given its then wording and limit of £175 million. Nevertheless the documents show that Mr Ablyazov's evidence when cross examined was a lie and that Clyde & Co's endorsement of it in their letter of 17 November 2009 was similarly untrue. The Bank places significance on this episode in the context of the present application as an example of documentation in the hands of Clyde & Co relating to Mr Ablyazov's assets which was not brought to the attention of the Bank or the Court at the time. The listing of the documentation scheduled to Clyde & Co's letter of 2 December 2009 suggests that the corporate structure was complex and the volume of documentation very substantial.

11

On 15 December 2009 Clyde & Co wrote on Mr Ablyazov's behalf making further disclosure of particulars relating to the previously disclosed assets. This was put forward as "voluntary" further disclosure, with the statement that no further questions would be answered.

12

On 19 February 2010 the Bank applied for the appointment of receivers over Mr Ablyazov's assets. In February and April 2010 Mr Ablyazov committed breaches of the Freezing Order by granting security in favour of a Russian bank, AMT Bank LLC, over certain loan repayment rights and land in Moscow. Meanwhile in March...

To continue reading

Request your trial
32 cases
  • Karam Salah Al Din Awni Al Sadeq v Dechert LLP
    • United Kingdom
    • King's Bench Division
    • 5 April 2023
    ...67 As to the range of conduct that may fall within the scope of the iniquity exception, Popplewell J in JSC BTA Bank v Ablyazov [2014] EWHC 2788 (Comm), [2014] 2 CLC 263, having considered various authorities, said at [68]: “The principle is not confined to criminal purposes, but extends ......
  • R v Edward Brown (formerly Latham)
    • United Kingdom
    • Court of Appeal (Criminal Division)
    • 29 July 2015
    ... ... absence of nurses, custody officers and others". On the first day of the trial, an application ... Council v Governor and Company of the Bank of England (No 6) [2005] 1 AC 610 , at [25]) ... the evidence given would have done the defendants good instead of harm. Of course the power in ... degree in each case ( JSC BTA Bank v Ablyazov 2014 EWHC 2788 Comm) ... 42 ... ...
  • Candey Ltd v Basem Bosheh
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 1 August 2022
    ...allegations were correct). 64 The judge relied on the decision of Popplewell J (as he then was) in JSC BTA Bank v Ablyazov (“ Ablyazov”) [2014] EWHC 2788 as the leading authority on the interplay between legal professional privilege and fraud (the so-called “Iniquity Exception”). She summar......
  • JSC BTA Bank v Mukhtar Ablyazov and Another
    • United Kingdom
    • Queen's Bench Division (Commercial Court)
    • 9 December 2016
    ...2664 (Comm); [2011] EWCA Civ 1386; [2012] EWHC 237 (Comm); [2012] EWCA Civ 1411; [2013] EWHC 510 (Comm); [2013] EWHC 3691 (Ch); [2014] EWHC 2788 (Comm); and [2016] EWHC 230 (Comm). 9 Mr Ablyazov was the Chairman of the Board of Directors of BTA between May 2005 and February 2009. Ove......
  • Request a trial to view additional results
5 firm's commentaries
  • The Weekly Roundup: The Costly Edition
    • United Kingdom
    • Mondaq UK
    • 9 August 2022
    ...because of the iniquity exception. Both parties relied on the decision of Popplewell J (as he then was) in JSC BTA Bank v Ablyazov [2014] EWHC 2788, the leading authority on the interplay between legal professional privilege and the 'iniquity exception'. In that case, the Court reviewed the......
  • Iniquity Exception To Privilege JSC BTA Bank v Ablyazov
    • United Kingdom
    • Mondaq United Kingdom
    • 28 August 2014
    ...crime, and no longer has the benefit of absolute protection from disclosure. The case is JSC BTA Bank v. Mukhtar Ablyazov and others [2014] EWHC 2788 (Comm). Communications between a solicitor and his client for the purposes of seeking or giving legal advice, or for the purposes of litigati......
  • Getting the Deal Through – Dispute Resolution 2018 – England & Wales
    • United Kingdom
    • JD Supra United Kingdom
    • 16 August 2018
    ...under the ‘iniquity princi- ple’ ie, when communications are made for wrongful, eg, fraudulent, purposes. In JSC BTA Bank v Ablyazov [2014] EWHC 2788 (Comm), the iniquity caused by the litigant’s concealment and deceit in relation to his or her assets put the advice outside the normal scope......
  • Court Of Appeal Considers Iniquity Exception To Privilege
    • United Kingdom
    • Mondaq UK
    • 11 August 2022
    ...therefore was whether the iniquity exception applied. That depended on an application of the test set out in JSC BTA Bank v Ablyazov [2014] EWHC 2788 (Comm) (considered here): were the disputed communications part of the ordinary course of the professional engagement of the solicitor, or ha......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT