Jsc Bta Bank (Respondent / Claimant) v Mukhtar Ablyazov
| Jurisdiction | England & Wales |
| Judge | Lord Justice Rix,Lord Justice Toulson,Lord Justice Maurice Kay |
| Judgment Date | 06 November 2012 |
| Neutral Citation | [2012] EWCA Civ 1411 |
| Docket Number | Case No: A3/2012/0661 |
| Court | Court of Appeal (Civil Division) |
| Date | 06 November 2012 |
[2012] EWCA Civ 1411
Lord Justice Maurice Kay
Vice President of the Court, Civil Division
Lord Justice Rix
and
Lord Justice Toulson
Case No: A3/2012/0661
A3/2012/0565
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION COMMERCIAL COURT
MR JUSTICE TEARE
2009 FOLIO 1099
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Duncan Matthews QC, Mr Charles BéarQC, Mr George HaymanandJames Sheehan (instructed by Addleshaw Goddard LLP) for the Appellant
Mr Stephen Smith QC, Mr Tim AkkouhandMr Caley Wright (instructed by Hogan Lovells International LLP) for the Respondent
Hearing dates : Monday 2 nd July 2012
Tuesday 3 rd July 2012
Wednesday 4 th July 2012
These appeals arise out of litigation (spread over many separate actions) which has been brought against Mr Mukhtar Ablyazov (and others) by a major Kazakhstan bank, JSC BTA Bank (the "bank"), which alleges that it has been brought to its knees by Mr Ablyazov's defalcations. Mr Ablyazov was the one-time chairman of the bank, but has fled to the UK, where he has been granted asylum. The claims allege that Mr Ablyazov has defrauded the bank of almost US$5 billion. The bank has since had to be rescued by its creditor banks, who have foregone much of the debt owed to them in exchange for a share in the proceeds of this litigation.
In the present round of appeals, Mr Mukhtar Ablyazov appeals from three judgments of Mr Justice Teare under which the judge has respectively (i) found him guilty of contempt of court; (ii) sentenced him on each of three proven contempts to 22 months in custody concurrently; and (iii) in consequence has made an "unless" order whereby Mr Ablyazov will be debarred from defending the claims made against him, and his defences will be struck out, unless within a stated period he both surrenders to custody and makes proper disclosure of all his assets and his dealings with them. The stated period for surrender was until 9 March 2012, and for disclosure until 14 March 2012. However, the judge's order also provided that, in the event of appeal, the sanctions for non-compliance would not take effect until seven days after any dismissal of the appeal. Mr Ablyazov had a right of appeal from the judgments committing him to prison, and obtained permission to appeal from the judge from his judgment imposing sanctions. I will refer to the three judgments as the "committal" judgment, the "sentence" judgment, and the "unless" judgment respectively.
Over the past few years the judge has had unrivalled experience of this litigation, and has been called upon to produce many judgments in it (although other judgments have also been authored by other judges, and by this court).
The claims and the defence
It is unnecessary to say much about the underlying claims. The essence of them is that the bank alleges that Mr Ablyazov conspired to make fraudulent loans to companies in which it is said that he was interested. The loans have not been repaid and the money has, for the most part, disappeared. The claims made include those of a proprietorial nature, asserting tracing remedies. Mr Ablyazov asserts that the claims are an unjustified attempt by the President of Kazakhstan, President Nazarbayev, to victimise and destroy him, as a political opponent and as a leading figure in Kazakhstan's democratic opposition.
Mr Ablyazov points to an earlier chapter of his personal history when in 2002 he was arrested in Kazakhstan on what he says were trumped up charges, and his assets seized. He was imprisoned, although released in 2003. He says he was also tortured, and attempts were made to have him assassinated. The judge remarked, in an earlier judgment of his, [2010] EWHC 1779 (Comm), that Mr Ablyazov's evidence suggests that "Kazakhstan has much in common with Ancient Rome".
However, Mr Ablyazov appeared to have made a comeback. After a period in Moscow from 2003 to 2005, he returned to Kazakhstan and acquired a controlling interest in the bank and became its chairman. He says that under his control it was hugely successful, but that he was constantly pressured to make a gift of his interest in it to the President's nominees, which he resisted. In 2007–2008, as the world moved towards and into economic crisis, Mr Ablyazov says that the President stepped up his efforts to wrest the bank from his control, and the bank says that Mr Ablyazov entered upon his scheme of looting the bank. Ultimately, the bank was nationalised and, in January 2009, Mr Ablyazov fled to London.
These allegations and counter-allegations have not been adjudicated. They remain allegations only. However, there have been attempts by both parties to stay or strike out each other's litigation.
Thus, Mr Ablyazov applied to stay the bank's claims as being brought as an abuse of the process of the court on the ground that they were being pursued for a collateral purpose, namely to damage his reputation and to eliminate him as a political opponent of the President of Kazakhstan. In response, the bank applied to dismiss Mr Ablyazov's application inter alia as being brought without any evidence to support it. Mr Ablyazov's application was dismissed, on the basis that it was not arguable that the process of the court was being abused. On the other hand, that was despite the judge being prepared to assume that Mr Ablyazov's case concerning the President's political animus against him was arguable, even if unlikely. The judge said ( JSC BTA Bank v. Ablyazov (No 6) [2011] EWHC 1136 (Comm), [2011] 1 WLR 2996, at [46]):
"In circumstances where the claimant was insolvent and had reason to believe that substantial assets have been misappropriated it is to be expected that the claimant would wish to recover those assets. Indeed, the claimant is now contractually obliged to use its reasonable endeavours to maximise the recovery of its assets. In those circumstances the suggested inference may also not be a reasonable inference. I have even more doubt as to whether it can be inferred that the claimant's predominant purpose in bringing proceedings against the first defendant was to eliminate him as a political opponent of the President…However, I hesitate to decide on this application that no such inference can be drawn in the face of the tsunami of evidence which has been served by the defendant about political and economic life in Kazakhstan. It is extremely difficult for this court to make a judgment about that evidence without it (or at least the relevant parts of it) being tested and examined in detail. The inference which the court is being asked to draw may appear unlikely but I am not persuaded that it is unarguable."
See also [54], where Teare J said inter alia that "it is not contended that the claimant does not have a good arguable case against the first defendant".
Mr Ablyazov sought permission to appeal from that judgment, but he was refused by Jackson LJ on paper, and by Stanley Burnton LJ upon oral renewal, [2011] EWCA Civ 1588. The latter described the proposition, that a suit to enforce the disgorgement of ill-gotten gains could be stayed because the claim was actuated in part or principally by personal or political hostility on the part of the government of a foreign country, as "startling" (at [9]).
The freezing injunction and receivership order
This litigation was commenced by the bank obtaining a without notice freezing injunction from Blair J on 13 August 2009. The freezing order, affirmed inter partes, lies at the root of the subsequent proceedings to commit Mr Ablyazov, and thus of this appeal. On 21 August 2009, Teare J dismissed Mr Ablyazov's application to stay the standard disclosure aspects of the freezing order until after the return date, and on 30 September 2009 this court dismissed Mr Ablyazov's appeal: [2009] EWCA Civ 1124, [2011] 1 WLR 976. Mr Ablyazov's disclosure was so defective that the judge found it necessary to make an order for Mr Ablyazov's cross-examination: [2009] EWHC 2833 (QB). He described the disclosure's deficiencies as "extraordinarily inadequate" (at [5]). Mr Ablyazov was cross-examined on 27 October and 18 November 2009. In the meantime, on 12 November 2009, the freezing order was confirmed and continued inter partes.
Despite disclosure by Mr Ablyazov of assets which he originally said were worth several billion dollars, a figure which he subsequently revised to something in excess of one billion, by February 2010 the bank had concluded that Mr Ablyazov would not comply voluntarily with his disclosure obligations, and so on 16 February 2010 applied for the appointment of receivers over Mr Ablyazov's assets. The application was heard over 6 days in May and June 2010. On 16 July 2010 Teare J gave a 200 paragraph judgment in that application, and appointed receivers: [2010] EWHC 1779 (Comm). The judge said:
"[126] In summary therefore the circumstances which give reason to believe that the Freezing Order may not provide the Bank with adequate protection against the risk that Mr A's assets will be dissipated prior to any judgment that the Bank obtains are as follows…His initial disclosure of his assets can now be seen to have been seriously inadequate in that he failed to mention the crucial role of a nominee and the nature of the operating assets (save for one). There are grounds for believing that he wished to make it difficult for the Bank to enforce the Freezing Order…
[161] Although Mr Ablyazov has stated that he will obey the orders of this Court that statement has to be...
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