JSC BTA Bank v Mukhtar Ablyazov (First Defendant) Ilyas Khrapunov (Second Defendant)
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Teare |
| Judgment Date | 11 February 2016 |
| Neutral Citation | [2016] EWHC 230 (Comm) |
| Docket Number | Case No: CL-2015000549 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 11 February 2016 |
[2016] EWHC 230 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, 7 Rolls Buildings
London EC4A 1NL
Mr. Justice Teare
Case No: CL-2015000549
Stephen Smith QC and Tim Akkouh (instructed by Hogan Lovells International LLP) for the Claimant
Charles Samek QC and Marc Delehanty (instructed by Hughmans) for the Second Defendant
Hearing dates: 26, 27 & 28 January 2016
There has been considerable litigation in this court since 2009 between the Kazakhstan bank, JSC BTA Bank ("the Bank"), and its former chairman, Mr. Mukhtar Ablyazov ("Mr. Ablyazov"). Much of the litigation has concerned attempts by the Bank to enforce the worldwide freezing order ("the WFO") granted by the court against Mr. Ablyazov in 2009 which attempts culminated in contempt proceedings against Mr. Ablyazov. The Bank established that Mr. Ablyazov breached the terms of the WFO and that certain individuals assisted him in doing so; see JSC BTA Bank v Ablyazov (No.8) [2013] 1 WLR 1331 The Bank now considers that Mr. Ablyazov's son-in-law, Mr. Ilyas Khrapunov ("Mr. Khrapunov") also assisted Mr. Ablyazov in breaching the WFO. In 2009, when the Bank says that Mr. Khrapunov conspired with Mr. Ablyazov to breach the WFO, Mr. Khrapunov was 25 years old. He had married Mr. Ablyazov's daughter in 2007.
The Bank has commenced eleven actions and, following Mr. Ablyazov's flight from the jurisdiction on the eve of being committed to prison for contempt, has obtained judgments in default against Mr. Ablyazov for a total sum exceeding US$4.6 billion. But "the Bank has not succeeded in recovering amounts of a magnitude remotely approaching that sum via its enforcement efforts" (see the first affidavit in this action of Mr. Hardman, the Bank's tireless solicitor at Hogan Lovells International). Notwithstanding the apparent paucity (at least in terms relative to the size of the judgment debt) of the Bank's recoveries and the long and undoubtedly hugely expensive years of litigation, the Bank's desire to litigate appears undiminished. It has now opened up another front by taking proceedings against Mr. Khrapunov. In an action against Mr. Khrapunov commenced in July 2015 the Bank has alleged that since 2009 he has conspired with Mr. Ablyazov to prevent the Bank from making any substantial recovery by breaching the WFO, creating and using false and misleading documents and by taking whatever steps they considered necessary to prevent the Bank from recovering the judgments debts. By so doing it is said that they abused the process of the court and interfered with the administration of justice. The cause of action relied upon is the tort of conspiracy to injure by unlawful means, the unlawful means being serial contempts of court. They are summarised in paragraph 18 of the Particulars of Claim and particularised in paragraphs 27–35. The alleged unlawful dealings concerned assets of Swiss, Belizean and Russian companies. In support of that action the Bank obtained a WFO against Mr. Khrapunov which was granted by Males J. on 17 July 2015. Mr. Khrapunov has so far failed to produce any information as to his assets as required by that WFO.
Mr. Khrapunov has responded to this claim in a manner characteristic of defendants in this litigation, namely, with vigour. Mr. Samek QC has submitted on his behalf that the cause of action relied upon is "wholly unsustainable", "bad in law" and "must fail". The focus of this submission is the question whether a contempt can constitute unlawful means for the purposes of the tort. Further, in circumstances where Mr. Khrapunov is domiciled in Switzerland, the suggestion that this court has jurisdiction to hear and determine the claim against him pursuant to the Lugano Convention is said to be unsustainable. Mr. Khrapunov therefore asks the court to set aside the Claim Form and the WFO which was issued against him.
Thus the court must consider two questions of law. The first is whether the Bank has a cause of action known to the law. The second is whether this court has jurisdiction under the Lugano Convention to hear and determine the claim.
The Bank's case on the facts is supported by a 40 page affidavit from Mr. Hardman. No evidence in opposition has been filed by Mr. Khrapunov. He has however sworn an affidavit in response to the WFO issued against him in which he has said that since 1 January 2013 (the relevant date specified in the WFO) he has not administered any assets with a value exceeding £10,000 for Mr. Ablyazov or dealt with any such assets in accordance with Mr. Ablyazov's direct or indirect instructions.
The cause of action
It is important to note that the Bank does not have to persuade the court on this application that its cause of action will succeed. It only has to persuade the court that it has a good arguable case.
The tort of conspiracy to injure by unlawful means "involves an arrangement between two or more parties, whereby they effectively agree that at least one of them will use "unlawful means" against the claimant, and, although damage to the claimant need not be the predominant intention of any of the parties, the claimant must have suffered loss or damage as a result" (see Revenue and Customs Commissioners v Total Network [2008] 1 AC 1174 at paragraph 213 per Lord Neuberger). The only element of that definition which is in dispute on this application is whether at least one of the defendants used unlawful means.
Mr. Smith QC, on behalf of the Bank, submitted that it is "at least eminently arguable that a conspiracy to breach court orders and/or to create and use misleading documents and/or to abuse the process of the court and/or to intentionally interfere with the administration of justice constitutes unlawful means."
In support of that submission he relied upon the decision of the Court of Appeal in Surzur Overseas Limited v Koros [1999] 2 Lloyd's Rep. 611. In that case a freezing order was granted against Mr. Koros and others. Mr. Koros failed to disclose his interest in three shipowning companies. Later he sought to transfer the vessels to third party buyers but on terms which enabled the sellers to retain control over the vessels. Surzur became aware of possible dealings in the vessels and obtained a variation to the freezing order which covered the shares or other legal or beneficial interests in the three vessels. MOAs on the Norwegian Saleform, which were said to be false, were placed before Surzur seeking consent to the sale of the vessels. Surzur refused to consent and an application was made to the court. Rix J. refused to vary the freezing order. Further material, said to be false, was produced and another application was made to the court. Moore-Bick J. permitted the sale in accordance with the MOAs. Subsequently Surzur claimed damages from Koros and the other defendants. The cause of action relied upon was conspiracy to cause harm by unlawful means, namely, the creation of false documents, the making of fraudulent and misleading statements and the deploying in court of false evidence. At first instance the claim was held to have no prospects of success because the defendants were immune from suit on the basis of the witness immunity rule pursuant to which no action lies against parties or witnesses for anything said or done, even if falsely, in the course of proceedings in a court of justice. The Court of Appeal, basing itself on the speech of Lord Morris in Roy v Prior [1971] AC 470 at p.477, held that if an action is not brought simply in respect of false evidence but is brought in relation to some broader objective during the currency of which the false evidence was given the witness immunity rule does not apply. Thus, since the conspiracy was one to hide assets and cheat Surzur by the manufacture of false documents, the witness immunity rule did not apply. Waller LJ (with whom Aldous and Hirst LJJ agreed) added that:
"Abuse of process can very arguably be the unlawful means on which a conspiracy can be founded. …………a conspiracy which had its aim and objective of defeating an order of the court and obtaining the release from a Mareva of assets by persons who were not, I emphasise, parties to the original action, must be a conspiracy to abuse the process very akin to the malicious arrest which was the subject of Roy v Prior. There is no logic in creating an exception for malicious arrest, and not a conspiracy to abuse the process entailing the defeating of something very close to an arrest a Mareva injunction."
Surzur v Koros is, it seems to me, authority for the proposition that there is a good arguable case that a conspiracy to injure, by procuring the variation of a freezing order removing certain assets from it by creating false documents and giving false evidence, is actionable, the unlawful means being the creation of false documents and the giving of false evidence. However, the case did not decide that there is a good arguable case that a conspiracy to cause harm by procuring breaches of a freezing order is actionable because those were not the facts of the case. However, the terms in which the court's decision was expressed, "a conspiracy to abuse the process entailing the defeating of …a Mareva injunction", would appear apt to cover a conspiracy to cause harm by procuring breaches of a freezing order. Surzur v Koros therefore suggests but does not decide that breaches of a freezing order can amount to unlawful means for the purposes of the tort of conspiracy to injure by unlawful...
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