JSC BTA Bank v Mukhtar Kabulovich Ablyazov (18th Defendant/Respondent)
|England & Wales
|Mr Justice Henderson
|26 November 2013
| EWHC 3691 (Ch)
|Case No: HC10C02462
|26 November 2013
 EWHC 3691 (Ch)
IN THE HIGH COURT OF JUSTICE
Royal Courts of Justice
Fetter Lane, London, EC4A 1NL
Mr Justice Henderson
Case No: HC10C02462
Mr Stephen Smith QC and Ms Emily Gillett (instructed by Hogan Lovells International LLP) for the Claimant
Hearing dates: 8 and 9 October 2013
On 8 and 9 October 2013 I heard the adjourned application by the claimant JSC BTA Bank ("the Bank") for summary judgment against the 18 th defendant, Mukhtar Kabulovich Ablyazov ("Mr Ablyazov"). The application was undefended, as Mr Ablyazov's solicitors (Addleshaw Goddard LLP) had informed the Bank's solicitors (Hogan Lovells International LLP) by a letter dated 12 September 2013 that he would "not be further defending" the application. This statement was accompanied by the following explanation and reservation of rights:
"You and your client are well aware of our client's current personal circumstances, and that of his family.
All of our client's rights are reserved and our client's decision not to defend the application further should not be taken as an admission or acceptance of liability for factual findings in the AAA proceedings or those already made against him in the wider proceedings, including the committal proceedings."
On the eve of the hearing, Addleshaw Goddard confirmed that Mr Ablyazov's instructions remained unchanged.
Behind the brief introduction which I have just given, there lies a background of ever-increasing, and at times bewildering, complexity. The present action ("the AAA proceedings") is just one of a total of 11 sets of proceedings in England and Wales in which the Bank, a major bank in Kazakhstan which was effectively nationalised in February 2009, seeks to recover sums in excess of US$5 billion which it alleges were fraudulently misappropriated by its former chairman, Mr Ablyazov, acting in concert with other former members of the Bank's senior management, for the ultimate benefit of Mr Ablyazov himself. It is alleged that he has obtained this benefit through a web of offshore companies controlled and managed on his behalf by, or through, a network of nominees and trusted associates.
All of the proceedings, apart from the AAA proceedings, were begun in the Commercial Court, where they have been principally managed by Teare J. He has delivered a number of major judgments, including two which are of particular importance for present purposes.
First, on 16 February 2012 Teare J gave judgment following the hearing of committal proceedings based on three sample allegations of contempt of court made by the Bank against Mr Ablyazov: see . Teare J held all three allegations to be proved to the criminal standard of proof, that is to say beyond reasonable doubt. One of the allegations was that Mr Ablyazov had failed, in breach of the worldwide freezing order previously made against him, to disclose his beneficial ownership of the shares in a company incorporated in the British Virgin Islands ("BVI") called Bubris Investments Limited ("Bubris"). Under its later name of Celina Holding Investments Limited, Bubris is the fourth defendant in the AAA proceedings and is alleged by the Bank to have played a key role, together with four other BVI companies which are the fifth to eighth defendants (together "the BVI Defendants"), in the alleged fraud which forms the subject matter of those proceedings. In the committal proceedings, which were heard over a period of about three weeks between 30 November and 21 December 2011, Mr Ablyazov was represented by a team of two leading and two junior counsel, instructed by Addleshaw Goddard. During the hearing, he elected to give evidence and was cross-examined for two and a half days.
Mr Ablyazov failed to attend the handing down of judgment in the committal proceedings, and instead absconded. He was sentenced in his absence to 22 months' imprisonment on each count, the terms to run concurrently. The judge also made an "unless" order ("the Unless Order") debarring him from defending the claims made against him in the Commercial Court proceedings, and striking out his defences, unless within a stated period he both surrendered to custody and made proper disclosure of all his assets and his dealings with them. The stated periods for compliance with these conditions expired in March 2012, but the order also provided that, in the event of an appeal, the sanctions for non-compliance would not take effect until seven days after the dismissal of the appeal. Mr Ablyazov had an unfettered right to appeal against the committal order and sentence; the judge also granted him permission to appeal from the Unless Order.
Mr Ablyazov has remained a fugitive from justice since February 2012, and his whereabouts remained unknown to the Bank until he was discovered in the South of France on 31 July 2013. Since then he has been held in custody by the French authorities, while extradition proceedings against him by at least three countries (which do not include the United Kingdom, because civil contempt of court is not an extraditable offence) are pending.
Despite his flight from the jurisdiction of the English court, Mr Ablyazov has continued to give instructions to his lawyers and to be represented in court proceedings when it has suited his interests to do so (although more recently courts have begun to refuse to hear submissions on his behalf while his multiple contempts remain unpurged). His appeals in the committal proceedings, including an appeal from the Unless Order, were heard by the Court of Appeal (Maurice Kay LJ VP, Rix and Toulson LJJ) in early July 2012, and judgment was handed down on 6 November 2012: see . All of Mr Ablyazov's grounds of appeal were comprehensively dismissed, subject to one minor point of disagreement which made no difference to the outcome (Toulson LJ considered that surrender to custody should not have been made a condition of the Unless Order, whereas the majority agreed with Teare J that it should). The leading judgment was delivered by Rix LJ, who (among much else) reviewed the evidence relating to the beneficial ownership of Bubris before concluding at paragraph :
"There is thus compelling circumstantial evidence that Mr Ablyazov was the true owner of Bubris. There is no documentary evidence to the contrary … The judge was entitled and right to discount the evidence of Mr Ablyazov and his other witnesses, and indeed to find that such evidence was incredible and to be lies."
Having considered, and rejected, Mr Ablyazov's appeal in relation to the other two alleged contempts, Rix LJ concluded the relevant part of his judgment as follows:
"96. I would end this section of my judgment by saying this. It is noticeable from the facts of this case, both as found by the judge, but also in the nature of the structure of the arguments as they have developed, how time and time again, as some aspect of Mr Ablyazov's conduct has come under question, so the evidence deployed has become remarkable for the way in which it has taken tortuous turnings which have asked the court to suspend its belief in reality in favour of reduplicating unrealities. Thus in the case of Bubris, the court was asked to believe both that Mr Batyrgarejev, one of Mr Ablyazov's dedicated lieutenants, had been appointed UBO [ ultimate beneficial owner] of Bubris by mistake, and that the true UBO had only emerged in September 2010, albeit backdated to May 2010, after two years in which a succession of nominal UBOs had been declared. The significance of September 2010 is that the freezing order against Bubris was served at the end of July 2010.
100. As this series of coincidences, misfortunes, errors, misunderstandings and inexplicable developments multiply, the court is entitled to stand back and ask whether there is in truth a defence or defences as alleged, even if no burden rests on Mr Ablyazov, and the burden remains on the bank, or whether there is at any rate the realistic possibility of such, or on the other hand whether the court is being deceived. The trial judge decided that it was being deceived by witnesses without credibility. It is not for this court to say that he was wrong without strong grounds for doing so, grounds which have simply not been formulated.
101. I would therefore conclude that the appeal on each element of the committal judgment should be dismissed."
In his short concurring judgment, Maurice Kay LJ said this:
"202. It is difficult to imagine a party to commercial litigation who has acted with more cynicism, opportunism and deviousness towards court orders than Mr Ablyazov. Rix LJ has described in trenchant terms the factors which cause me to express myself in this way. There can be no complaint that Teare J decided that the court's powers should be deployed so as to put the maximum pressure on Mr Ablyazov to comply with its orders so as to endeavour to prevent its fair procedures from being subverted."
The effect of the dismissal of Mr Ablyazov's appeal was to trigger the Unless Order, and on 9 November 2012 Teare J made a declaration that Mr Ablyazov had failed to comply with the surrender and disclosure obligations, as a result of which he was debarred from defending the Bank's Commercial Court proceedings with effect from 13 November 2012. The trial of three of those proceedings (known as the Drey, Granton and Chrysopa proceedings) had begun before Teare J on 7 November, the day after the Court of Appeal's judgment. Mr Ablyazov was the first defendant in each of them. After Mr Ablyazov's defences had been struck out, the trial continued against the remaining...
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