JSC Commercial Bank Privatbank v Igor Valeryevich Kolomoisky
| Jurisdiction | England & Wales |
| Judge | Mr Justice Trower |
| Judgment Date | 31 January 2023 |
| Neutral Citation | [2023] EWHC 165 (Ch) |
| Docket Number | Case No: BL-2017-000665 |
| Court | Chancery Division |
[2023] EWHC 165 (Ch)
THE HONOURABLE Mr Justice Trower
Case No: BL-2017-000665
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Tim Akkouh KC and Christopher Lloyd (instructed by Hogan Lovells International LLP) for the Claimant
Michael Bools KC and Geoffrey Kuehne (instructed by Fieldfisher LLP) for the First Defendant
Clare Montgomery KC and Alyssa Stansbury (instructed by Enyo Law LLP) for the Second Defendant
Hearing date: 25 January 2023
Approved Judgment
Remote hand-down: This judgment will be handed down remotely by circulation to the parties or their representatives by email and release to The National Archives. A copy of the judgment in final form as handed down should be available on The National Archives website shortly thereafter but can otherwise be obtained on request by email to the Judicial Office (press.enquiries@judiciary.uk). The deemed time and date of hand down is 10.30am on Tuesday 31 Jan 2023.
The application with which this judgment is concerned started life as an application by the claimant to enforce the existing worldwide freezing order, made in its current form by the Court of Appeal on 15 October 2019 (the “WFO”) and/or to seek an order of similar nature in six overseas jurisdictions: Cyprus, the BVI, Jersey, Switzerland, the Cayman Islands and Georgia. This part of the application was therefore based on the jurisdiction considered by the Court of Appeal in Dadourian Group International Inc v Simms [2006] EWCA Civ 399.
By the same application notice, the claimant also made an application for further disclosure, in the form of an order requiring the first and second defendants to file and serve witness statements disclosing details of income received from a list of specified assets since the WFO was made at first instance by Nugee J on 19 December 2017 (the “Nugee order”), together with details of bank accounts with credit balances in excess of £1 million as at 9 September 2022.
The form of the order based on the Dadourian application is now agreed. The substance of the disclosure order itself was in large part agreed as well, but three issues on the form of the order sought remained outstanding. At the conclusion of the argument I gave my ruling on the form of the order to be made. This judgment contains my reasons for that decision.
The argument revolved around paragraph 5 of the draft order the relevant parts of which are as follows:
“5. By 4.30pm on 28 February 2022, the First Defendant and Second Defendant shall each file and serve a witness statement which shall set out [(insofar as they are able after having made all reasonable enquiries)]:
5.1. Details of any dividends, distributions or other income paid [to the First or Second Defendant (or paid to a third party on their behalf)] in respect of their interests in the companies and assets listed at Annex B of this Order since 21 December 2017 (including (i) the amount of any payment, (ii) the nature of the payment; and (iii) the date on which the payment was made);
…
Provided that the First and Second Defendants shall not be obliged to disclose under this sub-paragraph any dividends, distributions or other income received in relation to any company or asset where the cumulative amount of such payments since 21 December 2017 has been less than £1 million (or its local equivalent).
5.2. Details of any bank account [the credit balance of which is an asset (as defined by paragraph 4 of the WFO)] of the First and/or Second Defendant and which has a credit balance exceeding £1 million (or its local equivalent) as at 9 September 2022. The details shall include (i) the credit balance as at 9 September 2022, (ii) the name(s) in which the account is held, (iii) the account number, and (iv) the name and address of the bank. …”
The issues related to the proposals by one or more of the parties to include the words in square brackets.
The first issue was that the first defendant, but not the second defendant, does not agree on the scope of the disclosure order insofar as it extends to the income, dividends and distributions paid by the assets and companies listed under his name in Annex B to the draft order unless the payments were made to him or a third party on his behalf. He therefore sought the inclusion of the words in square brackets at the beginning of paragraph 5.1.
The second issue was that, although the first and second defendants both agreed to disclose details of any of their bank accounts with a credit balance of over £1 million as at 9 September 2022, neither of them agreed that this should extend to other accounts which may constitute an asset as defined by paragraph 4 of the WFO. They therefore resisted the claimant's proposal to include the words in square brackets at the beginning of paragraph 5.2.
The third issue was that the first and second defendants sought to qualify the absolute obligation to give the information sought by paragraph 5 by including the words in square brackets in the opening three lines of paragraph 5. They contended that their obligation should be only to make all reasonable enquiries.
The legal principles to be applied were not in dispute to any material extent. As Waller LJ explained in Motorola Credit Corpn v Uzan [2002] EWCA 989 at [29], a freezing order cannot normally be effective without disclosure, or as Lord Woolf LCJ said (at [37]) a disclosure order gives the WFO the teeth which enable it to be properly policed. Mr Akkouh said that I should approach the application on that basis. In principle I agree. Policing a freezing order enables a claimant to decide what further steps it should take to protect its position, and includes policing in the form of requiring updates in relation to assets subsequently received ( Kazakhstan Kagazy Plc v Zhunus [2018] EWHC 369 (Comm)).
The claimant submitted, and I agree, that disclosure is capable of being an effective form of policing because it makes it less likely that the defendant will act in breach of the freezing order. In a case such as the present, it will also enable or at least assist the defendant himself to comply with it. Disclosure also enhances the ability of a claimant to ensure that the order is properly enforced, because it enables the claimant to serve third parties with an enforceable court order. In the present case Mr Akkouh said that the claimant intends to use this ability in order to facilitate the process of enforcing both the WFO itself and any orders it obtains in consequence of the permission granted in exercise of the Dadourian jurisdiction to notify banks and other third parties in the relevant jurisdictions of the existence of the freezing relief.
I also had in mind the possibility that this is a case in which the risk of dissipation may increase the closer the case gets to trial, a factor which increases the justification for ensuing that the policing mechanisms that are in place, whether through enhanced disclosure or otherwise, are both flexible and robust. In my view, the court should give weight to the need for agility in the game of cat and mouse between claimants and defendants (as colourfully described in JSC BTA Bank v Ablyazov (No 10) [2015] 1 WLR 4754 (per Lord Clarke at [18])) and is entitled to have real regard to the concerns articulated by Males J in Arcadia Petroleum Ltd v Bosworth [2015] EWHC 3700 (Comm) as follows:
“the fact that the defendants are complying at present does not mean that they will necessarily continue to do so in future, in particular as any judgment approaches, at all events if they perceive the case to be going against them. At present it may be that any such judgment is certainly many months and perhaps even years away, but the defendants may see the benefits of compliance with the order very differently as time goes by from the way that they now do.”
As to the first issue, the first defendant agreed as a matter of principle that the claimant should have further information as to dividends, distributions and other income paid in respect of his interests in the relevant companies and assets. But he contended that it should be limited to payments of such dividends, distributions and other income as have been made to him or to a third party on his behalf. He said that the order should not extend to disclosure of payments to some other person or entity, even if they were paid in respect of his interest.
The first defendant made that submission in light of what he said is a disclosure order that is in any event more detailed than that which is normally made and extends over a significant time, viz. a period of more than five years from the date the claim form was issued. It was said that it is quite inappropriate to make an order without the qualification he seeks, because of its breadth.
The claimant submitted that the wider disclosure wording is required in order to cover two categories of payments which are caught by the freezing order provisions in the WFO. If the assets are frozen because they have been caught by the order from a date subsequent to the date at which is was made, there is good reason to give careful consideration to whether the disclosure order originally made to police the freezing order is sufficient for that purpose. Although the disclosure originally ordered may have achieved its purpose, the position may change over time, more particularly where a case takes as long as this one has to come to...
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