Court orders defendant subject to worldwide freezing order to provide disclosure of legal expense funding
On 8 June 2018 the Commercial Court handed down the latest judgment in the long-running saga of the Ablyazov litigation. The judgment illustrates the practical steps which may be taken in order to police compliance with an asset freezing order in commercial litigation.
Since 2009 Kazakhstan’s BTA Bank of has been attempting to recover billions of dollars’ worth of misappropriated assets from its former chairman Mukhtar Ablyazov and his associates, including his son-in-law Ilyas Khrapunov. In the current claim BTA alleges that Mr Khrapunov conspired with Mr Ablyazov to prevent enforcement of judgments obtained by BTA.
In a judgment handed down on 8 June 2018 the Commercial Court ordered Mr Khrapunov, who is subject to a worldwide freezing order over his assets, to provide full and proper disclosure of how his legal expenses were being funded.
Mr Khrapunov had claimed that his defence was being funded by his mother. However, BTA did not believe that she had sufficient assets and suspected that the real source of funding was Mr Ablyazov. BTA also raised the prospect that undisclosed assets of Mr Khrapunov might be funding the proceedings, partially based on a recent judgment in the same litigation in which the Court of Appeal found there to be a good arguable case that Mr Khrapunov had lied in his asset disclosure.
Having considered the evidence, Patricia Robertson QC (sitting as a Judge of the High Court) considered that BTA had established a real risk that the freezing orders may have been breached through the use of monies belonging to one of the defendants. That made it reasonable for BTA to seek to probe beyond the assertion in witness evidence that Mr Khrapunov’s mother was meeting the costs from her own wealth, by seeking further disclosure.
The judgment illustrates that the courts are willing to empower claimants to effectively police compliance with freezing orders by ordering defendants to provide further information beyond basic asset disclosure. It is not a necessary pre-requisite to such an order that the applicant establishes that the injunction has been breached. All that is necessary is to show that there are, as the judgment puts it “very real questions… which deserve to be given answers.” Those answers may indeed demonstrate compliance. Equally, they may not.
JSC BTA Bank v Ablyazov and another  EWHC 1368#
Tom is a general commercial litigator with experience acting in a wide variety of cases including:
- Disputes between directors, partners, shareholders and joint-venturers;
- Corruption and bribery actions involving global asset tracing projects, acting both for Defendants and Claimants;
- Insurance and reinsurance litigation; and
- Complex multi-jurisdictional and multi-party commercial claims.