JSC BTA Bank v Ablyazov & Ors [2011] EWHC 2664 (Comm) (26 October 2011)

JSC BTA Bank v Ablyazov & Ors [2011] EWHC 2664 (Comm) (26 October 2011)

Where there are substantial grounds to believe that the funds used to pay a defendant's legal expenses under a freezing order may be derived from assets subject to the order or a proprietary claim, the court has jurisdiction to order the defendant to disclose the identity of the ultimate beneficial owner and the source of those funds. The order is justified to ensure the effectiveness of the freezing injunction and to prevent its circumvention, even if the defendant asserts the funds are from a third party. The threshold is whether there is a real risk that the injunction may be being broken, not proof that the funds are the defendant's.

Citation
[2011] EWHC 2664 (Comm)
Parties
Claimant: JSC BTA Bank; First Defendant: Mukhtar Ablyazov; Defendants: 16 Other Defendants
Jurisdiction
England and Wales
Judgment Date
26 October 2011
Procedural Posture
Commercial Court Litigation (freezing Order and Receivership Ancillary Application) / Interlocutory Application for Disclosure Regarding Source of Legal Funding
Outcome
Application granted in part
Legal Topics
Freezing Orders, Receivership, Disclosure Obligations, Proprietary Claims, Legal Expenses Funding, Section 37 Senior Courts Act 1981
Civil Procedure Banking Law Asset Recovery Freezing Orders Receivership Disclosure Obligations Proprietary Claims Legal Expenses Funding +1 more

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Parties

JSC BTA Bank

Claimant

Mukhtar Ablyazov

First Defendant

16 Other Defendants

Defendants

Procedural Posture

Commercial Court Litigation (freezing Order and Receivership Ancillary Application) / Interlocutory Application for Disclosure Regarding Source of Legal Funding

Legal Issues

  1. 1 Whether the court has jurisdiction to order disclosure of the ultimate source of funds used to pay a defendant's legal expenses under a freezing order
  2. 2 Whether the defendant is obliged to disclose the identity of the ultimate beneficial owner and source of funds of a third-party company funding legal expenses
  3. 3 Whether the funding arrangements are a façade to circumvent the freezing order

Ratio Decidendi

Where there are substantial grounds to believe that the funds used to pay a defendant's legal expenses under a freezing order may be derived from assets subject to the order or a proprietary claim, the court has jurisdiction to order the defendant to disclose the identity of the ultimate beneficial owner and the source of those funds. The order is justified to ensure the effectiveness of the freezing injunction and to prevent its circumvention, even if the defendant asserts the funds are from a third party. The threshold is whether there is a real risk that the injunction may be being broken, not proof that the funds are the defendant's.

Court Disposition

Application granted in part

Orders

  • Mr Ablyazov is ordered to disclose to the Bank's UK solicitors the identity of the ultimate beneficial owner of Green Life International SA and the ultimate source of the funds used to pay his legal expenses.