CJSC Alfa Bank (Belarus) v Lek Securities UK Ltd [2024] EWHC 804 (Comm) (08 March 2024)

CJSC Alfa Bank (Belarus) v Lek Securities UK Ltd [2024] EWHC 804 (Comm) (08 March 2024)

There is a serious issue to be tried as to whether the defendant holds assets on trust for the claimant and its customers and whether the defendant has dealt with those assets in breach of the custody agreement and sanctions regulations. Damages are not an adequate remedy because the assets are held on trust for third parties. The claimant is entitled to an interim proprietary injunction restraining the defendant from dealing with the assets, with the cross-undertaking in damages qualified as required by sanctions law.

Citation
[2024] EWHC 804 (Comm)
Parties
Claimant/applicant: CJSC Alfa Bank (Belarus); Defendant/respondent: Lek Securities UK Limited
Jurisdiction
England and Wales
Judgment Date
08 March 2024
Procedural Posture
Interim Proprietary Injunction Application (without Notice) / First Instance, Interim Relief
Outcome
Interim proprietary injunction granted
Legal Topics
Proprietary Injunction, Trust Assets, Sanctions Compliance, Custody Agreements, Cross Undertaking in Damages
Commercial Law Trusts Law Sanctions Law Financial Services Regulation Proprietary Injunction Trust Assets Sanctions Compliance Custody Agreements +1 more

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Parties

CJSC Alfa Bank (Belarus)

Claimant/applicant

Lek Securities UK Limited

Defendant/respondent

Procedural Posture

Interim Proprietary Injunction Application (without Notice) / First Instance, Interim Relief

Legal Issues

  1. 1 Whether the defendant holds assets on trust for the claimant and its customers
  2. 2 Whether the defendant's transfer of assets to Quintet Private Bank breached the custody agreement and sanctions regulations
  3. 3 Whether an interim proprietary injunction should be granted to protect the claimant's assets

Ratio Decidendi

There is a serious issue to be tried as to whether the defendant holds assets on trust for the claimant and its customers and whether the defendant has dealt with those assets in breach of the custody agreement and sanctions regulations. Damages are not an adequate remedy because the assets are held on trust for third parties. The claimant is entitled to an interim proprietary injunction restraining the defendant from dealing with the assets, with the cross-undertaking in damages qualified as required by sanctions law.

Court Disposition

Interim proprietary injunction granted

Orders

  • Defendant restrained from disposing of, dealing with, or diminishing the value of any asset constituted by or derived from the claimant's assets paid to the defendant under the agreement, including (1) securities transferred to Quintet and (2) the cash balance of approximately $4.6 million held under the Trust Deed.
  • Defendant prohibited from giving instructions to Quintet to dispose of, deal with, or diminish the value of the Quintet assets.