JSC BTA Bank v Ablyazov & Ors

Disclosure is ordinarily integral to an effective freezing injunction. A court nevertheless retains a discretion to defer or restrict disclosure after weighing the prejudice to each party. The possibility that information may incriminate a defendant in foreign criminal proceedings is relevant, but it creates no entitlement to privilege under English law.

Protection against foreign self-incrimination depends upon the court’s discretion. By contrast, Civil Evidence Act 1968 protection concerns criminal proceedings in the United Kingdom. An appellate court will not disturb a first-instance discretionary order merely because it would have struck the balance differently. Intervention requires the decision to fall outside the generous ambit within which reasonable disagreement is possible.

The claimant bank alleged that its former senior officers had misappropriated substantial sums and concealed valuable assets through nominees. Blair J granted a freezing injunction. Teare J subsequently ordered the defendants to disclose assets and answer questions intended to locate and preserve property.

The defendants appealed before the return date of the injunction. They argued that disclosure should await their substantive challenge because the information might reach the prosecuting authorities in Kazakhstan and incriminate them there. They also contended that some questions sought evidence for the merits rather than information needed to police the injunction.

The central issues were whether Teare J had properly exercised his discretion, whether the possibility of foreign self-incrimination required disclosure to be deferred, and whether the order’s reference to an entitlement to refuse incriminating disclosure extended beyond United Kingdom proceedings.

1. Appeal dismissed unanimously. Pill LJ held that Teare J was entitled to order immediate disclosure. Sedley and Moses LJJ agreed. The disclosure was confined, by the claimant’s concession, to the solicitors and counsel directly concerned with the proceedings until the return date.

2. Disclosure is ordinarily part and parcel of a freezing injunction because it enables the order to be policed and made effective. The normal rule is not absolute, but Teare J had considered the defendants’ limited preparation time, the claimant’s earlier delay, the criminal proceedings in Kazakhstan, the alleged relationship between the claimant and the prosecuting authorities, and the competing risks of prejudice. He was not obliged to postpone disclosure until the return date.

3. The possibility of self-incrimination in foreign proceedings did not create an entitlement to privilege. The court instead had a discretion whether to grant protection. The possibility of a future claim was a relevant factor, but no such claim had yet been made. Restricting disclosure to the claimant’s lawyers substantially reduced the identified risk, although Sedley LJ recorded concern about the professional and practical difficulties that such confidentiality might later cause.

4. The judge attached considerable and permissible weight to the need for disclosure to make the freezing order effective. The absence of an identified substantive defence was entitled to little weight because particulars of claim had not been served, but there was no basis for concluding that this factor materially distorted his decision. The order remained within the generous ambit of reasonable discretionary judgment.

5. Teare J was also entitled to approve the Schedule C questions. In the context of the proprietary and tracing claims, they were directed to locating and preserving assets rather than merely improving the claimant’s substantive case.

6. The proviso allowing a defendant who was “entitled” to privilege to refuse disclosure referred only to the statutory privilege under section 14 of the Civil Evidence Act 1968. It did not extend to protection which the court might, as a matter of discretion, grant in relation to foreign proceedings. No amendment of that wording was required.

7. Sedley LJ added that the proper scope of privilege in civil fraud proceedings remained open to question. A claim to privilege should receive close scrutiny and would ordinarily be expected to identify the document or class of fact withheld and explain why it was potentially incriminating.

1. Court of Appeal (Civil Division): The court unanimously dismissed the appeal and upheld Teare J’s disclosure orders, subject to the agreed restriction on access to the disclosed material.

2. Queen’s Bench Division, Teare J: On 21 August 2009, the judge ordered disclosure of assets and answers to tracing questions in support of the freezing injunction.

3. Queen’s Bench Division, Blair J: On 13 August 2009, the judge granted the freezing injunction, which was varied on 14 August 2009.