JSC BTA Bank v Ablyazov & Ors

A court may make an unless order requiring compliance with disclosure obligations supporting a freezing order, even while an application to challenge jurisdiction or discharge the freezing order remains unresolved. The decision is discretionary. The court must balance the prejudice to the respondent if information is disclosed before jurisdiction is established against the claimant’s risk of losing effective enforcement if disclosure is delayed. It may consider the strength of the underlying case, the risk of dissipation, the importance of the disclosure to policing the freezing order, the overriding objective and the wider interests of justice. A realistic sanction may include debarring the respondent from defending and permitting judgment to be entered, subject to restrictions preventing enforcement while the jurisdiction challenge is pending.

The claimant alleged that more than US$1 billion had been misappropriated through sham loans and transfers involving the defendants. A deputy judge granted worldwide freezing orders containing extensive asset and tracing disclosure obligations. Most defendants failed to comply adequately and subsequently challenged the jurisdiction of the English court and sought to discharge the freezing orders.

The claimant applied for an unless order debarring the defendants from defending and permitting judgment to be entered unless they supplied the required information. The central issue was whether such a sanction could properly be imposed before the jurisdiction challenge and application to discharge the freezing orders had been determined.

1. Power to make the order. The court was entitled to impose an unless sanction for non-compliance with disclosure obligations ancillary to a freezing order. The existence of an unresolved jurisdiction challenge did not deprive the court of that power. The reasoning in Grupo Torras v Sheikh Fahad supported making disclosure orders on the assumption that jurisdiction existed, and effective enforcement required a realistic sanction. ([2004] C.A. 60 of February 2004; paras [38]-[39].)
2. Discretionary balance. The relevant question was not confined to whether non-compliance would imperil the fairness of a future trial. The court could consider the overall fairness of the proceedings and the wider interests of justice under the overriding objective. Relevant considerations included the scale and strength of the fraud case, the risk that assets would be dissipated, the importance of information for policing the freezing order, the likely delay in resolving jurisdiction, and the prejudice caused by compelled disclosure if jurisdiction ultimately failed. (Paras [40]-[42].)
3. Norwich Pharmacal information. Information directed to identifying further wrongdoers and tracing the misappropriated money attracted materially the same considerations as the other disclosure obligations. The fact that some questions had a Norwich Pharmacal character did not prevent an unless order where the information was necessary to make the freezing relief effective. (Paras [43]-[46].)
4. Ancillary matters. The proposed order did not render the jurisdiction challenge nugatory because judgment could not be enforced pending its determination and would fall away if the challenge succeeded. Foreign comity carried no significant weight on these facts. A generalised risk of self-incrimination was insufficient, particularly where the privilege had not been invoked. (Paras [47]-[51].)
5. The order was made, with amendments to its form and a compliance deadline of 4 p.m. on 3 September 2010. The claimant could enter or apply for judgment against a non-compliant respondent, but enforcement against the challenging respondents was stayed pending determination of the jurisdiction challenge. An application for permission to appeal postponed entry or application for judgment until permission was determined. (Paras [52]-[56].)