Ablyazov v JSC BTA Bank

All extant allegations of contempt should, so far as possible, be considered on one occasion because the maximum committal term which a superior court may impose on any occasion is two years. This is a desirable aim, not an inflexible rule requiring every allegation to be pursued together or abandoned.

Whether allegations may be reserved, and whether contempt proceedings should precede overlapping substantive proceedings, are fact-sensitive case management decisions. Overlap is a relevant factor but does not compel postponement. Where breaches of a freezing order are alleged, the strong public interest in policing the order and encouraging compliance may weigh heavily in favour of an early contempt hearing.

The Bank brought committal proceedings alleging 35 breaches of freezing, disclosure and receivership orders against its former chairman. Teare J, in [2011] EWHC 1522 (Comm), limited the forthcoming contempt hearing to three selected allegations. He permitted the Bank to seek permission to pursue the remaining allegations later and preserved the appellant’s right to apply to strike them out.

Two selected allegations overlapped with issues in substantive proceedings listed or expected for 2012 and 2013. The appellant challenged both the reservation of the remaining allegations and the decision to hear the overlapping allegations before the substantive trials. The central questions were whether the allegations not selected had to be abandoned and whether overlap required postponement of the contempt hearing.

1. Appeal dismissed unanimously. The guidance in Villiers v Villiers did not establish a fixed rule that all extant contempt allegations must be determined on one occasion or otherwise abandoned. It expressed the desirable aim of considering them together so far as possible. That aim reflects section 14(1) of the Contempt of Court Act 1981, which limits a superior court’s committal term on any occasion to two years. Manipulation of the timetable to obtain cumulative sentences exceeding that limit would be an abuse, but different allegations may properly be considered on different occasions.

2. Whether to reserve allegations for later consideration is a fact-sensitive case management decision. Teare J was entitled to conclude that trying all 35 allegations promptly would disrupt preparation for the substantive trials and be unfair to the appellant. Deferring every allegation until after those trials would materially weaken the prospect that committal proceedings might induce compliance with the freezing order. The appropriate treatment of the 32 reserved allegations could be decided if and when permission to pursue them was sought, subject to close judicial scrutiny and the appellant’s preserved right to object.

3. A worldwide freezing order is an important means of preserving assets for the enforcement of a judgment. There is a strong public interest in policing and enforcing such an order. Contempt proceedings may properly be used not only to punish disobedience but also to encourage disclosure and improved compliance.

4. Overlap between contempt allegations and issues in a substantive trial does not itself require postponement. It is one factor in the case management balance, and its weight depends upon the circumstances. Courts must consider the risks of satellite litigation, disruption, inconsistent treatment of evidence and applying the criminal standard to isolated issues. Those risks may nevertheless be outweighed by the need to enforce a freezing order effectively.

5. Teare J had considered the overlap and was entitled to approve the Bank’s selection. The selected allegations concerned assets and transactions central to the Bank’s tracing and proprietary claims. The paramount importance of making the freezing order effective justified proceeding before the substantive trials.

• Court of Appeal (Civil Division): By [2011] EWCA Civ 1386, unanimously dismissed the appeal and upheld Teare J’s case management directions for the contempt application.
• Queen’s Bench Division, Commercial Court: Teare J, in [2011] EWHC 1522 (Comm), limited the contempt hearing to three allegations, permitted a later application concerning the remaining allegations and allowed selected overlapping allegations to proceed before the substantive trials.