Ablyazov & Ors v JSC BTA Bank

A foreign corporation’s claim to recover property or compensation for fraud is a civil claim, even where it is state-owned or acts at a foreign government’s behest. It does not become an exercise of foreign sovereign authority, or indirect enforcement of foreign penal or revenue law, merely because of that connection. In a claim with a real prospect of substantial recovery, mixed or predominant motives such as political hostility or personal malice do not of themselves make proceedings abusive. An ulterior purpose is insufficient unless the court’s process is misused to obtain something unavailable in properly conducted proceedings. Permission to appeal was refused because the proposed grounds had no real prospect of success.

A Kazakh bank brought civil claims for fraud, embezzlement and breach of duty against its former chairman and others. The defendants sought stays, arguing that the claims indirectly enforced foreign penal, revenue or public law and were abusive because they served the political purpose of weakening opposition to Kazakhstan’s President.

Teare J dismissed the defendants’ applications on 10 February 2011 and later upheld the bank’s application concerning the improper-purpose challenge on 10 May 2011, in judgments reported at [2011] EWHC 202 (Comm) and [2011] EWHC 1136 (Comm). Jackson LJ refused permission to appeal on paper. The defendants renewed their applications before the Court of Appeal. The central issues were whether the claims enforced civil liabilities and whether their alleged motives made the proceedings abusive.

Stanley Burnton LJ refused the renewed applications for permission to appeal.

1. The bank’s claims were claims to enforce civil liability. If well-founded, they would produce a substantial judgment for recovery of property or compensation. They were akin to claims protecting property rights, including a possible claim to recover trust property, and could have been brought by an individual. The fact that the foreign claimant acted at the behest of a foreign government did not convert the claims into enforcement of sovereign authority. Mbasogo v Logo Ltd [2006] EWCA Civ 1370 [2007] QB 846 concerned a materially different claim involving an alleged conspiracy to overthrow a foreign government.
2. The claims were not direct or indirect enforcement of foreign revenue or penal law, or of liabilities imposed by sovereign authority. QRS 1 ApS v Frandsen [1999] EWCA Civ 1463 [1999] 1 WLR 2169 was distinguishable because it concerned recovery of foreign tax, and depended on the only creditors being the foreign tax authorities.
3. Mixed or even predominant purposes such as personal malice or political hostility were irrelevant to a claim with a real prospect of recovering substantial property or compensation in tort. Following Broxton v McClelland [1995] EMLR 485 and Wallis v Valentine [2002] EWCA Civ 1034 [2003] EMLR 8, an ulterior motive alone did not constitute abuse. Abuse required misuse of the court’s process to achieve something not properly available through properly conducted proceedings. Wallis illustrated that relief may be justified by the combination of an unlikely prospect of relevant harm and a dominant purpose of harassment and expense. The present claims, if successful, would yield substantial recovery, so the defendants’ argument had no real prospect of success.
4. The fair-trial contention had not been struck out and would be considered at trial. The other stay applications had been rightly dismissed. There was no real prospect of a successful appeal, and permission was refused.

• High Court of Justice, Queen’s Bench Division, Commercial Court: Teare J made orders on 10 February and 17 May 2011. The relevant judgments are reported at [2011] EWHC 202 (Comm) and [2011] EWHC 1136 (Comm).
• Court of Appeal (Civil Division): Jackson LJ refused permission to appeal on paper. On renewal, Stanley Burnton LJ refused permission to appeal.