JSC BTA Bank v Ablyazov & Ors

Proceedings are not an abuse merely because a claimant has an ulterior purpose, provided the proceedings are also pursued for a legitimate purpose reasonably related to the remedy sought. A collateral advantage is not illegitimate where it is a natural consequence of properly prosecuting a genuine claim. In mixed-purpose cases, the existence of a legitimate purpose ordinarily prevents abuse; it is unnecessary to determine which purpose is predominant. The court must assess the circumstances as a whole and should not apply earlier formulations mechanically. At an interlocutory stage, the question is whether abuse is arguable. The merits of the underlying claim may be relevant where they assist in assessing whether recovery of assets was genuinely a purpose of the proceedings.

The claimant bank brought several commercial claims against former officers and associates, including Mukhtar Ablyazov. The defendants sought stays on the basis that the claims had been procured or pursued to assist the President of Kazakhstan in eliminating Mr Ablyazov as a political opponent.

The court had previously considered other aspects of the stay applications. This judgment addressed whether the collateral-purpose case was arguable and, if so, whether the claims themselves were arguably an abuse of the English court’s process. The central issues concerned mixed purposes, the separate legal personality of the bank, and the significance of the bank’s restructuring obligations to its creditors.

1. The application to stay the claims on grounds of abuse of process was dismissed. The other defendants’ applications raised no different issue and were dismissed for the same reasons.

2. The court recognised the two established collateral-purpose categories identified in Broxton v McClelland: seeking a collateral advantage beyond the proper scope of the action, and conducting proceedings in a manner intended to cause problems beyond those ordinarily encountered in properly conducted litigation. The first category was relevant.

3. Following Goldsmith v Sperrings Ltd, an object is not a prohibited collateral advantage if it is reasonably related to providing redress for the grievance. The natural consequences of successfully pursuing a legitimate claim, including financial loss, reputational damage or asset enforcement, do not become illegitimate merely because they are desired or beneficial to another person.

4. The authorities did not establish a binding rule for mixed purposes. The court preferred the approach indicated by Bridge LJ in Goldsmith v Sperrings Ltd: where one purpose is legitimate, proceedings should not ordinarily be treated as abusive. That approach avoided an unnecessarily difficult inquiry into the predominant purpose and was consistent with Re Ross (a Bankrupt) (No.2).

5. The bank had a separate legal personality from Samruk-Kazyna and the President of Kazakhstan. It had a legitimate interest in recovering assets allegedly misappropriated by the defendants and was contractually obliged, following its restructuring, to maximise recoveries for creditors. The alleged political purpose therefore did not deprive the bank’s own purpose of legitimacy.

6. Although the political-purpose case was arguable on the evidence, it was not arguable that the court’s process was thereby abused. The alleged reputational damage, asset recovery and political consequences were natural consequences of properly prosecuting the bank’s fraud claims. The application was dismissed. It was unnecessary to address the alternative submission based on judicial restraint.

The judgment was a first-instance decision on applications to stay the claims for abuse of process. It followed an earlier judgment in the same proceedings, reported at [2011] EWHC 202 (Comm).