JSC BTA Bank v Ablyazov

Applications alleging breaches of a freezing order should usually be determined promptly and before trial of the underlying action, because contempt proceedings may promote compliance. Fairness may justify postponement where the contempt hearing would materially prejudice preparation for trial or deny a fair trial. Case management may require allegations to be reduced to a proportionate number, particularly where the alleged contempt is extensive and the maximum sentence is limited. Allegations must identify the relevant asset, the alleged beneficial ownership and the alleged breach with sufficient clarity. In contempt proceedings, fairness requires disclosure of documents which damage the applicant’s case or assist the respondent’s case. Whether further allegations should later be heard depends on the circumstances then prevailing. Contempt hearings carrying a possible prison sentence should ordinarily be held in public.

The Bank sought directions for an application to commit Mr Ablyazov for contempt of court arising from alleged breaches of a freezing order. The application originally contained 35 allegations, later reduced to 23. The Bank proposed an eight-day hearing in September or October 2011. Mr Ablyazov argued that the hearing should await the trials of the underlying proceedings, including the Drey, Chrysopa and Granton actions, because of overlap of issues, preparation burdens and the relevance of his credibility.

The court considered the appropriate number and timing of allegations, the required particulars, disclosure obligations, whether unselected allegations could be reserved, and whether the hearing should be private.

1. Timing and case management. Allegations that a freezing order has been breached may be brought promptly to put pressure on the defendant to comply: Dadourian Group International Inc. v Simms [2007] 1 WLR 2967. Such applications will usually be heard before the underlying action, although fairness may require the contempt hearing to follow the trial. The court should balance the importance of enforcing the freezing order against the need to preserve a fair trial.
2. The application was limited to three allegations, one concerning failure to disclose, one concerning false evidence on oath and one concerning wrongful dealing with assets. This was proportionate because the pressure created by the risk of imprisonment would not materially increase with seven or 23 allegations. Any further injunctive relief could be sought under section 37 of the Senior Courts Act 1981 without a contempt application.
3. The overlap between the contempt issues and the underlying trials did not require postponement. The limited hearing would not unduly disrupt preparation or cause unfairness. The court referred to Daltel Europe Limited and others v Makki and others [2005] EWHC 749 (Ch) and KJM Superbikes Ltd. v Hinton [2009] 3 AER 76.
4. Allegations of failure to disclose or wrongful dealing had to identify the asset and explain how the defendant was said to hold it beneficially. The facts supporting the alleged beneficial ownership and breach had to be given in evidence, with earlier witness-statement passages clearly identified.
5. Although the court considered the submission that there was no disclosure duty, fairness required disclosure of any document damaging the Bank’s case or assisting Mr Ablyazov’s case. The court did not consider that Masri v Consolidated Contractors [2010] EWHC 2640 (Comm) invalidated that requirement.
6. It was premature to declare that later allegations would constitute an abuse of process. The circumstances at that time would determine the issue, and Mr Ablyazov’s right to seek a strike-out by reference to Villiers v Villiers [1994] 1 WLR 493 was preserved. The observation in Phillips v Symes (No.3) [2005] 1 WLR 2986 did not require a different order.
7. The hearing was to take place in public, subject to anonymisation of restricted information, consistently with paragraph 9 of PD RSC 52.