JSC BTA Bank v Ablyazov & Ors

The court may order a defendant subject to a freezing injunction to disclose the identity of a third-party funder and the ultimate source of funds used for legal expenses where there are grounds to believe that the injunction may be circumvented. The jurisdiction is ancillary to the injunction and arises where disclosure is just and convenient to secure its effectiveness. It is unnecessary first to establish that the funds belong to the defendant. The court must balance the risk of concealed dissipation against prejudice to the defendant and any bona fide funder. Appropriate safeguards may include restricted disclosure, undertakings and controls on subsequent use of the information.

The claimant bank sought an order requiring the first defendant to disclose information about Green Life International SA, a company said to be funding his legal expenses, including its directors, shareholders, ultimate beneficial owner, business and the ultimate source of its funds.

The defendant maintained that Green Life was a bona fide independent funder and that disclosure might expose its owner to pressure, causing the funding to cease and impairing his defence. The bank alleged that Green Life was another vehicle through which the defendant’s own assets were being used in breach of a worldwide freezing order. The central issues were whether the court had jurisdiction to require the information, what threshold applied, and whether the discretion should be exercised.

1. Application granted. The defendant was ordered, subject to conditions and undertakings, to serve a witness statement identifying Green Life’s directors, shareholders and ultimate beneficial owner, describing its business, stating the ultimate source of funds used for his legal expenses, and exhibiting relevant documents.
2. The jurisdiction arose both from the disclosure machinery in paragraph 9(a) of the freezing order and from section 37 of the Senior Courts Act 1981. The power to grant a freezing injunction included ancillary orders necessary to ensure that it achieved its purpose: A.J.Bekhor & Co Ltd v Bilton [1981] QB 923; Maclaine Watson & Co Ltd v International Tin Council (No 2) [1989] Ch 286; and JSC Bank v Solodchenko [2011] EWHC 2163 Ch.
3. The order was protective. It could be made where there were grounds to believe that there was a real risk that the injunction was being breached. Establishing that the money was in fact the defendant’s property was not a precondition. The court nevertheless had to guard against oppressive use of the freezing order: House of Spring Gardens Ltd v Waite [1985] FSR 173.
4. Paragraph 9(a) was not a free-standing obligation to identify the source of every payment. Its notification requirement operated as a condition of relying on the exception permitting reasonable legal expenditure. If genuinely borrowed money fell outside paragraph 4, the notification obligation did not arise; if the funds were within paragraph 4, paragraph 9(a) applied.
5. The evidence gave strong grounds for believing that the earlier funding companies were the defendant’s creatures or conduits and good reason to believe that Green Life might be similar. The balance of prejudice favoured disclosure. Information was therefore subject to the restricted-information regime, and could not be used for pending or future committal applications without permission. The court did not decide whether genuinely borrowed money itself breached the freezing order; that issue required a fresh application.