JSC BTA Bank v Ablyazov & Ors

Where relief from a procedural sanction is conditional upon compliance with a specified obligation, failure to satisfy the condition ordinarily leaves the sanction operative. The court may nevertheless grant further relief where enforcing the sanction would be unjust, including where the practical requirements of compliance were materially more difficult than previously understood. The applicant’s conduct remains important. The court may impose further conditions directed to securing the underlying purpose of the order, including production of documentary proof, payment of costs and compliance with further conditions informed by evidence of foreign law. A party seeking relief cannot rely on an artificially narrow construction of the condition where the parties and the court proceeded on the basis that effective performance, including contemplated authentication, would be provided.

The claimant sought judgment against the twelfth defendant, Maden Holding Inc, after Maden failed to comply with an unless order concerning disclosure under a freezing order. Maden had previously obtained relief from the sanction, subject to a condition requiring it to execute and provide a power of attorney enabling the claimant’s lawyers to obtain information from a Latvian bank concerning approximately US$2,516,000.

Maden did not provide the power of attorney by the extended deadline. It later supplied some information, but not the promised supporting documents, and argued that the condition required only execution, not notarisation or legalisation. The central issues were whether Maden had complied, whether further relief should be granted, and what conditions were appropriate in light of uncertainty about the requirements of Latvian law.

1. Failure to comply. The conditional order granted relief from the sanction in the unless order only if Maden executed and provided the specified power of attorney by 5 January 2011. No power was provided by that date. Maden therefore required further relief from sanction. [2011] EWHC 470 (Comm) at [55]–[58].
2. Construction of the condition. Although the order did not expressly specify notarisation or legalisation, the parties had proceeded on the basis that an appropriately effective power would be obtained and provided. Maden could not, when seeking relief, rely on the absence of an express authentication requirement after the court had granted an extension on that understanding. The explanation given for non-compliance was also misleading, since the power had in fact been executed by the deadline. [57]–[60].
3. Further relief. Despite Maden’s serious and repeated failures, shifting explanations and delay in seeking relief, it would be unjust to enter judgment for more than US$1 billion because procuring an effective power of attorney had proved materially more difficult than the court had initially appreciated. The court therefore granted further relief against sanction subject to conditions. [61]–[65].
4. The conditions were to include production of documentary proof supporting the payments identified by Maden, payment of the costs of and occasioned by the application, and compliance with any further condition required to obtain an effective power of attorney enabling the claimant’s lawyers to obtain information and documentation concerning the whole of the untraced sum. [66]–[71].
5. The court declined to prescribe the precise form of authentication without evidence of Latvian law. Evidence was required as to the persons who could grant and receive the power, the governing law, documents to be scheduled, and any requirements for notarisation or apostille, including where and by whom those steps had to be undertaken. [72]–[76].