JSC BTA Bank v Solodchenko & Ors

The court may order a person who has given disclosure pursuant to a freezing or ancillary disclosure order to attend for cross-examination where this is just and convenient. The jurisdiction is exceptional, but it does not require proof that every alternative means of obtaining information has failed. The court must weigh the substantial burden of cross-examination against the need to secure effective disclosure and consider less burdensome alternatives. Cross-examination must remain confined to testing compliance with the disclosure order and obtaining missing information. It must not become a general inquiry into the merits. Serious deficiencies in disclosure, evidence that the respondent may possess relevant knowledge, urgency, and the absence of an obvious alternative source may justify the order.

JSC BTA Bank sought an order requiring the seventeenth defendant, Anatoly Ereshchenko, to attend for cross-examination concerning his purported compliance with a disclosure order made on 3 November 2010. The order had been made before he became a party, under the Norwich Pharmacal and Bankers Trust jurisdiction, and required information and documents concerning the tracing of allegedly misappropriated investments and the ownership and control of related companies.

Mr Ereshchenko maintained that he had no relevant knowledge or documents. The Bank relied on evidence suggesting that his disclosure was seriously incomplete, including his unexplained attendance at a storage facility containing Eastbridge documents and emails indicating personal involvement in transactions concerning the disputed assets. The central issue was whether cross-examination was just and convenient, having regard to its exceptional and burdensome nature and the availability of alternative means of obtaining information.

1. Application granted. Mr Ereshchenko was ordered to attend for cross-examination on his witness statements and affidavit, subject to procedural safeguards.
2. The jurisdiction to order cross-examination on an affidavit of assets is established under section 37 of the Senior Courts Act 1981. Its purpose is to secure effective compliance with disclosure obligations and to obtain information that ought to have been supplied. The same principles apply to disclosure ordered against a non-party. The authorities included House of Spring Gardens Ltd v Waite [1985] FSR 173 and Kensington International Ltd v Republic of Congo [2006] EWHC 1848 (Comm).
3. The governing test is whether, in all the circumstances, the order is both just and convenient. Cross-examination is an exceptional measure and the court must consider whether a less burdensome alternative would achieve the same purpose. However, the absence of an alternative remedy is not a precondition. The court applied the approach in Yukong Line Ltd of Korea v Rendsburg Investments Corp of Liberia [1996] EWCA Civ 759.
4. There were strong grounds for believing that Mr Ereshchenko’s disclosure was seriously inadequate. The evidence concerning the storage boxes and five emails relating to coupon payments and security interests provided substantial reasons to believe that he had relevant knowledge and had failed to give a substantive response. The disappearance or unavailability of other relevant individuals meant that there was no obvious alternative source of information. It was reasonable for the Bank to pursue several investigative avenues simultaneously.
5. The cross-examination was to be confined to securing compliance with the disclosure order and was not to become a roving inquiry into the merits of the claim. The Bank undertook not to use material obtained in the main proceedings, or for committal proceedings, without the court’s permission. The hearing was directed to take place on the first convenient date after 9 May 2011, with a provisional estimate of one to two days. An interpreter was to be available if required.