JSC BTA Bank v Ablyazov & Ors

A freezing order is construed in the light of its purpose and as reasonably understood by the businessman to whom it is addressed. Its relevant assets are ordinarily those which would or could have value to the claimant and against which execution could be secured. A personal right to draw down an unsecured, non-assignable and cancellable loan facility is not such an asset. Exercising that right is therefore not disposing of or dealing with an asset within the order. The extended wording concerning assets held or controlled by third parties does not alter that conclusion where the borrower has no ownership or control of particular funds. Because breach may attract penal sanctions, genuine ambiguity is resolved in favour of the putative contemnor.

The Bank had obtained a freezing order against Mr Ablyazov. The order prohibited dealings with assets up to a specified value and included an extended definition covering assets which a respondent could deal with as if they were his own, including assets held or controlled by a third party on his instructions.

Mr Ablyazov had rights under four loan agreements with Wintop Services Limited and Fitcherly Holdings Limited. The facilities were unsecured, personal, non-assignable without consent and cancellable as to undrawn sums. Drawdowns had funded legal and living expenses. The Bank sought declarations that the rights under the agreements were assets within the freezing order and that exercising them breached the order.

1. Application refused. The court declined to make the declarations or grant consequential relief.
2. The freezing order was construed according to the purpose it was designed to serve: preserving assets against which the Bank might later enforce a judgment, rather than preventing any increase in Mr Ablyazov’s indebtedness. In that context, the relevant assets were those which would or could have value to the Bank and against which execution could be secured.
3. A right to borrow under the Loan Agreements was not the sort of asset contemplated by the order. The rights had no quantifiable monetary value, were practically incapable of assignment, could be withdrawn by the lenders, and could not realistically be obtained by the Bank through execution. Exercising the rights therefore did not dispose of or deal with assets within the order.
4. The extended definition of assets and the additional wording concerning legal, beneficial or other interests did not change the result. Mr Ablyazov had no ownership or control of particular funds. The lenders retained control of their money until payment and decided which funds would be used. The payments did not require a notional transfer of ownership to Mr Ablyazov.
5. The court considered the reasoning in Cantor Index Ltd v Lister and Anglo Eastern Trust Ltd v Kermanshahchi persuasive in the context of a strict construction of a freezing order. The court also treated the enforcement-focused principles in Algosaibi v Saad Investments Company Limited, as approved in Linsen International v Humpuss Sea Transport Pte Ltd, as supporting the conclusion.
6. Although the interpretation could permit a person subject to a freezing order to increase indebtedness outside its restraints, that consequence did not justify adopting a broader construction. Any genuine ambiguity in an order carrying penal consequences was to be resolved in favour of the putative contemnor.