JSC BTA Bank v Ablyazov & Ors

The court may appoint a receiver under section 37 of the Senior Courts Act 1981 within existing proceedings to ensure that a defendant is represented at trial. An application for that limited purpose is not itself proceedings concerning the validity of decisions of a company’s organs under article 22.2 of the Judgments Regulation. Where the application does not determine the company’s internal management or conflict with proceedings in its place of incorporation, the English court may act. The interests of justice in securing representation may outweigh delay, particularly where the delay has caused no prejudice.

BTA Bank brought the Chrysopa action against several defendants, including Usarel Investments Limited, alleging fraud and seeking damages and proprietary remedies. Entities claiming to be shareholders in Usarel and corporate directors of the company applied for the appointment of a receiver to instruct solicitors and counsel to defend Usarel at the forthcoming trial.

The Bank argued that article 22.2 of the Judgments Regulation gave exclusive jurisdiction to the Cypriot courts, because Usarel was incorporated in Cyprus, and that the English court should in any event decline relief. The application raised whether the English court had jurisdiction and, if so, whether appointment was just and convenient.

1. Application granted. The court appointed a litigation receiver for the limited purpose of ensuring that Usarel was represented in the English proceedings.

2. The application was made within proceedings in which the court already had jurisdiction over Usarel. It did not seek to sue the Bank or establish jurisdiction over any person. The jurisdictional rules in the Judgments Regulation were therefore not engaged.

3. The application was not “proceedings” within article 22.2. The relevant proceedings were the Bank’s claim against the defendants. The application concerned Usarel’s ability to be represented in those proceedings and sought the exercise of the court’s power under section 37 of the Senior Courts Act 1981.

4. Appointment was just and convenient. The order did not determine the disputed shareholdings or the validity of Usarel’s corporate directors. It was consequently not inconsistent with any decision of the Cypriot courts and created no material risk of irreconcilable judgments. Although the court would ordinarily give considerable weight to the place of incorporation in matters of internal company management, the receiver’s purpose was narrow and directly connected with a trial in England.

5. The Bank had not shown a real risk of prejudice. The application’s lateness was relevant, but the delay had not prejudiced the Bank. The interests of justice in ensuring representation therefore justified relief.

6. The receiver was to be described as a litigation receiver. The order included a 21-day period for challenge, undertakings supported by a £25,000 payment into court, authority to ratify earlier instructions and borrow money, and a prohibition on granting security over Usarel’s assets.