AKCINÉ BENDROVÉ BANKAS SNORAS (IN BANKRUPTCY) v MR. VLADIMIR ANTONOV

A stay of civil proceedings pending related criminal or extradition proceedings is exceptional. It requires a real risk of serious prejudice that may lead to injustice, assessed against the claimant’s right to have its claim determined and the prejudice caused by delay. Tactical loss from disclosing a defence is ordinarily insufficient. Where disclosure or evidence may expose a defendant to foreign self-incrimination risk, the court may allow proceedings to continue with proportionate ring-fencing orders controlling dissemination and use. Asset disclosure is integral to an effective worldwide freezing order; foreign criminal proceedings do not create an automatic privilege to withhold it. An innocent, material non-disclosure on an without-notice freezing-order application does not automatically discharge the order where proportionality requires its continuation.

The claimant bank, incorporated in Lithuania and subsequently placed in bankruptcy, brought English civil claims against Mr Antonov and Mr Baranauskas alleging misappropriation of approximately €500 million and breach of duties under Lithuanian law. A worldwide freezing order had been granted against Mr Antonov and later amended.

Mr Antonov applied for a stay of the civil proceedings and of an application concerning asset disclosure until the determination of extradition proceedings. He also sought discharge of the freezing order for alleged non-disclosure, delay and absence of risk of dissipation, and variation of the order to remove or limit his asset-disclosure obligations.

The central issues were whether continuing the civil proceedings created a real risk of serious prejudice leading to injustice, whether the omission of an English restraint order justified discharge, whether risk of dissipation remained, and whether foreign self-incrimination concerns or the mutual-assistance regime required disclosure to be removed.

1. Stay application. The applications for a stay were refused. The governing question was whether continuation created a real risk of serious prejudice leading to injustice, balancing Mr Antonov’s interests against the Bank’s right to pursue its claim and the prejudice to the Bank and creditors caused by delay. The principles in R v Panel on Takeovers and Mergers, ex p Fayed [1992] BCC 524, Panton v Financial Institutions Services Limited [2003] UKPC 8 (PC) and V v C [2002] C.P. Rep. 8 were applied. Advance disclosure of an exculpatory defence and loss of tactical advantage in criminal proceedings did not ordinarily amount to injustice.
2. The possibility that defence material, documents or witness statements might reach the Lithuanian prosecutor created a sufficient practical risk to justify safeguards, but not a stay. The court ordered a ring-fencing regime, based on the approach in A-G for Zambia v Meer Care & Desai & Ors [2006] EWCA Civ 390, restricting dissemination and use of relevant material outside named persons in England and prohibiting use for foreign criminal or civil proceedings without permission.
3. Freezing order. The Bank had failed to disclose the English restraint order. That information was objectively material, but the omission was innocent and the order was asset-specific. Applying the principles in Brinks Mat v Elcombe [1988] 1 WLR 1350 and Re Stanford International Bank Ltd [2011] Ch 33, discharge would have been disproportionate because disclosure would not have altered the decision to grant a worldwide order. The order was continued.
4. Risk of dissipation remained. The alleged wrongdoing itself, the evidence of prior dishonesty or fraud, and Mr Antonov’s ability as a sophisticated operator to direct worldwide transactions justified the inference, notwithstanding his presence in England and existing asset-specific restraints. The investigative delay was reasonably explained by the forensic reconstruction of the Bank’s affairs and did not defeat the order.
5. Asset disclosure. Disclosure was essential to make the freezing order effective. Foreign self-incrimination concerns engaged the court’s discretion but did not create an absolute right to withhold disclosure. In the absence of cogent evidence to the contrary, the court assumed that Lithuania would comply with the Convention. Further safeguards restricted dissemination and secondary use of current-asset information, required private applications for permission to use it elsewhere, and prohibited public reference without permission.
6. The argument that disclosure circumvented the statutory mutual-assistance regime failed because the Bank had not been shown to be equivalent to, or a conduit for, the Lithuanian prosecutor. The applications to stay the proceedings, discharge the worldwide freezing order and vary the disclosure obligations were therefore refused.

not stated in the judgment.