JSC BTA Bank v Ablyazov & 16 Ors

Where freezing and receivership orders were properly made on the basis of a defendant’s beneficial ownership, a later assertion that third parties acquired the asset does not require the court simply to remove the asset from the orders. The court may determine whether the alleged transfer was effective and whether the defendant retained beneficial ownership. The relevant question is whether it is just and appropriate to order a trial of the competing ownership claims. A claim seeking to maintain protection over property allegedly beneficially owned by a judgment debtor may constitute a Chabra claim. The court may have territorial jurisdiction over the alleged third-party owners where they are necessary and proper parties to that issue, including under paragraph 3.1(3) of the Civil Procedure Rules 1998 Practice Direction 6B.

The Bank obtained freezing and receivership orders concerning assets allegedly beneficially owned or controlled by Mr Ablyazov. Three companies applied to amend the orders so that they no longer applied to shares in Dregon Land, asserting that the shares had been acquired through enforcement of security and subsequent sales.

The Bank alleged that the transactions were fictitious or collusive and that Mr Ablyazov remained the true beneficial owner. The application raised whether the existing orders could continue pending determination of beneficial ownership and whether the court had jurisdiction to try the Bank’s claim against the applicants.

1. Application dismissed. The court refused to amend the Receivership Order and Freezing Order to remove the Dregon Land shares. A trial was ordered to determine the competing claims to beneficial ownership.
2. The orders and their predecessors had been properly made when the shares were beneficially owned by Mr Ablyazov. The applicants had themselves brought the issue before the court. The question was therefore whether it was just and appropriate to order determination of where beneficial ownership lay.
3. That threshold was satisfied. The Bank had established a good arguable case that the applicants were not beneficially entitled to exercise full ownership rights in the shares. The evidence raised a properly triable issue concerning the alleged enforcement and sale transactions.
4. Alternatively, the court had jurisdiction to make a Chabra order. Applying C Inc plc v L [2001] CLC 1054, the Bank’s claim was a classic claim that the asset remained beneficially owned by the judgment debtor. There was a live issue between the Bank and Mr Ablyazov, who had been served within the jurisdiction, and it was reasonable for the court to try that issue. The applicants were necessary and proper parties.
5. The court accordingly ordered a trial of the competing beneficial-ownership claims and directed that further submissions be made on pre-trial directions.