PJSC Vseukrainskyi Aktsionernyi Bank v Maksimov & Ors

A worldwide freezing injunction may be continued against a non-party to an arbitration where there is a good arguable case that the company is owned and controlled by the respondent and that its assets may be available to satisfy an eventual award. The court may restrain dissipation where England is the seat of the arbitration and there is a sufficient connection with England. A person brought within an injunction may challenge it, but cannot relitigate an ownership issue already determined against closely identified parties on evidence which could have been deployed earlier. Material non-disclosure does not automatically discharge an injunction where the omitted documents add little to the evidential picture and would not materially affect the result.

The claimant bank sought damages in London arbitration against its former president, Sergey Maksimov, under an English-law framework agreement. Freezing injunctions had previously been granted against Maksimov and related companies under section 44(3) of the Arbitration Act 1996. Field J later extended the injunction to Carlsbad Enterprises Ltd, a Cyprus company, and permitted service out of the jurisdiction.

Carlsbad applied to discharge the order. It challenged jurisdiction, ownership and control, the amenability of its assets to enforcement, the just and convenient basis for relief, and alleged material non-disclosure. The central issues were whether Carlsbad could reopen the ownership question, whether service out was permitted under CPR 62.5(1)(b), and whether the injunction should continue.

1. Relitigation of ownership. Carlsbad was entitled to apply to discharge a freezing order affecting it for the first time. However, it could not reopen the ownership and control issue decided by Popplewell J where it had a sufficient degree of identification with the earlier corporate defendants and sought to rely on evidence that could have been deployed at the earlier hearing. The principles in Gleeson v Wippell [1977] 1 WLR 510, approved in House of Spring Gardens v Waite [1991] 1 QB 241, applied.
2. Merits. In any event, the Bank continued to show a good arguable case that Carlsbad was owned and controlled by Maksimov within the meaning of the TSB v Chabra [1992] 1 WLR 245 jurisdiction. The extensive further evidence did not justify setting aside the order, and the factual disputes could be investigated at the ordered trial.
3. Jurisdiction and service out. The application was sufficiently urgent for relief under section 44(3) of the Arbitration Act 1996. Although there was no binding authority on whether CPR 62.5(1)(b) permitted service out on a Chabra defendant who was not party to the arbitration agreement, the reasoning in Tedcom Finance v Vetabet Holdings [2011] EWCA Civ 191 supported that construction. The court adopted the view that, in a proper case, service out could be ordered where the company was shown to be owned and controlled by an arbitration party and dissipation could defeat enforcement. BNP Paribas v OJSC Russian Machines [2011] 2 CLC 942 was consistent with that approach. The English seat and English governing law supplied the necessary connection.
4. Enforcement and convenience. The Bank established a good arguable case that, if ownership and control were proved, enforcement might be available in Cyprus through some process capable of making the assets available to satisfy the award. The combination of the English seat, English governing law, the connection with the arbitration, the apparent ownership evidence and the risk of dissipation made continuation of the injunction just and convenient, despite the foreign corporate and asset issues.
5. Non-disclosure. The Bank had failed to search thoroughly for and disclose relevant know-your-customer documents and a 2013 account-opening document. Applying the principles summarised in Arena [2003] EWHC 1089 (Ch) at [213], the failure was regrettable but not material enough to justify discharge because the documents added little and did not materially undermine the Bank’s case.
6. Carlsbad’s application to set aside Field J’s order was dismissed.