JSC BTA Bank v Ablyazov

Summary judgment may be granted in a complex fraud claim where the claimant establishes, on the evidence available, that the defendant has no real prospect of successfully defending the claim and there is no compelling reason for a trial. Complexity and allegations of fraud do not themselves require a full trial. The court must avoid conducting a mini-trial and should not reject evidence merely because it may provide powerful cross-examination material. An issue previously determined between the same parties may give rise to issue estoppel, subject to the exceptional availability of further material which could not reasonably have been adduced earlier. Findings on foreign law recorded in citable form may be admissible and conclusive under the Civil Evidence Act 1972 unless the contrary is proved.

The Bank claimed approximately US$300 million from its former chairman in respect of the alleged misappropriation of AAA-rated securities. The claim was advanced under Kazakh law, principally for breach of duties imposed on company officers and duties concerning affiliated persons and interested transactions. The application for summary judgment had been adjourned and was ultimately undefended after the defendant stated that he would not further defend it, while reserving his rights.

The central issues were whether the defendant was the beneficial owner and controller of the companies that received the securities, whether the transfers caused loss, whether findings in earlier proceedings created an issue estoppel, whether the Bank’s claims were barred or displaced by employment-law principles, and whether there was any compelling reason for a trial.

1. Summary judgment. The application was granted. Under CPR Part 24, the question was whether the defendant had no real prospect of successfully defending the claim and whether there was any other compelling reason for a trial. The court adopted the guidance in Mentmore International Ltd v Abbey Healthcare [2010] EWCA Civ 761, including the principles derived from Three Rivers DC v Bank of England (No. 3) [2001] 2 All ER 513. The court must not conduct a mini-trial, but may reject factual assertions where the available material shows that they are fanciful.
2. A complex fraud claim can be suitable for summary judgment where liability turns on a central proposition that can safely be determined on the evidence. The approach in R B G Resources Plc (in liquidation) v Rastogi [2004] EWHC 1089 (Ch) illustrated that principle. The available evidence established that the defendant beneficially owned all five recipient companies, that they received the securities without consideration, and that the transfers caused loss corresponding to their market value.
3. The earlier finding that the defendant beneficially owned Bubris created an issue estoppel. The requirements stated in The Sennar (No. 2) [1985] 1 WLR 490 were satisfied. The exceptional qualification recognised in Arnold v NatWest Bank Plc [1991] 2 AC 93 did not apply because no further material capable of casting doubt on the earlier decision had been identified.
4. Under the JSC Law, beneficial ownership and the de facto ability to determine or influence a company’s decisions were sufficient to establish affiliation. The defendant therefore owed duties to disclose his affiliation and interested transactions. His failure to do so caused loss and engaged the statutory damages provisions.
5. Findings on Kazakh law in the earlier Trial Judgment were admissible and conclusive under section 4(2) of the Civil Evidence Act 1972, unless the contrary was proved. Claims arising from the defendant’s statutory status as an officer were not displaced by the alleged employment relationship or the one-year limitation period in the Labour Code.
6. Judgment was entered for US$294,138,715.27. Interest was awarded under section 35A of the Senior Courts Act 1981 at 7.3% per annum from the accrual of the cause of action.

Not stated in the judgment as an appeal. The application was heard at first instance after earlier proceedings and interlocutory decisions in related litigation.