(Granton Action) JSC BTA Bank v Ablyazov & Ors

Compound interest may be recovered at common law as damages only where the claimant pleads and proves actual interest loss. A general claim for interest or damages is insufficient. Where actual loss has not been pleaded, the court may award simple interest under section 35A of the Senior Courts Act 1981. The appropriate rate is assessed by reference to the relevant class of borrower and the evidence. Interest may run from the accrual of the cause of action, even where the foreign law governing the underlying claim would recognise interest only later. In assessing whether non-monetary recovery prevents double recovery, the comparison should include statutory interest.

Following judgment on liability in [2013] EWHC 510 (Comm), the claimant bank sought compound interest at common law on sums awarded in the Granton, Drey and Chrysopa actions. Alternatively, it sought simple interest under section 35A of the Senior Courts Act 1981.

The defendants contended that common-law interest had not been pleaded or proved and that, in the Chrysopa action, interest could not run before judgment or be included when comparing the value of recovered shares with the damages claim. The court determined the proper basis, rate and commencement date for interest, and the treatment of interest in the double-recovery comparison.

1. Common-law interest. The court applied the guidance in Sempra Metals v IRC [2008] 1 AC 561. A claimant seeking compound interest as damages must plead and prove actual interest losses. The bank’s pleadings merely claimed interest and did not identify how the money would otherwise have been used, the borrowing costs incurred, or any other actual interest loss. Expert evidence about general borrowing rates could not replace the required pleading. The common-law claim was therefore unavailable.
2. Section 35A interest. Simple interest was awarded under section 35A of the Senior Courts Act 1981. The appropriate class of borrower was Kazakh banks, rather than banks or financial institutions generally. On the evidence, the appropriate rate was 7.3%, reflecting the average rate paid by the bank and its peer group between 2006 and 2012, rather than the claimed 8%.
3. Commencement date. On the proper construction of article 353 of the Civil Code, interest under Kazakh law accrued from the date on which the defendant caused the damage. In any event, exercising the statutory discretion, interest should run from accrual of the causes of action. The court treated section 35A as a procedural remedy and considered it appropriate to reflect the economic loss caused by deprivation of the money. This was consistent with Maher v Groupama Grand Est [2009] EWCA Civ 1191.
4. Chrysopa action and double recovery. The bank had succeeded in damages against the relevant defendants, although payment was deferred to avoid double recovery pending valuation of the recovered shares. Interest could therefore be awarded before the final sum became payable. The comparison between the value of the shares and the damages recovery had to include statutory interest. The words “plus interest” were accordingly correctly included.

This was a first-instance ruling on ancillary interest following the court’s liability judgment in [2013] EWHC 510 (Comm). No further appellate history is stated in the judgment.