JSC Mezhdunarodny Promyshlenniy Bank & Anor v Pugachev

A passport impounding order may restrain a defendant from leaving the jurisdiction where objective evidence demonstrates a real risk that the defendant will leave in order to frustrate the court’s processes. The claimant need not prove on the balance of probabilities that the defendant intends to flee.

The jurisdiction must be exercised cautiously because liberty and freedom of movement are engaged. The restriction must be proportionate in all the circumstances. The court should weigh the risk and resulting prejudice to its processes against the defendant’s reasons for travelling and the practical value of any proposed safeguards.

The defendant was subject to a worldwide freezing order, disclosure obligations and an order requiring him to remain within the jurisdiction and surrender his passports. Hildyard J refused his application for the temporary return of his French passport so that he could attend a meeting with investigating judges in Paris.

The defendant appealed, contending that there was insufficient evidence that he would fail to return and that refusing temporary travel was disproportionate. The central issues were the evidential threshold for finding a risk of flight and whether the continued restriction on movement was proportionate.

1. Appeal dismissed. Floyd LJ, with whom Bean LJ agreed, held that the claimant did not have to prove on the balance of probabilities that the defendant would fail to return. The statutory expression “probable cause for believing” required something less than proof on the balance of probabilities, although substantially more than an applicant’s asserted fear. At a minimum, there had to be evidence from which it could reasonably be inferred that the defendant would leave the jurisdiction and not return. Bean LJ expressed the sufficient threshold as an objectively demonstrated real risk that the defendant would leave in order to frustrate the court’s processes.

2. There was ample evidence supporting that inference. The defendant faced continuing investigation of his assets and a realistic prospect of contempt applications. His earlier misleading explanations about his passports, and his increasingly unimpressive reasons for seeking travel, showed a willingness to impede the court’s processes and permitted the court to look elsewhere for his true reasons.

3. The passport order restricted liberty and freedom of movement and therefore had to be exercised cautiously and proportionately. The public policy requiring litigants to obey court orders was capable of justifying that restriction. The judge properly weighed the claimants’ need to secure the effectiveness of the freezing and disclosure orders against the prejudice caused by preventing attendance in Paris.

4. The proposed safeguards were more apparent than real. An accompanying solicitor could not reliably prevent the defendant from slipping away, while retaining his passport offered little protection once he was in France and able to move through the Schengen area. The evidence did not establish that personal attendance at the meeting was necessary, and video conferencing had not been explored.

5. The restriction was justified and proportionate. There was no proper basis for appellate intervention.

1. Court of Appeal (Civil Division): The defendant’s expedited appeal was dismissed. The court upheld the refusal temporarily to suspend the passport order.
2. High Court, Chancery Division: Hildyard J continued the passport order and, on 25 May 2015, refused the defendant’s application for its temporary suspension so that he could travel to Paris.