JSC Mezhdunarodniy Promyshlenniy Bank & Anor v Pugachev

When exercising the jurisdiction under Senior Courts Act 1981, section 37, to restrain a person subject to a freezing order from leaving the jurisdiction, the court must be satisfied that the restriction is just and convenient, necessary and proportionate. The court must assess the particular circumstances, the continuing risk of evasion or non-compliance, and the adequacy of proposed safeguards. The fundamental nature of freedom of movement requires caution. The relevant question is whether the restriction is required to reduce the risk of irremediable harm, rather than which competing event is more likely. A passport order may properly continue where disclosure obligations remain imperfectly fulfilled and proposed safeguards would not reliably prevent flight.

The claimants sought continuation of an order requiring the defendant to surrender his passports and preventing him from leaving England and Wales. The order supported worldwide freezing orders and ancillary asset-disclosure obligations made in aid of Russian proceedings. The defendant applied for a short suspension so that he could attend an investigating hearing in Paris concerning criminal proceedings he had initiated there. He offered safeguards, including accompaniment by a solicitor and controlled use of his passport.

The claimants relied on the continuing risk of flight, the defendant’s incomplete disclosure, and uncertainty arising from an Interpol Red Notice. The central issue was whether suspension was just, convenient, necessary and proportionate in the circumstances.

1. Application refused. The Passport Order was to continue.
2. The jurisdiction arose under section 37 of the Senior Courts Act 1981. Following Bayer AG v Winter and Others [1985] 1 WLR 497, the court could restrain a person subject to a freezing order from leaving the jurisdiction where that was just and convenient to secure effective compliance with the order and ancillary disclosure obligations. Surrender of a passport was ancillary to that restraint.
3. The court accepted, with necessary modification, the principles stated in Young v Young [2012] EWHC 138 (Fam), [2012] Fam 198. A passport order restricts liberty and must be exercised cautiously. There must be a sufficient risk to justify the restriction, and the order must be proportionate to the purpose of securing compliance.
4. Gough and another v Chief Constable of the Derbyshire Constabulary [2002] EWCA Civ 351, [2002] QB 1213 concerned a statutory football-banning regime and therefore offered limited analogy. It nevertheless reinforced the need to consider proportionality, the individual circumstances, and whether the restriction was reasonably required to achieve the relevant objective.
5. The defendant’s disclosure had reduced but not removed the risk of flight. The risk remained objectively sufficient, particularly given possible further disclosure, potential contempt applications, his previous retention of a passport, and uncertainty concerning the Red Notice. Accompaniment and solicitor custody of the passport would not provide sufficient protection because overnight supervision could be difficult and travel within the Schengen area might be possible without a passport.
6. The asserted necessity of personal attendance in Paris was not demonstrated. The evidence was unpersuasive, and postponement or video-conferencing appeared possible. The risk of flight involved potentially irreparable harm, whereas non-attendance in Paris would cause at most a temporary setback. Applying the statutory standard of what was just and convenient, suspension was refused.

First-instance decision on an application to suspend an existing passport order. The judgment states that the judge would not be disposed to give permission to appeal, regarding the matter as one of discretion.