JSC Mezhdunarodniy Promyshelnniy Bank & Anor v Pugachev & Ors

Passport and travel-document restraints may be granted as ancillary relief to a freezing order where necessary to make the order and its disclosure obligations effective. Purported compliance does not automatically end such restraints, but claimants must establish inadequacy before continued restraint is ordered.

Further disclosure must have practical utility, be necessary to police the freezing order and remain proportionate. Focused disclosure may be justified by substantial unexplained payments, whereas wholesale investigation requires a proper evidential basis. A company administering assets may have disclosure obligations even without proof that it acted on the defendant’s instructions.

The claimants, a Russian bank in liquidation and its liquidator, pursued proceedings supporting Russian insolvency litigation against the first defendant. Earlier orders imposed worldwide freezing relief, disclosure obligations and restraints on his departure from England and Wales, including retention of his passports.

The applications concerned continuation of the passport relief and further disclosure by Luxury Consulting Ltd concerning payments and assets administered since the original freezing order. The court had to determine whether purported compliance justified ending the travel restraints and whether additional disclosure was warranted.

1. Under section 37 of the Senior Courts Act 1981, the court may restrain a freezing-order defendant from leaving the jurisdiction and require passport surrender where necessary to enforce the freezing order and ancillary disclosure obligations. The court applied Bayer AG v Winter [1985] 1 WLR 497.
2. “Purported” compliance did not automatically end the restraints. The claimants had to establish non-compliance. The court extended the relevant dates to permit an application challenging the affidavit, but declined to continue the restraints indefinitely on a brief assessment of its adequacy.
3. Wholesale disclosure concerning the sterling account was refused because the expenditure was consistent with permitted living expenses and there was no proper evidential basis for investigation. Focused disclosure concerning the euro account was ordered because substantial payments remained unexplained.
4. Disclosure was also ordered concerning assets administered by LCL. “Administered” included managing assets and was not limited to assets managed on Mr Pugachev’s direct or indirect instructions. The court ordered the relief because LCL appeared to operate as a managerial vehicle and personal wallet connected with Mr Pugachev.

The judgment records earlier procedural decisions in the same litigation, including [2015] EWCA Civ 906. The present court continued the freezing orders by consent, extended time for challenging the adequacy of disclosure and ordered focused further disclosure, while refusing some wider relief.