JSC BTA Bank v Ablyazov & Anor

A breach of a court order cannot, by itself, ground an award of damages in contempt proceedings. The contempt jurisdiction protects the administration of justice and is principally punitive. That restriction does not prevent the breach from constituting unlawful means for the separate tort of conspiracy to injure, where the defendants intentionally combine to cause loss. Serious contempts, including breaches of freezing orders which interfere with the administration of justice, may qualify as unlawful means. For Lugano Convention jurisdiction, the relevant date for domicile is when proceedings are issued. In a conspiracy claim, the harmful event occurs where the conspiracy is implemented and the resulting asset loss is sustained, rather than necessarily where the conspiracy was formed.

JSC BTA Bank brought proceedings against Ilyas Khrapunov, alleging that he conspired with Mukhtar Ablyazov to defeat enforcement of judgments and a worldwide freezing order by dealing with assets and interfering with the administration of justice. Khrapunov, domiciled in Switzerland, applied to set aside the claim form and freezing order.

The issues were whether the alleged breaches of the freezing order could constitute unlawful means for the tort of conspiracy to injure and whether the English courts had jurisdiction under the Lugano Convention, particularly under Articles 5(3) and 6(1).

1. Cause of action. The Bank was required only to show a good arguable case. The alleged conspiracy satisfied that threshold if the alleged contempts could amount to unlawful means.
2. Damages for contempt. The court’s contempt jurisdiction is directed to maintaining the authority of the court in the public interest. It does not generally include power to award damages for loss caused by contempt. This conclusion was supported by principle, Civil Procedure Rules 1998 Part 81.2, and the observations of the House of Lords in Customs and Excise Commissioners v Barclays Bank [2007] 1 AC 181. A separate contractual remedy may arise where an undertaking or consent order also evidences an agreement between the parties.
3. Unlawful means. The absence of a damages remedy for contempt alone did not prevent contempt from being unlawful means for another tort. The liability in conspiracy arose from the combination and intentional infliction of damage, not from contempt considered in isolation. Following the reasoning in Revenue and Customs Commissioners v Total Network [2008] 1 AC 1174, serious contempts punishable by committal, sequestration or fines could constitute sufficiently reprehensible unlawful means. The Bank therefore had a good arguable case.
4. Lugano Convention. The Bank did not have the much better argument that Ablyazov remained domiciled in England under Article 6(1). By July 2015 he had fled England, had no settled place of abode there and was imprisoned in France. The Bank did, however, have jurisdiction under Article 5(3) for dealings before 16 February 2012. The closest causal damage occurred in the foreign jurisdictions where the assets were located, but the conspiracy was arguably implemented through decisions and instructions issued from London before that date.
5. The application to set aside the claim form and freezing order was dismissed, subject to possible amendments to reflect the jurisdictional limits. The application for permission to cross-examine Khrapunov was deferred pending clarification of the continuing injunction and disclosure obligations.