BM-Bank JSC v Chernyakov & Ors

A committal application may proceed in a defendant’s absence where the defendant has unequivocally waived the right to attend. The burden remains on the applicant to prove each alleged contempt to the criminal standard. Freezing orders may extend to assets directly or indirectly controlled by the respondent, including assets held through a company. Deliberate non-disclosure, false evidence, dissipation of frozen assets and assistance in such breaches may constitute contempt where the required intention is proved. Serious and continuing breaches ordinarily justify imprisonment.

The Bank applied to commit Mr Chernyakov and Ms Erokhova for contempt arising from breaches of freezing injunctions and disclosure orders made in proceedings concerning enforcement of Russian judgments. The allegations concerned concealed bank accounts, sale proceeds, a bond, cash, corporate assets, promissory notes, transfers of funds and expenditure at Harrods. The defendants failed to attend after indicating that they would give evidence. The central issues were whether the hearing should proceed in their absence, whether the allegations were proved to the criminal standard, and what sanctions were appropriate.

1. Proceeding in absence. Applying JSC BTA Bank v Stepanov [2010] EWHC 794 (Ch), the defendants had unequivocally waived their right to attend. The hearing proceeded in their absence, but the Bank retained the burden of proving each allegation to the criminal standard.
2. Liability. Mr Chernyakov was found to have deliberately failed to disclose bank statements, sale proceeds, an ICD bond, cash and transferred funds. Ms Erokhova assisted one breach, failed to disclose promissory notes and a Harrods credit, and spent funds in breach of her injunction. Allegations concerning the German property interests and the Tagore promissory note were not proved.
3. Freezing-order scope. The order covered assets directly or indirectly controlled by the respondent, including assets held through a separate company. The court relied on JSC BTA Bank v Ablyazov (No 10) [2015] 1 WLR 4754 (SC) and Yossifoff v Donnerstein [2015] EWHC 3357 (Ch).
4. Sanction. Following JSC BTA Bank v Solodchenko (No 2) [2011] EWCA Civ 1241, Mr Chernyakov was sentenced to two years’ imprisonment and Ms Erokhova to four months’ imprisonment. Both were given liberty to seek relief connected with purging contempt.