PJSC Tatneft v Gennady Bogolyubov & Ors

A freezing order does not confer security on the claimant. Its purpose is to prevent dissipation and preserve the possibility of enforcement. Ancillary disclosure is therefore directed to making the injunction effective and policing it, rather than securing the claim.

The default position under the standard worldwide freezing order is full disclosure of the defendant’s assets. Disclosure is not ordinarily limited to the value frozen. A defendant cannot select the assets disclosed and then seek to vary the order to approve that selection. Departure from full disclosure is discretionary and likely to be rare. The applicant must show that the usual order is inappropriate on the particular facts.

The claimant brought substantial fraud proceedings against four defendants and obtained a worldwide freezing order. Following service of the order, the second defendant applied to vary the ancillary disclosure obligation so that his updated asset list would constitute all disclosure required.

He argued that the assets already disclosed exceeded the frozen amount, that further disclosure was unnecessary to police the injunction, and that disclosure of assets in Russia and Ukraine created a risk of prejudice. The central issue was whether the court should limit the standard obligation of full asset disclosure and, if so, on what basis.

1. Application refused. The court declined to limit the second defendant’s disclosure obligation to the assets already identified or to the value frozen.
2. A freezing order is not security for the claim. Its purpose is to prevent dissipation of property which might be available to satisfy a future judgment. The ancillary disclosure jurisdiction under Senior Courts Act 1981, section 37.1, and Civil Procedure Rules 1998, rule 25.1(1)(g), exists where disclosure is necessary to ensure the injunction’s effectiveness.
3. The standard form worldwide freezing order requires full asset disclosure. That requirement has a freestanding function: it enables the claimant to know what assets may be available to meet a judgment. Limiting disclosure after partial disclosure would permit cherry-picking, weaken the policing function of the injunction, and undermine the contempt consequences of non-compliance.
4. The authorities, including JSC BTA Bank v Ablyazov (No 10) [2015] 1 WLR 4754, JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2016] 1 WLR 160, Motorola Credit Corp v Uzan (No 2) [2004] 1 WLR 113 and JSC BTA Bank v Solodchenko [2011] 1 WLR 888, did not support the proposed limitation. The relevant observations in Motorola were subsidiary and did not derogate from the general principle.
5. The court had discretion to vary the order, but the burden lay on the applicant. Any departure would depend on the particular facts and was likely to be rare. The defendant had not shown adequate protection, given disputed and volatile valuations, competing claims, complex holding structures and incomplete disclosure.
6. Concerns about disclosure of Russian and Ukrainian assets were insufficiently evidenced to justify withholding them. The court was, however, prepared to impose a limited confidentiality ring, excluding the claimant’s client representatives because their participation had not been shown necessary to police the order.