JSC BTA Bank v Ablyazov & Anor

The court may order disclosure of the source of legal-expense funding to police a worldwide freezing order. The applicant must show grounds for believing that there is a real, rather than fanciful, risk that the order may be breached. No fixed evidential threshold, such as a strong case or likelihood of breach, is required. The strength of the evidence is a discretionary factor, to be weighed with competing considerations. The court must protect the effectiveness of its orders while guarding against oppression. It may consider underlying evidence recorded in an earlier judgment, but cannot simply adopt findings made in litigation to which the affected party was not privy.

The Bank applied for an order requiring Mr Khrapunov to disclose further details and supporting documents concerning the funding of his legal expenses. He said that his mother was paying them from her own resources. The Bank argued that the funds might instead derive from assets of Mr Ablyazov, concealed through nominees, or from undisclosed assets of Mr Khrapunov.

Both men were subject to worldwide freezing orders. The application was not for committal and the court was not asked to determine whether either order had in fact been breached. The central questions were whether there were sufficient grounds to order disclosure for the effective policing of the freezing orders, and how earlier judgments and evidence should be treated.

1. Jurisdiction and threshold. The court had jurisdiction to order disclosure concerning the source of legal-expense funding where this was necessary to ensure that a freezing order was effective. The applicant had to establish adequate grounds for the order. The relevant threshold was a real, rather than fanciful, risk that the injunction might be being broken. No separate requirement of a strong case or likelihood of breach applied. The strength of the evidence was a factor in the discretionary balance.
2. Earlier judgments. The court could not rely on a bare finding in earlier litigation to which Mr Khrapunov was not a party or privy. It had to decide on the evidence before it. It could, however, consider the substance of the underlying documents and witness evidence recorded in those judgments, giving it appropriate weight and allowing Mr Khrapunov to challenge it.
3. Application. The evidence raised a real risk that funds belonging to Mr Ablyazov might have been channelled to Mr Khrapunov’s mother or to Vilder Company SA. The Court of Appeal’s findings also gave rise to a good arguable case that Mr Khrapunov had hidden assets of his own or within his control. Either basis independently justified disclosure.
4. The need to maintain the effectiveness of the freezing orders outweighed the risk of oppression. A confidentiality club appropriately protected the mother’s interests. The order was just and convenient, but did not itself amount to a finding that either freezing order had been breached.