JSC BTA Bank v Khrapunov

Unlawful means conspiracy imposes primary liability. The unlawful means need not be independently actionable. Criminal conduct, including criminal contempt of court, may suffice where it is the instrument by which harm is intentionally inflicted on the claimant, rather than conduct merely incidental to that harm.

The absence of a standalone right of action for contempt does not create a public policy immunity from a distinct tort whose elements are otherwise established.

Under article 5(3) of the Lugano Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters 2007, domestic law identifies the legally relevant conduct, but the jurisdictional expression receives an autonomous interpretation. The causal event is the originating harmful event which sets the tort in motion. For conspiracy, that event may be the conspiratorial agreement rather than its later implementation.

The respondent bank alleged that Mr Khrapunov had agreed in England with Mr Ablyazov to conceal and dissipate assets subject to freezing and receivership orders. The alleged unlawful means were repeated criminal contempts of court. Mr Khrapunov, who was domiciled in Switzerland, challenged the existence of the pleaded tort and the jurisdiction of the English court.

Teare J rejected reliance on article 6 of the Lugano Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters 2007. For article 5(3), he treated the implementation of the conspiracy, rather than the agreement, as the event giving rise to the damage. The Court of Appeal, [2017] EWCA Civ 40, held that the agreement made in England was the relevant causal event.

The issues before the Supreme Court were whether criminal contempt could constitute unlawful means for conspiracy, whether public policy precluded the claim, and whether the agreement in England founded special jurisdiction under article 5(3).

1. Disposition. The Supreme Court unanimously dismissed Mr Khrapunov’s appeal. Lord Sumption and Lord Lloyd-Jones delivered a joint judgment with which Lord Mance, Lord Hodge and Lord Briggs agreed.
2. Nature of unlawful means conspiracy. Conspiracy is a tort of primary liability and not merely a form of joint tortfeasance or secondary liability. Once the combination has caused loss, the conspiracy is independently actionable. The legal character of the overt acts may therefore be altered by the fact of combination. It was unnecessary for the unlawful means to be independently actionable by the claimant. The contrary condition applicable to a different economic tort in OBG Ltd v Allan [2008] AC 1 did not govern conspiracy.
3. Criminal contempt as unlawful means. The governing question was whether there was a just cause or excuse for combining to use the unlawful means. That depended upon the nature of the unlawfulness and its relationship with the damage. Applying Revenue and Customs Comrs v Total Network SL [2008] 1 AC 1174, criminal conduct could constitute unlawful means although it created no independent cause of action. It had to be the instrument by which harm was intentionally inflicted, rather than conduct merely incidental to that harm. The alleged contempts were directed at defeating the Bank’s enforcement rights. The benefit intended for Mr Ablyazov was concomitant with the Bank’s loss, so injury to the Bank was necessarily intended.
4. No preclusionary rule. The authorities suggesting that contempt does not itself confer a private right did not establish a public policy immunity from other civil liability. An absence of a standalone right is different from a rule precluding an otherwise complete cause of action. Genuine immunities, such as witness immunity, apply irrespective of the legal label attached to the claim. Contempt has no equivalent immunity. The pleaded allegations therefore disclosed a good cause of action for conspiracy. The Court left open whether contempt is independently actionable without a distinct cause of action.
5. Jurisdiction. Article 5(3) of the Lugano Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters 2007 required an autonomous interpretation. Domestic law nevertheless identified the legally relevant conduct and determined whether an event was harmful. The causal event was the originating event which set the tort in motion, without a comparative assessment of every event’s causal impact. In an unlawful means conspiracy, the agreement encouraged and procured the unlawful acts subsequently committed pursuant to it. Consistently with Cartel Damage Claims (CDC) Hydrogen Peroxide SA v Akzo Nobel NV Case C-352/13, the agreement made in England, rather than its implementation abroad, was the event giving rise to and at the origin of the damage. The English court therefore had jurisdiction.

• United Kingdom Supreme Court: In JSC BTA Bank v Khrapunov [2018] UKSC 19 , the court unanimously dismissed Mr Khrapunov’s appeal and upheld the Court of Appeal’s conclusion that the agreement in England founded jurisdiction under article 5(3) of the Lugano Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters 2007.
• Court of Appeal: In [2017] EWCA Civ 40 , the court held that the conspiratorial agreement in England was the event giving rise to the damage. It also upheld the rejection of the Bank’s reliance on article 6.
• High Court: Teare J rejected reliance on article 6 and the contention that the damage occurred in England. He treated the implementation of the conspiracy through decisions and instructions as the relevant causal event under article 5(3), rather than the agreement itself.