PJSC National Bank Trust & Anor v Mints & Ors

A worldwide freezing order requires solid evidence of an objectively real risk that a future judgment will be defeated by unjustified dissipation of assets. Dishonesty alone is insufficient, but the nature, scale and method of dishonest transactions may support the necessary inference. Evidence of dissipation by companies may be relevant against those who control them. Transfers of assets after notice of threatened proceedings are prima facie dissipation, unless satisfactorily explained and shown to be for full value. Delay is a factor, not an automatic bar. The court must assess the evidence cumulatively and decide whether relief remains just and convenient.

Russian banks brought fraud claims against four members of the Mints family and obtained a worldwide freezing order without notice. At the return hearing, the first three defendants opposed continuation, arguing that the banks had not shown a real risk of dissipation and had delayed in seeking relief. The alleged fraud involved replacing secured, performing loans with long-term, illiquid bonds and subsequently transferring or distributing assets formerly available as security.

The court considered whether the evidence established a real risk of unjustified dissipation, whether conduct by companies controlled by the defendants could be relied upon against them, and what effect should be given to delay.

1. The freezing order continued. The court held that the Claimants had established a real risk of unjustified dissipation by solid evidence. The order was continued, subject to its replacement by undertakings.
2. The applicable principles, summarised in Fundo Soberano De Angola v Santos [2018] EWHC 2199 (Comm), required an objectively judged real risk that a future judgment would not be met because assets had been concealed or transferred. The risk had to be established separately against each respondent. A good arguable case of dishonesty was insufficient by itself; the nature of the dishonesty had to point to likely dissipation. Offshore structures were relevant but not conclusive, and legitimate dealings in the ordinary course of business were not to be restrained.
3. The burden remained on the applicant. As explained in Holyoake and another v Candy and others [2017] EWCA Civ 92, the applicant had to provide material from which a real risk could be inferred before the respondent was expected to provide an explanation.
4. The replacement transactions were capable of supporting the inference. They removed valuable security and replaced it with illiquid, unmarketable and substantially less advantageous bonds. Their scale, complexity and use of multiple entities and jurisdictions reinforced the inference, consistently with VTB Capital Plc v Nutritek International Corporation [2012] EWCA Civ 808.
5. Transfers of the released shares to another group company after notice of proceedings were prima facie classic dissipation. The fact that the group as a whole might not have lost assets was irrelevant. The transfers were not justified without evidence of full value or a commercial benefit to the transferors.
6. Evidence of dissipation by companies could be relevant evidence against their controllers. The Nori capital reduction and payment of approximately US$200 million to its shareholder provided further solid evidence, particularly in the absence of an explanation.
7. Delay did not bar relief. The court applied the approach in JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2015] EWCA Civ 906 and Madoff Securities International Ltd v Raven [2011] EWHC 3102 (Comm). The relevant question remained whether a real risk existed when the application was made. There was no requirement to identify very recent dissipatory transactions. Delay was assessed with all the evidence and did not make relief futile or unjust.
8. Once sufficient material supported an inference of risk, the defendants had to provide satisfactory explanations or positive evidence showing that no real risk remained. They had provided neither.

First-instance decision. The judgment records that Moulder J. granted the worldwide freezing order on 27 June 2019. This court continued the order at the return hearing, subject to its replacement by undertakings.