National Bank Trust v Yurov

On consequential matters after judgment for damages, the court may permit collateral use of information obtained under a freezing order where there are cogent and persuasive reasons and the use will not cause injustice to the disclosing party. Post-judgment enforcement of findings of civil fraud, including in foreign jurisdictions, supplies a strong public interest in favour of release and international judicial co-operation.

A freezing order is not intended to provide security for a claimant or create an untouchable fund. A defendant ordinarily may use frozen assets for reasonable living and legal expenses, but bears the burden of persuading the court that no other assets or sources of payment are available. The court must assess the overall justice of the case. Where credible evidence shows that third-party assets, including those of a spouse, are available, an allowance may properly be refused, subject to liberty to apply.

The hearing concerned consequential orders following the court’s earlier judgment, [2020] EWHC 100 (Comm), in which National Bank Trust succeeded in claims against the defendants and judgment was entered for approximately US$900 million.

The court considered applications concerning a non-party’s request for a disclaimer, the wording of declaratory and enforcement orders, release of the cross-undertaking in damages, collateral use of information disclosed under a worldwide freezing order, the form of relief against one defendant’s wife, and allowances for living and legal expenses.

The central issues were whether disclosed material could be used in civil enforcement proceedings in Switzerland and other jurisdictions, and what exceptions should be included in the post-judgment freezing order.

1. Bank Winter. Bank Winter was not a party, was not represented at trial and gave no evidence. The findings concerning it were necessary to determine the claims against the defendants. They did not bind Bank Winter, and no supplemental disclaimer or costs order was required.
2. Collateral use. The court adopted the principles stated in ACL Netherlands BV v Lynch, including the approach derived from Crest Homes Plc v Marks: the applicant must establish special circumstances amounting to cogent and persuasive reasons for collateral use, and must show that release or modification will not cause injustice to the person who disclosed the material. The public interest in discovering the truth and in investigating serious fraud is relevant.
3. The post-judgment enforcement of an English judgment following serious findings of civil fraud constituted a very strong public interest. International co-operation between courts supported permitting the Bank to use material disclosed under the 2016 worldwide freezing order in civil enforcement proceedings in Switzerland. The risk of injustice to Mr Fetisov was theoretical and minimal. The application was therefore granted, including as against him.
4. Freezing-order expenses. The ordinary position is that a natural person should have provision for living expenses and reasonable legal costs, unless other available assets or sources of payment exist. The defendant bears the burden of persuasion, but the ultimate question is the overall justice of allowing payment from frozen funds. That assessment may include the availability of assistance from spouses or other third parties.
5. Mr Yurov and Mr Fetisov had produced no evidence that their wives’ assets were unavailable or that their claims would be stifled. No provision was therefore made for their living or legal expenses, although liberty to apply was granted if proper evidence were later produced. Mr Belyaev was allowed £17,000 initially, subject to further evidence and possible revision.
6. Ms Pischulina was not continued under a broad post-judgment freezing order because an undertaking and associated caution would provide adequate protection. The Bank’s cross-undertaking was released against all defendants. The remaining consequential orders were made accordingly.

The judgment followed the court’s earlier merits judgment dated 23 January 2020, reported at [2020] EWHC 100 (Comm). It was a consequential hearing in the same proceedings.