JSC Commercial Bank Privatbank v Igot Valeryvich Kolomoisky & Ors.

Further disclosure may be ordered where it is necessary and practically useful to police a freezing order and is proportionate to that purpose. The disclosure obligation need not mirror the assets voluntarily disclosed previously, particularly where the freezing order reaches assets held or controlled through non-trading companies or corporate structures. Payments made in respect of a defendant’s interest in an underlying asset include income paid to another person or entity where the payment derives from that interest. The court must assess necessity, practicality, proportionality and prejudice separately for each defendant. An obligation may appropriately be qualified by requiring all reasonable steps and reasonable enquiries, without requiring legal proceedings.

The claimant sought enforcement and extension of an existing worldwide freezing order, together with further disclosure from the first and second defendants. The form of the freezing-order relief was agreed. Three issues remained concerning disclosure of income derived from specified assets, bank accounts with balances exceeding £1 million, and whether the defendants’ obligations should be absolute or limited by a reasonable-steps and reasonable-enquiries qualification.

The central questions were whether the proposed disclosure was necessary to police the freezing order, whether it was proportionate and practically useful, and how the burden and prejudice should be assessed for each defendant.

1. Disclosure and policing. A freezing order normally requires disclosure to make it effective and capable of being properly policed. Further disclosure may be ordered where it has practical utility, assists enforcement or compliance, and is necessary and proportionate. The court must guard against disclosure being sought for collateral purposes.
2. Income derived from interests. The relevant freezing-order definition of assets included assets of non-trading companies and assets held or controlled in accordance with a defendant’s direct or indirect instructions. The disclosure obligation therefore extended to dividends, distributions and other income derived from the first defendant’s interests in the specified assets, even where payments were made to a company or another person rather than directly to him.
3. The phrase payment made in respect of an interest was sufficiently clear. It concerned income derived from the defendant’s direct or indirect investment, rather than payments made in the ordinary day-to-day operations of the underlying businesses. The £1 million aggregate threshold was a sensible and proportionate limitation.
4. Bank accounts. Disclosure of bank accounts holding more than £1 million was necessary and proportionate for both defendants. Such accounts were readily identifiable, liquid and transferable, and fell within the relevant freezing-order definition where held or controlled in accordance with the defendants’ instructions. The order was targeted and did not amount to a general reopening of asset disclosure.
5. Individual assessment and qualification. Necessity, practicality, proportionality and prejudice had to be considered separately for each defendant. The appropriate balance was to require both defendants to take all reasonable steps and make all reasonable enquiries, including contacting persons able to assist, but without requiring them to commence legal proceedings.
6. The claimant’s proposed disclosure wording was therefore justified, subject to the reasonable-steps and reasonable-enquiries qualification. The court ruled on the form of the order accordingly.

First-instance decision concerning the form of further disclosure and enforcement relief under an existing worldwide freezing order.