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England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> JSC BTA Bank v Ablyazov & Ors  EWHC 2500 (Comm) (29 July 2011)
Cite as:  EWHC 2500 (Comm)
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QUEEN'S BENCH DIVISION
B e f o r e :
|JSC BTA BANK||Claimant/Respondent|
|(1) MUKHTAR ABLYAZOV|
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No: 020 7404 1400, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
MR D MATTHEWS QC and MR T GRANT and MR E HO (instructed by Stephenson Harwood) appeared on behalf of the Defendants/Applicants
Crown Copyright ©
"Justice lies in granting security because:
"(1) there are real concerns as to the claimant's stability and creditworthiness and, therefore, its ability to meet any costs award;
(2) as is also agreed the applicants will have no way to enforce any costs award even assuming the claimant can meet it, if the claimant does not pay it voluntarily. Enforcement in Kazakhstan both in principle and in practical terms will be impossible;
(3) it is said this litigation is being fought by the claimant with striking aggression, which has and will significantly continue to increase the size of the costs incurred, justifying further the need for the claimant to have the comfort of security;
(4) as the claimant sought to make clear in the stay applications the applicants say the litigation is motivated in whole or in part by political and personal undercurrents, the ultimate end of which is the political destruction of Mr Ablyazov. This is not ordinary commercial litigation for the recovery of money. Accordingly, the applicants have real concerns that, if they are successful in this litigation, the claimant will take every possible step to avoid the enforcement of any costs award."
"More vulnerable to adverse business financial and economic conditions but currently has the capacity to meet financial commitments."
"Highly speculative. B ratings indicate that material default risk is present but a limited margin of safety remains. Financial commitments are currently being met. However, capacity for continued payment is vulnerable to deterioration in the business and economic environment."
"Obligations rated B are considered speculative and are subject to high credit risk."
"I am a well known businessman in the CIS region and I am the ultimate indirect owner of companies that are involved in a wide ranging of Banking, financial investment, property investment development and other commercial activities. As I have explained above I currently hold assets in the mining, Banking commercial, real estate, shipping and tobacco sectors. In each case what I actually own, via the relevant nominee trusteeship structure, is shares in one or more holding companies, which own the trading company or companies that own the ultimate physical asset. For example, a piece of commercial real estate."
"Traditionally, security was provided by payment into court or solicitors undertakings. Nowadays, bank guarantees are the norm, provided they are from first class banks. Other forms of security are not ruled out, but they must be copper bottomed in the sense that they can be enforced in a simple and straightforward way. Otherwise, the purpose of ordering security is defeated."
"Thus, in this case, as at an earlier stage, Mr Justice Moore-Bick rejected an offer by the appellant to provide security by the deposit of share certificates in other companies in which he had an interest and this court in AP (UK) v West Midlands Fire and Civil Defence Authority  EWCA Civ 1917 rejected security in the form of a charge over property. The reason for this was put by Mr Justice Moore-Bick, in this case, when he said:
"The fact is that, if any of these shares have any realisable commercial value, it will be more appropriate for Mr Aoun to use them as counter security for a bank guarantee in favour of the defendants."
"For myself, I have never come across such a suggestion in a commercial or mercantile action. The reason for that must be that, in a normal case, if real property is sufficiently valuable to stand as security, there will be no difficulty in the claimant's procuring a bank guarantee for the purposes of security for costs by, if appropriate, granting a charge to the bank."
"In short, the matter is fraught with uncertainty and difficulty. Any attempt to execute such security would not be a simple and straightforward matter as the court intends when it makes such an order. The respondents were entitled to security which could be realised with relative ease."
"The Court of Appeal also held that Mr Ablyazov had breached the freezing injunction by his sale of interests in Omsk Bank and BTA Kazan and the investment of the proceeds of sale in AMT Bank, albeit that the breach might, if Mr Ablyazov's unsatisfactory evidence was correct, be technical in nature."
"Mr Ablyazov strenuously denies that he has failed to cooperate with the receivers. He has, in the past, raised objections to the criticisms made of him in the receiver's reports. The receivers have not engaged with him on these issues. Mr Ablyazov has and continues to do his best to cooperate with the receivers in very difficult circumstances not of his own making.
"The receivers' key criticism of Mr Ablyazov is that he has been unwilling to instruct the companies, which are subject to the extended receivership order, to comply with the receivers. This criticism ignores the fact that Mr Ablyazov's position is, that to the best of his knowledge and belief, he is not the owner of any of those companies, save for three companies which were worthless shells, so does not have the power to compel them to do anything.
"Notwithstanding the above, Mr Ablyazov asked the receivers in March 2011 to inform him what steps they wished for him to take with regard to contacting the companies which are subject to the extended receivership order, and has never received a response to this request from the receivers."