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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> JSC Commercial Bank Privatbank v Kolomoisky & Ors  EWHC 1445 (Ch) (14 June 2022)
Cite as:  EWHC 1445 (Ch)
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Fetter Lane, London, EC4A 1NL
B e f o r e :
| JSC COMMERCIAL BANK PRIVATBANK
|- and –
|(1) IGOR VALERYEVICH KOLOMOISKY
(2) GENNADIY BORISOVICH BOGOLYUBOV
(3) TEAMTREND LIMITED
(4) TRADE POINT AGRO LIMITED
(5) COLLYER LIMITED
(6) ROSSYN INVESTING CORP
(7) MILBERT VENTURES INC
(8) ZAO UKRTRANSITSERVICE LTD
Michael Bools QC and Geoffrey Kuehne (instructed by Fieldfisher LLP) for the First Defendant
Hearing date: 8th June 2022
Crown Copyright ©
Mr Justice Trower :
"Right to receive consideration in the amount of US$926,854,000 for the transfer to a third party of 100% interest in Kadis Holding Ltd, a Nevis company, which holds a 50% interest in Starmill Ltd, a Cypriot company, which in turn holds a 99.8% interest in PJSC Kryvyi Rih Iron Ore Combine (KZhRK), in the form of a right to receive dividends and other distributions. Mr Kolomoisky is under an obligation to transfer to Mr Bogolyubov 50% of such consideration pursuant to an agreement with Mr Bogolyubov dated 23 January 2013".
The claims made in the proceedings
"21. The defendants, including Mr Kolomoisky and Mr Bogolyubov, accept, for the purposes of this appeal, that there is a good arguable case that the bank lost approximately US$515m through these transactions and that they were orchestrated by Mr Kolomoisky and Mr Bogolyubov, using the borrowers and suppliers in the manner generally alleged by the bank. Mr Kolomoisky and Mr Bogolyubov have not themselves to date proffered any explanation for the transactions in question or sought to explain their commercial rationale, if any.
22. The judge observed in his judgment at para 25 that there was no difficulty with the bank proving a good arguable case of a fraudulent scheme. The evidence was strongly indicative of an elaborate fraud perpetrated by someone, allied to an attempt to conceal from any auditor or regulator the existence of bad debts on the bank's books, and money-laundering on a vast scale. The borrowers had no commercial track record or any substantial assets. The documentary evidence clearly demonstrated that the supply agreements were shams, and "were used as a deceptive basis on which to justify very large sums of money owing out of the bank". The artificial complexity of the recycling of funds was itself indicative of a fraudulent scheme. At para 104, the judge noted that Mr Kolomoisky and Mr Bogolyubov had admitted "a good arguable case of fraud on an epic scale"."
The KZhRK receivable
"agrees and facilitates that [the first defendant] receives as dividends, distributed profits or other payments from the KZhRK business, acceptable to the first defendant, the amount of … USD 926.854 million."
The current application
"In circumstances where a creditor in an amount of almost US$1 billion would normally be expected to be extremely proactive in seeking the payment of those monies (especially where such creditor does not have the benefit of any security), the Bank is extremely concerned that the First Defendant is apparently so ambivalent as to when (or even whether) he receives payment of the monies he is owed. One explanation for that apparent ambivalence is that the First Defendant is well aware that any cash sums paid to him would be much easier for the Bank to enforce against than an unsecured contractual right against an individual under a flimsy one-page agreement. In the absence of any contrary explanation being provided by the First Defendant, despite being offered numerous opportunities to do so, that appears to the Bank to be the most likely explanation, and it is, needless to say, a troubling one."
"...justifies the grant of a freezing injunction where it is needed to ensure that assets against which a judgment could be enforced remain available to satisfy the judgment. It has been pointed out that this principle can in an expanded form apply to any conduct which would diminish the value of assets against which a judgment could potentially be enforced, even if that conduct does not involve dealing with those assets directly…."
"So far as judicial precedent is concerned, we can say with some confidence that the jurisdiction to make a freezing order also carries with it the power to make whatever ancillary orders are necessary to make the freezing order effective: AJ Bekhor v Bilton  QB 923. This power also extends to the making of mandatory orders requiring a defendant to exercise powers, such as a power to revoke trusts: Tasarruf v Merrill Lynch  1 WLR 1721. We were not shown any authority which places explicit limits on that power."
"I have no doubt that the Court's jurisdiction to order a Mareva injunction extends to ordering that a specific asset, which might otherwise be dissipated, should be safeguarded in a particular way including, if it is money, payment into Court. The order should not be made, of course, if depriving the defendant of the immediate use of the asset would work unfairly or unjustly for him; that and other relevant matters will affect the exercise of the Court's discretion in the particular case."
"arguments over whether the injunction should be classified as prohibitory or mandatory are barren … what matters is what the practical consequences of the actual injunction are likely to be."
The claimant's submissions
The first defendant's submissions
Form of Order