BAILII [Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]

England and Wales High Court (Commercial Court) Decisions


You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> PJSC Tatneft v Gennady Bogolyubov & Ors [2018] EWHC 1314 (Comm) (10 May 2018)
URL: http://www.bailii.org/ew/cases/EWHC/Comm/2018/1314.html
Cite as: [2018] 1 WLR 5705, [2018] WLR 5705, [2018] WLR(D) 431, [2018] EWHC 1314 (Comm)

[New search] [Context] [View without highlighting] [Printable RTF version] [View ICLR summary: [2018] WLR(D) 431] [Buy ICLR report: [2018] 1 WLR 5705] [Help]


Neutral Citation Number: [2018] EWHC 1314 (Comm)
Case No: CL-2016-000172

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

Royal Courts of Justice
Strand, London, WC2A 2LL
10/05/2018

B e f o r e :

THE HONOURABLE MRS JUSTICE COCKERILL
____________________

PJSC Tatneft
Claimant
- and -

Gennady Bogolyubov & Ors
Defendant

____________________

Paul McGrath QC, James Sheehan (instructed by Akin Gump LLP) for the Claimant
Mark Howard QC, Ruth Den Besten (instructed by Fieldfisher LLP) for the Defendant
Hearing dates: 9th May, 10th May

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    [NOTE: As the hearing of this matter was in private some parts of the judgment have been edited to maintain confidentiality]

    Mrs Justice Cockerill :

  1. This is an application to vary a worldwide freezing order which is brought by the applicant, the second defendant to the action, Mr Kolomoisky. It is brought in relation to a freezing injunction obtained by the claimant and respondent, PJSC Tatneft ("Tatneft").
  2. Tatneft is a producer of crude oil located in Tatarstan, Russia, which is part-owned by the government of Tatarstan, which is a member of the Russian Federation, which also holds a controlling or golden share in Tatneft.
  3. The proceedings in this case were issued on 23 March 2016, claiming damages in the sum of $334 million from four individual defendants, including Mr Kolomoisky. In essence, the allegations are that the defendants were, in 2009, involved in a fraudulent scheme to divert payments for oil supplied by Tatneft in 2007 by a series of intermediaries: Taiz, Tekhnoprogress, Avto and Suvar-Kazan LLP to a Ukrainian company, UTN, which operates the Kremenchuk oil refinery in the Ukraine. Tatneft claims to act in these proceedings, pursuant to an agreement dated 22 October 2015 as the assignee of claims belonging to the Suvar-Kazan LLP company, which has now been liquidated.
  4. The relevant procedural history of this case is as follows. By an application notice dated 16 March 2016 Tatneft applied without notice for a worldwide freezing relief prohibiting each of the defendants from disposing or dealing with their assets up to the limit of $380 million, comprising $334 million of damages, $34.3 million of interest and $11.5 million of costs.
  5. On 22 March 2016 that application came in front of Mr Justice Teare. He made the worldwide freezing order sought by Tatneft pending a return date on 22 April 2016.
  6. Mr Justice Teare ordered disclosure of all the defendants' assets exceeding 10,000 in value and however held, worldwide, such disclosure to be made within 48 hours of service and confirmed on affidavit within seven days, and he granted permission to delay service and notification of the worldwide freezing order to permit Tatneft to obtain ancillary freezing orders in other jurisdictions.
  7. In the event, as has been mentioned in front of me, there was some delay in effecting service on Mr Kolomoisky. Mr Kolomoisky was notified of the WFO informally. There was then some debate as to whether he should comply with the initial asset disclosure, if and insofar as Tatneft considered that he had been served with the worldwide freezing order, and it was indicated that Akin Gump, acting for the claimants, considered that any compliance with that request for disclosure to be premature on the basis that the worldwide freezing order had not been served on Mr Kolomoisky and that position was reiterated at the return date on 22 April.
  8. On 22 April, Mr Justice Teare continued the worldwide freezing order and it was continued again on 12 May and 30 June 2016. At all of these dates Mr Kolomoisky had not been served with the worldwide freezing order, so he was not present and did not participate.
  9. It became apparent that the defendants who had been served intended to apply to discharge the worldwide freezing order and either to challenge jurisdiction or seek reverse summary judgment. Those applications were listed to be heard with a further return date as against Mr Kolomoisky in October 2016. That has been referred to as "the effective return date".
  10. During this period the claimants were trying to achieve service via the Foreign Process Section, Russia being a Hague Service Convention country.
  11. On 15 July 2016 Akin Gump proposed that service be effected by arrangement or otherwise by way of substituted service on Mr Kolomoisky's solicitors. That was, they said, to ensure that he was served in good time to enable preparation of the discharge application or jurisdictional challenge that he might wish to make.
  12. In the event, service was made by arrangement on 5 August 2016. A consent order was entered into containing provision for service to be effected upon him on or before 9 September 2016 or otherwise by alternative means on his solicitors, and service duly followed.
  13. So, following the service of the worldwide freezing order, Mr Kolomoisky gave disclosure in his first asset list. That stated that he had assets worth far in excess of the maximum sum frozen. On the same date he issued this application for an order varying the worldwide freezing order to provide that the asset list comprised the full disclosure of assets that he was required to make. He also filed and served evidence in support of that application.
  14. Akin Gump proposed that the variation application be adjourned until after the effective return date. That took place between 7 and 13 October 2016. On 8 November 2016 Mr Justice Picken upheld Mr Kolomoisky's jurisdictional challenge on the basis that there was no serious issue to be tried and ordered the discharge of the worldwide freezing order, such discharge to be stayed pending an application for permission to appeal to the Court of Appeal, on terms that Mr Kolomoisky would be under no obligation to provide any further disclosure pending that.
  15. He also revised the limit in the freezing order downwards from $380 million to $200 million with immediate effect in the light of the position in respect of quantum, as discussed at the hearing before him. In particular, he accepted Mr Kolomoisky's submission that the maximum value of Tatneft's claim was, on its own case, $294.2 million, of which $105.3 million had already been recovered.
  16. So, the stay extended for over a year pending the rolled-up hearing of the application for permission to appeal and the appeals to the Court of Appeal.
  17. On 14 November 2017 the Court of Appeal overturned the judgment of Mr Justice Picken and ordered that Mr Kolomoisky's challenge to the jurisdiction and application to discharge the worldwide freezing order should be dismissed. That meant that the worldwide freezing order was reinstated subject to the downward revision of the limit, as set out in the order of Mr Justice Picken, to which no challenges have been made.
  18. Further permission to appeal was sought by the defendants from the Supreme Court but that application was refused in March of this year.
  19. On 14 November the Court of Appeal also directed the variation application to be heard urgently. On 27 November 2017 the application was issued and an updated asset list supported by Mr Kolomoisky's second affidavit was served, together with an application to amend the variation application to seek an order that the updated asset list comprised the disclosure which he was required to make and, by agreement of the parties, Tatneft subsequently served evidence. The hearing before me is the hearing of that variation application.
  20. So, the starting point for me today is that in the light of the procedural history, Tatneft has established that there is a good arguable case that it, as assignee, is the victim of a substantial fraud perpetrated in part by the second defendant, Mr Kolomoisky.
  21. Tatneft has also established to the requisite standard that unless its assets are frozen, there exists a real risk that Mr Kolomoisky will take steps to dissipate the assets to defeat or at least render more difficult any subsequent enforcement of a judgment in favour of the claimants.
  22. It has been made very clear to me that Mr Kolomoisky, disputes the merits of the claim. In his skeleton argument he sets out an outline of his defence to the allegations made. I will just summarise those briefly, but he says, firstly, that Tatneft has no standing to bring the present proceedings, in that there was no valid assignment. He says that the matters to which the claims relate were substantially settled by agreement in 2008. He says that the assignment agreement, which is the settlement to which I have just referred, formed the basis of a series of judgments which were entered in favour of the party through whom Tatneft claims in Russia. These are known as the Tatarstan judgments and an enforcement order pursuant to which that party recovered $105 million has already been made, and Tatneft is thus estopped from re-litigating matters which have been disposed of by the Russian courts.
  23. He says that Tatneft's claims are made under Article 106.4 of the Russian Civil Code and that there is an issue of principle as to whether that provision applies to an economic tort, such as the Tatneft claims, and whether it can be used to pierce the corporate veil, and that in any event Tatneft is unable to demonstrate the requisite elements of harm, unlawful acts, specific and direct causation and intent to harm.
  24. He says that UTN was intended to be a joint venture between the Republic of Tatarstan and the Ukrainian Government, that there was a change in the management of UTN and that the decision not to pay Tatneft was not one taken by the individual defendants but was a decision of UTN, and that was taken prior to the unlawful events which are said to have occurred only from March 2009. He also says there was never any relevant intention to harm the party through whom Tatneft claims, and he also says that Tatneft's claim is time-barred, the applicable limitation period under Russian law being three years, and the proceedings having been issued in March 2016, the relevant knowledge being in place in December 2009.
  25. The claimant in this case says that there is almost no attempt to explain the central elements of the scheme or put forward any justification for Mr Kolomoisky's role in it. It says that he has been compelled to admit much of his role in what they describe as the scheme, and the arguments which are put forward at this stage are to some extent re-runs of arguments which were deployed in the strike-out application and which were found to lack merit in that context.
  26. Again, however, this is neither here nor there in the current context. This is not a set aside application but a variation application, and I must therefore proceed on the basis that the requirements for the injunction are met.
  27. So, I note that Mr Kolomoisky says that he has a good defence to the claim but that is the basis on which I must proceed. I can properly consider the fact that the claim has been carefully sifted, both on the strike-out application and in the Court of Appeal, and that while Mr Justice Picken decided that the claim was not viable, the Court of Appeal reached the opposite conclusion.
  28. The application is for a variation, as I have said. The essence of that application is that the worldwide freezing order be varied to provide that the updated asset list shall constitute the only disclosure of assets that Mr Kolomoisky is required to make under paragraph 9.1 of the freezing order, for the duration of these proceedings or further order of the court.
  29. That application is made pursuant to paragraph 13 of the order, and under CPR 3.17, or as part of the court's inherent jurisdiction, both of which give power to vary the terms of the worldwide freezing order.
  30. At the hearing before me possible variants to the order sought have been put forward in the course of argument, both as to limiting disclosure geographically and also as to the imposition of a confidentiality club over some at least of the disclosure. I will come to those in due course, but the application as originally made was simple, that there be a variation to say that no further disclosure is necessary.
  31. The backdrop to the application, and the underpinning to what was fundamentally said, is to be found in the purpose of the freezing order regime. The relevant law in this regard has been summarised in the applicant's skeleton argument, where it is noted that it is well established that a freezing order does not create any propriety or security interest in or over the defendant's assets, its purpose being to guard against the defendant acting artificially to create a situation in which the claimant cannot obtain satisfaction of any judgment he may obtain.
  32. The principle was affirmed by the Supreme Court in JSC BTA Bank v Ablyazov (No 10) [2015] 1 WLR 4754 by Lord Clarke at paragraph 20:
  33. "The purpose of a freezing order is to stop the injunctive defendant from dissipating or disposing of property which could be the subject of enforcement if the claimant goes on to win the case it has brought, and not to give security for his claim."
  34. The particular jurisdiction which is in issue in this case is the jurisdiction to give an ancillary order for disclosure. That arises under section 37.1 of the Senior Courts Act 1981 and/or CPR 25.1(1)(g) to make an order for ancillary disclosure if it is satisfied that it is necessary to do so to ensure the effectiveness of the freezing order. That is noted in the Court of Appeal decision in JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2016] 1 WLR 160 by Lord Justice Lewison at paragraph 47:
  35. "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."
  36. It is submitted on behalf of Mr Kolomoisky that that asset disclosure order should only be made in order, to the extent necessary, to allow the claimant to police the injunction. It refers me to the case of Grupo Torras SA v Al-Sabah [2014] 2 CLC 636 where Lord Justice Steyn held, at page 644:
  37. "When rarely and in exceptional cases a worldwide Mareva is granted, a disclosure order will usually follow. On the other hand, I would emphasise that a disclosure order should only be made for a purpose for which the power exists, namely to police the Mareva injunction."

  38. My attention was also drawn to the dictum of Lord Justice Neale in Derby v Weldon Nos 3 and 4, [1990] Ch 65, that an order for disclosure:
  39. "... being ancillary to the Mareva injunction should not go beyond the ambit of the injunction."
  40. This point was made by reference to the case of AJ Bekhor v Bilton [1981] 1 QB 923 at 942, where the court said, "The courts must be vigilant to ensure that the Mareva defendant is not treated like a judgment debtor."
  41. The applicant says that it follows from these authorities that once sufficient assets have been disclosed to the claimant such as to enable him to police assets equating to the value of the freezing order, the claimant has all the protection that he is entitled to or needs to receive as a result of having obtained the freezing order. In such circumstances, further disclosure is not "necessary" to ensure that the freezing order is effective and the court ought not to grant it.
  42. The applicant also prays in aid the authorities in the slightly different context of suspension of disclosure provisions pending an application to discharge the order if the balance of prejudice is against the defendant providing disclosure. Such authority is as Raja v van Hoogstraten 10 [2004] EWCA Civ 968 by Lord Justice Chadwick at 105.
  43. My attention was also drawn to the authority of Motorola Credit Corp v Uzan (No 2) [2004] 1 WLR 113. This is an authority which was cited by Tatneft but on which the applicant also relied. My attention was drawn to the passages from paragraphs 142 onwards in relation to, there, the question of cross-examination of a defendant on his affidavit of assets.
  44. In that case a rather similar submission was made: that once assets of more than the limit frozen had been disclosed, no legitimate purpose was served by ordering cross-examination to discover whether there were further undisclosed assets, and as the defendants were free to deal with their assets in excess of the freezing limit, they should not have been required to disclose assets in excess of that value and the disclosure orders should have been varied.
  45. The court in that case noted, at paragraph 143, that there was no English authority to support that submission, but noted that there was an authority of the Supreme Court of Western Australia in Deputy Commissioner of Taxation v Hickey (1996) 33 ATR 453. In that case the judge in that case refused to order cross-examination of a defendant subject to a worldwide freezing order who had disclosed sufficient assets within the jurisdiction to satisfy the claim. The judge said that the cross-examination of a defendant cannot be said to be necessary for the protection of the claimant's rights.
  46. The court went on then to cite the case of Yukong Lines of Korea v Rendsburg, 22 October 1996; Court of Appeal (Civil Division) Transcript No 1285 of 1996 where Lord Justice Phillips said that in relation to the discretion to cross-examine, the test is:
  47. "... whether in all the circumstances it is both just and convenient to make the order. There are no hard and fast rules and certainly no rule which precludes an order for cross-examination."
  48. That is prayed in aid here as being effectively a parallel test.
  49. My attention was also drawn to paragraph 144-5 of the Motorola case where the court said that the particular case which was in front of it was a case where, for the purposes of argument, the claimant was prepared to accept that the defendants had disclosed assets of more than the freezer limit, but those assets consisted largely of shareholdings in a network of family-controlled Turkish companies, including those directly involved in this case, but those were anything but effectively frozen and it was most unlikely that the claimant could satisfy any judgment against such assets.
  50. The applicant said that this case was therefore not at all akin to the situation in Motorola Credit Corporation v Uzan No 2 because here we were not looking at a case of assets which are cherry-picked; these are all assets which were effectively frozen, and these were assets available for execution.
  51. The applicant in his skeleton said that even if some ancillary asset disclosure is required to be made by Mr Kolomoisky, that disclosure is only necessary up to the limit, and that was recognised by Tatneft when making its application for the worldwide freezing order. The applicant prayed in aid the fact that in the skeleton argument in support of the application for the worldwide freezing order, Tatneft indicated that:
  52. "The claimant seeks disclosure under CPR rule 25.1(1)(g) in relation to the value and location of D1 to D4's assets, up to the value of $380 million. Such an order is now commonplace to ensure that a freezing order is effective ..."
  53. It was said on behalf of the applicant that the discrepancy between this statement and the draft freezing order supplied to and then made by the court was never explained. It was also submitted in the succeeding passage in the skeleton that the inclusion of the unrestricted order suggested that the right approach generally in relation to freezing orders was only to freeze up to the limit of the freezing order sought.
  54. Orally, in front of me, the applicant did not quite say that the orders for disclosure should never have been made for an amount beyond the limit of the freezing injunction, because it accepted that in order to police the order effectively, it may be necessary to know what there is to police.
  55. The thrust of the argument that was advanced before me was more to the effect that when disclosure has been made and goes above the headline figure, a question will arise as to whether more disclosure is necessary, and that was the case here. It was said the correct question for the court in that situation is to ask: are the claimants adequately protected by the disclosure that they have; is more disclosure necessary?
  56. It was submitted that in those circumstances, the claimant's interest only goes to knowing assets to the limit of the injunction and that is all that is necessary to make the injunction effective, particularly in the light of the freedom to deal with matters in the course of business, given that those assets, if disposed of, will still be frozen as the proceeds of the disposal. It was said that giving disclosure of more than the amount frozen in fact confuses the position of the beneficiary of the injunction with the position of a judgment creditor, and that was said to be the fundamental flaw in the argument advanced on behalf of Tatneft.
  57. It was also suggested that to the extent that further security was needed on the part of the claimant, such security could be given, for example, by incorporating a notice of intention to deal with particular assets or, bearing in mind the fact that values can go up and down, a liberty to apply provision, which it was noted is not in the standard form order. Liberty to apply in the standard form order is only in favour of the defendant. But there could be a liberty to apply to the claimants to seek further disclosure and to freeze further assets.
  58. Tatneft says that this argument ignores the fact that the disclosure obligations imposed on the second defendant are the standard form ancillary disclosure obligations required under a typical worldwide freezing order. That follows the standard form of the order prescribed by the Commercial Court Guide and by CPR part 25. The relevant part of the order has been in place, I am told, since the standard form was first introduced in 1994. Tatneft says that for nearly 25 years full disclosure has been the norm; there is no good reason for any change of principle now.
  59. It also submits that to do this would be out of step with developments in the jurisdiction, which have been not to adopt a more lax approach towards freezing injunctions, but rather the contrary. To adapt to the increasing complexity with which fraudsters hold and administer their assets the trend has been firmly in favour of increased powers and protections under the order, and my attention has been drawn to the various changes which have taken place in the order over the years in relation to the standard definition of the respondent's assets, to encompass assets in which the respondent only had a legal interest, to recognise that the court can in fact extend to appointment of a receiver over a power to revoke a trust which was merely tantamount to ownership, and that in Pugachev where the Court of Appeal confirmed that there was a power to order disclosure of assets in which the respondent had not been shown to have a legal or beneficial interest, as ancillary to the freezing order jurisdiction.
  60. Throughout all these developments Tatneft says the standard requirement of full asset disclosure has remained constant. The second defendant's application, the claimant says, goes firmly against this grain and is, in effect, contrary to both principle and to the direction of travel.
  61. It says that any move away would undercut the reason for the existence of an obligation to make full asset disclosure, which is to enable the worldwide freezing order to be policed and to make the freezing order relief effective; in other words, to give it teeth, as was said in Motorola Credit Corporation v Uzan (No 1) [2002] 1 All ER (Comm) 945 at 29.
  62. It submits that the quid pro quo for the fact that the order does not give security to a claimant when a real risk of dissipation has been established is this oversight which the full disclosure gives over all the defendant's assets. It is said that without this visibility a claimant will not know what assets are caught by the injunction and cannot police it.
  63. It adds that this purpose is even more important in circumstances such as the present, where the claim is substantial in value and there is a complex offshore structure and entities to hold assets in many different jurisdictions. It says that the approach advocated for the applicant is unworkable because it could only conceivably work if security which it is well established does not exist were to exist, so for example, if the disclosure of the assets somehow ring-fenced those assets for the purposes of future enforcement.
  64. In fact, of course, the claimant in this case stands alongside other creditors, and the worldwide freezing order is no bar to other creditors enforcing ahead of them should they be in a position to do so.
  65. Another circumstance in which it was said it might be possible for the applicant's approach to work, is if there could be no element of cherry-picking, because otherwise one is in the territory highlighted by Lord Justice Potter in the second Motorola case, to which I have already referred, where he said at [146] that:
  66. "The purpose of disclosure is to make the freezing order effective. In the ordinary way, a defendant is required to disclose all his assets above a certain value. This is because if he can choose which assets to disclose, he is likely to choose those which are the least available or accessible to the claimant for the purposes of execution."
  67. Tatneft says that the usual effect of a freezing order is to enable a defendant to deal with any given asset he has disclosed, so long as his total assets remain in excess of the minimum sum and in that sense the order is ambulatory, and the fact that particular assets may be identified does not alter the fact that the freezing order does not act as a pre-trial attachment.
  68. Tatneft also highlights the fact that essentially because there is no security in the order as made, there is an alternative, which is payment in. It says that there is no injustice in requiring a respondent such as the second defendant to make full disclosure of all his assets, given that he may avoid that and procure the automatic discharge of the injunction by paying the maximum sum into court by way of security. There is express provision for this in the standard form or for provision of alternative security by agreement. Or he can apply to vary the freezing order to allow assets to be realised and their proceeds paid in to court.
  69. Tatneft says it is notable that the second defendant has not provided security in this way, despite his claims to be an extremely wealthy man, and has instead chosen to pursue this route, first to discharge or attempt to discharge the worldwide freezing order and, secondly, to seek a very substantial limitation.
  70. Tatneft says that there is no reason of principle to make the asset disclosure order for less than the usual full disclosure and the burden is squarely on the second defendant to put forward a sufficient case for departing from the wording of the standard order and from the policy which underlies it. He says that the burden is a heavy one and the second defendant has failed to discharge it.
  71. In relation to the point on the drafting of the skeleton, it is said that the argument hinges on a selective and inaccurate reading of the submissions made and that it is very clear from the transcript of the hearing at which the terms of the order were specifically addressed that Tatneft sought and obtained full disclosure. In short, it is said that the reference in that skeleton argument was wrong. It was a simple mistake and that cannot amount to a reason to vary, particularly in circumstances where there was no misunderstanding, nor did it cause any harm. In fact, in pursuance of the obligation of full and frank disclosure, this would be an amendment to the standard form, which would have had to have been drawn to the attention of the court. In reality, it was clear that the standard form order was sought and the cases cited in the skeleton were not support for the proposition that the disclosure order should only extend to the limited amount.
  72. On this preliminary point, I am squarely in favour of the arguments advanced by Mr McGrath QC for the claimant. But dealing with the particular arguments which are advanced, I will deal with the last point first.
  73. The genesis of the standard order has been clearly traced in the submissions made before me. The standard order is for full disclosure. That order has been used thousands of times in this court. It has been effectively approved by the committees considering the drafting of standard forms, by the Rules Committee and by the Court of Appeal who have considered the cases in this area and, where they have considered it appropriate to do so, have indicated areas in the standard forms with which they are not happy.
  74. Given the position in relation to the standard form, there was no unflagged departure from the standard form in the drafting of the order presented to the court. I accept the submission that the skeleton argument was in error and that error was of no moment in terms of effect and in any event effectively corrected by the presentation of the case orally. So that small point can be put to one side.
  75. Turning to the more substantive arguments: the first question is whether there is some reason of principle why a defendant who has disclosed some but not all of his assets in response to an order requiring him to disclose all of them can say he should not have to disclose them all. Although he was careful not to put the argument that way in oral submissions, the argument advanced by Mr Howard QC for the applicant amounts, in substance, to saying that the approach of the standard form is wrong.
  76. This is because there is no real difference in principle between the position pre- and post-disclosure. If all that is needed, when one looks at it from the perspective of ex post facto, is disclosure up to the amount of the injunction, there seems to be no reason why orders when made should not be so limited.
  77. That difficulty of dividing the two positions presents a problem for the applicant's argument; because it may be that there is a superficial attraction, when disclosure has been made of a sum in excess of the claim, in the argument that no more disclosure is needed. But as soon as one reflects the argument back to the initial stage, the problems which actually also affect the later stage become very clear.
  78. The first problem is that this approach is a cherry-picker's charter. Just as an initial limitation would, a limitation at a later stage would enable a defendant to deliberately disclose only his most difficult assets to enforce against and then sidestep the rest of the obligation. This would plainly subvert the purpose of the orders, both as to freezing and as to policing the freezing order by disclosure.
  79. Also, as Mr McGrath QC noted, it means that the original disclosure order becomes almost meaningless for contempt purposes. If a defendant need, as a matter of principle, only disclose up to the amount frozen, he can ignore the order in substance without being subject to the sanction of contempt. That would be a surprising conclusion.
  80. It also puts the order effectively in the control of the defendant. If the argument advanced on behalf of the applicant is correct, he can properly decide what to disclose and what not, and this is of course exactly what Tatneft says is happening here. Having disclosed partially - that is only assets which the defendant has chosen to disclose - he is now seeking to vary the order to rubber-stamp that choice. This, it seems to me, flies in the face of what Lord Justice Potter said in Motorola at [146]. It also flies in the face of what was said in JSC BTA Bank v Solodchenko [2011] 1 WLR 888 at [55], that the order for disclosure has an important freestanding function, namely:
  81. "So that the claimant can know whether there will be assets (and if so what assets) available to meet a judgment."
  82. Indeed, when pressed on this, Mr Howard QC agreed that the argument cannot apply at the first stage. He said:
  83. "It is perfectly rational and understandable that the orders are unlimited in amount because in order to police it, you may need to see the totality of the assets and know where they are."
  84. That is an entirely correct concession; and that, as the Solodchenko case says, is the raison d'etre behind the standard order. That rationale remains the case if partial disclosure has been made.
  85. This links also to the point regarding the lack of ring-fencing. The two orders, the main freezing order and the ancillary disclosure order, are not aimed at securing a sum for judgment, but putting in place a regime where attempts to dissipate assets in order to frustrate any future judgment is prevented so far as possible. An order is in place, but meanwhile, life goes on. Things may happen to particular assets which render them unavailable. For example, another creditor may press a claim which requires their liquidation before any judgment exists. Since a freezing order does not ring-fence, assets disclosed could slip away perfectly legitimately by this or other means. Without disclosure above the limit a claimant has no visibility of the rest of the assets where this happens.
  86. Similarly, there is nothing to prevent disposal of assets in the ordinary course of business. Again, if the applicant were right, the value of the freezing order could be impinged on if disclosure only of assets to a certain level were needed.
  87. Likewise, as Mr McGrath QC said, if the applicant were right, two claims accompanied by freezing orders to the same extent could be met by disclosure of the exact same assets in both cases. That would provide both claimants with, on the face of it, visibility of the amount of the claim, but in reality, they would only have visibility of assets which could satisfy one of the claims. That does not provide the protection which is the purpose of the freezing injunction jurisdiction in a context where ex hypothesi you are dealing with a person who has been considered to be at risk of not playing by the rules. That is, there has been determined to be a real risk that he will do something to make himself judgment proof.
  88. It is necessary in that context to have full disclosure to enable the injunction to have the teeth to which the authorities refer. I accept the submission that this is perhaps even more so the situation where there are diverse assets held in complex or even only semi-complex structures.
  89. I do not consider that the Motorola case at all derogates from the general principle which I have considered above. To the extent that it has some indications which Mr Howard QC prays in aid, I note, firstly, it is not a particularly recent case; secondly, the point in question was a very, very subsidiary point within that judgment; thirdly, it occurred in a slightly different context of orders for cross-examination and, fourthly, the indications did not form part of the ratio even in relation to that part.
  90. It seems to me that the real analysis in that part of the judgment is the dictum of Lord Justice Potter, paragraph 146, which I have already quoted, which is entirely in line with what I have set out above.
  91. I also note that in that case it was remarked that no English authority had previously raised this argument that there should be no obligation to tell of assets above the level of the freezing injunction. That comment was made in 2004. It appears that in the 14 years which have passed, nothing has changed. I cannot say that that surprises me.
  92. It follows that I do not accept that there is a point of principle which the applicant can pray in aid in this context. I note that in making his skilful submissions, Mr Howard QC did not actually seek to frame the point very particularly as a recognisable point of principle, by saying, for example, "In principle where there is a compliant disclosure up to the limit of the freezing injunction, the defendant should not be obliged to comply further". His argument was in reality much more focused on the individual circumstances of the case and it seems to me rightly so.
  93. Nor do I accept, it follows, that the points put forward by way of makeweight for Mr Kolomoisky are of any help. Notification of an intention to deal with assets would, absent anything else, just create knowledge. Even this, plus his hypothesised addition of a right in a claimant to come back, which of course would have to be scheduled and might not occur before the disposal, would lead to further enquiry and delay in ascertaining what further assets there are, by which time assets could have been disposed of beyond recall.
  94. I would also add that the approach for which Mr Kolomoisky contends, absent some clear basis of principle (for example saying that the standard form order is wrong and no obligation to disclose should ever go beyond the amount of the freezer) seems to me to run the risk of creating a mini industry of variations. On this approach the court would make an unlimited order. The defendant following the approach advocated in this case would seek a variation down to the amount disclosed, which would be an amount just above the level of the injunction. Then, possibly, the claimant would have to seek a variation if values of assets collapse or if the defendant serves a notice to deal with the assets which have been identified. In my judgment this is emphatically not what the jurisdiction envisaged, nor would it be desirable. Freezing injunctions may be intrusive but the purpose behind them is an important one. They come accompanied by a regime which enables them to be discharged if security is given in an appropriate form or varied at need. It would be contrary to principle for the jurisdiction to be subjected to such a significant limitation, which has the capacity very materially to alter the protection given to litigants dealing with a counterpart who has demonstrated being a dissipation risk.
  95. The question therefore is not one of principle but must be one of discretion. I do not suggest, and nor I think does Tatneft, that the court could not make such an order. It plainly can. But the default position in the context of this sort of injunction is full disclosure. It is for the applicant to make the case that this course should be followed.
  96. There may be cases where further disclosure is plainly unnecessary in a particular case owing to specific factors in that case. In my view they are likely to be rare; indeed, I am not prepared to hypothesise what those may be. But in any event in my judgment, it is for the applicant to show that the usual order is inappropriate in that case and that will be a matter which the court has to balance on the facts of that case, bearing in mind the purpose of the order and the particular facts prayed in aid by the applicant.
  97. It is to this question of whether the court should act on a discretionary basis that the rest of the argument is addressed.
  98. The core of the applicant's case is twofold: firstly, that disclosure is already adequate and, secondly, that disclosure will prejudice him. As to the first point, that disclosure is adequate to police the injunction, he has said in his skeleton argument that the updated asset list contains sufficient asset disclosure to ensure that Tatneft's claims are protected and can be properly policed. In relation to the updated asset list, the assets disclosed are worth an amount which far exceeds the limit. They are unencumbered. They are in jurisdictions within which any judgment obtained by Tatneft will be readily enforceable, and the structures through which they are held are entirely normal, given Mr Kolomoisky's wealth and political exposure.
  99. In relation to the specific assets disclosed by Mr Kolomoisky, there are shares in A Co. worth in this context a relatively small amount. There are shares held in Evraz plc, which were first valued in November 2017. At the time the matter came before me they were valued at a rather higher figure. There is a 41.85% interest in B Co. That was given a very considerable value in the updated asset list in November 2017. There is a dispute about the valuation of those shares and what has been said before me is that on any analysis when one looks at the expert evidence the value of those shares must be at least some considerable proportion of the claim in this action.
  100. There is a 59.1% interest in C Co. which was valued at (in this context) a relatively small amount in November 2017, and a 33% interest in D Co which was said to be worth a more substantial amount - but only a fraction of the claim in this action.
  101. The applicant says that although the updated asset list provides a lower value of disclosure compared to his initial asset list, the removal of some of those earlier assets, which have been overtaken by events, causes no detriment to Tatneft. The reduction in the value of the assets is proportionate to the reduction of the limit and the assets in question are essentially Ukrainian assets where it has always been Tatneft's position that it could not enforce any relevant judgment in Ukraine.
  102. In any event it is said that when you look at the assets which remain in the updated asset list, on any analysis you are looking at a figure above the $200 million which is required to be frozen under the order, and that one of those assets is well over half of the amount in and of itself.
  103. These arguments have a twofold relevance. They are in part the core argument which relates to the argument of principle, in that if there were such a principle, the applicant would need to show that he had disclosed sufficient assets to engage the principle.
  104. However, this argument also forms part of what may come into account as one factors in a broader discretionary exercise, so it does remain relevant, despite the determination which I have made on the point of principle.
  105. In relation to this argument, Tatneft hotly disputes that there are effectively adequate or equivalent assets to the amount which is needed in relation to the freezing order. It points to a number of factors. It points to the collapse in the value of the second defendant's assets, saying that over half of their value has been wiped out since the initial asset disclosure.
  106. That difference relates to two of the assets which were in the original disclosure, the PrivatBank shares and the D Co matter. It says that the characterisation by Mr Kolomoisky of the PrivatBank matter as an expropriation is one with which it takes issue. It says that the facts give good reason to believe that the second defendant cannot genuinely have considered his minority interest to be worth the amount which he identified in his initial asset disclosure. It says that that is indicated both by matters in the public domain in terms of concerns which have been expressed by the Particulars of Claim in the PrivatBank proceedings and by a report in October 2016 that the Government of Ukraine intended to imminently nationalise PrivatBank.
  107. So, it says that it suggests strongly that the second defendant knew perfectly well about this at the time that he gave his first asset disclosure.
  108. Tatneft casts doubt on the estimated valuations of the shares in PrivatBank which were prepared by Mr Good in 2016, pointing out that it is not said he was aware of the evidence on which they were based. It does not say that he had full knowledge of the true extent of the party-related lending, which forms part of the claim which has now been brought by PrivatBank, and that it would suggest that the second defendant had overstated the value of his own interest, even on the basis of Mr Good's valuation, by a very significant amount.
  109. There is, as I have said, a claim by PrivatBank against the second defendant and the first defendant. In that case the court has found there to be a good arguable case that they caused PrivatBank extensive losses, nearly $2 billion of losses, as a result of sham loans, and so it is said for Tatneft that it is nonsense for the defendant to claim that he had an interest worth the amount identified at the time of the initial asset disclosure.
  110. In relation to D Co, it says that the fact that D Co entered chapter 11 bankruptcy very shortly after the original disclosure casts considerable doubt on the valuation which was given at the time, and it says that there is reason to doubt the impartiality of the value which was given.
  111. It says that other valuations put forward by the second defendant are unreliable, in particular in relation to B Co. There was extensive evidence between the parties in relation to B Co which dealt with such matters as whether the correct approach to valuation had been taken by Mr X, who gave the valuation in 2017; and whether certain assumptions which he had made were robust.
  112. That has been the subject, as I say, of expert evidence on behalf of both parties. Ultimately, where this landed in front of me was principally based on the evidence given by Mr Good on behalf of the applicant.
  113. Tatneft says that nothing in Mr Good's report provides a proper basis for dismissing the concerns which his own expert has raised, but in any event, that analysis suggests that a reliable floor value for B Co is considerably lower than the figure given in the asset disclosure and that given the partial beneficial interest of the defendant he would have at best an interest considerably less than that on a pro rata basis; further the experts are agreed there should be a minority discount. There is disagreement between them as to the extent of that minority discount, but even taking the 25% which Mr Good suggests is appropriate, that makes the true value of the defendant's interest very considerably lower than the figure that he had indicated. Tatneft also takes similar points in relation to the other assets.
  114. Tatneft therefore says that the full disclosure is also necessary because developments since the application have shown that this is not a case in which the defendant can say that he has disclosed assets sufficient to safeguard the claimant's interest as a possible future judgment creditor.
  115. In particular, in the light of the PrivatBank claim, which is extremely large and which has resulted in a freezing order against the defendants in the sum of $2.6 billion, the result, Tatneft says, is that every one of the assets disclosed by the second defendant to Tatneft is potentially at risk from the competing claim. It says that the existence of the massive competing claim underscores the need for full and proper disclosure to maintain the effectiveness of the existing freezing order.
  116. It also points to a claim brought by, Mr Vadim Shulman, in the High Court in 2017. Mr Shulman's claim is reportedly valued at as much as US$500 million.
  117. Tatneft also says that the assets which have been disclosed are assets against which enforcement will be difficult owing to the structures through which they are held. It submits that the complexity of these structures suggests that they were designed to make the interests of the defendant more difficult to trace and any enforcement process more costly and time-consuming. It highlights the fact that there are five further assets listed in the worldwide freezing order which were known to Tatneft which were specifically frozen and which have never been properly disclosed.
  118. The other major limb of the application insofar as the discretionary factor is concerned is that disclosure is disproportionate and will irremediably prejudice the applicant.
  119. So far as the issue of disproportionate is concerned, I will come back to that at a later stage, but so far as prejudice is concerned the submissions made on behalf of the applicant are that he contends that the proceedings are politically motivated and abusive, in that they comprise part of a campaign of persecution waged against him by President Putin and his associates. He has given very detailed evidence in relation to what he says is this campaign. In summary, as set out in his skeleton argument, he says that since he resisted Russian expansion into the Crimea and into Ukraine, the Russian investigative committee which serves the interests of the Russian presidency has initiated criminal proceedings against him. He says those are unlawful and politically motivated. He says that that committee has announced that he has committed a crime for which life imprisonment lies under the laws of the Russian Federation.
  120. He says that in September 2014 by the order of the Moscow court his Russian assets were frozen and the Povarskaya Plaza Business Centre was seized on the basis that it was owned by him. It was said that this was done to prevent him using the proceeds to fund his activities in South Eastern Ukraine, and that "the same destiny awaits the rest of the properties and other assets in Russia belonging to Kolomoisky".
  121. He says that following pressure applied by the Russian Central Bank in April 2014, PrivatBank was forced to sell its indirect subsidiary, Moskomprivatbank and that by a decree dated 3 September 2014 the Russian Federation expropriated assets which it believed to be owned by him in the Crimea, which were then sold at auction and that although it was purportedly acquired by the Federation of Trade Unions of the Republic of Tatarstan, it has been said that it acted as a front for large companies with the main purchaser being Tatneft, the claimant in this case.
  122. He says that further assets belonging to him, or said to belong to him, have been unlawfully seized by the Russian Government.
  123. He says as a result of this persecution and misappropriation of his assets, a number of investment treaty arbitrations have been commenced and are pending before the permanent court of arbitration in The Hague seeking very substantial damages for unlawful expropriations.
  124. He says, therefore, that he has grave concerns that the disclosure of all of his assets, whether they are located in Russia, Ukraine or elsewhere, will be open to abuse if such disclosure falls into the hands of the Russian state which, via the government of the Republic of Tatarstan, holds an interest in Tatneft. He says that he has a very real concern, and one which is justified, that any information about his assets wherever they are located will find its way into the hands of the Russian state and that will give rise to serious risk of interference and attempted expropriation of those assets, in particular in the light of recent events.
  125. His justified concerns, he said, are compounded by the powers available as a matter of Russian law for the state to compulsorily acquire information, and also by the unlawful nationalisation of PrivatBank.
  126. Tatneft says that the evidence does not come near to establishing such a risk. It says that the attempt to equate Tatneft with the Russian State and to allege that the former will act as a conduit for passing information to the state has no evidence to support it.
  127. That is even more so in relation to Tatneft's legal team. It says that there is an essential flaw, in that if he had actually given full and frank disclosure of all his assets outside Russia and the Ukraine, it might have been possible to take seriously his suggestion that he wished to limit disclosure out of concern as to the safety of his assets, but his evidence does not justify any failure to disclose his other assets.
  128. It also, it is said, involves an implied and unjustified criticism of judicial process in the jurisdictions in which his assets may be found, suggesting that such jurisdictions would bend to any unjustifiable and unmerited claim by the Russian state to expropriate the second defendant's assets.
  129. In relation to the concrete allegations, it says that while there is evidence of steps taken in respect of the second defendant's assets by the Russian Federal authorities and the Crimean authorities, those may be seen more properly as steps as a response to very serious allegations of criminal wrongdoing, which cannot be said to be without substance.
  130. The second defendant admits involvement in financing and assisting Ukrainian forces, and that led to the decision by the Russian authorities to open a criminal case against him.
  131. It is said that the allegations made against him are extremely serious and there is evidence which shows a detailed account of the allegations made and their basis.
  132. So, it cannot be said, Tatneft submits, that the defendant can establish that the steps taken against his assets are unjustified, regardless of whether they may or may not have some political motivation.
  133. It is true, it is said, that the Russian authorities have powers of search and seizure in respect of documents and assets, but that is nothing to the point, given that that is subject to the permission of the Russian court and there is no basis on which this court could properly suggest that this would be improperly exercised. Nor is it suggested that Russia could exercise these powers extra-territorially.
  134. It is said that this is not a place for the adjudication on the merits of the investigations. That will be a matter for the courts and authorities of the relevant states, and that speculation as to such matters is not a proper basis on which to grant the second defendant permission to withhold relevant disclosure.
  135. In relation to the assertion that Tatneft is to be equated with the Russian state, it is said that there is no credible evidence in this regard. The Republic of Tatarstan holds a minority stake, which is a golden share, but that is, it is said, somewhat of a misnomer since it creates only limited rights and those are really akin to those which one would expect, such as those which a holder of more than 25% of shares in an English company would have, but its day-to-day operations are managed and controlled by a management board which does not include any government officials.
  136. There is no evidence, it is said, that the Republic of Tatarstan has any control at all over or involvement in these proceedings, and that the court should bear in mind that there has never been an attempt to strike out the proceedings as being proceedings pursued for an improper purpose.
  137. So, it says in the light of these points, there is no foundation for the assertion that documents disclosed by Mr Kolomoisky to Tatneft would find their way to the Russian state, and a fortiori in relation to Akin Gump, there is no basis at all, it is said, for saying that Akin Gump would be subject to any compulsory powers or would be likely to pass documents over to the Russian state and if there were any such concerns, that could be addressed by a confidentiality club.
  138. I deal next with the subsidiary points which form part of the argument in relation to this, deployed partly in relation to necessity and partly in relation to the general discretionary point.
  139. The applicant says that I should bear in mind that there has been delay, and that leads to a real question about whether Tatneft truly needs the asset disclosure.
  140. It points to the timeline and says that the complaints are in relation to old matters. It says that the timeline in relation to the provision of the asset list shows a failure to proceed with dispatch and that if asset disclosure was truly necessary in support of the ability to police the WFO, Tatneft could have sought an order for alternate or substituted service and that it did not do so, and that even when it did propose service by arrangement, its principal concern was to ensure that matters could be brought on at the return date, and that it was Tatneft who proposed the hearing of the variation application to be adjourned until after the effective return date, and so that effectively caused further delay. It is said that that should give rise to the inference that there is no real need for this disclosure.
  141. Tatneft says that the point does not stand up in the face of the chronology of the offence, in particular the fact that the disclosure obligation was not engaged until formal service of the worldwide freezer. It says that it promptly took steps after the order had been made to try to serve. It was not its fault, because of the Hague Convention, that delays interposed and that the service only took place in September 2016; that Tatneft cannot be criticised for not seeking alternative service because as a matter of law it would only, given the existence of the Hague Convention, have been justified in exceptional circumstances, and in correspondence those acting for Mr Kolomoisky said that exceptional circumstances could not be shown and so there could be no chance for alternative service.
  142. It says that in the light of the fact of the progress of the case, the necessary matters which needed to be concerned in the light of the challenge, there can be no criticism of the way the matter progressed and that the complaint that Tatneft should have moved more quickly lies ill in the mouth of the defendant where he resisted any listing before September 2018 and the matter had to be referred to the judge in charge of the commercial list to bring it on now. So, it says that that is a bad point.
  143. There is also a point in relation to security. In relation to this, it is said that the court should not require Mr Kolomoisky to provide further disclosure of his assets, given that security to the full value of the limit was offered in 2017 but was not accepted.
  144. I have been taken through the chronology of that correspondence as set out in the applicant's skeleton. Essentially in November 2017 the solicitors for the first defendant flagged up the possibility of security. There was a possibility that security would be put up in the form of a substantial sum to be paid into court, and a charge over the shares in two companies which each owned valuable properties, whose value would make up the remainder of the $200 million, but Fieldfisher LLP wrote on the same date confirming that the security would be provided for the benefit of Mr Kolomoisky as well.
  145. On 16 November 2017, that is two days later, Akin Gump replied to the letters, asking a number of questions about the security offered and seeking further information also that direct security be provided over the property and extensive information in relation to the value of the property, including whether it could be regularly revalued.
  146. On 22 November Skaddens replied to those requests answering that security was put forward with the full consent of and for the benefit of all of the defendants and was subject to the full satisfaction of any judgment obtained against any of the defendants, subject to settlements only against them all, and that on its provision it would be anticipated that the worldwide freezer would be discharged against all the defendants. It was said that security could be provided in the form of a direct legal mortgage, rather than through the Guernsey companies, and that regular revaluations might be effected.
  147. It is said that that was then not accepted as might be expected; that there was chasing on behalf of the defendants on 27 November, 8 December and 11 December 2017, and that Akin Gump reverted with yet further questions in relation to the security as to the amounts each defendant would contribute and so forth.
  148. A substantive reply to these questions was provided by Skaddens on 14 December. At this point the offer effectively lapsed, because on 19 December 2017 the PrivatBank proceedings were commenced and the further worldwide freezing order was obtained against Mr Boglyubov, who is the first defendant, so formally the offer was withdrawn on 2 January 2018.
  149. What is said on behalf of the applicant is that when you look at this correspondence, it is absolutely incomprehensible that this offer was not accepted. It was, Mr Howard QC said, an offer that you would expect Tatneft to "bite off the hands" of those offering. There was no explanation of why it was necessary to ask all these questions and the court must take cognisance of the fact that there has been delay and that the approach in relation to this gives rise to the presumption that there was some underlying reason why it was not accepted, and there was no genuine interest in accepting security.
  150. Tatneft says that this is not a good point. The offer was inadequate, in that there were a number of things which had to be clarified. Tatneft made a number of reasonable requests for clarification of the offer and that while correspondence was ongoing the offer was withdrawn in the light of events, the PrivatBank freezer in particular. So, it says that the offer has no relevance to the present application, given that it was withdrawn while negotiations were still going on.
  151. It says that the value as replacement for the worldwide freezer was in any event doubtful in several respects and that it was unsurprising that questions were asked, given the coincidence of the amount put forward, the fact that the properties which were being put forward had previously been marketed without listing a single offer, which raised a question mark over its value. The security originally offered was not even over the properties itself. The offer was on terms that the security was not available in the event of any settlement unless all claims were settled and so forth.
  152. It says that, given the doubtful value of the offer, Tatneft was perfectly entitled to take time to consider and clarify its terms and the offer could not be accepted because it was withdrawn, and that no negative connotation can properly be attached to the facts in this case.
  153. Taking all these points into account, I return to the question which I posed earlier: is this a case where it is appropriate for the court to exercise its discretion to vary the order as sought?
  154. I am not persuaded that it is. I would add that as regards this first element even if, as I have found it is not, this were a simple question of asking: "is there adequate protection?" in order to trigger a hypothetical point of principle, I would have found that the hurdle was not met on the evidence before me.
  155. The position as to the assets is that the value of the disclosed assets has, on any analysis, eroded. The amount in the second disclosure list is less than half the amount in the original asset disclosure. On present figures, as Mr Howard QC indicated before me this morning, there is considerable controversy over the value of some of the assets.
  156. Given the conclusion I have reached as to the raison d'etre of the disclosure obligation, I would not be minded to consider the exercise of the discretion which there is unless there were at least a very considerable cushion in terms of value, even if there were robust evidence that values could not change.
  157. Here, on the contrary, there is arguably very little cushion, we can see that values have changed and there is no reason to think that they could not change further. Plainly some of the assets disclosed have an element of volatility. Plainly there is a degree of uncertainty about what their values would be going forward.
  158. Further, I am persuaded that there is some material which gives grounds for doubts about the accuracy and robustness of the original asset disclosure and indeed the revised asset disclosure. The disparities between the original and revised asset disclosure are fairly startling, even allowing for the volatility of markets.
  159. The position as to PrivatBank is not entirely satisfactory, based on the evidence which has been deployed before me, and the valuation of Mr X of B Co is, on any analysis, not one which either expert has placed himself fully behind.
  160. As a result of this, Mr Howard QC was in a position of saying that in relation to assets which the applicant had said were worth a very considerable sum, he could only say that they were worth at least a figure which was around a fifth of that. Certainly, in the context of an application to significantly limit disclosure obligations, which is an indulgence, the lack of a substantiated basis for the higher figure and the disparity with the figure in which any real confidence could be placed are both relevant when there remain some questions over the valuations which have been put on the assets particularly relied on to discharge the disclosure obligation.
  161. In addition, in relation to the question of adequate protection, that would not be the only factor. This is not a case where this is the only claim on the horizon. On the contrary, this is a case where there are a number of competing claims known to this court, one of them very considerable indeed - indeed, much greater than the claim in this case. Indeed, the offer of security to which I have adverted was apparently withdrawn because of the new claim. That might be because of the impact of the freezing injunction itself. It might also indicate that it impacted on the ability to secure both claims at the same time.
  162. There may be more claims as yet unknown. There is at least one claim which is known of and the applicant's evidence itself seems to suggest that there may be claims advanced by the Russian authorities.
  163. Further, if, as was submitted for Mr Kolomoisky, the assets which I have seen are the most enforcement friendly assets, there is reason to suppose that if there are further claims, these very assets may be targeted by those claims.
  164. Further, looking at the other side of the equation in relation to these assets, I do also take into account to some extent that the assets relied on are, save possibly as to the smallest one, held in structures which at least give pause for thought as to enforceability, given the multiple layers between Mr Kolomoisky and the asset and the changes which can take place at each layer.
  165. For example, there is in one case an issue as to a change of a nominee who is one of the layers holding the asset, where the evidence showing that the nominee was holding on behalf of Mr Kolomoisky did not seem to be available.
  166. Spinning off from this, if these are indeed the most enforcement-friendly assets, that itself raises concerns about assets yet undisclosed.
  167. So, as I have said, I would have concluded that this aspect of the application would not satisfy the adequate protection test, but, as I have said, I do not think that that is the relevant test. But, that being the case, the material provides little, if any, weight to put into the scales in favour of the applicant when considering an exercise of the discretion.
  168. Turning then to the miscellaneous, smaller points. I do not consider that the question of delay or that of security is of very significant moment. As to delay, the disclosure followed the usual course and there is no reason to penalise the claimant for following the protocol.
  169. I do not think that there can be any criticism of the claimants for not making an application for alternative service, given the state of the law on the question, in Hague Service Convention cases such as the present; nor do I see any real grounds for criticism in relation to the other matters in relation to the timeline.
  170. As for the security question, it seems to me that the claimant was indeed entitled to bottom out the issues in relation to the offer of security, given that the offer was not for full cash. The questions asked were simply prudent questions - which the legal team would certainly have been criticised for not asking if the offer had been accepted and the properties had turned out not to be realisable at the value given.
  171. The point made on behalf of the applicant might have had teeth if the delay had continued much longer, since it is true to say that answers were being given, but, as matters eventuated, the offer was necessarily revoked at a time which makes it, it seems to me, impossible to say that queries would not ultimately have been bottomed out and been accepted.
  172. So, there is no basis in my judgment for saying, as was submitted on behalf of the applicant, that the events in relation to security indicate some ulterior motive on the part of the claimant which should put some weight into the scale in favour of exercising the discretion in favour of the applicant.
  173. This brings me finally to the other major factor which was prayed in aid, the argument as to prejudice. The first point to note is that this of course only relates to assets within Russia and the Ukraine. It follows that the assets outside Russia and the Ukraine must be disclosed. So too must the assets listed, including in the asset list in schedule D(ii) to the order, which have not been disclosed to date and which, on its face, is a breach of the order.
  174. As regards the Russia and Ukraine assets, I understand the concerns which have been expressed on behalf of the applicant. However, I do not accept that the evidence which is before me is of such moment that in this context any concerns about exposure in Russia and the Ukraine could make it appropriate for me to exercise my discretion not to order disclosure of those assets.
  175. The evidence, it seems to me, can be read in both directions. It can be said that what one sees is essentially a politically motivated attack on Mr Kolomoisky. It can equally be said that what is being done is in response to criminal wrongdoing. It is not possible for me to evaluate that evidence on the material before me, but I note that there has been no attempt to strike out this claim on the basis of improper motive. I have to conclude that the link between the disclosure and this application and the risk to the applicant is not clearly made out.
  176. There is, for example, no real evidence of moves taken by the Russian state in the interim. For example, there appears to have been no evidence as to contact from the Russian authorities to Tatneft or Akin Gump. In the absence of much stronger evidence, it would be remarkable for a court in this jurisdiction, looking at matters on an interlocutory basis, to form the view that there was sufficient danger of prejudice by way of interference by the Russian state that it should exercise a discretion not to order disclosure of documents which are prima facie necessary to police an injunction. That is particularly so in circumstances where this was not the application originally made, where the disclosure to date has been so partial and as a result the court considering the exercise of the discretion simply does not know the value of the assets in each location. All this court knows about are assets which are very arguably not worth much more than the sum frozen.
  177. If full disclosure of the assets outside Russia and the Ukraine had been made and was some considerable way more than the claim and there were no other claims portending, it may be possible that the court might have taken a sympathetic view. I do not however think that I can properly place any weight on the broad indication given by Mr Howard QC orally in reply that the non-Russian assets are "a very significant amount of assets to a very high value". This is frankly too little, too late.
  178. Likewise, I do not regard the fact that another defendant has come to an arrangement with the claimant as to not disclosing his Russian assets as material. What is acceptable to the claimant regarding the assets of A has no bearing as to what is acceptable regarding the assets of B. The fundamental principle is that disclosure is deemed necessary to police the order. Prima facie that is all assets and any derogation from that must be fact dependent.
  179. On the facts before me, I do not regard the evidence as being sufficient to justify me in exercising the discretion to derogate from the default position that disclosure should indeed be full as required by the order.
  180. I am more sympathetic to the view, given that this information is of a highly confidential nature and the second defendant plainly is a high-profile person who is at odds with the Russian Government and whose assets are likely to be of interest to them and, it would seem, others, that the information as handed over be subject to restriction. Tatneft says I should be slow to make an order for a confidentiality club. It says that the ball was in the applicant's court on this since the second defendant is asking for a special dispensation from the usual requirement of full disclosure. It was incumbent upon him to establish that such disclosure, coupled with the protection of a confidentiality club, would not accommodate any concerns. As it is obvious that such an arrangement would be capable in principle of meeting those concerns, he should have addressed what terms he considered appropriate and necessary. However, while he said he wished to make submissions on this issue, he then did not do so in his skeleton and the matter was addressed only fleetingly in oral submissions.
  181. Tatneft says that the court should not lightly impose a confidentiality club on a claimant with the benefit of a freezing order, not just because of the limitations it imposes on the claimant's ability to give instructions for the protection of its own legal rights and the professional and juridical difficulties it creates but also because it should not be used as a fraudster's refuge. I am referred to BTA Bank v Ablyazov [2010] 1 All ER (Comm) 1029, at paragraphs 41 to 42, by Sedley LJ.
  182. Nonetheless, Tatneft says that if I would be minded to impose a confidentiality club, it would suggest that it be confined to assets in Russia and the Ukraine and that disclosure would include Akin Gump London and Moscow, Tatneft's counsel team and two named individuals within Tatneft, whose names have been identified to me and who are in house lawyers.
  183. As regard the applicant's proposal made orally for a tight confidentiality club bounded to London, Tatneft says that what is being suggested would prejudice it because Akin Gump London and Moscow operates an integrated team communicating directly with counsel and that the Moscow end of the equation is peculiarly able to deal with Russian language issues and, thus, best able to deal with the Russian assets.
  184. Having considered the matter, I am prepared to impose a confidentiality ring but, in the absence of any application by Mr Kolomoisky in relation to this and evidence supporting it, I am only prepared to derogate from what has been offered by Tatneft to a very limited extent.
  185. So, I will impose a confidentiality ring, essentially as offered by Tatneft, but with the exception of the client representatives. I cannot at the moment see why they are necessary to police the order, which is what the disclosure is for and therefore what the confidentiality ring must have in mind.
  186. So far as the form of the order is concerned, this was addressed again somewhat fleetingly in argument and I will therefore not make formal orders as such in relation to the smaller points which arose, but I will give indications which can be the basis for discussion or for further argument before me in due course, if necessary.
  187. As regards the possibility of making an order as regards the non-Russian assets only with liberty to apply, that was floated on behalf of the applicant. As I have indicated, I am not sympathetic to any order which excludes the Russian assets. I had, as I indicated orally, wondered whether it would be appropriate to stage disclosure, with non-Russian disclosure coming first, enabling the applicant to apply after this to exclude the Russian assets, if indeed the disclosure of non-Russian assets was so very substantial.
  188. However, it seemed to me on reflection that this would only be appropriate if one took the view that such an application would have a good prospect of succeeding, if made. However, in the light of:
  189. i) the conclusion I have reached as to the issue of principle and therefore the fairly high hurdle which applies to the exercise of the discretionary test;

    ii) the conclusion I have reached on the evidence before me as to the discretionary issue, in particular in relation to the other factors which go into the mix; and;

    iii) the fact that I am imposing a safeguard by way of confidentiality club;

    I do not think that this is the case and therefore, again, this is an indication that I am currently strong minded to make an order with the same dates as regards non-Russian and Russian assets.
  190. The applicant asked for a variation to the lower limit upwards from the 10,000 limit which makes sense for most ordinary purposes in light of the very large sums in play here. He sought a revision upwards to $1 million and indicated it would make practical sense if the PrivatBank disclosure could be replicated. Mr McGrath QC for Tatneft indicated that this figure was too high.
  191. In relation to this, I remain open to persuasion but I would be inclined at the moment to favour this revision and indeed to favour such dovetailing with the PrivatBank disclosure as can sensibly be done.
  192. That, therefore, impacts also on the format of the order for disclosure. The claimant seeks disclosure as from the date of the order and as of today's date and says that this is the standard procedure which enables it to assess whether or not there has been any abuse of the non-disclosure in the interim period. The applicant says that this is oppressive and a waste of costs and that it would be much preferable to use the PrivatBank disclosure which is accurate as at 19 December 2017.
  193. On this issue, if it cannot be agreed, I will hear further argument on it. I see much force, as I have indicated, in the benefits of not reinventing the wheel in two different freezing injunctions cases and, so far as possible, using the PrivatBank disclosure - if necessary, perhaps, with an updating schedule. The real issue here is the backwards-facing disclosure. In one sense -- perhaps the most important sense -- what matters is the visibility of the assets and this would be served by an order as at today or, as I have said, by virtue of the PrivatBank disclosure, possibly plus an update.
  194. However, I see there may be a legitimate interest in ascertaining whether there has been a serious breach of the order made. It seems to me that there is potentially a clash here between supporting the ethos of the order in one direction and the overriding objective in the other and that may require closer consideration than it has been given. So, I make no order in relation to that and leave it to the parties to see what progress they can make.
     


BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII
URL: http://www.bailii.org/ew/cases/EWHC/Comm/2018/1314.html