Khrapunov v JSC BTA Bank, Court of Appeal - Civil Division, February 02, 2017, [2017] EWCA Civ 40

Resolution Date:February 02, 2017
Issuing Organization:Civil Division
Actores:Khrapunov v JSC BTA Bank

Neutral Citation Number: [2017] EWCA Civ 40

Case No: A3/2016/1136 & 1141




[2016] EWHC 230 (Comm)

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 02/02/2017






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Charles Samek QC & Marc Delehanty (instructed by Hughmans Solicitors) for Ilyas Khrapunov

Stephen Smith QC & Tim Akkouh (instructed by Hogan Lovells International LLP) for JSC BTA BANK

Hearing dates: 19 & 20 December 2016

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Lord Justice Sales:

  1. This is an appeal and cross-appeal from a decision by Teare J on issues of jurisdiction in relation to a new front in the long-running saga of litigation between JSC BTA Bank (``the Bank'') and its former Chairman, Mr Mukhtar Ablyazov, and associates of his. The present proceedings relate to a claim by the Bank against Mr Ablyazov's son-in-law, Mr Ilyas Khrapunov, for the tort of conspiracy to injure the Bank by unlawful means. It is alleged that Mr Khrapunov conspired with Mr Ablyazov to hide Mr Ablyazov's assets from the Bank or dissipate them, in breach of a worldwide freezing order against Mr Ablyazov and a receivership order made against him. The unlawful means relied on are breaches of that freezing order and that receivership order.

  2. Mr Ablyazov lived in England between February 2009 and 16 February 2012, when he fled the jurisdiction to avoid being committed to prison for contempt of court. He is currently in France. Mr Khrapunov lives in Switzerland. The Bank wishes to sue him in England.

  3. The Bank issued the claim form in the present proceedings against Mr Ablyazov and Mr Khrapunov on 17 July 2015. The judge had to decide whether at that date there was a proper basis for this under the terms of the Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (Official Journal L 339/3 of 21.12.2007), known as the Lugano Convention (``the Convention'').

  4. The judge held that the Bank has a good arguable case in conspiracy against Mr Khrapunov to the requisite standard on the basis of his and Mr Ablyazov's alleged breaches of the freezing order and the receivership order, which the judge held qualify as relevant unlawful means for the purposes of the tort. The judge rejected the Bank's submission that as at 17 July 2015 Mr Ablyazov was domiciled in the United Kingdom, so as to provide a foundation for jurisdiction against Mr Khrapunov under Article 6 of the Convention. The judge also rejected the Bank's submission, based on Article 5(3) of the Convention, as interpreted by the ECJ in Case 21/76 Handelskwekerij G. J. Bier B.V. v Mines de Potasse d'Alsace S.A. [1978] QB 708 (``Bier''), at paras. [19] and [26], that the English courts could assume jurisdiction for the dispute on the basis that ``the place where the damage occurred'' (which I will refer to as ``limb (a) of Article 5(3)'') was England. However, the judge held that the English court has jurisdiction on the basis of Article 5(3) of the Convention on its other limb as interpreted in Bier, namely that ``the place of the event giving rise to'' the damage in question (``limb (b) of Article 5(3)'') was England. But the judge held that this was only for the period to 16 February 2012, when Mr Ablyazov fled from the United Kingdom.

  5. Mr Khrapunov and the Bank each appeal, to contest different parts of the judge's ruling. Mr Khrapunov contends that (i) the judge erred in holding that there was a good arguable case against him as a matter of law, in that breaches of a court order cannot qualify as relevant unlawful means for the purposes of the law of conspiracy, and (ii) the judge was wrong to hold that there was a basis for any assertion of jurisdiction under limb (b) of Article 5(3). In other respects, Mr Khrapunov seeks to support the judge's ruling to the extent it was in his favour.

  6. Mr Khrapunov has not filed any evidence to deny that he has indeed assisted Mr Ablyazov in seeking to avoid the effect of the worldwide freezing order against him and the receivership order in the ways alleged by the Bank. The judge therefore proceeded on the basis that the Bank has a good arguable case that he has done the acts or assisted Mr Ablyazov in the ways alleged, and there is no challenge to this on appeal. Mr Khrapunov's argument under point (i) above is an argument of law, regarding what types of unlawful actions are capable of qualifying as unlawful means for the purposes of the tort of conspiracy to injure by unlawful means.

  7. The Bank contends that (i) the judge erred in rejecting its case for jurisdiction based on limb (a) of Article 5(3), because the damage which it suffered directly from the tort relied upon was a diminution in the value of its cause of action, worldwide freezing order and judgments obtained in England against Mr Ablyazov; (ii) the judge erred in limiting the jurisdiction of the English court under limb (b) of Article 5(3) to acts in furtherance of the conspiracy in the period to 16 February 2012: the acts pursuant to the conspiracy for which the Bank could sue in England should not have been time-limited in this way; and (iii) the judge was wrong to reject its claim to establish jurisdiction under Article 6 of the Convention. The Bank also contends, under a respondent's notice, that the judge should have held that a cause of action in damages arises where a court order is breached and was wrong to reject the Bank's argument to this effect; and that accordingly there is this further basis on which the judge should have found that the alleged breaches of the freezing order and the receivership order constitute unlawful means for the purposes of the tort of conspiracy to injure by unlawful means.

  8. In addition, the Bank sought on the appeal to raise a new argument, to the effect that even if it could not establish a good arguable case against Mr Khrapunov for conspiracy to injure by unlawful means of the requisite kind, it could establish a good arguable case against him for the tort of conspiracy to injure the Bank by lawful (or, perhaps more accurately, non-unlawful) means as established by the decision of the House of Lords in Quinn v Leathem [1901] AC 495.

  9. In my view, this last point should be disposed of at the outset of this judgment to clear the ground for what is really in issue on this appeal. Mr Smith QC for the Bank expressly disavowed reliance on the Quinn v Leathem form of conspiracy in argument at first instance. He needs permission from this court to raise it as a new point on appeal. In my judgment permission to take this new point on appeal should be refused.

  10. For the Quinn v Leathem form of the tort of conspiracy, it has to be established that the predominant intention of the conspirators was to inflict injury upon the claimant, rather than to promote their own interests: see Crofter Hand Woven Harris Tweed Co. Ltd v Veitch [1942] AC 435; Lonrho Ltd v Shell Petroleum Co. Ltd (No. 2) [1982] AC 173; Revenue and Customs Commissioners v Total Network SL [2008] UKHL 19; [2008] [2008] 1 AC 1174 (``Total Network''), [56] (Lord Scott), [66] and [72]-[76] (Lord Walker). But it has not been pleaded by the Bank that Mr Ablyazov and Mr Khrapunov acted with such a predominant intention; nor has any application been made to amend the Bank's particulars of claim to allege that they did so; nor is it asserted in the evidence filed by the Bank for the purposes of resolving the issues on jurisdiction that it can be inferred that they did in fact act with such a predominant purpose. In the course of his submissions at first instance, Mr Smith explained to the judge that the Bank was not relying on the Quinn v Leathem form of conspiracy precisely because it accepted that Mr Ablyazov and Mr Khrapunov acted with the predominant purpose of serving their own interests (particularly Mr Ablyazov's) by removing Mr Ablyazov's assets from control by the Bank pursuant to the freezing order so as to prevent the Bank from having recourse to them to enforce any judgment obtained against Mr Ablyazov. Indeed, it seems obvious from the evidence and pleadings filed so far that this was indeed the predominant purpose of Mr Ablyazov and Mr Khrapunov in acting as they are alleged to have done.

  11. Accordingly, it can be seen at once that the Bank has no pleaded and no good arguable case in reliance on the Quinn v Leathem lawful means form of conspiracy, and it would be inappropriate to give it permission to introduce this new point on appeal. The passage in the speech of Lord Neuberger in Total Network on which Mr Smith sought to rely, at [228]-[230], is an insufficient foundation to support a contrary view. It was not the basis of Lord Neuberger's judgment in that case and was expressly obiter; no other member of the appellate committee agreed with it; it referred to a submission which had been abandoned by the Revenue (see [228]) and hence was not the subject of full argument; it is specifically referable to the different context of that case; it elides in that particular context predominant purpose to injure with predominant purpose to serve one's own interests, whereas in general terms as a matter of logic they are different and the leading cases affirm that they are; and it does not explain in detail how the idea floated by him might be reconciled with other high authority in this area. In the event, Mr Smith made no attempt to support Lord Neuberger's discussion at [228]-[230] by detailed submissions and argued only faintly for permission to rely on this new point on appeal.

    Factual background

  12. In May 2005 Mr Ablyazov became Chairman of the Bank, which was registered in Kazakhstan. In February 2009 he was removed from...

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