The UK Supreme Court judgment in JSC BTA Bank v Khrapunov  UKSC 19 was handed down on 21 March 2018. It is a significant judgment which confirms that those that assist in the breaching of a freezing order could face the possibility of a civil damages claim for conspiracy (in addition to quasi-criminal contempt of court sanctions); and that the English court is willing to accept jurisdiction if the tort was "set in motion" within the jurisdiction, even if the subsequent relevant acts took place outside of it.
This is because the Court held that:
a) contempt of court can constitute unlawful means for the purpose of the tort of conspiracy to cause loss by unlawful means; and
b) the English Court has jurisdiction under the Lugano Convention1 over a conspiracy claim, where the conspiracy was devised within the jurisdiction, even if all other elements of the tort took place outside of the jurisdiction.
Between 2005 and 2009, Mr Mukhtar Ablyazov was the Chairman and controlling stakeholder of JSC BTA Bank ("Bank"), before being removed when the Kazakhstan bank was nationalised in 2009. Mr Ablyazov fled to England and obtained asylum but the Bank brought a number of claims against him in the High Court. The Bank successfully applied for a worldwide freezing order, a receivership order and a number of search and disclosure orders. These latter orders revealed a number of undisclosed assets that Mr Ablyazov sought to put out of reach of the Bank. In 2011 the bank applied for an order committing Mr Ablyazov for contempt of court. On receipt of the draft judgment sentencing him to 22 months imprisonment Mr Ablyazov fled the country. The Bank obtained default judgments against Mr Ablyazov in the sum of US$4.6 billion and damages to be assessed but very little has been recovered and Mr Ablyazov's whereabouts is currently unknown.
The Bank brought the present claim in 2015 against Mr Ablyazov (who has not participated in these proceedings) and his son-in-law, Mr Khrapunov ("Appellant"), who is domiciled in Switzerland. The Bank alleges that the Appellant entered into a "combination" or understanding with Mr Ablyazov to assist him in dissipating and concealing his assets while being aware of the freezing and receivership orders (and therefore was in contempt of court). The Bank argue this activity constitutes the tort of conspiracy to cause financial loss to the Bank by unlawful means.
The Appellant brought the appeal on two grounds:
a) that the tort of conspiracy could not be made out here because contempt of court cannot constitute the required "unlawful means"; and
b) the harmful event was not the conspiracy, but the acts done pursuant to it and these acts were committed outside the jurisdiction (the Appellant lives in Switzerland), such that the English courts do not have jurisdiction.
The Supreme Court disagreed on both counts and found in favour of the Bank.
The Supreme Court considered the historical context behind the tort of conspiracy (one of the "economic" torts) and confirmed that the tort in this case was "unlawful means" conspiracy which it defined as a "a conspiracy to do by unlawful means an act which may be lawful in itself, albeit that injury to the claimant is not the predominant purpose"3.
The Supreme Court considered that the test to be applied in this case is whether there is a just cause or excuse for the defendants combining with each other to use unlawful means4. This depends on the nature of the unlawfulness and its relationship with the resultant damage to the claimant. For example, a criminal offence could be sufficient "unlawful means" for the purpose of the law of conspiracy, provided that it was objectively directed against the claimant, even if the predominant purpose was not to injure the claimant5.
The Supreme Court held that although the predominant purpose of the contempt of court (being the concealment of assets in breach of the court orders) was to further Mr Ablyazov's interests rather than damage the Bank, that damage was not just incidental but necessarily intended. The object of the conspiracy, and the overt acts done pursuant to it, were to prevent the bank from enforcing its judgments against Mr Ablyazov. Therefore, the cause of action in conspiracy to injure the Bank by unlawful means was made out.
The question of whether the English court had jurisdiction to hear the claim came down to the interpretation of the Lugano Convention. The usual rule under the Convention is that a defendant should be sued in his/her place of domicile (article 2). Article 5(3) allows for derogation from that position, in matters relating to tort, to give jurisdiction to the courts of another Convention state "where the harmful event occurred or may occur". This wording is held to cover both "(a) the place where the damage occurred and (b) the place of the event giving rise to it" (Bier, Case C-21/76  QB 708).
The Court focused on part (b) of Bier and held that the defendant's agreement in England satisfied this limb and therefore was the "harmful event which set the tort in motion". It reached this conclusion by agreeing with the Court of Appeal that in entering into the agreement with Mr Ablyazov, the Appellant would have been encouraged and procured the commission of unlawful acts by agreeing to help Mr Ablyyazov to carry the scheme into effect. The alleged subsequent dealings with the assets subject to the freezing and receivership orders would have been undertaken pursuant to and in implementation of that agreement, whether or not he was taking instructions from Mr Ablyazov.
The Supreme Court's decision confirms that those that assisting in breaching an injunction risk facing a civil conspiracy claim for damages in addition to the possible prison time and fine a court might impose following contempt of court charges resulting from breach of the original injunction.
This provides a would be claimant with the possibility of significant additional avenue (and target) for financial redress when the harmful event which sets the tort in motion occurs within the jurisdiction, irrespective of where the subsequent acts take place.
It is also worth noting that the Court left open the question of whether civil court proceedings could be brought for contempt of court, absent of conspiracy, remarking that "we do not think that the last word has necessarily been said on this subject in this court".
The present application is the result of an interim application contesting jurisdiction of the English courts; we now wait to see whether the Bank will actually succeed on the conspiracy claim.
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2 As opposed to "lawful means conspiracy" where the predominant purpose must be to injure the claimant.
3 Para 8 of the judgment referencing Quinn v Leathem  AC 495
4 Para 11
5 Revenue and Customs Comrs v Total Network SL  AC 1174
Mar 01 2024