The Court of Appeal has given another judgment in the long-running dispute between JSC BTA Bank (the Bank) and its former Chairman, Mukhtar Ablyazov.

This judgment concerns the Bank’s claim issued in July 2015 against Mr Ablyazov and his son-in-law, Ilyas Khrapunov, for conspiracy to injure the Bank by unlawful means. The Bank alleges that Mr Khrapunov conspired with Mr Ablyazov in 2009 to hide assets, contrary to worldwide freezing and receivership orders.

Mr Ablyazov was not in England when the Bank issued the proceedings, having fled in February 2012. Mr Khrapunov was living in Switzerland. Given this, the question was whether the English courts had jurisdiction over the claim under the Lugano Convention. Mr Justice Teare had found the English Courts had jurisdiction, but only over acts committed before Mr Ablyazov fled England. Both sides appealed.

The Court of Appeal broadly upheld Teare J, save that it found the English Courts had jurisdiction over all the alleged acts to hide assets, not merely those before Mr Ablyazov’s flight. 

The Court of Appeal’s reasoning was as follows:

  • The breach of a court order does amount to unlawful means for the purposes of the tort of conspiracy to injure by unlawful means. Relying on Revenue and Customs Commissioners v Total Network SL [2008] UKHL 19, unlawful means for these purposes includes simple crimes (i.e. those not independently actionable in private law), torts and breaches of contract. This includes civil contempt of court by breaching court orders. This was so even though Mr Khrapunov, being based abroad, was not subject to the penal sanctions in the orders (he could however be liable under civil law).
  • Where a person has unlawfully left the jurisdiction, it cannot be said that he is still “domiciled” there for the purposes of obtaining jurisdiction over a co-defendant under Art. 6 of the Lugano Convention. This would undermine the certainty necessary for litigants. 
  • Under ECJ case law and Art.5(3) of the Lugano Convention, English Courts have jurisdiction over torts where the “damage occurred” in England or England is the place “of the event giving rise to the damage”. Where court orders are breached, the Court found that damage occurs where those orders would have been executed. In the case of worldwide freezing orders, that will rarely be England. As to “the event giving rise to the damage” the Court of Appeal held that this was the original conspiracy to breach the orders, which in the case of Messrs Ablyazov and Khrapunov was England. In so holding, the Court of Appeal disagreed with Teare J who had held that the relevant event was the implementation of the conspiracy abroad. 

With this judgment, the English Courts have again shown they have the resolve to deny refuge to perceived wrongdoers and are prepared to take a pragmatic approach to achieve that end.

See the judgment in full here: Ilyas Khrapunov v JSC BTA Bank;JSC BTA Bank v Ilyas Khrapunov v Mukhtar Ablyazov [2017] EWCA Civ 40

For two other recent decisions on jurisdiction click here

The Supreme Court has given Mr Khrapunov permission to appeal this decision.