JSC BTA Bank v Khrapunov


In JSC BTA Bank (2018), the Supreme Court has held that in cases of conspiracy to cause loss by unlawful means, limb (b) of Article 5(3) of the 2007 Lugano Convention must be interpreted to mean that the 'place of the event giving rise to the damage' refers to the location of the initial conspiratorial agreement.

What's it about?

In 2009 JSC BTA Bank (the Bank) obtained a worldwide freezing order (WFO) against Mr Ablyazov, its former chairman. Three years later the Bank issued a claim for conspiracy to cause loss by unlawful means against Mr Ablyazov and his son-in-law Mr Khrapunov, alleging that that they conspired to injure the Bank by preventing it from enforcing its judgments against Mr Ablyazov's assets.

At first instance, Teare J considered whether the English courts had jurisdiction over the dispute under Article 5(3) of the Lugano Convention, which provides that a person may be sued in the place where the harmful event occurred. Due to the similarities between this provision and its counterpart in the 2001 Brussels Regulation (and the Recast Regulation), Teare J referred to the decision in Bier, which held that the place where the harmful event occurred is either (a) the place where the damage was suffered; or (b) the place of the event giving rise to the damage.

Whilst the Bank was held to have suffered damage in the foreign jurisdictions where it was unable to enforce its judgments against Mr Ablyazov, the English courts did have jurisdiction under limb (b) of Article 5(3) in respect of any damage caused by acts done pursuant to instructions given by Mr Abyazov to Mr Khrapunov whilst in England, with the provision of such instructions held to be the event giving rise to the damage.

The Court of Appeal dismissed Mr Khrapunov's appeal as regards jurisdiction, but held that Teare J had been wrong to conclude that the event giving rise to the damage was the provision of instructions to Mr Khrapunov. Instead it was the initial 2009 agreement, concluded in London, between Mr Abylazov and Mr Khrapunov which 'set the tort in motion' and therefore constituted the event giving rise to the damage, thus giving the English court jurisdiction over the entirety of the Bank's claim.

The Supreme Court upheld the Court of Appeal's decision in respect of limb (b) of Article 5(3). Any instructions which were subsequently given to Mr Abylazov or actions taken to prevent the enforcement of the WFO were given or undertaken in pursuance of the 2009 agreement. It was this agreement which constituted the event giving rise to the damage and as such the English courts possessed jurisdiction under Article 5(3) of the Lugano Convention over the whole claim. The court's jurisdiction was not limited to harm caused pursuant to instructions given by Mr Ablyazov whilst he was in England.

Why does it matter?

On first reading this case appears to provide a degree of certainty as to the interpretation of limb (b) of Article 5(3) of the Lugano Convention in cases of unlawful act conspiracy. The emphasis will be on identifying the location where the initial conspiratorial agreement was entered into, as it is this agreement which 'sets the tort in motion' and provides the legal foundation for liability.

Whilst this interpretation of Article 5(3) provided sufficient clarity in this case, it may cause problems in circumstances where it cannot be conclusively determined where the initial agreement was entered into. For example, where parties are located in different jurisdictions when an agreement is concluded, where would the event giving rise to the damage be located? The extent to which this interpretation of Article 5(3) will resolve jurisdictional issues in similar cases appears limited, especially in the digital age where cross-border communications and international agreements are an everyday occurrence.

Key contacts

This briefing was drafted by Dan Hovington and Tom Ash, Trainee Solicitors.