Hogan Lovells Secures Success in UK Supreme Court for BTA Bank in Ablyazov Fraud Case
22 October 2015
21 October 2015 - Hogan Lovells has achieved a further landmark judgment for BTA Bank in one of the biggest fraud cases to have ever come before the English courts. Today the Supreme Court has ruled in favour of BTA Bank in relation to its appeal over Mr Ablyazov's use of unusual loan arrangements to circumvent spending restrictions contained in the English standard form freezing order.
The judgment relates to four loan agreements with two BVI companies, worth £40 million in total, which Mr Ablyazov took out while his assets were frozen by the worldwide freezing order obtained by BTA Bank at the outset of the English proceedings. Mr Ablyazov directed the lenders to pay monies to fund his solicitors, the solicitors of other defendants and various other third parties, without disclosing details of those payments to BTA Bank or the court. The Supreme Court has today unanimously ruled that Mr Ablyazov's secret funding arrangements were in fact captured by the terms of the freezing order, and were therefore subject to the restrictions and disclosure obligations contained within it. In doing so, the Supreme Court has overturned the previous decisions at first instance and in the Court of Appeal.
This is the first time the Supreme Court has been asked to interpret the standard form freezing injunction and the ruling sets a precedent for future English freezing orders.
The Hogan Lovells team advising BTA Bank was led by London litigation partners Chris Hardman and Alex Sciannaca, supported by associate Tom Devine.
Commenting on the judgment, Alex Sciannaca said:
"This is the first time that the Supreme Court has been called upon to rule on the Bank's continuing proceedings to recover the billions of dollars stolen from it by Mr Ablyazov.
"We welcome this decision, which confirms that the huge loan agreements that Mr Ablyazov set up to fund his and other defendants' legal costs - as well as to make various other undisclosed payments to third parties - were captured by the freezing order, meaning that those payments should have been subject to the scrutiny of the Bank and the court all along.
"The Supreme Court's judgment closes a loophole in the freezing order regime that unscrupulous defendants such as Mr Ablyazov have previously sought to exploit."
Notes to Editors
- BTA Bank launched global legal proceedings against Mukhtar Ablyazov and his associates in 2009 after auditors at PwC identified a massive hole – more than $10 billion – in the Bank’s balance sheets. This led to the discovery of a large-scale fraud committed by Mukhtar Ablyazov while he was Chairman of the Bank.
- The legal proceedings in England consist of 11 claims filed by BTA Bank in the English High Court seeking to recover more than US$6 billion in assets misappropriated by Mr Ablyazov. The Bank has secured judgments for more than US$4.5 billion and is in the process of seeking to enforce those judgments against assets currently held in receivership.
- As previously reported, Mr Ablyazov was found guilty of contempt of court in February 2012 and sentenced to three concurrent 22 month prison sentences. Mr Ablyazov fled the jurisdiction before sentencing and was subsequently debarred from defending various claims brought against him by BTA Bank. His appeals against the contempt and debarral orders were dismissed by the Court of Appeal in November 2012, with Lord Justice Maurice Kay observing that "It is difficult to imagine a party to commercial litigation who has acted with more cynicism, opportunism and deviousness towards court orders than Mr. Ablyazov". On 26 February 2013, the Supreme Court of the United Kingdom refused Mr Ablyazov's application for permission to appeal the debarral judgment.
- Mr Ablyazov is currently in prison in France. In January 2014, The Court in Aix-en-Provence granted both the Russian and Ukrainian requests to extradite Mr Ablyazov. However, the decision was annulled by the French Court of Appeal in April because of a procedural error made by the court. The case was sent for re-trial in the Court of Lyon. In October 2014, The Court of Lyon granted both Russia and Ukraine’s requests to extradite Mr Ablyazov. Mr Ablyazov once again appealed the decision. In March 2015, the French Supreme Court upheld the earlier ruling by the Court of Lyon to extradite Mukhtar Ablyazov to Russia or Ukraine. In October 2015, it was reported in the French media that the French Prime Minister has issued a decree for the extradition of Mr Ablyazov to Russia.
- Hogan Lovells has been acting for the Bank since May 2009 in its series of major fraud cases before the English Courts. The Bank was represented in this appeal by Hogan Lovells partners Chris Hardman and Alex Sciannaca, with support from associate Tom Devine.