Following an important Court of Appeal decision handed down this month in one of the biggest fraud cases ever to come before the English courts (JSC BTA Bank v Ablyazov), the former chairman of BTA Bank, Mukhtar Ablyazov, is to be debarred from defending BTA's fraud claims, which have a combined value of more than US$6 billion. This will permit BTA to enter judgment against him and enforce that judgment against his assets to recoup money for the Bank and its creditors.
Fraud litigation is an increasingly complex area. The BTA case has involved a number of developments in English law which are of significant importance in the context of cross-border fraud litigation.
In a series of landmark judgments in the BTA litigation, the English Courts have provided significant guidance in a number of crucial areas, including the scope and effect of Freezing Orders, Receivership Orders and non-party disclosure orders.
Worldwide freezing and disclosure orders have become a familiar part of the English litigation landscape. Where a claimant is faced with a well-funded defendant, he will need to consider how effective they really are. The freezing orders obtained by BTA in this litigation were, over time, made more effective than the standard form, in particular by being made unlimited in respect of overseas assets and by it being made clear – following clarification from the Court of Appeal – that they extended to assets held by a respondent as bare trustee for others. The Court of Appeal also issued a key ruling clarifying the ambit of the "ordinary course of business" exception whereby a party is entitled to sell and charge assets on the basis that it is doing so in the ordinary course of business. Ablyazov attempted to rely on this exception on the basis that he was an entrepreneur and it was his business to manage his assets. Whilst accepted at First Instance, this argument was rejected by the Court of Appeal. That judgment should in future limit the ability of defendants to dissipate their assets.
The receivership order obtained by BTA was the largest and most extensive pre-judgment receivership ever made by an English court. The assets covered by it were predominantly based outside England and owned through a highly complex structure of offshore companies, trustees and nominees. Subsequently, following a series of without notice applications, an additional 636 companies that Ablyazov had not admitted to owning were added to the receivership.
Much of the evidence required to demonstrate Ablyazov's ownership of those additional companies was obtained by way of a non-party disclosure order granted against Yahoo!, which required it to hand over the contents of a number of email accounts used by Ablyazov's brother-in-law, Syrym Shalabayev. The Court agreed that Shalabayev should not be told of the order until after BTA's lawyers had reviewed the emails; a series of further orders were then made effectively permitting those email accounts to be monitored on an ongoing basis. Yahoo! also disclosed the IP addresses from which the accounts had been accessed, allowing BTA to track Shalabayev's geographical location and to show that he had been using a number of accounts in the names of different people.
It is clear from the BTA litigation that the English courts are willing to develop the application of the law in an attempt to ensure that their orders are not flouted. Although it is inevitable that frauds will continue to be perpetrated and concealed in ever more ingenious ways, and that new and more powerful weapons are needed for litigators, for now the courts are doing as much as they can to keep up with the modern means deployed by fraudsters.