JSC BTA Bank v Mukhtar Ablyazov & 16 Ors  EWHC 1819 (Comm)
In a further instalment of the long-running case, the Commercial Court considered whether Mr Ablyazov's activities in relation to certain loan agreements constituted disposing or dealing with assets within the meaning of a freezing injunction.
JSC BTA Bank (the "Bank") obtained a freezing order over Mukhtar Ablyazov ("Mr Ablyazov") which provided that he must not: "in any way dispose of, deal with or diminish the value of any of [his] assets ... to the value of £451,132,000". Under the freezing order Mr Ablyazov was permitted to spend up to £10,000 a week on ordinary living expenses and a reasonable amount on legal advice and representation (although the order required Mr Ablyazov to notify the Bank of the source of the money spent on legal advice). In addition, Mr Ablyazov was not prohibited from "dealing with or disposing of [his] assets in the ordinary and proper course of any business conducted by [him] personally".
Mr Ablyazov became a party to four loan agreements for up to £40 million from which Mr Ablyazov financed his legal and living expenses. The lenders had no security over Mr Ablyazov's assets under the loan agreements, the loans were not capable of assignment without the lenders' consent and the right to draw down could be withdrawn. Although the Bank suspected these agreements were a sham, in the event they were not a sham , it claimed Mr Ablyazov's rights under the agreements were assets that fell within the freezing order.
Christopher Clarke J took the view that the freezing order should be construed in the way "it ought reasonably to be understood by a businessman to whom it was addressed in the light of the purpose which it was designed to serve". That purpose was to prevent Mr Ablyazov from disposing of his assets so as to frustrate any attempt by the Bank to secure payment of its judgment.
In that context, the assets covered by the freezing order would be something of value to the Bank and against which the Bank could secure execution. Christopher Clarke J concluded that Mr Ablyazov's exercise of his rights under the loan agreements was not subject to the freezing order, as the loans could not have been released without the lenders' consent and did not represent Mr Ablyazov either disposing of, dealing with or diminishing the value of any of his assets.
He determined that although the right to borrow was a chose in action and thus a type of asset from a legal perspective, from a businessman's perspective, the wording of the freezing order does not refer to a chose in action but "assets", "dispose of" and "deal with". He concluded that the right to borrow does not constitute a disposal or dealing with an asset.
This decision provides helpful clarification that a right to borrow does not constitute an asset for the purpose of a freezing order - at least in these circumstances where the loans were unsecured and incapable of assignment.