Representation of Standish, Milsom and Outen Receivers of the assets of Mr Mukhtar Ablyazov
The Decision
- On 23 December 2011 the Royal Court of Jersey delivered a judgment recognising for the first time receivers appointed by the High Court of England and Wales to locate and preserve the assets of a defendant in proceedings pending trial in England in order to strengthen a worldwide Mareva injunction. These receivers were not therefore receivers in an insolvency, nor seeking to enforce security.
- The Royal Court reviewed overseas authorities and said:
"...the Royal Court has an inherent jurisdiction to recognise the appointment of receivers appointed by a foreign court provided that there is a sufficient connection between the defendant whose assets have been made the subject of a receivership order and the jurisdiction in which the order has been made".
- The English receivership order was made in the context of a dispute in the English courts between JSC BTA Bank and Mukhtar Ablyazov. The Bank is based in Kazakhstan and Mr Ablyazov is a Russian national resident in London and the former chairman of the Bank. The Bank has accused Mr Ablyazov of widespread misappropriation of the Bank's funds. At the time of the making of the receivership order, the claims were in excess of US$1.8 billion with further claims anticipated to bring the total sum claimed to $4 billion. Mr Ablyazov denies the claim and alleges it is politically motivated. The English court has said that the case "is being fought by the means of the forensic equivalent of trench warfare ". The English court had imposed a Mareva-type freezing order over the assets of Mr Ablyazov and a receivership order over all his worldwide assets up to the value of a specified sum.
- The Royal Court noted that Mr Ablyazov was resident in England and that this was a sufficient connection with the English jurisdiction. The Royal Court, having confirmed its power, then exercised its discretion to recognise the receivers' appointment and powers principally on the grounds that the English order had been made after a 5 day inter parties hearing before a High Court judge, who was in an excellent position to assess whether it was necessary to go beyond a freezing injunction and make a receivership order to protect the assets.
- The Royal Court however applied restrictions and limitations on the exercise of the receivers' powers in Jersey. First, it was not necessary or proportionate to give the receivers power to require any person in Jersey to attend upon them to provide information about the assets. That was a power which should only be exercised with specific authority of the Royal Court. Secondly, where the receivers requested information from a person in Jersey that person would have a right to come to the Royal Court to argue it should not have to provide that information.
Comment
- A receivership order of this type is an unusual and intrusive remedy, justified only in exceptional circumstances, which involves putting control of the defendant's assets in the hands of receivers. It is used where a Mareva-type freezing order would not be effective. This is the first time that this type of receiver has been recognised in Jersey. This type of receiver is not a receiver:
- On an insolvency, where Article 49 of the Bankruptcy (Désastre) (Jersey) Law 1990 or common law recognition might apply;
- In a trust context such as in Re the IMK Family Trust, sub nom Mubarik v. Mubarak 2008 JLR 250 and 2008 JLR 430 (CA);
- As an administrateur of a "lost person" Brown v. HSBC 2003 JLR N[50], [2003] JRC 190A; Rumasa v. W&H Trademarks (Jersey) Limited 1985-86 JLR 308; or
- Appointed by the holder of security, such as a fixed charge or a debenture: Hotel Beau Rivage Company Limited v. Careves Investments Limited 1985-86 JLR 70.
- It is however clear that the Royal Court in exercising its discretion will wish to exercise control over the procedure and enable anyone affected in the jurisdiction to be able to have recourse to the Royal Court in Jersey (without having to apply to the foreign court).
- Having recognised a foreign receivership order, the Royal Court may one day have to decide whether it would have authority to make a receivership order in Jersey in support of a Mareva injunction relating to purely Jersey domestic proceedings.
Please click here to read the judgment.
On asset tracking generally, see Dessain and Wilkins "Jersey Insolvency and Asset Tracking" Third Edition, published by Key Haven Publications Plc. (Fourth Edition due Spring 2012). Please click here for details.
