Jeremy Outen, John Milsom, and David Standish (as Joint Receivers of Assets of Mukhtar Ablyazov) Appellants v Mukhtar Ablyazov Respondent

• Jurisdiction: British Virgin Islands
• Judge: The Hon. Mde Janice M. Pereira,The Hon. Mr. Davidson Kelvin Baptiste,The Hon. Mr. Don Mitchell
• Judgment Date: 10 November 2011
• Judgment citation (vLex): [2011] ECSC J1110-1
• Court: Court of Appeal (British Virgin Islands)
• Docket Number: HCVAP 2011/030
• Date: 10 November 2011

[2011] ECSC J1110-1

IN THE COURT OF APPEAL

Before:

The Hon. Mde Janice M. Pereira Justice of Appeal

The Hon. Mr. Davidson Kelvin Baptiste Justice of Appeal

The Hon. Mr. Don Mitchell Justice of Appeal [Ag.]

HCVAP 2011/030

Between:

Jeremy Outen, John Milsom, And David Standish (as Joint Receivers of Assets of Mukhtar Ablyazov)

Appellants

and

Mukhtar Ablyazov

Respondent

Appearances:

Mr. Robert Miles, QC, Mr. John Carrington with him, for the Receivers

Mrs. Tana'ania Small-Davis for Aleman, Cordero, Galindo & Lee Trust (BVI) Ltd., an Interested Party

Mr. Andrew Willins for Totalserve Trust Company Ltd., an Interested Party

Civil appeal - Commercial court - English Receivership Order - Allegation of misappropriation of bank's funds by Respondent, a former officer of the bank - Identification, location and preservation of assets - Recognition in the Virgin Islands of the English Receivership Order, in particular 12C which required inter alia parties served in the Territory and on the reasonable requests of the Receivers to disclose confidential information held by them in facilitating the identification and location of assets alleged to be held and concealed by the use of a network of corporate vehicles incorporated in the Territory of the Virgin Islands and elsewhere - Whether the learned judge erred in refusing to recognise paragraph 12C of the English Receivership Order - Whether the English Receivership Order should be recognised in its entirety

Held: setting aside the decision of the Commercial Court Judge made on 15 ^th July 2011 refusing to recognise paragraph 12C of the English Receivership Order, and ordering that paragraph 12C of the said Order be recognised but only to the extent of paragraph 12C(a), and that both the Receivers and the Interested Parties file submissions on costs within 21 days, that:

• 1. The Court has a very broad power to recognise the appointment of and the powers of a foreign receiver pursuant to the jurisdiction established by such cases as Schemmer and Others v Property Resources Ltd. and Others [1975] Ch. 273. Once the foreign Receivership Order is recognised, the court may then make such ancillary orders in relation to persons or assets within the jurisdiction in order to achieve the purposes of the Receivership, including orders requiring cooperation with the receiver by way of injunction, as it considers just or convenient, pursuant to the Schemmer jurisdiction and/or section 24 of the Eastern Caribbean Supreme Court (Virgin Islands) Act ("the Supreme Court Act"). An order in the form of paragraph 12C is such an order. The learned judge found that there was no statutory or other legislative basis for the court's jurisdiction when there in fact was. As such, he erred in the exercise of his discretion.

  Schemmer and Others v Property Resources Ltd. and Others [1975] Ch. 273 applied.

• 2. Where a foreign receiver has been recognised locally, the local court may make such orders in respect of persons or assets within its jurisdiction as are necessary to achieve the purpose of the receivership and in the interests of justice. It is right that the Receivers should be given the assistance of the Court in obtaining information which has been reasonably requested by them and is necessary for the performance of their function. If they ask unreasonable questions or make an unreasonable demand for documents of the citizen or resident, the court is available for the granting of relief. The court is the arbiter of disputes. If there should be a genuine dispute, that will be resolved by the court.

• 3. The Registered Agents of companies incorporated in the Territory of the Virgin Islands are likely and are required by law to have information in relation to those companies and their assets. The BVI companies within the Receivership are alleged to have been used by the respondent for the purpose of concealing ownership of assets. The Registered Agents of those companies are "mixed up" in a Norwich Pharmacal sense in such concealment, and accordingly it is just and convenient that they be required to provide such information and assistance to the Receivers as the Receivers may reasonably require for the purposes of the Receivership, particularly in circumstances where the Receivers are seeking to understand a complex network of companies established across a number of jurisdictions.

• 4. With regard to the learned judge's finding that to make the orders sought would deprive the recipients of the protections inherent in the Norwich Pharmacal procedure, even though this application is not made in a typical Norwich Pharmacal application, this does not deprive or limit the court in the exercise of its jurisdiction and powers given by section 24 of the Supreme Court Act. This section enables the Court to make such ancillary orders as may be necessary to give effect to an order made, such as a Receivership Order or an Injunction, as may appear to be just and convenient.

• 5. Paragraph 12C of the English Receivership Order required that the information sought must be required by the Receivers for the purpose of getting in the assets and carrying out their functions in relation thereto. This amounts to a restriction on the type of information that the Receivers can require. The learned judge failed to properly consider the express requirement of reasonableness in paragraph 12C of the English Receivership Order. Furthermore, the Receivers are constrained by paragraph 27 of the English Receivership Order to use or disclose all information that has come into their possession for the purposes of the receivership. This amounts to a restriction on the use to which it can be put. The Court is accordingly satisfied that no real issue of confidentiality arises.

• 6. Paragraphs 12C(b) and (c) of the Receivership Order are not necessary and would be unduly onerous and over broad to require third parties such as Registered Agents in this jurisdiction who are not defendants to be required to attend on the Receivers and do all such things as the Receivers may require. The Court is satisfied however, that the Registered Agents may be in possession of information and documentation which may be of assistance to the Receivers in tracing the assets, which the Receivers are obliged to do.

• 7. On the question of costs incurred in complying with such requests, the Receivers have indicated their willingness to give an undertaking to meet the reasonable costs of third parties. The Court considers that this is appropriate. Accordingly, the order made by this Court shall become effective upon the Receivers filing with the Court an undertaking in writing signed by them to meet the costs reasonably incurred by any of the third parties in complying with any request for information or documents made by the Receivers pursuant to the Receivership Order.

ORAL JUDGMENT

1 This is the judgment of the court. This is an appeal by the Receivers of Mukhtar Ablyazov against a refusal of Bannister J. to recognise in its entirety a Receivership Order made by Teare J. in England in ongoing litigation between JSC BTA Bank ("the Bank") as claimants and Mr. Ablyazov as defendant, in which Mr. Ablyazov has been accused by the Bank of widespread misappropriation of the Bank's funds. The Receivers are officers of the English Courts. The sum claimed by the Bank is in excess of US$1.8 billion. The Court in England was satisfied that Mr. Ablyazov had not been forthright with regard to the identification and location of all his assets, and that his assets were contained in a web of companies operating in various jurisdictions, some 700 of which have been identified and of which some 281 are located in the Territory of the Virgin Islands. There are alleged to be hundreds if not thousands of separate bank accounts held by those companies. Money is being moved around this web of companies and bank accounts. In order to get a full picture of the two issues of assets and control, the Receivers needed to receive information from the Registered Agents of these companies as rapidly as possible.

2 This led to a Receivership Order being made on 6 ^th August 2010 in England. That Receivership Order was varied on 8 ^th April 2011. On 15 ^th April 2011 in the Territory, the learned trial judge made an order (on the Receivers' without notice application) recognising and giving effect to the English Receivership Order in this jurisdiction as it then stood at 8 ^th April 2011. This order was continued following a return date on 6 ^th May 2011.

3 The English Receivership Order was twice further amended by Teare J. on the application of the Bank on 27 ^th May 2011 and 9 ^th June 2011. The order of 9 ^th June 2011 amended the English Receivership Order by (amongst other things) the addition of a new paragraph 12C, requiring certain third parties served with the order (including certain registered agents within the BVI) to provide the Receivers with such information and documents, attend on the Receivers, and do such other things, as the Receivers reasonably require. Paragraph 12C read as follows:

"12C. Any person upon whom this order is served within this jurisdiction or who falls within paragraph 20(2) (including without limitation those persons specified in Schedule 5), shall:

• (a) give to the Receivers such information and documentation relating to the Undisclosed, Further Undisclosed and Additional Undisclosed Assets,

• (b) attend on the Receivers at all such times, and

• (c) do all such things,

as the Receivers may reasonably require for the purposes of getting in the Undisclosed, Further Undisclosed and Additional Undisclosed Assets and carrying out their functions in relation thereto."

4 The Receivers again applied for recognition of the English Receivership Order in its extended form, by a without notice application dated 15 ^th June 2011. The application was initially heard by the learned trial...