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Charles Samek QC and Marc Delehanty Instructed in Latest Round of BTA Bank v Ablyazov Litigation

Charles Samek QC and Marc Delehanty represented Ilyas Khrapunov, the son-in-law of Mukhtar Ablyazov, on an
application made by BTA Bank seeking that he give disclosure of his personal
assets pursuant to a worldwide freezing order, notwithstanding his claim to
privilege against self-incrimination.

JSC BTA
Bank v Ablyazov and Khrapunov 
[2016] EWHC 289
(Comm)

Background

Charles Samek QC and
Marc Delehanty, instructed by Peter Black and Matthew Jenkins of Hughmans
Solicitors, are acting for Mr Khrapunov in proceedings brought by BTA Bank for
an alleged unlawful means conspiracy to breach English Court orders made
against Mr Ablyazov. These proceedings, issued in July 2015, are the latest in
the long-running Ablyazov litigation in the Commercial Court. This fresh claim
is the subject of a CPR Part 11 application challenging jurisdiction. This
application was heard before Teare J (across three days) in January 2016 and
judgment is awaited.

The facts

Upon an ex parte application by BTA Bank in July
2015, Males J made a worldwide freezing order against Mr Khrapunov. This
required Mr Khrapunov to give disclosure to BTA Bank of his personal assets but
also provided that he would not have to do so if this would give rise to a risk
of incrimination in any jurisdiction.
Further, at a subsequent ex parte hearing,
”confidentiality club” provisions were imposed such that any personal asset
disclosure given would only be provided to the Bank’s solicitors, Hogan Lovells,
and counsel, and would be kept confidential by them (i.e., the Bank itself would not have access to the disclosure).

On the basis of the privilege
against self-incrimination provided for in the freezing order, Mr Khrapunov declined
to disclose details of his personal assets. In response, the Bank issued an
application to require him to provide the disclosure. The Bank advanced two
arguments: first, that Mr Khrapunov
had failed to show that he would be at a real risk of prosecution if he were to
give disclosure; and, secondly, in
any event, the confidentiality club provisions had the effect of removing any
risk of self-incrimination that there otherwise might be.

To meet the second
point, Mr Khrapunov adduced expert evidence of US and Swiss law which set out
the legal procedures by which investigating authorities in those jurisdictions could
compel the Bank’s solicitors to provide the authorities with any disclosure received
from Mr Khrapunov notwithstanding any confidentiality club provisions. Particular
attention was directed towards the scope for US prosecuting authorities to
compel international law firms with branches in the US to deliver-up material
disclosed to an English branch of the firm, notwithstanding Court orders in England
requiring the firm to keep the disclosure confidential.

Judgment

The application was
heard by Phillips J on 19 January 2016. He examined the claim to privilege and was
satisfied that Mr Khrapunov had made good the substance of his claim to a risk
of incrimination. It was not fanciful that disclosure of his assets could
increase the risk of criminal charges being brought and increase the likelihood
of self-incrimination in relation to such charges. In so finding, the judge
noted that “great latitude” is to be
afforded to defendants in their assessment of the risk of self-incrimination,
applying Phillips v Newsgroup Newspapers [2010] EWHC 2952 (Ch).

However, Phillips J
acceded to the Bank’s application on the basis that the confidentiality
provisions were, in his judgment, sufficient to remove any real risk of
incrimination. Importantly, Phillips J did not reject Mr Khrapunov’s expert
evidence as to the possibility of compelled provision of the disclosure by the
Bank’s solicitors to foreign authorities. Rather, he considered that the risk
that the foreign authorities would actually seek to obtain the disclosure was
remote and fanciful because there had been no indication of criminal proceedings
in those foreign jurisdictions (where the authorities would have powers of
compulsion vis-à-vis the Bank’s solicitors). Furthermore, Phillips J did not
accept the submission that use of the disclosure by the Bank’s solicitors (within
the parameters of the confidentiality provisions) would give rise to a risk of
indirectly revealing details of Mr Khrapunov’s personal assets.

The judgment is
currently subject to an application for permission to appeal by Mr Khrapunov.
The full text can be downloaded HERE.

Comment

This judgment (and
any appeal) will be of interest to civil fraud practitioners because it offers a
practical illustration of the challenge inherent in affording sufficient
protection against self-incrimination to a foreigner who is made the subject of
an English freezing order.

Furthermore, the
judgment will be of particular interest to international law firms with branches
across multiple jurisdictions (especially in the US) litigating in England. The
judgment demonstrates that, in such circumstances, undertaking to keep
disclosure confidential to a claimant’s English legal team is far from a
straightforward way to remove a bona fide risk of self-incrimination.

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