JSC BTA BANK V ABLYAZOV

[2011] EWHC 587 (Comm), Queen's Bench Division, Commercial Court, Mr Justice Christopher Clarke, 28 March 2011

Arbitration - Stay of proceedings - Alleged invalidity of loans - Whether arbitration clauses in loan agreements were invalid - Burden of proof

Proceedings were brought in England by the claimant bank in respect of loan facilities to a Russian company, Tekhinvest (owned by Colligate), and to other companies (the KPC Companies). The facilities and the loans under them were subject to Kazakhstan law, and "disputes, differences or claims arising from this contract (agreement) or in connection therewith, including the ones relating to its performance, breach, termination or invalidity" were to be resolved by arbitration in Russia. The bank asserted that Tekhinvest and the KPC Companies were controlled by Mr Ablyazov, and that the loans were liable to be set aside because those four companies had participated in his dishonest scheme to defraud the bank. In particular, it was said Mr Ablyazov was a disguised majority shareholder and Chairman of the bank, but had failed to disclose his interest in the borrowing companies to the bank. Tekhinvest and Colligate, but not the other defendants (who included Mr Ablyazov), sought a stay of the proceedings under section 9 of the Arbitration Act 1996. Christopher Clarke J granted a stay.