JSC BTA BANK V ABLYAZOV

[2013] EWCA Civ 928 (Comm), Court of Appeal, Lord Justice Rimer, Lord Justice Beatson and Lord Justice Floyd, 25 July 2013

Freezing injunction - Defendant borrowing money to pay legal fees- Whether right to borrow within freezing injunction

A freezing injunction was granted against the defendant. The injunction provided that the defendant could not remove, dispose of, deal with or diminish any of his assets in England and Wales up to the value of £451,130,000. After the injunction was granted, the defendant entered into four loan facility agreements under each of which he could draw down up to £10 million. The entire £40 million was drawn down, and much of it was used to pay his legal expenses. The claimant bank contended that the agreements were shams, and that the defendant was the ultimate owner of the lenders, but for the purposes of the current proceedings the bank acted on the assumption that the loans were genuine. It contended that drawing down on borrowing facilities was dealing with assets and a contravention of the freezing injunction. The Court of Appeal, upholding the first instance decision of Christopher Clarke J, held that the proper construction of the freezing order was that the word "asset" did not encompass a right to borrow, so that there was no infringement of the order on the assumption that the loans were not shams. The question of whether a disclosure order should be made in order for the bank to be able to discover if the loans were genuine would be remitted to the Commercial Court.