Home Information Cases JSC BTA Bank v Mukhtar Ablyazov & Ors (February 2011)

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JSC BTA Bank v Mukhtar Ablyazov & Ors (February 2011)

Summary

Claims by a bank, controlled by the state of Kazakhstan, for repayment of sums of money from its former chairman, where the chairman denied the claims on the basis that the claims were politically motivated, were not actions that involved the direct enforcement of a foreign penal, revenue or other public law. Stay applications issued by the chairman were non-justiciable save for the allegation that the bank had a collateral purpose in bringing the claims.

Facts

The applicant Kazakh bank (J) applied to dismiss applications brought by the respondents (M) to stay four actions. The state of Kazakhstan had taken control of J when there were significant concerns as to the ability of it to continue as a going concern. M was the former chairman of J and was accused by J of widespread misappropriation of its funds. Four claims had been issued within the jurisdiction of England and Wales for the repayment of sums and other claims were anticipated. M denied the claims and stated that they were politically motivated. The issues for determination were whether (i) it was arguable that the actions involved the indirect enforcement of a foreign penal, revenue or other public law; (ii) the stay applications raised issues which were not justiciable by the instant court.

Held

(1) A claim that involved the exercise or assertion of a sovereign right would not be enforced, Mbasogo v Logo Ltd (2007) and Iran v Barakat Galleries Ltd (2009) applied. Consideration of whether the central interest in bringing the claim was governmental in nature was a useful test. The claims J sought to enforce were claims based upon the alleged conduct of M before J was nationalised. They were private law claims which could be brought by an individual. Had J sought to enforce those claims before it was nationalised M could not have asserted that the claims were an exercise of the sovereign authority of Kazakhstan or that the central interest in bringing the claims was governmental in nature. The nature of the claims did not change upon nationalisation of J. To regard J's interests as governmental in nature would be to disregard the separate legal personalities and interests of J and its shareholders, Williams & Humbert Ltd v W&H Trade Marks (Jersey) Ltd (1986) AC 368 HL applied. J had a claim and M alleged that the object or purpose of the government of Kazakhstan in ensuring that such claim was brought was to eliminate him as a political opponent, Buchanan Ltd & Marcharg v McVey (1955) AC 516 and QRS 1 ApS v Frandsen (1999) 1 WLR 2169 CA (Civ Div) considered. Accordingly, it was not arguable that J's actions involved the indirect enforcement of a foreign penal, revenue or other public law (see paras 18, 20, 22 and 33-34 of the judgment). (2) The applications to stay on the ground that the claims were part of, and a continuation of, an illegal scheme to eliminate M as a political opponent were non-justiciable on the grounds that M was inviting the court to decide whether the nationalisation of J in Kazakhstan was illegal and invalid. The act of state doctrine prevented the court from enquiring into the validity of a foreign sovereign act within the territory of the foreign state. The circumstances of the case did not fall within, or engage, the public policy exception to the act of state doctrine and applications to stay on the ground that the court would give effect to the nationalisation of J which was a flagrant breach of international law were non-justiciable. M's allegation that J had a collateral purpose in bringing the claims, namely to continue the president's alleged campaign of eliminating M as a political opponent, did not involve a challenge to the validity of the president's actions. The act of state doctrine did not require that the court ignore such matters and, as such, it could not be said that the stay application in relation to that was non-justiciable (paras 55-58, 76 and 78).

Judgment accordingly

Queen's Bench Division
Teare J
Judgment date
10 February 2011
References

​LTL 17/2/2011 : [2011] EWHC 202 (Comm) : [2011] 2 All ER (Comm) 10