The claimant bank had an asset freezing order in place over the assets of the defendant. The defendant had in place loan facilities allowing him to draw down substantial amounts as chosen. The claimant appealed from refusal of a declaration that the defendants rights under an unsecured loan contract to draw funds should not be seen as part of the defendant’s assets for the purposes of t he freezing order.
Held: The appeal failed. Such an item was part of the relevant background and context, even though such a chose in action could not be subject to execution. A person entitled to borrow and doing ‘was not ordinarily to be described as disposed of or dealing with an asset’.
Beatson LJ identified three relevant principles: (i) the enforcement principle, namely that ‘the purpose of a freezing order is to stop the injuncted defendant dissipating or disposing of property which could be the subject of enforcement if the claimant goes on to win the case it has brought, and not to give the claimant security for his claim’; (ii) the flexibility principle, namely that ‘the jurisdiction to make a freezing order should be exercised in a flexible and adaptable manner so as to be able to deal with new situations and new ways used by sophisticated and wily operators to make themselves immune to the courts’ orders or deliberately to thwart the effective enforcement of those orders’; and (iii) the strict construction principle, namely that, because the consequences of breach are serious, injunctions must be ‘clear and unequivocal’ and ‘strictly construed’ in favour of the addressee. He held that there were tensions between his three principles. He discussed whether there was a principled objection to the recognition of the rights under the loan facility agreements as assets for the purposes of a freezing injunction and concluded that the answer was no. He considered (a) whether the terms of the current standard Commercial Court form of freezing order make choses in action such as those under the Loan Agreements ‘assets’ within the order and (b) if so, whether drawing down a loan amounts to disposing of, dealing with or diminishing the value of the assets. Beatson LJ concluded that the answer to both questions was ‘No’ and that the appeal should be dismissed.
Rimer, Beatson, Floyd LJJ
[2013] EWCA Civ 928, [2013] WLR(D) 305, [2013] 2 CLC 286, [2014] 1 WLR 1414, [2014] 1 All ER (Comm) 700, [2014] 1 Lloyd’s Rep 195
Bailii, WLRD
England and Wales
Citing:
Appeal from – JSC BTA Bank v Ablyazov and Others ComC 4-Jul-2012
The bank had obtained a freezing order. The defendants had claimed four substantial loan agreements, but the Bank asserted that these were shams. The first defendant had been found guilty of contempt, and now seemed to have fled the country. . .
Cited by:
Appeal from – JSC BTA Bank v Ablyazov SC 21-Oct-2015
The court was asked as to the interpretation and application of the standard form freezing order. In the course of long-running litigation between JSC BTA Bank and Mr Ablyazov the Bank had obtained a number of judgments against the respondent . .
Lists of cited by and citing cases may be incomplete.
Litigation Practice
Updated: 17 November 2021; Ref: scu.513695