Supreme Court: Actions In Contempt Of Court Can Be 'Unlawful Means'

Originally published by Out-Law.com

Multiple breaches of worldwide freezing orders (WFOs) in contempt of court can form the basis of an action for damages caused by 'unlawful means' conspiracy, the UK's highest court has confirmed.

The Supreme Court's decision, which confirms the outcome in two lower courts, gives Kazakhstani bank JSC BTA Bank the right to pursue the son-in-law of its former chairman for damages in an action in the English courts. The bank has outstanding judgments and a WFO against the former chairman, Mukhtar Ablyazov, who is alleged to have embezzled some $6 billion worth of the bank's funds and whose whereabouts are currently unknown. The son-in-law, Mr Khrapunov, was alleged to have assisted Mr Ablyazov in dissipating and concealing his assets while aware of the WFO.

Contempt of court, in this case by way of breach of a court order, is not in itself grounds for a damages claim. The bank instead successfully argued that contempt of court could constitute the 'unlawful means' part of an action for 'conspiracy to injure by unlawful means', because the breaches were "objectively directed" against it even if their "predominant purpose" was to further Ablyazov's financial interests.

The Supreme Court dismissed an argument put forward on behalf of Mr Khrapunov that allowing an action for conspiracy to commit a contempt of court would be inconsistent with public policy. The court ruled that there was no such policy reason restricting the remedy for contempt of court to criminal penalties only.

Alan Sheeley, civil fraud and asset recovery expert at Pinsent Masons, the law firm behind Out-Law.com, said that the ruling was "not only right in law but also means justice prevails".

"The Supreme Court has stated very clearly that Mr Khrapunov should answer for his actions," he said.

"This is another example of the English court demonstrating that it has real teeth. It will not entertain the frustration of its orders and in particular freezing orders, the 'nuclear weapon' of the civil litigator's arsenal. The allegation is that Mr Ablyazov proactively engineered, with Mr Khrapunov, a scheme to allow him to continue his lifestyle in full knowledge that it would be detrimental to the bank's position," he said. "The Supreme Court, in this case, has made it clear that such conduct is an actionable unlawful means conspiracy, rejecting Mr Khrapunov's technical arguments that there was no 'unlawful means' because, without a conspiracy, he...