BL-2017-000665 - [2025] EWHC 2909 (Ch)

The second argument advanced by Mr Bogolyubov in support of his application for a stay was based on stifling. Save in a very limited sense (see paragraphs 238 to 240 below), Mr Haydon did not run an argument on behalf of Mr Kolomoisky based on stifling, which was a realistic position to adopt, recognising as it did that the evidence did not demonstrate that Mr Kolomoisky does not have access to funds. He did make some submissions about the impact of Mr Kolomoisky being in prison and the effect that would have on his ability to do certain things, but for the most part they were concerned with the precise terms of the WFO and the DDO to which I shall come shortly. I did not understand that Mr Kolomoisky’s imprisonment was relied on as a factor which in and of itself pointed towards the grant of a stay.

The strength of Mr Bogolyubov’s stifling argument was affected by discussions between the parties during the course of the Second Consequentials hearing. Those discussions were concerned with the nature and extent of a ring-fencing proposal designed to permit Mr Bogolyubov to pay his costs, the legal costs of the appeal and other English litigation and foreign proceedings to which he is subject, much of which relates to claims by the Bank itself. The underlying concept was that a sum should be ring-fenced in the client account of Mr Bogolyubov’s English solicitors, Enyo, and excluded from the assets over which the Bank would otherwise be entitled to enforce its judgment. To this extent there would be a limited stay of execution to mitigate the risk that his appeal might otherwise be stifled, a factor which weighs in the balance when the court is considering the risk of injustice to each side if a stay is or is not granted.

There was some but not full agreement on the precise terms of the ring-fencing proposal and the extent to which it is capable of mitigating any prejudice to Mr Bogolyubov caused by the refusal of a general stay. I will come back shortly to deal with the specific issues on which the parties still disagree, for the most part in quite summary form, but I have reached the conclusion that the form of CO which I propose to make, and which I will describe in more detail shortly, is sufficient to give protection to Mr Bogolyubov’s ability to pursue his appeal and his case in the other litigation to which he is a party. The consequence is that arguments based on the risk of stifling or other legitimate prejudice to his conduct of litigation have little weight in determining the Individual Defendants’ application for a more general stay.

The next question is to ask whether the Bank will suffer any specific prejudice if a stay is granted, by which I mean does it rely on something more than the starting point in every case which is that a successful litigant is not to be prevented from enforcing his judgment even though an appeal is pending?

Initially the Bank relied on the fact that it is of systemic importance to the Ukrainian economy and plays a vital role in funding the Ukrainian war effort. This means that the funding demands placed upon it are urgent. However, given that the Bank has now agreed that, for sanctions-related reasons, the proceeds of any enforcement should be held in Hogan Lovells’ client account in England pending appeal, this is no longer a factor of any real significance as, for that reason alone, recovered funds will not be available for that type of use.

Of much greater weight is the likely effect of a stay on the Bank's ultimate ability to make a full recovery. The factors relevant to this consideration include the size of the judgment sum, the complexity of the corporate structures within which the Individual Defendants held their assets and the multiplicity of potential enforcement jurisdictions. These factors all point to the likelihood that the enforcement process will be lengthy. The Bank submitted that, for so long as it is precluded from enforcing the judgment sum, it is left in a peculiarly vulnerable position, not just from the risk of further dissipation of the Individual Defendants’ assets (a risk which is mitigated but not excluded by the existence of the WFO), but also from the risk that other creditors may seek to enforce against the assets of the Individual Defendants while the Bank is precluded from doing so.

As to the first of those risks, in the Bank's evidence in opposition to the application for a stay, its solicitor, Mr Lewis a partner at Hogan Lovells, gave many examples in paragraphs 26 to 46 of his witness statement of the occasions on which findings I made in the Judgment gave support to a conclusion that the Defendants’ conduct appeared to have been in breach of the WFO, including the funding by the Individual Defendants of the Corporate Defendants’ defence and the non-disclosure of their interests in Primecap, Sanderlyn, Versala and Dilorsano. Another example of enforcement-related prejudice was the conclusions I reached on Mr Bogolyubov’s conduct relating to the striking off and dissolution of certain BVI companies which I determined “provides some foundation for the Bank’s belief that Mr Bogolyubov is behaving in a manner which is directed at making it more difficult for the Bank to enforce any judgment it may obtain”. There was also late disclosure by Mr Bogolyubov of valuable receivables which only occurred after pressure from the Bank.

Those conclusions were of course reached applying the civil standard of proof having regard to the seriousness of the conduct. To that extent they do not demonstrate or prove that contempts of court have been committed because for that purpose the criminal standard is required. Nonetheless, and leaving aside Mr Lewis’ contentions that an actual breach of the WFO has been proved, this section of his witness statement contains what I regard as highly material evidence in support of my conclusion that it would be wrong for the court to assume that the continuation of the WFO will provide the Bank with full protection from continuing dissipation. This is more particularly the case as the Individual Defendants have so far successfully opposed the Bank’s applications for recognition of the WFO in Cyprus and Switzerland, both being jurisdictions which are highly relevant to the Bank’s enforcement efforts.

As to the second of the risks referred to in paragraph 211 above, the WFO does not of itself provide for security for the Bank’s claim. It is therefore exposed to competition from other creditors until such time as it is able to obtain charging orders (and similar protection), which anyway in most jurisdictions requires a currently enforceable judgment debt. There is evidence that the Individual Defendants have other creditors for substantial sums (e.g., Mr Pinchuk who is said by Mr Bogolyubov to be a creditor of his for in excess of US$100 million and his former wife who is seeking substantial sums in pending matrimonial proceedings). I also accept the submissions (a) that it is reasonable for the Bank to want to take steps as soon as practicable to protect itself in competition with other creditors and (b) that it is possible that fictitious creditors seeking to stymie legitimate enforcement by the Bank might emerge.

I have formed the view that, in all the circumstances there will be real and material prejudice to the Bank if it is not permitted to take steps to enforce the judgment it has now obtained. Weighing this prejudice in the balance against (a) the sanctions-related arguments which I have concluded are weak (more particularly in light of what I have explained in paragraphs 201 to 204 above) and (b) the stifling arguments the significance of which have for all practical purposes been disposed of by the ring-fencing provisions in the CO, I have reached the clear conclusion that the solution which best accords with the interests of justice is to refuse the application for a general stay of execution, but to do so on terms for which the CO will now provide. I now turn to that issue, because some of the precise terms of the CO remain in dispute.