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

The next series of issues relates to the WFO. The Defendants accept that, as a matter of principle, a WFO should continue in force post-judgment, but there are a large number of detailed points on the precise terms of the order to be made, which the parties have not been able to agree. In determining these issues I have well in mind that, even after judgment, the WFO is directed at preventing unjustified disposition and the WFO itself is not intended as a safeguard against insolvency or as a means of providing security for a claim: Les Ambassadeurs Club Ltd v Yu [2021] EWCA Civ 1310 at [14] to [17]. Indeed the fact that it does not have that purpose is one of the reasons why the Bank was justified in submitting that it would be significantly prejudiced if a general stay pending appeal were to be granted.

The first point is that, in light of my refusal to grant a general stay, the words in square brackets at the end of paragraph 6 of the draft WFO should be deleted.

The next issue arises on paragraphs 9(b), 11(b) and 12A of the draft WFO. The question is whether the ‘Lauren L’ should be required to return from Montenegro to the European Union, the United Kingdom or Monaco by 31 December 2025, which is the Bank’s position or 1 May 2026 with an update on the 18th of December 2025 which is Mr Bogolyubov’s position. I indicated during the course of the hearing that I hoped that this matter could be dealt with by agreement between the parties, but unfortunately that does not seem to have been possible.

Having regard to what is said on this subject in the evidence from Mr Maling and Mr Lewis, in my view the Bank has not established that the proposals made by Mr Bogolyubov are unreasonable or that there is a special risk to this asset if his proposals are not implemented. I consider that Mr Bogolyubov’s version of the Yacht Restrictions should apply so that the ‘Lauren L’ may be docked in Montenegro until 1 May 2026 and the instructions to the captain and crew may be formulated accordingly. I did not understand that the italicised and highlighted periods in paragraphs 11 and 12 of the draft WFO were in issue and I am content to include that language.

The next question on the draft WFO is whether Mr Bogolyubov should be required to identify the amount and purpose of expenditure on legal fees or simply the amount and the payee. Consistently with the ruling I have made on the language of paragraph 3E(2)(b) of the CO, the Bank’s wording at the end of paragraph 14(a) of the WFO is to be included.

The next question arises on the language of paragraph 14(b) to the draft WFO. Should Mr Kolomoisky, who is in prison, be permitted to spend up to £2,000 per week on living expenses or only a reasonable sum to be determined by the court and should he be required to keep receipts? Mr Haydon had no instructions on the amount actually required but sought £2,000 per week. In my view this is very substantial for someone who is imprisoned. As I have very little detail of why it may be required and Mr Haydon has no clear instructions, I think that the right figure is a reasonable sum up to £1,000 per month, but I consider that the provision for receipts is disproportionate in all the circumstances.

In the context of the ring-fencing provisions in the CO, I have already ruled on Mr Bogolyubov’s ordinary living expenses. I consider that £30,000 per month is the right figure. I do not think that receipts are required at this stage and in my judgment Mr Bogolyubov’s suggestion that he should provide a monthly breakdown of any items in excess of €1,000 is sufficient and proportionate for policing purposes.

Paragraphs 15 to 20A of the draft WFO relate to the preservation of companies. There are a number of miscellaneous disputes in relation to the appropriate language on which I rule as follows:

Turning to the provisions on preservation of receivables, paragraph 21 of the draft WFO must include Mr Kolomoisky and must use the language of “all reasonable endeavours” recognising (a) that in this particular context that may require each of the Individual Defendants to incur reasonable expenditure to ensure that the steps are indeed taken and (b) that what is reasonable for Mr Kolomoisky to do may be affected by his imprisonment.

As to the points of principle on paragraph 22 of the draft WFO, the first point is that Mr Kolomoisky objects in principle to the calling in of debts on account of his application for a stay of execution pending appeal. In my judgment this objection is not well-founded. The structure of paragraphs 22 and 22A imposes obligations which are reasonably required to minimise the prospects of the recovery of debts becoming statute barred, which objectively speaking is for the benefit of all parties. It is drafted in such a manner as will give rise to the least intrusion practicable in the ability of the Individual Defendants to deal with their receivables in a legitimate manner and enhance the prospects of them continuing to be available for enforcement in due course.

The next question relates to timing under paragraphs 22(b) and 22(c) of the draft WFO. The Bank seeks 28 days and Mr Bogolyubov seeks 3 months because of the need for accounts to be prepared. In light of the time which has already elapsed, the right time period is 56 days. The second aspect is how the obligations affect Mr Kolomoisky. This is unclear because the opening words of paragraph 22 do not work as introductory language for all of the sub-paragraphs. The opening words originally suggested by Mr Bogolyubov worked better, because using the phrase “the following steps shall without limitation be taken” would then enable there to be a proper focus on which of the sub paragraphs relate to Mr Bogolyubov and which relate to both of the Individual Defendants.

So far as Mr Kolomoisky is concerned, the drafting should reflect the fact that his obligations in paragraphs 22(a), 22(c), 22(d) and 22(e) are “all reasonable endeavours” obligations recognising as before that this may require him to incur reasonable expenditure to ensure that the steps are indeed taken and that the timescale within which it may be reasonable for him to take any step may be affected by his imprisonment. While I accept that the evidence shows that Mr Kolomoisky’s ability to instruct lawyers to commence legal proceedings is compromised by his imprisonment, I do not agree that he is not is a position to give appropriate (and if necessary, general) instructions on which his lawyers can act to ensure that limitation periods do not expire.

Paragraph 22(d) of the draft WFO: in my view the Bank’s wording is the right language to include. It is appropriate for the Bank to be required to consent to proceedings not being taken, but that is subject to a proviso that the Bank’s consent must not be unreasonably withheld. This latter provision is important and ensures that an appropriate balance has been struck in the processes required for preserving the value of uncollected receivables.

As I understand it, Mr Bogolyubov agrees to the Bank’s language in paragraph 22(e) of the draft WFO, but it must be revised to reflect the general point made in paragraph 250 above in relation to Mr Kolomoisky.

As to paragraph 26 of the draft WFO, it is appropriate that it imposes a forthwith obligation on Mr Bogolyubov. However, for the reasons I have already addressed the obligation on Mr Kolomoisky must be that he is to take all reasonable steps to deliver or procure the delivery of the identified items. The language should be “The First Respondent shall use all reasonable endeavours to forthwith deliver and the Second Respondent shall forthwith deliver …”.

As to paragraphs 28 and 29 of the draft WFO, I do not accept that what is likely to be a very onerous disclosure exercise is necessary or proportionate for the purposes of preserving material relating to the identification or preservation of assets against which the Bank may wish to enforce its judgment. I consider that it is insufficiently focused on the particular individuals who are likely to have information in relation to particular types of asset and why it is appropriate for communications with them to be enumerated or searched for at this stage of the proceedings. It seems to me that the Bank’s request for this category of relief is disproportionate, anyway at a stage prior to the determination of the Defendants’ proposed appeal.

Paragraph 30 of the draft WFO relates to Mr Bogolyubov’s obligations to take steps under the draft WFO which require expenditure. Mr Bogolyubov agrees that, once the funds identified in paragraph 3E(2)(c) of the CO are spent, and provided that the Bank’s consent or the court’s permission is obtained, he should look to any of his available non-ring-fenced assets to defray such expenditure. With some hesitation, more particularly in light of the fact that the court’s permission is included as an alternative to the Bank’s consent, I have concluded that the wording suggested for insertion by Mr Bogolyubov is the right order to make.

The next issue gives rise to a more substantial point of principle. It relates to the language of paragraph 38 of the draft WFO in respect of which the Bank seeks two changes to the standard Babanaft proviso, i.e., the proviso which identifies the categories of person outside the jurisdiction of the court who are, and those who are not, treated by the order as affected by it. The relevant part of the Babanaft proviso in the form used in the model order now prescribed by CPR 25.14(1) reads as follows:

“The terms of this order will affect the following persons in a country or state outside the jurisdiction of this court:

…

(c)

any other person, only to the extent that this order is declared enforceable by or is enforced by a court in that country or state”.

The Bank's proposal, contained in paragraph 38(b)(iii) of the draft WFO, is that it should take the following amended form:

“The terms of this Order will affect the following persons in a country or state outside the jurisdiction of this court:

…

(iii)

any other person (including, without limitation, the persons identified in schedule B), only to the extent that this Order is enforceable pursuant to Article 39 of Regulation (EU) No. 1215/1212 in that country or state, or is declared enforceable by or enforced by a court in that country or state.”

Schedule B contains a list of 144 individuals. The evidence is that the list comprises the Individual Defendants’ nominees who hold interests in assets on their behalf, as identified in their asset disclosure and subsequent correspondence together with previously undisclosed nominees and other individuals identified in the Judgment as having played a significant role in administering the Individual Defendants’ assets. It was not said on behalf of the Individual Defendants that this was not the case. The Bank submitted that it is appropriate for them to be named in this manner because they will be bound by the freezing order once it is enforceable or enforced, that being the legal effect of the freezing order as it stands. It is important that these individuals, who administer assets worth huge sums of money held within Byzantine structures, understand that they are required to comply with the order when it is enforced. It is said that it is appropriate to impress on them the need to take their obligations seriously not least because they have demonstrated exceptional loyalty to the Individual Defendants.

Although the Bank has not identified any authorities where this form of order has been considered and approved in a reasoned judgment, I was shown an order made by Teare J on 23 November 2012 in JSC BTA Bank v Ablyazov in which Schedule H listed a large number of corporate service providers, registered agents, banks and liquidators who were specifically identified as other persons within the standard form of Babanaft proviso. I do not know the reason why Schedule H was included by Teare J in Ablyazov or whether there was any dispute as to whether or not it was an appropriate thing to do.

It was said by Mr Bogolyubov that adding language which specifically referred to particular individuals would cause those individuals great uncertainty. This was not accepted by the Bank on the basis that the individuals concerned hold assets for the Individual Defendants and cannot deal with them or should not be dealing with them otherwise than in compliance with the WFO. It was also said on behalf of Mr Bogolyubov that individuals so named may not be bound by the order, may refuse to take steps in relation to assets or may resign out of concern about the potential impact of the WFO. But the Bank pointed out that what was sought to be achieved was a minimisation of the risk of dissipation, and a refusal to deal in relation to a legitimate transaction is something which can be dealt with by consent, while a refusal to deal in relation to an illegitimate transaction is precisely the sort of reaction which the individuals ought to have.

I think that there is substance in Mr Bogolyubov’s submission to this extent. The relevant third parties are individuals not subject to the jurisdiction who may have legitimate concerns that they will be faced with proceedings for contempt in England if they do not comply with an order that may or may not be enforceable in their home jurisdiction. The inclusion of the schedule gives the impression to the named individuals that this court has determined that English law regards them as being affected by the order without more. For reasons that I will explain in relation to the second proposed change I do not consider that this is the correct approach to take.

The second proposed change would mean that the Bank does not have to obtain a declaration of enforceability by a foreign court where the order is enforceable pursuant to Article 39 of Regulation EU No. 1215/2012 (“Brussels Recast”), which is applicable because these proceedings were initiated before the end of the EU Withdrawal Agreement transition period. Article 39 reflects the abolition of the exequatur set out in the earlier 2002 version of the Judgments Regulation. As Article 42 of Brussels Recast explains, all that an applicant now needs to do is provide the competent enforcement authority with a copy of the judgment and a certificate confirming its enforceability. Article 39 provides that:

“[a] judgment given in a Member State which is enforceable in that Member State shall be enforceable in the other Member States without any declaration of enforceability being required.”

Articles 45 and 46 of Brussels Recast then provide for a process by which the foreign court can (on a number of identified grounds) refuse recognition on the application of any interested person and can refuse enforcement on the application of any person against whom enforcement is sought. These grounds are similar to the grounds on which an exequatur could have been refused under the earlier versions of the Judgments Regulation which were superseded by Brussels Recast in January 2015. The effect is that from a procedural perspective, the position has been reversed: pre-2015 a declaration of enforceability was required but could be opposed on certain grounds, while post-2015, a judgment was enforceable unless steps were taken to challenge it on what were essentially the same grounds.

The Bank seeks this second change against the background of the opposition with which it was faced in Cyprus when seeking to apply for standalone relief. In January 2023 it had sought permission from this court pursuant to the Dadourian jurisdiction to enforce the WFO in amongst other places Cyprus. On the Dadourian application, the Bank’s explanation of why it had decided to seek a standalone freezing order from the Cypriot court, rather than rely on the automatic enforcement regime provided by the relevant provisions of Brussels Recast was driven in part by its evidence that no Cypriot case had decided that contempt proceedings can be brought in Cyprus in relation to a breach of an order that is automatically recognised, and it may be argued that this is impermissible. Having chosen to take the route of making a Dadourian application, this has not led to the result the Bank hoped for because, when it came to applying in Cyprus, it was faced with what it has described as outright opposition and lengthy delay, which it has not yet been able to overcome.

In response to the Bank’s complaint about the Defendants’ opposition in Cyprus, Ms Montgomery submitted that the Dadourian order was made without prejudice to Mr Bogolubov's right to oppose in any relevant country. In particular, she drew attention to the fact that, at the time the Bank sought Dadourian relief, the Bank’s evidence made clear that third parties would be able to challenge the form of Cypriot freezing order to be sought.

The Bank also submitted that the inclusion of the additional words in the proviso is justified because there is said to be a lacuna in the standard form wording of the Babanaft proviso: it envisages that a declaration of enforceability will always be made by a foreign court, despite the fact that there has been no such requirement in EU jurisdictions since the Brussels Recast regime came into effect.

As to this last point, Mr Bogolyubov’s case was that the Bank’s proposal would amount to an exorbitant and extra-territorial exercise of the court’s jurisdiction and that no authorities have been identified where this has been done. It was said that there was no lacuna, and that the rationale behind the standard form wording of the Babanaft proviso is not just that a WFO will not generally be enforceable overseas without an order of the foreign court. Rather, it reflects the fact that the English court has no personal jurisdiction over foreign non-parties, that it would be inappropriate as a matter of comity to attempt to impose obligations on persons abroad and that foreign courts may wish to impose protections as to the applicability of the WFO more particularly as against third parties who are not defendants and have not been served. It was also pointed out that Article 2(a) of Brussels Recast provides that protective measures are not judgments automatically enforceable under Article 39 where the order has been made without notice, unless the order containing the measure is served on the defendant prior to enforcement.

I am not satisfied that a WFO containing this second proposed change is an appropriate order to make, anyway in the present case. This is not just because I was shown no precedent where such an order has been made, although if the Bank were to be correct, that is surprising given the period of time over which Brussels Recast was in force in the United Kingdom. The more substantive point is that what is said to be the justification for adapting the proviso in the manner sought by the Bank does not engage with part of the underlying purpose of the proviso.

In Bank of China LLC v NBM LLC [2002] 1 WLR 844 at [17], Tuckey LJ said the following when articulating two general propositions applicable to a case in which the Baltic proviso was in issue:

“Firstly the limit of the court's territorial jurisdiction and the principle of comity require that the effectiveness of freezing orders operating upon third parties holding assets abroad should normally derive only from their recognition and enforcement by the local courts.”

One of the reasons that the role of the foreign court is important where the English freezing order may be enforceable against the defendants to the proceedings pursuant to Article 39 is that this court cannot anticipate the basis on which, as a matter of the local law, the enforceability against the defendants has effect as against third parties such as the other parties named in Schedule B to the draft WFO who are on notice of it. This is the kind of issue with which a foreign court might be expected to engage when considering the effect on third parties of the WFO being enforceable abroad. It also makes it clear to the persons notified of the order that the local court to whose jurisdiction they are subject has accepted that the English order is enforceable in Cyprus, and that it may have consequences to them in Cyprus, notwithstanding that they are not parties to and have not been served with the application in which the English order was made. It seems to me that, if foreign third parties are to be potentially subjected to the contempt jurisdiction of the English court, it is important that they know with clarity when the order is capable of affecting them in accordance with its terms and that an important part of that clarity would be removed in any state where Brussels Recast has effect if the language proposed by the Bank is included.

During the oral argument I asked Mr Akkouh whether the effect of the order being enforceable against the defendants in (e.g.,) Cyprus (which may well be the case as a result of Article 39) meant that it was possible to treat those who are notified of a freezing order in exactly the same way as if they were notified of it in England. He agreed that this was probably a matter of Cypriot law, but said that it did not matter because the only effect of the words which were included was to make it enforceable against third parties to the extent that it is in fact and law enforceable in Cyprus without a declaration by the Cypriot court.

I do not think that this is an answer, because (as explained in Gee on Commercial Injunctions at 19-057) whether non-parties are affected by the order is a different question from the question of whether the court has established jurisdiction over defendants to the proceedings. In my view, this gives rise to a more substantive objection to the Bank’s proposal. As Nicholls LJ said in Babanaft International Co v Bassatne [1990] Ch 13 at [44]:

“It would be wrong for an English court, by making an order in respect of overseas assets against a defendant amenable to its jurisdiction, to impose or attempt to impose obligations on persons not before the court in respect of acts to be done by them abroad regarding property outside the jurisdiction. That self-evidently would be for an English court to claim an altogether exorbitant, extra-territorial jurisdiction.”

Both Bank of China and Babanaft were decided before Brussels Recast came into force and so the courts were not looking at a situation in which enforcement could be effective without a declaration of enforceability and it might therefore be said that this explained the language in the judgments which focused on the role of the foreign court. However, in my view, the judgments also made clear that the important point is not just that the order is enforceable in (e.g.) Cyprus against the defendants who have been served, and in respect of which this court exercises in personam jurisdiction. The decisions in Bank of China and Babanaft both emphasise that it would be exorbitant for the order of this court to have an effect on unserved third parties outside the jurisdiction over whom this court does not exercise in personam jurisdiction, save and insofar as the enforceability of the order flows from the order of a foreign court which does exercise in personam jurisdiction over them. This is entirely understandable in circumstances in which the impact with which the language of the Babanaft proviso is concerned is the effect on unserved third parties who are not subject to the jurisdiction of this court rather than the impact on served defendants who are.

For these reasons I do not think it is appropriate to adapt the language of the Babanaft proviso in the present case. Of course, it is most unfortunate that challenges have been mounted to the Bank’s attempts to obtain standalone relief in Cyprus and that the backlog for cases to be determined in Cyprus is as significant as I was told that it is. However, in the light of the rationale for the Babanaft proviso, I do not think that it is open to me to grant relief which might give the impression that this court is itself seeking to exercise jurisdiction over persons who are not in fact subject to its jurisdiction. In the light of that conclusion, and in any event because I prefer Mr Bogolyubov’s submissions on the point, I also think it would be wrong to include Schedule B.

The penultimate point on the WFO arises on paragraph 41 of the draft and relates to fortification for the cross undertaking in damages. It was said by the Bank that, now it had obtained an enormous judgment against the Individual Defendants, fortification is no longer required. In support of this submission the Bank relied on the judgment of Picken J in Kazakhstan Kagazy at [147] in which the judge directed release of the fortification on the basis that the claimants had succeeded in a very substantial claim.

However Picken J went on (at [148]) to explain that it appeared that the defendants would in any event be liable to the claimants for a very substantial sum even if the main ground of appeal were to succeed. It followed that it was likely that a set off would be available against any claim in respect of the cross undertaking in damages. It is right that Picken J also said that “in any event, the Claimants having won so comprehensively in relation to the Claims, in my view, exercising what both Mr Howe and Mr Foxton acknowledge is a discretion, the right course is to release the fortification”, but it seems to me that his whole approach was driven by the fact that, because of the potential for set off, it was not necessary for fortification to continue.

I was not asked to reconsider the original requirement for the cross undertaking in damages to be fortified, but I do not consider that its release at this stage is justified merely because the Individual Defendants have been held liable for very substantial sums. In my view, and given that the amount is US$10 million, which is relatively modest in the context of this case, it is not right for the fortification of the cross undertaking in damages to be released at this stage. The position may well change if the application for permission to appeal (or if granted the appeal itself) is dismissed.

The final point on the WFO only emerged after my draft judgment was circulated to the parties. Mr Kolomoisky objected to the inclusion of the words “100% of the shares in” before the references to Sanderlyn Limited, Versala Limited and Dilorsano Consulting Limited in paragraph 5(c). It was pointed out, correctly, that this language had not appeared in any of the earlier drafts. Both for that reason, and because my findings in the Judgment in relation to those three companies were rather more nuanced that this language conveys, the words “100% of the shares in” will not be included.