CA-2024-001802 - [2025] EWCA Civ 1389

The Deputy Judge concluded that the effect of the findings which I have summarised at paras 31 and 32 above was that all the elements of a claim in unlawful means conspiracy were established. As he put it:

‘76. On my findings, Maître Zabaldano agreed to make the transfer of the Cresta Overseas Monies, following an instruction of Mr Chang which Maître Zabaldano knew came from Mr Su. Maître Zabaldano knew of the Freezing Order and the existence of the Judgment Debt. He knew that Mr Su had an interest in the Cresta Overseas Monies, and that the transfer would be in breach of Mr Su’s obligations under the Freezing Order.

77.

I am bound by authority – see paragraph 22 above – to hold that Maître Zabaldano can be liable for unlawful means conspiracy even though (as I find) he honestly believed that he was entitled to do what he did. While Lewison LJ disagreed in Racing Partnership (at [213]-[265]), the majority decision binds me.’

The majority decision in Racing Partnership Ltd v Done Bros (Cash Betting) Ltd [2020] EWCA Civ 1300, [2021] Ch 233 to which the Deputy Judge referred was to the effect that the claimant must prove that each of the defendants knew the facts which rendered the means unlawful, but need not show that the defendants knew that the means were unlawful. On the basis of that authority it made no difference that, as the Deputy Judge found, Maître Zabaldano honestly believed that he was entitled to obey the instruction to transfer the proceeds to UP Shipping. For the same reason, it is unnecessary now for this court to determine Lakatamia’s challenge to that finding of the Deputy Judge.

If the Deputy Judge had stopped there, he would have held Maître Zabaldano liable in unlawful means conspiracy. But he did not stop there. As he explained, it occurred to him when preparing his judgment that the Babanaft proviso in the freezing order might mean that Maître Zabaldano had no liability in tort for his actions in transferring the proceeds of sale of the villas to UP Shipping. What he had in mind was the proviso that ‘the terms of this Order do not affect or concern anyone outside the jurisdiction of this Court’. The Deputy Judge therefore invited post-hearing written submissions on this question, which were duly provided by Lakatamia and Mr Su. Having considered those submissions, he decided that Maître Zabaldano was entitled to the benefit of the Babanaft proviso and that it meant that he could not be liable for unlawful means conspiracy in this case.

I should set out in full the terms of the proviso, which was in the standard form used in the Commercial Court:

‘(1) Except as provided in sub-paragraph (2) below, the terms of this Order do not affect or concern anyone outside the jurisdiction of this Court.

(2)

The terms of this Order will affect the following persons in a country or state outside the jurisdiction of this Court –

(a)

the Defendant or their officers or agents appointed by power of attorney;

(b)

any person who –

(i)

is subject to the jurisdiction of this Court;

(ii)

has been given written notice of this Order at his residence or place of business within the jurisdiction of this Court; and

(iii)

is able to prevent acts or omissions outside the jurisdiction of this Court which constitute or assist in a breach of the terms of this Order; and

(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 question whether this proviso affords a defence to liability for unlawful means conspiracy to a person outside the territorial jurisdiction of the English court, as distinct from a defence to proceedings for contempt of court, is not free from authority. The issue arose in this court in JSC BTA Bank v Ablyazov (No 14) [2017] EWCA Civ 40, [2017] QB 853 and again when the same case reached the Supreme Court [2018] UKSC 19, [2020] AC 727.

In that case Mr Ablyazov had breached the terms of a freezing order against him by dealing with his assets contrary to the terms of the order and had been assisted in such dealing by a Mr Khrapunov. The claimant bank brought an action against both defendants in the tort of conspiracy to injure by unlawful means. Mr Khrapunov, who had been served with the proceedings in Switzerland pursuant to Article 5(3) of the Lugano Convention, challenged the jurisdiction of the English court. He did so on two grounds: (1) that the claim against him was bad in law because a claim for breach of a court order could not constitute unlawful means for the purpose of the tort, and (2) that Article 5(3) did not provide a basis for the English court’s jurisdiction. Both of these grounds were rejected.

It was in the course of considering the first ground that the relevance of the Babanaft proviso fell to be considered. In this court Lord Justice Sales dealt with the point in the following terms:

‘51. … Although it might not be right to subject a person located abroad who benefits from the Babanaft proviso to personal penal sanctions equivalent to those involved in enforcement of the criminal law, they should not be permitted to participate in deliberate unlawful action to undermine the court’s order and defeat the rights of a claimant without being exposed to civil liability to pay compensation. It should be noted that in our case the same point, with which I agree, covers the position of Mr Khrapunov as alleged co-conspirator with Mr Ablyazov, who is the person who is subject to the top worldwide freezing order and the receivership order. …

56.

… As I have observed, if the Babanaft proviso applies, that may well be a good reason why the co-conspirator should be exempt from personal penal sanction for contempt of court, but it does not follow that he should be immune from civil action for compensation for his participation in what has been done, which is so obviously unlawful vis-à-vis the claimant. In the case of a freezing order, if a co-conspirator has indeed deliberately helped the addressee of the order to hide his assets covered by that order or in some way render them immune from execution, thereby inflicting loss on the claimant, I consider that it is strongly arguable that justice is in favour of the imposition of civil liability on the co-conspirator to be liable to pay compensation to the claimant.’

On appeal to the Supreme Court the argument that the proviso afforded a defence to a conspiracy claim was briefly but firmly rejected:

‘23. … At first sight, there is more to be said for the argument that a right of action for conspiring to breach a freezing order injunction would expose foreigners to liability notwithstanding the standard provision in such orders that their terms “do not affect or concern anyone outside the jurisdiction of this court”. But the proviso is irrelevant to the position of a party in contempt, such as Mr Ablyazov, who is by definition subject to the jurisdiction of the court. A claim in conspiracy will normally allege conspiracy with the respondent to a court order to breach his obligations under the order, as it does in this case.

24.

We conclude that the bank’s pleaded allegations disclosed a good cause of action for conspiracy to injure it by unlawful means.’

Unpacking this reasoning a little, Mr Khrapunov, a foreigner outside the territorial jurisdiction of the court who therefore had the benefit of the proviso, could be liable in conspiracy for assisting Mr Ablyazov, who as the respondent to the freezing order did not have the benefit of the proviso, to breach his (i.e. Mr Ablyazov’s) obligations under the order, even though Mr Khrapunov could not be committed for contempt. Similarly in this case, even assuming that Maître Zabaldano could not be committed for contempt of court by reason of the Babanaft proviso, he could nevertheless be liable in unlawful means conspiracy for assisting Mr Su to breach Mr Su’s obligations under the freezing order.

In my judgment this was a decision of the Supreme Court by which both the Deputy Judge and this court are bound and the Deputy Judge’s reasons for distinguishing the case are untenable.

His first ground of distinction (at para 79) was that neither Maître Zabaldano nor Mr Chang was within the territorial jurisdiction of the English court at the time when any relevant act occurred, whereas in Ablyazov it was assumed that the relevant conspiracy was entered into in England. That was true as a factual difference, but the only relevance in Ablyazov to the location of the conspiracy was to do with the second ground of challenge to the jurisdiction of the court, under Article 5(3) of the Lugano Convention. It had nothing to do with the first ground, to which the effect of the Babanaft proviso was relevant. It is not, therefore, a relevant distinction.

Second, the Deputy Judge suggested (at para 82) that the passages from Ablyazov set out above were considering a different issue, namely whether there was a rule preventing persons in contempt from being exposed to anything other than criminal penalties; that for this reason they did not address the position of the alleged assister (Mr Khrapunov) but only the alleged contemnor (Mr Ablyazov); and that as a result the reasoning of the Supreme Court was not considering the impact of the proviso on someone outside the jurisdiction, but rather its impact on someone (i.e. Mr Ablyazov) within the jurisdiction. With respect, that is a misunderstanding of the case. The whole decision was concerned with the position of Mr Khrapunov, a foreigner outside the jurisdiction who did have the benefit of the proviso; not with the position of Mr Ablyazov, who did not.

Having distinguished the decision of the Supreme Court in these ways, erroneously as I have explained, the Deputy Judge suggested (at paras 84 and 85) that the decision of this court in Ablyazov was not binding because it was only a decision that there was a good arguable case that Mr Khrapunov was not protected by the proviso from liability for unlawful means conspiracy, leaving the Deputy Judge free to decide the issue for himself. While strictly speaking this may be correct, on any view the decision of this court was highly persuasive and, in any event, the Deputy Judge was bound by what the Supreme Court decided. I would also note that the Deputy Judge’s conclusion was contrary to the view expressed by Mr Justice Bryan (Lakatamia Shipping Co Ltd v Su [2021] EWHC 1907 (Comm), para 109) at an earlier stage of the litigation between Lakatamia and Mr Su, and his mother.

For these reasons the Deputy Judge was wrong to hold that the Babanaft proviso provided Maître Zabaldano with a defence to liability for unlawful means conspiracy.

In these circumstances it is unnecessary to deal with Mr Phillips’ criticism of the Deputy Judge for having raised the Babanaft proviso issue when it had never been raised by the experienced counsel acting for Maître Zabaldano during his unsuccessful challenge to the jurisdiction of the English court (which included the submission that there was no arguable case against him on the merits). (In fact the point had been mentioned by Maître Zabaldano’s solicitors in correspondence, but had then not been pursued when the challenge to the jurisdiction was made. That was obviously a deliberate (and correct) decision). But in fairness to Mr Phillips, I should say that the Deputy Judge’s apparent criticism of him for not having drawn attention to the issue was unwarranted. Even leaving aside the point that there was some reference to this issue in the course of the proceedings below, the duty of fair presentation does not extend to drawing the attention of the court to points which are hopeless in the light of binding Supreme Court authority.