Summary

An insolvent Kazakh bank had not abused the court process by pursuing actions to recover misappropriated assets. Although it was arguable that the President of Kazakhstan had persuaded the bank to bring the actions in order to eliminate a political opponent, it was unrealistic to suppose that the proceedings had not been brought, at least partly, for the legitimate purpose of recovering losses for the benefit of the bank and its creditors.

Facts

The applicant Kazakh bank (J) applied to dismiss applications by the respondents (M) to stay certain actions. J had brought the actions to recover assets which it alleged that M had misappropriated. Following its nationalisation, J had become insolvent. The Kazakh Government was its majority shareholder. M alleged that the President of Kazakhstan had persuaded J's directors to sue him for the purpose of eliminating him as a political opponent. The issue was whether it was arguable that J was pursuing the proceedings for a collateral purpose and thereby abusing the process of the court.

Held

It was arguable that the President had persuaded J to sue M for his own purpose but it was not arguable that the claims were an abuse of process. J had a separate legal personality from that of its majority shareholder and had its own legitimate interest in and reason for taking proceedings against M, namely to recover assets which it said that M had misappropriated. There was no suggestion that J did not have a good arguable case against M. Moreover, J was obliged to bring such claims for the benefit of its creditors and that interest was not illegitimate or collateral. Without the President's alleged interest, J would still have a legitimate reason for taking proceedings and it was unrealistic to suppose that it would not have done so in circumstances where it was insolvent,Williams & Humbert Ltd v W&H Trade Marks (Jersey) Ltd (1986) AC 368 HLapplied. If, however, the President's interest in the proceedings had also to be considered as J's interest, then J should be regarded as having two purposes for pursuing the proceedings against M. If one of two purposes was legitimate, it seemed right that a claimant should be entitled to proceed with his claim. That avoided the need to embark upon the difficult exercise of establishing which of two purposes was predominant. Since J was insolvent, it would be unrealistic to suppose that the proceedings had not been brought, at least in part, for the legitimate purpose of recovering losses for the benefit of J and its creditors. That meant that the proceedings were not an abuse of the process of the court. Even if that view of the law was wrong and proceedings would be an abuse of process in a mixed purposes case if their predominant purpose was an illegitimate collateral purpose, J's purpose was not sufficiently collateral to be illegitimate. The elimination of M as a political opponent was said to be the consequence of undermining his reputation and facilitating the expropriation of his assets. If J succeeded in its fraud action, M's reputation was likely to be undermined and his assets seized in order to execute the judgment. Those were natural consequences of the action succeeding and could not be an illegitimate purpose of the proceedings, Goldsmith v Sperrings Ltd (1977) 1 WLR 478 CA (Civ Div), Broxton v McClelland (No1) (1995) EMLR 485 CA (Civ Div), Land Securities Plc v Fladgate Fielder (A Firm) (2009) EWCA Civ 1402, (2010) Ch 467 and Ross (A Bankrupt) (No2), Re (2000) BPIR 636 CA (Civ Div) followed (see paras 22, 48-54 of judgment).

Application refused

For related proceedings see JSC BTA Bank v Ablyazov (2011) EWHC 202 (Comm)