COMMERCIAL COURT REINFORCES THE REQUIREMENT OF FULL DISCLOSURE OF ASSETS FOR FREEZING ORDERS

Tom Dane

In PJSC Tatneft v Bogolyubov and others [2018], the defendant (‘D’) applied to vary the terms of a worldwide freezing order to provide that an asset list that he had previously disclosed would constitute the only asset disclosure that he would be required to provide, despite it not being comprehensive.

The basis for the application was that the value of the assets that D had disclosed already exceeded the amount frozen by the order and thus the claimant had all the protection to which it was entitled or for which it was necessary to police the order. This would be a deviation from the standard requirement of full asset disclosure found in PD 25A.

The application was refused by the court. Although the court could authorise the order requested, it was not prepared to exercise its discretion to allow the variation. The court emphasised the default position of full disclosure so as to enable the effective policing of a freezing order.

The judge held that:

  • There are significant risks involved with allowing what the court called a “cherry-picker’s charter”: allowing defendants to choose which assets to disclose and therefore enabling the defendants to disclose only the most difficult assets to enforce against.
  • Particular regard should be paid towards the use of the court’s powers so as to ensure that freezing orders “adapt to the increasing complexity with which fraudsters hold and administer their assets”.
  • Full asset disclosure was necessary as it enabled the injunction to “have teeth”, especially where the assets involved were diverse and held in complex or semi-complex structures.

This judgment serves to reinforce the default position in a freezing injunction being the full disclosure of assets. Any attempt to persuade the court to deviate from the default position will need to overcome significant hurdles.

Post By Tom Dane (11 Posts)

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