Undertakings as part of worldwide freezing orders will be construed narrowly

Ashiq Hamid

In Akcine Bendrove Bankas Snoras v Antonov, the Commercial Court had to consider the interpretation of a standard undertaking given in support of a worldwide freezing order (the WFO) obtained by a Lithuanian Bank against two former directors, not to seek to enforce the WFO outside of England and Wales nor to seek an order of a similar nature.

Bank Snoras, a Lithuanian bank, was subject to a bankruptcy order made by a Lithuanian regional court in December 2011. Mr Vladimir Antonov owned 68% of the shares in the bank and 25% was owned by Mr Raimondas Baranauskas who were also directors of the bank. Snoras issued proceedings against the individual director respondents and was granted the WFO against both of them.

The WFO required undertakings by Snoras that they would not, without the permission of the court, “seek to enforce this order in any country outside England and Wales or seek to enforce this order in any country outside England and Wales or seek an order of a similar nature including orders conferring a charge or other security” (the Undertaking) against the directors or their assets. The terms of the Undertaking are commonly required in support of a WFO.

Snoras subsequently issued proceedings in Lithuania against both respondents and these proceedings largely overlapped with the proceedings in England and Wales. As part of the proceedings, Snoras applied for an order seizing certain assets of both directors which was granted by a Lithuanian regional court. Snoras also obtained various orders from the Zurich District Court seizing funds held in certain banks.

In light of these developments, the issue for the Commercial Court was to consider how the Undertaking should be construed, particularly the phrase “order of a similar nature” and whether those words referred broadly to an order which is similar in nature or effect to the current WFO or more narrowly to an order which is similar to an order enforcing the current WFO.

The Commercial Court preferred the narrow interpretation and applying that interpretation to the case at hand found that despite the Lithuanian and Swiss orders being similar in effect to the WFO, they were pursued independently of the existence of the WFO granted in England and were not obtained for the purpose of enforcing the WFO. Therefore, Snoras did not breach the Undertaking and, in any event, even if the Court found a breach it would have been minded to grant retrospective permission and continue the freezing order unless the respondent could present clear evidence that the foreign order has had an oppressive or prejudicial impact.

This decision provides clarification as to the scope of the standard undertaking used in support of a WFO. Those parties seeking to freeze assets abroad via separate legal proceedings (independent from any WFO granted by the English Court) can draw comfort from this decision.

Akcine Bendrove Bankas Snoras v Antonov & Ors [2018] EWHC 887 (Comm)

Post By Ashiq Hamid (3 Posts)

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