Introduction

The case of JSC VTB Bank v. Skurikhin & Ors ([2020] EWCA Civ 1337) before the England and Wales Court of Appeal (Civil Division) in October 2020 addresses a pivotal issue in civil procedure: whether it constitutes an abuse of process for a party to seek the setting aside of an interlocutory order based on a material change of circumstances that the party itself has orchestrated. The primary parties involved were JSC VTB Bank, a claimant seeking enforcement of judgments against Mr. Skurikhin, and the defendants including Mr. Skurikhin and entities associated with him.

Summary of the Judgment

The appellant, Berenger Foundation, sought to discharge a receivership order that had been placed on Pikeville, an entity holding significant assets controlled by Mr. Skurikhin. Berenger argued that Mr. Skurikhin’s exclusion as a discretionary beneficiary of both Berenger and Olympic represented a material change of circumstances justifying the discharge of the receivership order. However, the court dismissed this application, determining that the change was not genuine but rather a strategic maneuver orchestrated by Mr. Skurikhin to obstruct the enforcement of the existing judicial orders against him. The court held that such an action amounted to an abuse of the judicial process.

Analysis

Precedents Cited

The judgment extensively referenced several key legal precedents that informed the court’s decision:

• Thevarajah v Riordan [2015] UKSC 78: Addressed the conditions under which a party could rely on changes in circumstances they themselves instigated.
• Hunter v Chief Constable of the West Midlands Police [1982] AC 529: Discussed the inherent power of courts to prevent misuse of judicial processes.
• Johnson v Gore Wood & Co [2002] 2 AC 1: Explored the boundaries of abuse of process, emphasizing a fact-sensitive approach.
• Henderson v Henderson: Defined specific forms of potential abuse of process.
• Chanel Ltd. v Woolworth & Co [1981] 1 WLR 485: Established that interlocutory orders can only be reopened for significant or unforeseen changes in circumstances.
• Broxton v McClelland [1995] EMLR 485: Highlighted that a party’s motives may influence whether an action is deemed abusive.

Legal Reasoning

The court’s legal reasoning centered on the principle that reopening an interlocutory order based on a change of circumstances orchestrated by the party itself undermines the integrity of judicial proceedings. The Judge articulated that allowing such actions would enable parties to manipulate facts post-decision to their advantage, thereby "throwing the goalposts" and disrupting the finality and fairness of litigation.

The Court emphasized that:

• A material change of circumstances should generally be beyond the control of the party seeking to reopen the order.
• When a party orchestrates a change to benefit themselves, it can constitute an abuse of process.
• The overarching public interest lies in the finality of judicial decisions and preventing the misuse of court procedures.

In applying these principles, the court scrutinized the timing and motivations behind Berenger’s application to discharge the receivership order. It concluded that the exclusions of Mr. Skurikhin were strategic moves to obstruct enforcement rather than genuine responses to changes in circumstances.

Impact

This judgment reinforces the judiciary’s stance against the manipulation of legal processes for personal or strategic gain. It sets a clear precedent that courts will scrutinize attempts to reopen interlocutory orders, especially when such attempts are based on circumstances the party has control over or has orchestrated. The decision upholds the principle of legal finality and deters parties from engaging in tactics that could undermine the effectiveness of judicial enforcement.

Future cases will likely reference this judgment when addressing similar issues of abuse of process, particularly in the context of enforcing judgments involving complex asset structures and international elements.

Complex Concepts Simplified

Abuse of Process

Abuse of process refers to the misuse of the judicial system in a way that, while not necessarily illegal, is ethically improper or unfair. This includes actions that seek to manipulate or derail legal proceedings without legitimate grounds.

Interlocutory Order

An interlocutory order is a temporary court order issued during the course of litigation, addressing specific issues before the final judgment. Such orders can regulate conduct, protect assets, or manage other procedural aspects of the case.

Receivership

Receivership is a legal process in which a receiver is appointed by the court to manage and preserve the assets of a company or individual, typically to ensure that debts are repaid or legal judgments are enforced.

Worldwide Freezing Order (WFO)

A Worldwide Freezing Order is a court order that freezes a defendant's assets both within and outside the jurisdiction, preventing them from disposing of or dealing with these assets until the order is lifted or the case is resolved.

Conclusion

The JSC VTB Bank v. Skurikhin & Ors judgment serves as a significant affirmation of the courts' authority to prevent the manipulation of legal processes. By categorizing Berenger’s attempt to discharge the receivership order as an abuse of process, the court underscored the importance of procedural integrity and fairness. This decision not only preserves the efficacy of interlocutory orders but also deters parties from engaging in strategic maneuvers that could compromise the administration of justice. Legal practitioners and parties to litigation must heed this precedent to ensure that their actions within court proceedings adhere to principles of fairness and respect for judicial authority.