PJSC National Bank Trust & Anor v Mints & Ors

Factual and Procedural Background

On 27 June 2019, Judge Moulder granted a worldwide freezing order ("WFO") against the four Defendants in these proceedings. The application was supported by extensive written submissions and a detailed affidavit from an advisor to the Claimants, who are Russian banks or their predecessors, collectively referred to as "the Banks" or "the Claimants". The Banks had lent substantial sums to companies connected to the O1 Group, allegedly owned by the First Defendant, who is the father of the 2nd to 4th Defendants.

The claims arise from an alleged fraud orchestrated by the Defendants and certain former directors of the Claimants in mid-2017, when the Banks were on the verge of takeover by the Russian central bank ("CBR") due to financial difficulties. The alleged fraud involved repaying substantial secured loans to the O1 Group with the Banks' own money, replacing them with illiquid and uncommercial corporate bonds of significantly lesser value.

The WFO was initially granted until 11 July 2019. Prior to this return date, the parties agreed amendments excluding certain corporate bank accounts from the WFO. The Defendants provided asset disclosure but did not file witness evidence challenging the Claimants' case. Unexpectedly, shortly before the return date, the 1st to 3rd Defendants contested the continuation of the WFO, arguing insufficient evidence of risk of asset dissipation and material delay in seeking relief. The 4th Defendant initially adopted these submissions but later withdrew opposition to preserve the option of making a future full discharge application.

The hearing on 11 July lasted a full day, after which the court decided to continue the WFO, subject to replacement by undertakings. The judgment provides detailed reasons for this decision.

Legal Issues Presented

1. Whether the Claimants had established a real risk of dissipation of assets justifying the continuation of the worldwide freezing order.
2. Whether delay in seeking the freezing relief should bar or affect the grant or continuation of the WFO.
3. The appropriateness of replacing the WFO with undertakings.

Arguments of the Parties

Claimants' Arguments

• The Claimants contended that the Defendants engaged in a fraudulent scheme whereby secured loans were repaid with the Banks’ own funds and replaced by illiquid, unmarketable bonds, causing substantial loss.
• The replacement transactions and subsequent asset transfers demonstrated a real risk of dissipation, as valuable pledged assets were removed from the Banks’ reach.
• The reduction in capital of one group company and the transfer of assets to related entities after notice of claims further evidenced dissipation risk.
• The delay in bringing the application was justified by complexities in the case, difficulties in obtaining evidence, and the need to establish jurisdiction based on the Defendants’ domicile in England.
• The Defendants had not produced any satisfactory evidence to rebut the risk of dissipation.

1st to 3rd Defendants' Arguments

• The Defendants challenged the continuation of the WFO on the basis that the Claimants had not demonstrated a sufficient risk of dissipation of assets.
• They argued there was material delay in seeking relief, which undermined the claim of real risk.
• The Defendants submitted that the transactions were legitimate commercial restructuring without fraudulent intent.
• They pointed to arbitration proceedings initiated by group companies as evidence of active dispute rather than dissipation.
• It was contended that the Mints family had brought their assets to the UK, negating the risk of dissipation.
• They emphasized the absence of recent evidence of dissipation since January 2018.

4th Defendant's Arguments

• Initially adopted the submissions of the 1st to 3rd Defendants opposing continuation of the WFO.
• Later withdrew opposition to preserve the option of making a full discharge application on fuller evidence.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by affirming the established legal principles for granting a freezing order, emphasizing the necessity of solid evidence demonstrating a real risk of unjustified dissipation of assets. The court noted that the Defendants did not provide witness evidence to counter the Claimants' case, which had comfortably met the good arguable case threshold.

The court analyzed the factual matrix, focusing on the 2017 transactions whereby secured loans were replaced with illiquid bonds, the termination of prior security arrangements, and subsequent asset transfers within the O1 Group. These transactions were characterized by the court as dissipation because they removed valuable security from the Banks and replaced it with substantially less valuable instruments.

The court rejected the Defendants' argument that intra-group asset transfers were normal and non-dissipatory, particularly given the timing after notice of claims and the absence of evidence that full value was received or any commercial rationale was provided.

The reduction in capital of one group company and the lack of clarity about the disposition of substantial funds further reinforced the risk of dissipation, especially as the company was left a worthless shell. The court also accepted that the involvement of a third party to route funds across jurisdictions indicated the Defendants’ capacity to dissipate assets.

Regarding delay, the court acknowledged some delay but found it justifiable given the complexity of the case, difficulties in evidence gathering, and the need to establish jurisdiction based on the Defendants’ domicile. The delay was not so extensive as to negate the genuine belief in risk of dissipation, nor was it sufficient to bar relief.

Overall, the court concluded that the Claimants had provided solid evidence of a real risk of dissipation, and the Defendants had failed to provide satisfactory explanations or evidence to the contrary. The court therefore found it just and convenient to continue the WFO, subject to replacement by undertakings.

Holding and Implications

The court held that the worldwide freezing order should continue. The Defendants failed to rebut the Claimants’ evidence of a real risk of unjustified dissipation of assets, and the delay in seeking relief did not preclude the grant of the order.

The immediate effect is that the Defendants remain restrained from disposing of or concealing assets that might frustrate enforcement of any judgment. The WFO was replaced by undertakings to similar effect. No new legal precedent was established; rather, the court applied established principles to the facts before it.