Factual and Procedural Background
This appeal concerns claims brought by Company A against three individuals (referred to here as Defendant 1, Defendant 2 and Defendant 3) arising from the transfer and dissipation of sale proceeds that, the claimant alleges, should have been frozen by a long‑standing worldwide freezing order. Company A sued for (i) unlawful means conspiracy and (ii) inducement of a breach of rights existing under a judgment debt (the so‑called Marex tort).
Key factual events as found by the trial judge and described in the opinion:
- In 2011 a worldwide freezing order was made against Defendant 1 and companies connected to him. That freezing order remained in force through later proceedings.
- In late 2014 and early 2015 the English court entered liability judgments against Defendant 1 and related companies for sums in excess of US$47.6 million; the judgment debt (with interest and costs) later exceeded US$60 million after appeals lapsed for lack of security.
- Company C was a company controlled (found to be beneficially owned) by Defendant 1 and owned two villas in The State. Those villas were sold in October 2015 for €65.1 million and the sale proceeds were held in a court account in The State pending distribution.
- Most proceeds were distributed in February 2017: about €34.6 million to Company D (a bank) and €27,127,855.01 to Defendant 3 as the lawyer holding client funds for Company C in his client account.
- On 21–23 February 2017, on instructions said to originate from Defendant 1 and given via Defendant 2 to Defendant 3, Defendant 3 transferred approximately US$26.7 million (the remaining proceeds) from his client account to Company B. Those funds were subsequently dissipated upon receipt by Company B.
- Company A issued proceedings in July 2022 claiming unlawful means conspiracy against all three defendants and, against Defendant 2 and Defendant 3, an alternative claim in the Marex tort. Defendant 1 participated remotely at trial; Defendant 2 and Defendant 3 did not take part in the trial (Defendant 3 had previously contested jurisdiction in England and then ceased to participate further).
- The trial judge (Judge Colton) dismissed the claims against all three defendants. On appeal the appellate court found that key factual conclusions as to Defendant 2's knowledge were plainly wrong and that the trial judge was wrong to hold that the standard "Babanaft proviso" afforded Defendant 3 a defence, applying binding Supreme Court authority to the contrary. The appellate court allowed the appeal and entered judgment for Company A against each defendant.
Legal Issues Presented
- Whether the trial judge's factual findings about Defendant 2's knowledge of (a) the existence and continued operation of the freezing order and (b) the existence of the judgment debt were perverse and should be disturbed on appeal.
- Whether the Babanaft proviso in the freezing order (the standard proviso that "the terms of this Order do not affect or concern anyone outside the jurisdiction of this Court") affords a defence to a foreign adviser (Defendant 3) sued in tort for participating in conduct that assisted the addressee of the freezing order to dissipate assets.
- Whether the unlawful means conspiracy claim was established against each defendant on the facts found (including the application of established principles as to intention, concerted action and unlawful means).
- As an alternative, whether the so‑called Marex tort (inducement of a breach of rights under a judgment) was made out against Defendant 2 and Defendant 3, and what defences (including belief in entitlement or justification) might be available.
Arguments of the Parties
Company A's Arguments
- Company A (through Attorney Phillips and other counsel) submitted that the trial judge's factual conclusions concerning Defendant 2's knowledge were plainly wrong and could not stand: Defendant 2 was a director of multiple companies subject to the freezing order, had sworn affidavits of assets for one company, and was involved in company management and dealings that made knowledge of the freezing order and of the judgment debt effectively unavoidable.
- Company A argued that the Babanaft proviso could not shield Defendant 3 from civil liability in conspiracy to injure by unlawful means, relying on the reasoning of this court and the Supreme Court in the JSC BTA Bank / Ablyazov litigation to the effect that foreigners outside the jurisdiction may still be civilly liable for assisting an addressee of an injunction to defeat the claimant's rights.
- On the Marex tort, Company A asserted that (i) Defendant 2 and Defendant 3 knew of the judgment and of the likely effect of the transfer in putting funds beyond reach of enforcement and (ii) belief by the assister that they were entitled to act would not necessarily defeat liability where the assister knew the transfer would violate the claimant's judgment rights.
Defendant 3's Arguments
- Defendant 3 had challenged jurisdiction in England and, in his witness statement for that challenge, stated that he did not know at the time of the transfer that Defendant 1 was the ultimate beneficial owner of Company C; he said he had been informed that the ultimate beneficial owner was someone else.
- At trial the trial judge found that Defendant 3 genuinely believed that he was entitled and obliged (by his professional duties under local law in The State) to transfer the funds, and the trial judge treated the Babanaft proviso as potentially insulating Defendant 3 from tortious liability because he was outside the territorial jurisdiction.
Defendant 2 and Defendant 1
- Defendant 2 took no part in the proceedings at any stage and did not file an acknowledgment of service. The trial judge treated the evidence on which the claim proceeded and made findings (including that Defendant 2 instructed Defendant 3 to transfer funds on instructions from Defendant 1).
- Defendant 1 participated remotely and had earlier been the respondent to the freezing order and the judgment debtor; the trial judge found Defendant 1 was the beneficial owner of Company C and that instructions to transfer proceeds originated from him.
Other Procedural / Defence Points Raised
- Defendant 3 relied in part on professional obligations under local law (in The State) as a reason for his conduct and emphasised the Babanaft proviso. The trial judge considered whether that proviso afforded a defence and invited post‑hearing submissions on the point.
- Company A accepted it bore the burden of proof on the balance of probabilities and that it had a duty of fair presentation towards unrepresented defendants, but submitted nothing to suggest the duty would have required pressing points hopeless in the light of binding Supreme Court authority.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Marex Financial Ltd v Sevilleja Garcia |
Source of the so‑called "Marex tort" (inducement of breach of rights under a judgment). |
Cited as the origin of the secondary tort on which Company A relied as an alternative to conspiracy; the court did not decide all open issues on this tort because the conspiracy claim succeeded. |
| Babanaft International Co SA v Bassatne |
The standard "Babanaft proviso" in freezing orders that the order "does not affect or concern anyone outside the jurisdiction". |
The trial judge had relied on this proviso to conclude Defendant 3 had a defence; the appellate court held that treating the proviso as affording a defence to civil liability for conspiracy was contrary to binding Supreme Court authority. |
| JSC BTA Bank v Khrapunov / Ablyazov (Court of Appeal and Supreme Court) |
Whether the Babanaft proviso prevents civil liability for assisting breach of a freezing order; scope of liability for a foreign co‑conspirator. |
The appellate court treated the Supreme Court's reasoning as binding: a foreign assister may be civilly liable in conspiracy for assisting the addressee of a freezing order to defeat the claimant's rights even if the assister benefits from the Babanaft proviso as regards contempt. |
| FM Capital Partners Ltd v Marino |
Authoritative summary of the elements of unlawful means conspiracy. |
The appellate court adopted that summary as the statement of the elements to be applied to the facts (combination, intention to injure, concerted action, use of unlawful means and causation of loss). |
| Kuwait Oil Tanker Co SAK v Al Bader (No.3) |
Points on combination/awareness among conspirators and inference of intent. |
Cited to explain that conspirators need not join at the same time and intent may be inferred from primary facts; used in assessing concert and intention. |
| Revenue and Customs Commissioners v Total Network |
That unlawful means need not be independently actionable and that not all conspirators must themselves use unlawful means. |
Cited to support the proposition that only at least one conspirator must use unlawful means and to the scope of unlawful means for conspiracy. |
| Bourgoin SA v Minister of Agriculture |
Inference of intent where an act is done deliberately with knowledge of consequences. |
Used to support the approach that intent to injure can be inferred from deliberate conduct with knowledge of consequences. |
| Lonrho Plc v Fayed |
That a defendant's primary purpose being to protect own interests is not a defence where unlawful means intentionally injure claimant. |
Referenced when discussing intention and purpose in conspiracy claims. |
| OBG Ltd v Allan |
Principles on intention and mental element in inducement torts/related torts. |
Cited in discussing both conspiracy intention and the Marex tort (and whether honest belief affects mental element). |
| Volpi v Volpi |
Standard for appellate review of factual findings (whether a finding is one no reasonable judge could have reached). |
Relied on by Company A to submit that the trial judge's findings about Defendant 2's knowledge were perverse and should be overturned. |
| Arcelormittal USA LLC v Ruia |
That dishonesty is not an element of unlawful means conspiracy. |
Used to clarify that conspiracy does not require proof of dishonesty per se. |
| Palmer Birch v Lloyd |
Discussion of whether justification is a defence to unlawful means conspiracy and damage requirement. |
Cited to support that justification is not a defence to unlawful means conspiracy and to the damage element. |
| ED&F Man Capital Markets Ltd v Come Harvest |
That blind‑eye knowledge may suffice for intention and liability (turning a blind eye counts as knowledge). |
Applied to the argument that Defendant 2 must have known or deliberately turned a blind eye to the freezing order and judgment debt. |
| The Eurysthenes |
Authority for treating deliberate turning of a blind eye as equivalent to knowledge. |
Invoked when discussing the scope of knowledge required for conspiracy liability. |
| Meretz Investments NV v ACP Ltd; Allen v Dodd |
Cases concerning the tort of inducing a breach of contract and the role of honest belief/intent. |
Referenced by the trial judge when assessing whether Defendant 3's honest belief that he was entitled to act meant the mental element of the Marex tort was lacking; appellate court left open the correctness of those in this context. |
| Emerald Construction Co Ltd v Lowthian; British Motor Trade Association v Salvadori |
Principles on third‑party procurement of breaches and blind‑eye knowledge. |
Used in the discussion of the Marex tort and the mental element of inducement. |
| Selected earlier judgments in the same litigation (e.g. Lakatamia Shipping Co Ltd v Su at various dates) |
Prior interlocutory and jurisdictional decisions and prior summaries of legal principles relevant to the litigation. |
Used for factual background and to adopt prior summaries of principles (e.g. on Marex and jurisdictional points). |
Court's Reasoning and Analysis
The appellate court proceeded in a structured way. It first restated the established elements of unlawful means conspiracy (combination/understanding; intention to injure or intention resulting from inevitable loss; concerted action; use of unlawful means; and causation of loss) and emphasised authorities showing (i) that not all conspirators must themselves use unlawful means and (ii) that deliberate turning of a blind eye can suffice as knowledge.
Applying those principles, the court reviewed the trial judge's factual findings and their consequences:
- The trial judge had made clear, and the appellate court accepted, that the transfer of the sale proceeds to Company B occurred on the instructions of Defendant 2 acting for Defendant 1 and that the funds were thereafter dissipated.
- The trial judge found Defendant 1 was subject to the freezing order, was the beneficial owner of Company C, and owed the judgment debt at the time of transfer; the transfer therefore breached the freezing order and interfered with Company A's rights of enforcement.
- The trial judge also found that Defendant 3 knew the material facts (existence of the freezing order, existence of the judgment debt and Defendant 1's beneficial ownership) and therefore that Defendant 3 knew the transfer would hinder Company A's enforcement.
Turning to Defendant 2, the appellate court reviewed the trial judge's contrary conclusion that Defendant 2 did not know of the freezing order or the judgment debt. The appellate court concluded that the trial judge's findings on those points were plainly wrong: given Defendant 2's directorships in companies subject to the freezing order, his involvement in management and asset matters, his role in the events surrounding the sale and transfer, and the surrounding context (including Company A's attempts to intervene in the sale in The State), it was unreasonable to find he lacked knowledge. The appellate court held that either Defendant 2 knew the relevant facts or deliberately turned a blind eye (which is sufficient for liability). The court therefore allowed Company A permission to challenge those factual conclusions and found them wrong on appeal.
On the question whether Defendant 3 could rely on the Babanaft proviso as a defence to civil liability in conspiracy, the court undertook a close analysis of the authorities. It observed that the point had been considered in the JSC BTA Bank / Ablyazov line of authority. The appellate court emphasised the Supreme Court's reasoning that the Babanaft proviso may preclude penal sanctions for contempt against a foreign party outside the jurisdiction but does not necessarily confer immunity from civil liability for assisting the addressee of an injunction to breach obligations under that injunction. The appellate court concluded the trial judge was wrong to treat the proviso as affording a defence to Defendant 3 for unlawful means conspiracy.
The court therefore reached the legal result that all three defendants were liable in unlawful means conspiracy: Defendant 1 as the addressee of the order who acted unlawfully, and Defendant 2 and Defendant 3 as persons who assisted and participated in the concerted action that used unlawful means to defeat Company A's rights.
The court declined to resolve novel or open questions about the Marex tort and possible defences of honest belief or justification in that tort. It explained that those issues are developing, fact‑sensitive and should be decided only in a case where they are central and have been fully argued; given the success of the conspiracy claim there was no need to determine them in detail on this appeal.
The court also noted subsequent developments in The State (a default judgment in The State in favour of Defendant 3 and a communication from the local Bar association) but held those developments did not affect the English court's decision because Defendant 3 had chosen not to pursue his English defence at trial and the English court had lawfully concluded it had jurisdiction to adjudicate.
Holding and Implications
Holding: The appellate court allowed the appeal. It set aside paragraph 1 of the order of the trial judge and entered judgment for Company A against each of the three defendants on the unlawful means conspiracy claim.
Implications and practical effect:
- The direct effect is that Company A succeeds in its primary claim for unlawful means conspiracy and judgment was entered against Defendant 1, Defendant 2 and Defendant 3.
- The court held that the Babanaft proviso does not provide a general defence to civil liability for a foreign assister who participates in deliberate conduct to defeat the enforcement of a freezing order; the court treated Supreme Court authority on that point as binding.
- The appellate decision reversed the trial judge's key factual findings about Defendant 2's knowledge and, accordingly, the conspirators are treated as having the requisite knowledge or willful blindness to sustain conspiracy liability.
- The court did not decide novel aspects of the Marex tort or whether an honest belief or justification could operate as a defence to the Marex tort; those questions remain open for future litigation where they are directly in issue and fully argued.
- The judgment emphasises that foreign professional advisers cannot rely on the territorial proviso in freezing orders to escape civil liability for participating in deliberate schemes to frustrate enforcement—though such persons may remain beyond contempt sanctions—consistent with the Supreme Court's reasoning.
- No wider change in legal principle beyond application of existing authorities was announced; the court treated some issues as reserved for future cases and limited its holding to the facts and authorities before it.
This summary has been prepared solely from the contents of the provided opinion. All names, entities and locations have been anonymised and replaced with consistent generic placeholders in accordance with the instruction accompanying the task.