The latest decision in JSC BTA Bank v Ablyazov  UKSC 19 provides an important analysis of the tort of conspiracy by unlawful means and the jurisdiction issues which may also arise in connection with such claims.
In 2015 the JSC BTA Bank (“the Bank”) brought a claim against Mr. Ablyazov (“Mr. A”) and his son-in-law Mr. Khrapunov (“Mr. K”). The claim alleged that Mr. K, who is domiciled in Switzerland, was aware of freezing orders and receivership orders against Mr. A, and that he entered into a “combination” or understanding with him to help dissipate and conceal his assets.
The Court of Appeal and the High Court had held that Mr. K was instrumental in helping to conceal the assets. His actions were found to constitute the tort of conspiracy to cause financial loss to the Bank by unlawful means, namely serial breaches of the freezing and receivership orders, in contempt of court. It was also held that the English courts had jurisdiction even though the breaches took place elsewhere.
Mr. K was granted permission to appeal to the Supreme Court. In a decision handed down on 21 March 2018, the Supreme Court dismissed that appeal.
The tort of conspiracy is an “economic tort”, which requires either a conspiracy to injure or a conspiracy to do, by unlawful means, an act which may be lawful in itself. Mr. K argued that contempt cannot constitute the required “unlawful means” for the tort of conspiracy, as it is not a wrong which by itself entitles a claimant to sue. Therefore, he argued, there was no arguable case against him on which the tort could be founded.
The tort of conspiracy can be divided into two forms: “lawful means” conspiracy and “unlawful means” conspiracy. A person has a right to advance his own interest by lawful means, even if the foreseeable consequence is damage to the interest of others. However, where he seeks to do so by unlawful means, he has no such right.
Both forms require a claimant to prove that acts done in combination between the defendants have caused them loss. When considering what constitutes unlawful, the Court is not concerned with whether unlawful means gives rise to a different cause of action, independent of the alleged conspiracy.
The Supreme Court held that the correct test to be used when establishing whether the unlawfulness counts as unlawful means depends on
- the nature of the unlawfulness, and
- its relationship with the resultant damage to the claimant. This test is, therefore, case specific.
The Supreme Court concluded that the Bank’s pleaded allegations disclosed a good cause of action for conspiracy to injure it by unlawful means.
Mr. K also argued that the Bank was incorrect to bring its claim in England, as the courts lacked jurisdiction due to the Lugano Convention (“the Convention”) to which the UK and Switzerland are parties. The Convention states that a person should be sued in the Convention state in which he or she is domiciled. However, the Bank relied upon Article 5(3) of the Convention, which provides an exception to this and states that a person may be sued in matters relating to tort “in the courts for the place where the harmful event occurred or may occur”.
The Supreme Court held that the place where the conspiratorial agreement was made is the place of the event which gives rise to and is at the origin of, the damage. Therefore, as the start of the conspiratorial agreement took place in England, this was the place giving rise to the damage, even though all other steps took place overseas. The hatching of the agreement to conspire should be regarded as the harmful event which set the tort in motion.
This case is of interest to parties who frequently bring freezing orders, including financial institutions and Insolvency Practitioners. It clarifies the basis on which the tort of conspiracy may be alleged and widens the scope for pursuing fraudsters and potential targets under the English jurisdiction, notwithstanding the fact that those individuals might be performing some acts outside the UK.
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