The High Court judgment in JSC Commercial Bank PrivatBank v Kolomoisky, Bogolyubov and others [2025] EWHC 50 (Ch) reflects a longstanding willingness of the English court to make ancillary orders to support freezing injunctions.
In this case, the Court ordered a party to take all reasonable steps to restore dissolved companies to the BVI register because they were said to have held assets belonging to the subject of a freezing injunction – assets which were said to be worth up to $1bn. The English court has again shown that it is primed to use its equitable powers to provide effective and flexible remedies in response to the needs of a case.
Background
In 2017, the Ukrainian bank, JSC Commercial Bank PrivatBank (the Bank), issued a fraud claim against various defendants, including its former majority shareholders, Mr Kolomoisky and Mr Bogolyubov. Mr Bogolyubov has been subject to a worldwide freezing injunction in support of these proceedings ever since they were commenced.
In 2023, the Bank came to understand that several BVI companies disclosed by the defendants during asset disclosure had been dissolved. The present judgment relates to an application by which the Bank sought an order that Mr Bogolyubov must use all reasonable endeavours to restore these companies to the BVI register. The defendants' asset disclosure had previously indicated that the assets originally held by these companies may be worth as much as $1bn. Following the companies' dissolution, these assets were bona vacantia and vested in the BVI government. If the companies were restored to the register, the assets would re-vest in the companies and so once again fall within the ambit of the freezing injunction over Mr Bogloyubov's assets.
Requiring a respondent to a freezing injunction to take active steps to preserve the availability of a third party's assets
Under section 37 of the Senior Courts Act 1981, the English Court has the power to grant a freezing injunction or make ancillary orders in support of a freezing injunction where it is "just and convenient to do so."
A reminder of the test for a freezing injunction
As Lord Leggatt explained in Broad Idea Ltd v Convoy Collateral Ltd [2021] UKPC 24, a freezing injunction is justified "where it is needed to ensure that assets against which a judgment could be enforced remain available to satisfy the judgment. It has been pointed out that this principle can in an expanded form apply to any conduct which would diminish the value of assets against which a judgment could potentially be enforced, even if that conduct does not involve dealing with those assets directly".
Furthermore, in JSC Mezprom Bank v Pugachev [2016] 1 WLR 160, the Court of Appeal found that, where just and convenient, a court may order a respondent to take positive steps ancillary to a freezing order. Indeed as Lewison LJ explained in JSC Mezprom Bank, "[s]o far as judicial precedent is concerned, we can say with some confidence that the jurisdiction to make a freezing order also carries with it the power to make whatever ancillary orders are necessary to make the freezing order effective... we were not shown any authority which places explicit limits on that power."
In light of those powers, the court found that an ancillary order was just and convenient in the present circumstances, given that:
- if the relevant companies were not restored to the BVI register, it would not be possible for the Bank to enforce a judgment debt against the assets of those companies should it be successful at trial;
- the Bank had established a "good arguable case" that it had been and remained available to Mr Bogolyubov to prevent the dissolution of those companies by taking certain reasonable administrative steps in the BVI; and
- by the time the application was heard, Mr Bogolyubov had dropped his contention that he should not be compelled to restore these companies as a matter of principle.
Active steps in respect of a third party company not wholly owned by the respondent
While Mr Bogolyubov was eventually willing to accept most of the Bank's requests, he had resisted the suggestion that he should pay the full agency and registry fees necessary to restore one of the dissolved BVI companies (Myerson United Limited) on the basis that he only owned 50% of the company (with Mr Kolomoisky owning the remaining 50%).
The court disagreed. As a starting point, it noted that the terms of the freezing order separately restrained Mr Bogolyubov and Mr Kolomoisky from dealing with their assets, including the interests in assets they held in common. It follows that Mr Bogolyubov had a separate responsibility to take reasonable steps to prevent the assets of Myerson United Limited from being extinguished by restoring the company to the register. That was so despite Mr Kolomoisky being entitled to 50% of the company and irrespective of whether Mr Kolomoisky would fulfil his obligation to do the same.
In that regard, the court acknowledged that, to the extent Mr Bogolyubov incurs 100% of the expense of restoring Myerson United Limited to the BVI register, he may have an equitable right of contribution against Mr Kolomoisky proportionate to the extent of their interest.
Varying a freezing order to capture the assets of third party companies not wholly controlled by a respondent on paper
The approach of the court in respect of a company 50% owned by Mr Bogolyubov chimes with the muscular approach recently taken in other High Court proceedings to extend the ambit of a freezing order to cover the assets of third party companies. In Mold Investments Limited v Matthew Holloway and Andrew Jacques [2024] EWHC 280 (Ch), the court found that the assets of certain third party companies were under the direct personal control of the respondents, despite the respondents not being the sole directors or sole shareholders of those companies.
In so doing, the court in Mold Investments Limited opted not to follow the narrower two stage test set out in FM Capital Partners v Frédéric Marino and others [2018] EWHC 2889 (Comm) (which in turn takes a narrow interpretation of the Supreme Court's decision in JSC BTA Bank v Ablyazov [2015] UKSC 643). The test in FM Capital Partners states that the court will order the assets of a third party company to be frozen as long as:
- the company is wholly owned or controlled by the respondent. However, the court stated that the mere fact of a respondent being the sole shareholder and director of the company would not mean the respondent had control of the company's assets for the purposes of a freezing order. That is the case because any decision that the respondent might take to deal with or dispose of the company's assets would be made as an agent for the company and not as an individual in their own right; and
- the third party company's assets are in essence the respondent's assets. In that regard the court gave the example of a non-trading company with no active business interests. The court said such companies are "in truth no more than pockets or wallets of" respondents.
However, in Mold Investments Limited, various pieces of unsavoury evidence – including threats of physical violence against the director of the claimant coupled with the threat to dissipate the assets of the third party companies – came to light following the granting of the initial freezing order. That evidence pointed to the respondents' seeming ability, power and willingness to dispose of the assets of those companies as if they were "in fact" owned by the respondents themselves (and not by the companies). In the circumstances, therefore, the court considered it just and convenient to vary the freezing order so that it covered the third party companies' assets.
The test likely continues to be one of control as outlined in FM Capital Partners, albeit the High Court showed itself willing (in the more aggressive circumstances of Mold Investments Limited) to deploy its powers to freeze assets flexibly as against individuals who exhibit control over company assets, which on paper do not appear as their own.
Chabra injunctions
It is noteworthy that in Mold Investments Limited, the successful application to freeze the third party companies' assets was not made pursuant to a "Chabra" injunction. Named after the decision of Mummery J in TSB Private Bank International SA v Chabra [1992] 1 WLR 231, a Chabra injunction refers to the court's jurisdiction to grant a freezing injunction against a third party against whom the claimant asserts no claim for substantive relief i.e. the non-cause of action defendant.
Any Chabra injunction is "ancillary and incidental" to the freezing injunction granted against the principal defendant.Such an injunction can in principle be made where the respondent holds assets against which a judgment, made against the defendant to the claimant's substantive claim, could be enforced (for example, because the principal defendant has control over those assets, as was found to be the case in Mold Investments Limited).
For an example of exercise of the Chabra jurisdiction, read our article Serving Chabra freezing orders out of the jurisdiction.
Conclusion
As Lord Neuberger said in Linsen International Ltd v Humpuss Transportasi Kimia [2011] EWCA Civ 1042: "In the increasingly sophisticated world of international movement of goods, assets and money, and the formation of companies and the hiding of assets, the courts have to be astute to ensure that the law keeps pace with modern developments and is not flouted."
In that regard, we have previously considered how the English courts have kept pace with modern commerce and enabled fraud victims to seek to trace their assets into the hands of third parties operating through cryptocurrency exchanges as well as where parallel criminal proceedings are afoot.
Meanwhile, the recent judgments in JSC Commercial Bank PrivatBank and Mold Investments Limited illustrate how the English court is also willing to deploy its powers to widen the scope of freezing injunctions so that they capture global assets held by third parties ostensibly unconnected from the litigation at hand. In so doing, the court continues to ensure that valuable assets will be available against which subsequent judgments may be enforced.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
