“2. The Claimant ("the Bank") is a bank in Kazakhstan, 75.1% of whose share capital has, since2 February 2009 , been owned by the State of Kazakhstan through a sovereign wealth fund, Samruk-Kazyna. On that date the State effectively took control of the Bank when, according to the evidence of the Bank, there was significant concern as to the ability of the Bank to continue as a going concern. The Bank's accounts for the year ending31 December 2008 recorded a negative equity of about US$6.1 billion . Its debts, which are said to amount to US$12 billion , are being restructured pursuant to the law of Kazakhstan. 3. The Defendant ("Mr. Ablyazov") is the former chairman of the Bank and is accused by the Bank of "widespread misappropriation of the Bank's funds." It is said that he has treated the Bank "as if it were his own private source of funds". Four claims have now been issued in this jurisdiction against Mr. Ablyazov. The total sum claimed is in excess of US$1.8 billion . Further claims are anticipated which I was told will bring the total sum claimed to US$4 billion . 4. Mr. Ablyazov denies these claims. He states that the claims are an attempt by the President of Kazakhstan, Nursultan Nazarbayev, to take control of his assets in support of a politically motivated claim against Mr. Ablyazov, who is a leading figure in Kazakhstan's democratic opposition. His evidence paints a chilling picture of life in Kazakhstan where power resides with the President and the members of his family and close associates, where the rule of law is not respected and where dissent is ruthlessly eliminated. In 2003 Mr. Ablyazov was arrested and imprisoned and his assets seized after what he and others have said was a politically motivated trial. Whilst imprisoned on what he says were "trumped-up" charges he says that he was subjected to mistreatment, torture and an unsuccessful plot to assassinate him and that his assets were "distributed to the President's coterie". He says that political assassination is used in Kazakhstan as a means of silencing opposition and that there was a further attempt to assassinate him in 2004 in Moscow. His evidence suggests that Kazakhstan has much in common with Ancient Rome.”
“(i) As the claim is part of the Scheme, it is an abuse of the process of the English court and/or is oppressive and/or to permit it to proceed would be contrary to public policy. (ii) To allow the claim to proceed would be to give effect to, or be tantamount to giving effect to, a flagrant breach of international law, namely the Expropriation, which should not be permitted as a matter of English public policy. (iii) The claim is brought (or brought predominantly) for the collateral purpose of political oppression and/or persecution of the First Defendant and/or the elimination of the First Defendant as a political force in opposition to the present regime in Kazakhstan and is therefore an abuse of the process of the English court. (iv) The action involves the indirect enforcement of a penal, revenue or other public law of the Republic of Kazakhstan, namely the decree by which the said forced nationalisation was effected and/or the “Financial Stabilisation Law” of23 October 2008 and/or any and all laws making back-dated legislative changes to legitimise the Expropriation and/or any other law employed by the Kazakhstan authorities to effect the Expropriation and/or to advance the Scheme. (v) In all the circumstances, it will be impossible to have a fair trial of this action in breach of the Applicants’ rights at common law and underArticle 6 of the European Convention on Human Rights . In particular, the Applicants will not have a reasonable opportunity of presenting their case to the court under conditions which do not place them at a substantial disadvantage vis-à-vis the Claimant by reason of the illegal and/or illegitimate activities of the Kazakhstan authorities and/or the abuse by the Kazakhstan authorities of their powers in Kazakhstan in relation to the availability or willingness of witnesses to give evidence and the availability of documents, information and/or disclosure and otherwise.”
“10. The central allegation on which the Applicants rely is that Mr Ablyazov is the victim and principal target of the Scheme, a continuing oppressive and illegal scheme carefully orchestrated by the Kazakhstan authorities, the purpose of which is to expropriate Mr Ablyazov’s assets and/or to destroy their value, and to eliminate him as a political force in opposition to the present regime in Kazakhstan, headed by Nazarbayev. 11. Since late 2001, Mr Ablyazov has been a democratic political force in opposition to Nazarbayev’s increasingly authoritarian regime, in particular through significant political and financial support for the pro-reform movement, the DCK. Through his continued political activity, and his wealth (the major source of which was, by the time of the Expropriation, BTA), Mr Ablyazov was and remains a major threat to Nazarbayev’s dictatorial hold on power. 12. All significant power in Kazakhstan is concentrated in the hands of, and exercised by or at the direction of Nazarbayev, who maintains that power by controlling not just the organs of state (including the courts) but also major business and industrial assets in Kazakhstan, including its major banks. 13. From as far back as 2000-2001, pressure was repeatedly applied to Mr Ablyazov by Nazarbayev and his accomplices to transfer to Nazarbayev a controlling interest in BTA, either for free or for significantly less than its true value. 14. In 2002, Mr Ablyazov was imprisoned on false charges following a politically-motivated and widely condemned prosecution. Whilst in prison, shares in BTA, and Mr Ablyazov’s other assets, were illegally seized at Nazarbayev’s direction without compensation. Mr Ablyazov was released in May 2003, but only on the condition that he renounce all further political activity. Following his release, however, Mr Ablyazov cautiously resumed opposition political activity. 15. Nazarbayev’s demands for a substantial stake in BTA continued from early 2005. In February 2008, Nazarbayev presented Mr Ablyazov with the ultimatum that, unless shares in BTA were handed over to him quickly, they would be seized, and Mr Ablyazov would be arrested on new criminal charges. 16. Thereafter, the pressure from Nazarbayev on BTA increased, including through the Kazakhstan bank regulator, the FSA (which imposed unreasonable regulatory requirements with which it was impossible for BTA to comply), and associates of Nazarbayev. Mr Ablyazov was told that he was to be stripped of his assets, and his position at the head of BTA, to prevent him from supporting the democratic opposition or otherwise being a political threat to the Nazarbayev regime. 17. After repeated delays to his plans to acquire BTA by other means, Nazarbayev had new legislation introduced in October 2008 to enable the Government to nationalise the country’s banks, including BTA, under the guise of spurious legitimacy. Thereafter, various proposals were announced by the Government for the acquisition of stakes in BTA and the country’s other major banks. Instead of implementing those proposals as regards BTA, though, the Government and the FSA (under Nazarbayev’s control) implemented an obvious campaign to destabilise and undermine BTA, with a view to taking control of it. 18. This campaign culminated in the forced nationalisation of BTA in February 2009. Through the Samruk-Kazyna fund, the Government acquired a 75.1% stake in BTA, just over a super-majority stake, through a forced share issuance. This, and the subsequent restructuring carried out in relation to BTA, represented a total (or near total) expropriation of Mr Ablyazov’s interest in BTA, without any compensation. This was the Expropriation. 19. The Applicants say that the Expropriation was: (i) Unwarranted and inconsistent with prudent bank supervisory policies; (ii) In breach of, and invalid under, Kazakhstan law; (iii) In violation of Mr Ablyazov’s human rights; and (iv) A flagrant breach of international law. 20. BTA is now, through Samruk-Kazyna and through the individuals appointed by the Government to BTA’s management, a creature or instrument of, and under the control of, Nazarbayev and the Kazakhstan authorities. Indeed, as of January 2011, Nazarbayev has become, personally, the chairman of Samruk-Kazyna’s management committee. Post-Expropriation, BTA is being used by Nazarbayev and the authorities to continue to prosecute the Scheme. 21. The Scheme was and is being carried out in accordance and consistently with a carefully crafted confidential strategy for preserving Nazarbayev in power, entitled “Project SuperKhan”
“18. The Bank’s case is a case of fraud and embezzlement on an almost unprecedented scale. Essentially what is alleged is that Mr Ablyazov, on occasion with the assistance of the other Respondents, helped himself to huge amounts of the Bank’s cash resources by causing the Bank to make substantial transfers of funds to (or for the benefit of) a considerable number of overseas companies which he secretly owned. 19. Soon after the Respondents left the Bank, the Bank was obliged to undergo an insolvency process because its deficit of assets versus liabilities was in the region of US$16 billion Considerably greater, for example, than the total deficit in the BCCI liquidation in the 1990s. . This was the largest insolvency procedure which the Kazakh Republic has experienced. 20. The insolvency restructuring has now been completed. As part of it, the Bank’s creditors have had to write off US$ billions of debt (Hardman 22, para. 15 [6.1/13]). Those creditors include a number of well-known Western financial institutions (Hardman 22, para. 19), not least the Royal Bank of Scotland (which was itself subject to a similar nationalisation process in the UK at about the same time). 21. The restructuring has been approved in courts across the world, including the Chancery Division of the High Court in London (Hardman 22, paras. 36-37 [6.1/13]). Under the agreements entered into as part of the restructuring, the Bank is obliged to pursue all possible avenues to recover its losses from those who are believed to have been responsible for those losses (Hardman 22, paras. 20-24). The creditors are entitled to receive 50% of any recoveries (Hardman 22, para. 22). 22. The Bank is obliged to retain professional assistance to help it pursue those responsible for the losses (Hardman 22, paras. 20-24 [6.1/13]). The Bank’s asset recovery process is required to be monitored by a Recovery Sub-Committee, which is a sub-committee of the main Board of the Bank and must include at least one director appointed independently by the Bank’s creditors (and in fact includes two such creditor directors) (ibid.). The Bank has an obligation to report regularly to an independent recovery assets auditor and an obligation to justify certain key decisions to that auditor (ibid.). 23. The 7 actions which the Bank has commenced against one or more of the Respondents in the High Court in England (6 in the Commercial Court and one in the Chancery Division) are part of this recovery exercise. They are pursued on the authority of the new management The authority of the new management has been effectively blessed by the insolvency courts (Hardman 22, para. 37 [6.1/13]). and pursuant to the Bank’s obligations undertaken towards its creditors upon the restructuring. Major beneficiaries of any success in the actions will be the former creditors of the Bank. The suggestion that the actions are part of a pet project of the President to crush the Respondents could hardly be further from reality. The governance protections granted to the Bank’s creditors under the restructuring (including the asset recovery programme) are enshrined in the Bank’s charter which was amended for this purpose as part of the restructuring (Hardman 22, paras. 29-30 [6.1/13]); the Bank’s super-majority shareholder, Samruk-Kazyna, has undertaken to ensure that the governance and other rights of the creditors are maintained (Hardman 22, paras. 31-35).”
“If the Mateos family had remained in charge of the Rumasa group of companies perhaps no action would have been brought by any of the companies comprised in the Rumasa group against the appellants. But that consideration is irrelevant to the actions which have now been brought.”
“From the decision in the Buchanan case [1955] A.C. 516 counsel for the appellants sought to derive a general principle that even when an action is raised at the instance of a legal person distinct from the foreign government and even where the cause of action relied upon does not depend to any extent on the foreign law in question nevertheless if the action is brought at the instigation of the foreign government and the proceeds of the action would be applied by the foreign government for the purposes of a penal revenue or other public law of the foreign State relief cannot be given. It has to be observed that in the Buchanan case the action was being pursued by a person whose title as liquidator of the company depended on his having been appointed by a petition to the court in Scotland on behalf of the Inland Revenue, that the ground of action was that the transactions being attacked in the proceedings in Dublin were ultra vires and dishonest because there existed at the time that they were effected in Scotland a claim by the Inland Revenue which the transactions were designed to defeat, and that if no such claim existed the defendant would have been entitled to retain the subject matter of the claim. Most important there was an outstanding revenue claim in Scotland against the company which the whole proceeds of the action apart from the expenses of the action and the liquidation would be used to meet. No other interest was involved. That this was regarded as of critical importance appears from what was said in the decision on appeal by Maguire C.J., at p. 533. Having regard to the questions before this House in Government of India v. Taylor [1955] A.C. 491 I consider that it cannot be said that any approval was given by the House to the decision in the Buchanan case except to the extent that it held that there is a rule of law which precludes a state from suing in another state for taxes due under the law of the first state. No countenance was given in Government of India v. Taylor, in Rossano's case [1963] 2 Q.B. 352 nor in Brokaw v. Seatrain U.K. Ltd. [1971] 2 Q.B. 476 to the suggestion that an action in this country could be properly described as the indirect enforcement of a penal or revenue law in another country when no claim under that law remained unsatisfied. The existence of such unsatisfied claim to the satisfaction of which the proceeds of the action will be applied appears to me to be an essential feature of the principle enunciated in the Buchanan case [1955] A.C. 516 for refusing to allow the action to succeed. In the present case there is no allegation of any unsatisfied claim under the law of the Kingdom of Spain on which counsel for the appellants found. No provision of that law would provide a foundation for making any of the claims in question in the actions with which this appeal is concerned. The decision in the Buchanan case gives no basis for the substitution in place of such an unsatisfied claim, of a general desire on the part of the foreign state to secure a particular result, object or purpose from the enactment of the law. Counsel for the appellants were completely unable to point to any claim unsatisfied under the law of Spain of 29 June on which this aspect of their defence is founded and I consider that it has been clearly demonstrated that it was right for the judge to strike out the pleading which has been impugned in the trademarks action on the ground that it disclosed no reasonable defence and to refuse the proposed amendment in the banks' action on the same ground. Once this conclusion is arrived at I consider that the course taken by the judge under R.S.C., Ord. 18, r. 19 is justified by the terms of that rule.”
“a foreign Sovereign coming into this country, cannot be made responsible here for an act done in his sovereign character in his own country; whether it be an act right or wrong, whether according to the constitution of that country or not, the Courts of this country cannot sit in judgment upon an act of a Sovereign, effected by virtue of his Sovereign authority abroad, an act not done as a British subject, but supposed to be done in the exercise of his authority vested in him as Sovereign.”
“This court will not inquire into the legality of acts done by a foreign Government against its own subjects in respect of property situate in its own territory.”
“What we are concerned with here is legislation which takes away without compensation from a section of the citizen body singled out on racial grounds all their property on which the state passing the legislation can lay its hands and, in addition, deprives them of their citizenship. To my mind a law of this sort constitutes so grave an infringement of human rights that the courts of this country ought to refuse to recognise it as a law at all.”
“An expropriatory decree made in these circumstances and for this purpose is simply not acceptable today.”
“…the Expropriation took place without any compensation, was carried out for political and discriminatory purposes, and involved a massive deprivation of Mr. Ablyazov’s property…. The purpose of the Scheme as a whole is to expropriate the assets of Mr. Ablyazov and/or to destroy their value, and to eliminate him as a political force in opposition to the present regime in Kazakhstan. Thus, both the Expropriation in particular and the Scheme as a whole constitute flagrant breaches of international law, and grave infringements of the human rights of Mr. Ablyazov…..”