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Court of Appeal declines jurisdiction over massive Kazakh bank fraud claims


Alliance Bank JSC v Aquanta Corporation [2012] EWCA Civ 1588

The Court of Appeal has dismissed an appeal by a Kazakh bank from the judgment of Burton J declining jurisdiction in respect of a US$1.1 billion Kazakh bank fraud claim. The claimant had brought multiple claims in contract, tort and restitution against connected defendants alleging a conspiracy over several years whereby assets worth more than US$1 billion were allegedly stolen from it. It is alleged that the money was stolen by the procurement of loan agreements with exclusive English jurisdiction clauses, and laundered through four offshore companies owned or controlled by three brothers who are Kazakh nationals. The allegations had been the subject of criminal investigations and proceedings against some of the defendants in the Kazakh courts.

The bank sought to rely on English jurisdiction clauses in the loan agreements on the grounds that (i) it was subrogated to the lender's rights and/or (ii) the brothers were parties to the loan agreements and jurisdiction clauses since the offshore borrowing companies were their alter egos and/or (iii) the claims against the defendants were claims in respect of contracts governed by English law and containing an English jurisdiction clause and/or (iv) all the defendants were necessary or proper parties to a claim against one of the borrowing companies.

The Court of Appeal held that there was no serious issue that the bank was subrogated to the lender's rights under the loan agreement, or that the brothers were parties to the jurisdiction clauses in the agreements with the companies under the alter ego principle.  It also upheld the decision of Burton J held that in any event England was not the appropriate forum for the claim.  The judgment considers, among other things, the requirements of "extinguished rights subrogation", and the width of the jurisdictional gateway ("in respect of a contract") under CPR 6 Practice Direction 6B.

The judgment is here.

Richard Slade QC acted for the offshore companies (D1-4), instructed by Klein Solicitors.

Harry Matovu QC acted for two of the brothers and the former parent of the bank (D7-9), instructed by Memery Crystal.