In its recent decision in JSC VTB Bank v Pavel Skurikhin & Ors the English Court of Appeal dismissed as an abuse of process a challenge to a receivership order where the receivers sought to enforce a judgment of the Court. 

Mr Skurikhin was subject to two judgments in the sum of £13.5 million and a worldwide freezing order over his assets, up to £25million. VTB sought to enforce the judgments against a number of properties in Italy owned by a limited partnership, whose shares in turn were held by third parties for the benefit of a Liechtenstein Foundation of which Mr Skurikhin was a beneficiary. In connection with this VTB obtained the appointment of a receiver over the partnership’s shares and ultimately acquired possession of the properties which were put up for sale.

The Foundation subsequently passed a resolution excluding Mr Skurikhin from the class of beneficiaries and sought to discharge the receivership order on the basis that Mr Skurikhin’ s removal was a material change of circumstances and thus the receivership order should be discharged. The discharge application was dismissed in the High Court, which found that the Foundation’s resolution was likely brought about at the instigation of Mr Skurikhin to place obstacles in the way of enforcement of the judgments against him. The Court held that it was an abuse of process for the Foundation to seek to reopen an interlocutory order on the basis of a development that was wholly within its control. The Foundation appealed.

The Court of Appeal dismissed the appeal. The Court held that the application was a clear case of abuse of process in circumstances where the Foundation accepted Mr Skurikhin’s instructions to exclude him as a named beneficiary so that it might contend he had no interest in the assets against which VTB sought to enforce.  The Court also found that the removal of Mr Skurikhin from the class of beneficiaries was a breach of the freezing order and the change of circumstances brought about by the revocations was not material to the appointment of the receivers.

Parties often go to great lengths to evade the consequences of a judgment or order including pursuing robust legal challenges in court. This judgment amply demonstrates that the Court is well aware of the possibility that parties may misuse its procedures in such a way so as to avoid the consequences of a judgment or order. It also illustrates that even if complicated structures have been set up in order to distance an individual from his assets, courts will be willing to see through these structures and will focus on the reality of the situation so as to enable enforcement to take place.