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What amounts to ‘vexatious and oppressive’ conduct for the court to grant an ASI?

Author: Syedur Rahman  25 April 2024
4 min read

The jurisdiction to grant an anti-suit injunction (ASI) arises in two broad categories of case:

  • Where a claimant can invoke a contractual provision conferring on him the right to be sued in a particular forum;
  • Where the claimant can point to clearly unconscionable conduct or threat of unconscionable conduct on the part of the party sought to be restrained.

(see Seismic Shipping Inc & Anor v Total E & P UK plc (The Western Regent) 2005 EWCA Civ 985)

In a recent hearing, Bourlakova v Bourlakov [2024] EWHC 929 (Ch), the claimants relied on the second category. They said that the foreign proceedings were vexatious or oppressive, and should be restrained. 

In this instance, Mr Justice Trower refused the application and allowed the foreign proceedings to continue. We look what constitutes ‘unconscionable conduct’ and why the threshold was not met in this case.

Brief background

The facts, and the procedural history, of this case are complicated. For the purpose of this article, it is sufficient to say that there is an underlying dispute about the legal recipient of the late Mr Bourlakov’s billion euro fortune. 

One of the people who allege that they are rightfully owed money from Mr Bourlakov’s estate is Mr Kazakov. His claim is grounded in the ‘partnership issue’, which relies on the existence of a business partnership between Mr Bourlakov and Mr Kazakov, and a monetary obligation to pay Mr Kazakov the value of his stake in the business partnership. This is disputed. 

The other people who allege entitlement to proceeds from the estate include Mr Bourlakov’s ex-wife, a woman with whom he had an affair, and his children. 

Mr Kazakov alleges that he is owed €1.485 billion from Mr Bourlakov. This sum outweighs the value of the estate and Mr Kazakov sought an order from the Russian courts that Mr Bourlakov’s estate is bankrupt (the Bankruptcy Application).

Overall, facts relating to the dispute have spawned proceedings in nine separate jurisdictions.

What is vexatious or oppressive conduct?

Conduct which is objectively vexatious or oppressive may include:

  • Initiating foreign proceedings which are bound to fail.
  • Commencing proceedings abroad which raise issues that are already subject to proceedings in England. 

However, the second point should be read in light of the caveat that in the context of ASIs there is no presumption that a multiplicity of proceedings is vexatious. 

The court must ask itself how best to strike an appropriate balance between the possible injustice to the parties, depending on whether the ASI is granted or refused. 

Are the issues in the proceedings the same?

The important question in this case was whether the issues which arise in the Bankruptcy Application can properly be characterised as part of the dispute in respect of which the natural forum is England.

Or in other words, are the issues in the Bankruptcy Application the same issues that will be determined in the English proceedings? 

If there is an overlap, there is a risk of incongruent judgments in two separate jurisdictions. 

The claimants relied on this point. They said that a judgment in the Bankruptcy Application based on a finding that Mr Bourlakov owed €1.485 billion to Mr Kazakov would be irreconcilable with a judgment in the English proceedings finding that there was no partnership. 

However Mr Kazakov offered an undertaking that he would not argue for an issue estoppel on the partnership issue in England if the same issue had been determined on the Bankruptcy Application. The risk of issue estoppel that might affect the proper determination of the partnership issue was minimised.

The proceedings raise separate issues

Mr Kazakov’s arguments included:

  • Russia is the only place in which a bankruptcy administrator can be appointed under the Russian Bankruptcy Law.
  • The Bankruptcy Application is limited in scope and does not invite the Russian court to determine the existence of the partnership.
  • The decision of the Russian court on the Bankruptcy Application will not create an issue estoppel on the partnership issue in England.

Mr Justice Trower agreed with Mr Kazakov, considering that the only right that Mr Kazakov has which can be vindicated by a claim (if successful) in England is payment of a contingent amount payable under article 2 of the relevant agreement with Mr Bourlakov. 

That is not the same thing as the right to an insolvency appointment in Russia. 

Possible prejudice arising from granting the ASI

An important point for Mr Kazakov, was that it seems to be the case that if a petitioner withdraws his Bankruptcy Application in the Russian Courts, he cannot bring it again. 

While this position is not entirely certain (and there was disagreement between the experts on the point) the judge agreed that it was at least arguable that Mr Kazakov would not be able to proceed with a further bankruptcy application in Russia. If that is the case, it would prejudice his position unfairly. 

Comment

The majority of ASI applications are based on contractual provisions. i.e. There is an arbitration agreement in place that agrees that the governing law in England and Wales (for example), and one party ignores it and begins proceedings in a foreign court instead. 

It is more unusual to make a case based on ‘unconscionable conduct’. While the language is fairly emotive (such as ‘unconscionable’, ‘vexatious’ and ‘oppressive’), in some circumstances the assessment is quite factual: whether the proceedings are bound to fail, or whether the issues raised in the proceedings are the same.  

While some documentation may overlap, that is not definitive. The court will consider the purpose and the outcome of each of the proceedings to determine if the issues truly overlap.

The court is also wary of weighing up any prejudice to either party. If there is a possibility of prejudice to one side, then that will weigh heavily in their favour, even if it is an outside chance. 

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Syedur Rahman

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Syedur Rahman is known for his in-depth experience of serious fraud, white-collar crime and serious crime cases, as well as his expertise in worldwide asset tracing and recovery, international arbitration, civil recovery, cryptocurrency and high-stakes commercial disputes.

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