England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		4th February 2013

Mrs Justice Gloster DBE:

Introduction

1. By an application notice dated 4 July 2012 the first defendant, Vladimir Antonov ("Mr. Antonov"), sought the following relief:

i) the discharge of a worldwide freezing order granted by Teare J on 18 May 2012, on the application of the claimant, Akcine Bendrove Bankas Snoras ("the Bank"), as extended and amended on 15 June 2012 by Popplewell J (the "WWFO"), on the grounds of:

a) material non-disclosure;

b) delay; and/or

c) absence of any risk of dissipation to justify the making of the WWFO ("the Discharge Application");

ii) a variation of paragraphs 9 and 10 of the original WWFO, and paragraphs 7 and 8 of the WWFO as subsequently amended, so as to provide that Mr. Antonov is no longer required to provide details of his assets acquired since 2003, when he first acquired a substantial shareholding in the Bank ("the Variation Application"); and

iii) a stay of the underlying civil proceedings brought by the Bank (including a stay of the Variation Application) until after the final determination of certain extradition proceedings currently pending against Mr. Antonov ("the Stay Application")^[1].

The parties and other relevant entities

2. The Bank was incorporated in Lithuania on 17 March 1992. Prior to its insolvency in November 2011, it had one of the largest retail branch networks and was one of the major deposit taking institutions in Lithuania. As a result, its insolvency has had a significant public impact in that country. One of the Bank's subsidiaries, AS Latvijas Krajbanka ("Krajbanka"), carried out banking business in Latvia; it is currently in administration pursuant to Latvian law.
3. On 16 November 2011 the Bank of Lithuania ("the Central Bank") announced that an analysis of information from the Bank, compiled for supervisory purposes, had revealed poor quality assets and that the Bank had not reduced its operational risk as the Central Bank had previously required, in alleged breach of the requirements of Part 2 of Article 47 of the Law on the Banks of the Republic of Lithuania ("the Law on Banks"). On the same date the Central Bank also announced that it had imposed a moratorium restricting temporarily the Bank's activities until 21 November 2011 and had appointed Simon Vincent Freakley ("Mr. Freakley"), Chief Executive Officer of, and a partner in, Zolfo Cooper LLP ("Zolfo Cooper"), a United Kingdom firm specialising in restructuring, financial and corporate advisory work, as temporary administrator of the Bank pursuant to Article 76 of the Law on Banks ("the Temporary Administrator") to examine its financial situation and to assess the feasibility of the Bank resuming normal banking activities. In addition, on the same date, in accordance, or purportedly in accordance, with Articles 2, 3 and 8 of the Law on Financial Sustainability of the Republic of Lithuania ("the Law on Financial Sustainability"), the Government of the Republic of Lithuania ("the Lithuanian Government") announced that it had resolved to acquire compulsorily all of the shares in the Bank and to authorise the Ministry of Finance to manage, use and dispose of the shares as it saw fit, in essence nationalising the Bank.
4. On 24 November 2011, the Central Bank applied to the Vilnius District Court to initiate bankruptcy proceedings against the Bank. The Central Bank contended that, based on the work that it had done previously, and the further investigations undertaken by the Temporary Administrator, it had become apparent that a significant proportion of the assets recorded in the Bank's balance sheet were not available to it and that, accordingly, the Bank was insolvent. On 7 December 2011, the Bank's moratorium and temporary administration came to an end, and the Vilnius District Court issued an order opening bankruptcy proceedings in respect of the Bank (the "Bankruptcy Proceedings"). Pursuant to the terms of the order, Neil Cooper, a Chartered Certified Accountant and a licensed Insolvency Practitioner, and partner in the firm of Zolfo Cooper ("Mr. Cooper" or "the Bankruptcy Administrator"), was appointed bankruptcy administrator of the Bank. Upon the making of the Order, Mr. Cooper, in his capacity as such, assumed control of the day-to-day running of the Bank pursuant to Article 85 of the Law on Banks. The Bank contends that its total deficiency amounts to approximately £1 billion.
5. Mr. Antonov, who is (or was) a Russian banker and entrepreneur, now lives in the United Kingdom with his wife and two children, pursuant to indefinite leave given to him to remain in this country. In 2003, with the support of the Central Bank, he acquired 68.1% of the Bank, which he retained until its nationalisation in 2011. He became Chairman of the Supervisory Board of Bank.
6. In these proceedings, the Bank contends that one of the principal causes of its insolvency was the misuse and misappropriation of its assets by Mr. Antonov and by the former president of the Bank, the second defendant, Raimondas Baranauskas ("Mr. Baranauskas"), who owned 25.31 per cent of the ordinary shares in Snoras Bank prior to its nationalization in late 2011. The Bank contends that a considerable amount of forensic accounting work, completed since the appointment of Mr. Cooper, demonstrates a large scale abuse by Mr. Antonov of his position as Chairman and the apparent misappropriation or misuse by him and by Mr. Baranauskas, in breach of their duties under Lithuanian law, of assets totalling (to date) €492 million.
7. The Bank's civil claims for breach of duty have been brought in England on the basis that Mr. Antonov resides and is domiciled here. Mr. Antonov has served an acknowledgment of service and is not contesting the jurisdiction of this Court. The Bank did not apply to make Mr. Baranauskas subject to the WWFO, on the basis that his assets were located mainly in Lithuania and therefore covered by the freezing order in place in that country. Mr. Baranauskas has been served with proceedings in this case and has indicated that he intends to challenge jurisdiction.
8. A European arrest warrant ("EAW") has been issued against Mr. Antonov and Mr. Baranauskas, and the Lithuanian prosecuting authorities are seeking their extradition to Lithuania in connection with a criminal investigation taking place there into the conduct of the affairs of the Bank. Both men are resisting extradition.
9. The Lithuanian Government acting through the Deposit Insurance Fund ("the DIF"), a state owned entity, has guaranteed deposits in the Bank of up to €100,000 (Latvian Lira ("LTL") 345,280), per depositor. DIF has compensated depositors in amounts totalling in excess of LTL 4 billion, thereby making the Lithuanian Government the largest creditor in the Bank's bankruptcy by a considerable margin.

The Bank's claims in these proceedings

10. The Bank's claim against Mr. Antonov and Mr. Baranauskas for misappropriation and breach of duties owed to the Bank under Lithuanian law is for a total of approximately Euros 500 million. The claim is based on four principal allegations:

The Julius Baer Transactions (current value approximately €290 million)

i) The Bank contends that, in a series of transactions between September 2009 and March 2011, securities with a value of approximately €280 million^[2], which were owned by the Bank and held in a custody account with Raiffeisen Zentralbank Osterreich AG were transferred into accounts at a Swiss bank, Julius Baer & Co ("Julius Baer"), which were beneficially owned by Mr. Antonov and Mr. Baranauskas. The Bank also alleges that cash deposits were also used to acquire securities credited to these accounts. Once transferred out of the beneficial ownership of the Bank, the Bank contends that the securities were used as collateral for loans made by Julius Baer to Mr. Antonov and Mr. Baranauskas, the proceeds of which were paid on to entities owned and/or controlled by them. The Bank also alleges that the Bank's transfer records were improperly manipulated in order to disguise the transfer of ownership to Mr. Antonov and Mr. Baranauskas from the Bank, and that the latter's books and records continued to record the securities as being owned by the Bank; the Bank alleges that no consideration or commercial rationale has been identified for the transfers, and that they appear to amount to a de facto misappropriation or theft of the Bank's property.

The HSBC Switzerland Transactions (value approximately €57 million)

ii) The Bank contends that, in August 2009, a series of transfers of securities and cash owned by and held in the name of the Bank with HSBC Private Bank (Suisse) SA, Zurich were made to accounts owned and/or controlled by Mr. Antonov. The Bank alleges that the assets continued thereafter to be recorded in the books and records of the Bank as assets owned by it, but once transferred out of the beneficial ownership of the Bank, they were used as collateral for loans to third parties owned and/or controlled by Mr. Antonov. The Bank further alleges that, as with the Julius Baer transactions, no consideration or commercial rationale has been identified for the transfers, and that they appear to amount to a de facto misappropriation or theft of the Bank's property.

The Time Deposit Transactions (value approximately €128 million)

iii) The Bank contends that, between December 2010 and October 2011, a series of transactions took place whereby assets of the Bank (largely cash, but also securities in one instance) were transferred to third party institutions; and that these were recorded as unencumbered time deposits, or other assets, in the accounting records of the Bank but, in reality, were used as collateral for loans (or loan funding) by the third party institution to other entities, many of which it appeared were owned and/or controlled by, or otherwise connected to, Mr. Antonov. The Bank contends that the third party loans secured on the collateral have subsequently defaulted, but the collateral provided by the Bank has been appropriated or remains encumbered by the outstanding loans; that the pledging of these assets appears to have had no genuine commercial purpose; and that the true nature of the transactions was not revealed in the Bank's books and records.

The "Overvalue" Transactions

iv) The Bank alleges that there are two transactions whereby it paid significantly over market price for real property assets, which were acquired from companies owned or controlled by, or otherwise connected to, Mr. Antonov, in circumstances where those entities had themselves acquired the property only days before the subsequent sale to the Bank. The Bank further contends that the transactions appear to have been structured to enable Mr. Antonov, indirectly, to extract value from the Bank.

11. The Bank contends that the proceeds of the securities and cash, allegedly misappropriated from the Bank pursuant to the above transactions, were paid via a network of corporate entities and accounts in a variety of jurisdictions, often as part of same day transfers; that Mr. Cooper, as bankruptcy administrator, had established links between Mr. Antonov and many of the accounts and entities used in the movement of funds, which (according to the Bank) appear to have had no purpose other than to disguise the ultimate source of the funds. The evidence in the proceedings sets out extensive details of many of the funds transfers, and what the Bank alleged were Mr. Antonov's connection with the entities and accounts involved.

Procedural chronology

12. The following is a summary of some of the additional relevant dates relating to the insolvency, civil and criminal proceedings here and in Lithuania and elsewhere:

i) On 14 November 2011 the Lithuanian public prosecutor ("the Lithuanian Prosecutor") initiated a pre-trial investigation of Mr. Antonov and Mr. Baranauskas.

ii) On 16 November 2011, the Lithuanian Prosecutor, based on an assessment of the data provided by the Central Bank, and "… of the nature of the acts in respect whereof the pre-trial investigation is being performed" concluded, pursuant to Article 116 of the Code of Criminal Procedure of the Republic of Lithuania (which obliged him to take measures "to secure a potential civil claim"), that it was likely that a civil claim would be asserted, or property confiscation would be applied, in the case, and therefore that it was appropriate that a temporary, or provisional, restriction of ownership rights should be imposed in relation to property held by Mr. Antonov and his family members, effectively restraining them from disposing of various assets. Accordingly, a criminal temporary provisional restraint order ("PRO") was made by the Lithuanian Prosecutor against Mr. Antonov and his wife, restraining any dispositions in relation to eight specific motor vehicles.

iii) On 17 November 2011 the Deputy Lithuanian Prosecutor general was reported on Bloomberg Businessweek as having said publicly that "the Prosecutor General's Office had started an investigation into Snoras's operations and froze Lithuanian and foreign assets of some people involved."

iv) On 17 November 2011, the Lithuanian Parliament enacted six laws which, according to Mr. Antonov's expert in Lithuanian law, were designed retrospectively to validate the nationalisation of the Bank.

v) On 22 November 2011, Mr. Antonov spoke over the telephone with Mr. Freakley, Mr. Huck, a member of the Forensic Litigation Support Service Team at Zolfo Cooper, and Mr. David Ereira, a partner in Linklaters, Zolfo Cooper's English solicitors. According to Mr. Antonov: during the call, he stated that he wanted to cooperate with the administrators; that he believed that all of his funds had been frozen apart from one outside the EU; and it was agreed that Mr. Freakley and Mr. Huck would send him questions by email, but in fact they chose not to contact him again.

vi) On 22 November 2011, Mr. Antonov was declared a suspect by the Lithuanian Prosecutor's office.

vii) On 23 November 2011, according to Mr. Antonov, his Lithuanian lawyers arranged to meet the Lithuanian Prosecutor but the latter did not attend the meeting.

viii) On 24 November 2011, the first European Arrest Warrant was certified ("the November EAW") and Mr. Antonov confirmed with the Metropolitan Police through his lawyers, Mishcon de Reya, his intention to cooperate with the authorities as to the execution of the EAW. An agreement was reached for arrest by appointment.

ix) On 25 November 2011 an initial extradition hearing took place before Westminster Magistrates' Court. Mr. Antonov was granted bail subject to certain conditions.

x) On 21 November 2011 the Economic Crime Department at the Chief Directorate of the Criminal Police of the Republic of Latvia initiated criminal proceedings regarding alleged criminal activity by certain officials of the Bank's Latvian subsidiary, Krajbanka. On 25 November 2011, Mr. Antonov, as a member of the Supervisory Board of Krajbanka, was declared a suspect in relation to that investigation. On 28 November 2011, a PRO was made by the Latvian investigator of the Economic Crime Department ("the Latvian Investigator") in relation to real property allegedly belonging to Mr. Antonov in Latvia. On the same date a further PRO was made by the Latvian Investigator against Mr. Antonov in relation to the eight vehicles the subject matter of the previous PRO made by the Lithuanian Prosecutor on 16 November 2011.

xi) On 30 November 2011, by various orders, the Lithuanian Prosecutor imposed PROs upon various assets alleged to be beneficially owned by Mr. Antonov or in which he allegedly had an interest. These included: a property at 36 Ladbroke Square, London W11; an HSBC account in London and two credit card accounts; two further residential properties in the UK; two further HSBC accounts; funds and securities in an account at Hambros Bank; funds and securities in an account attributed to Mr. Antonov at Julius Baer International Ltd in Guernsey; three further motor vehicles; shares in an Austrian private limited company, ANJET Handels- und Transport GMBH in the amount of €35,000; shares in Krajbanka, the value of which was stated to be LVL 6,175,000; real property in Jurmala, Latvia; and money, securities and other property held in a bank account with Julius Baer, Geneva.

xii) On 1 December 2011, the Lithuanian Prosecutor imposed further PROs upon various UK assets alleged to be beneficially owned by Mr. Antonov or in which he allegedly had an interest in the UK; these included: money and securities in Conversgroup Holding Ltd available in specified accounts with HSBC Bank; and shares in Conversgroup Holding Ltd.

xiii) On 2 December 2011, the Lithuanian Prosecutor imposed a PRO in relation to Mr. Antonov's rights of ownership in a UK company, Convers Sports Initiatives Ltd.

xiv) On 5 December 2011, the Lithuanian Prosecutor imposed a PRO in relation to Mr. Antonov's rights of ownership in money and securities at a further UK HSBC account.

xv) On 7 December 2011, the Lithuanian Prosecutor imposed a PRO in relation to Mr. Antonov's rights of ownership in certain Costa Rican assets, including money available in a bank account at Banco De Costa Rica SA and shares in various Costa Rican companies.

xvi) On 12 December 2011, the Lithuanian Prosecutor imposed a PRO in relation to Mr. Antonov's alleged ownership interests of monies in various Swiss bank accounts of various companies allegedly owned by him.

xvii) On 13 December 2011, the Lithuanian Prosecutor imposed a PRO in relation to Mr. Antonov's ownership interests in assets held in various specified Ukrainian bank accounts as well as monetary funds held in other Ukrainian banks, real estate, securities, vehicles and "any other assets" in the Ukraine.

xviii) On 14 December 2011, the Lithuanian Prosecutor imposed a PRO in relation to numerous accounts opened in Mr. Antonov's name at the Bank in Lithuania as well as debt securities and shares in Snoras Holdings.

xix) On 20 December 2011, the Lithuanian Prosecutor imposed a PRO in relation to Mr. Antonov's ownership rights in shares, securities and pecuniary funds in Pensions Bank Limited (UK).

xx) On 20 December 2011, the Public Prosecutor's Office for the Canton of Zurich, Switzerland, made an order, pursuant to letters of request from the Lithuanian Prosecutor, freezing all assets, safe deposit boxes and monies, in Bank Syz & Co, Niederlassung, Zurich, Bank Julius Baer & Co AG, Zurich, and HSBC Private Bank (Suisse SA) in the names of, or in which, Mr. Antonov or various named companies, appeared authorised formally or at least economically interested. The order included a provision that, if, prior to the order, there had been any dissipation of assets, the Swiss Public Prosecutor was to be immediately informed.

xxi) On 5 January 2012, the Crown Prosecution Service ("CPS"), pursuant to a request from the Lithuanian Prosecutor, applied for and obtained an ex parte restraint order under the provisions of the Proceeds Of Crime Act 2002 (External Requests And Orders) Order 2005 against Mr. Antonov, his wife and a named company, from HHJ Marron QC, sitting in the Crown Court at Blackfriars. This restrained dealings with, or dispositions of, the following assets: Flat 12, 1-3 and part 5 Princes Gate, London SW7; 36 Ladbroke Square, London W11; credit balance in HSBC joint account no. 40-05-09 01512951; Saab 93 red convertible; credit balance in HSBC Private Bank (UK) Ltd current account no. 81131664; credit balance in Hambros account no. 40-48-48, 33570300; shares held in Convers Group Holding (UK) Ltd; shares held in Convers Sports Initiatives Plc; shares held in Pensions Bank Limited; Mercedes 280SL White convertible (ABW100F); and a Bentley continental GTC Auto (LJ08EDC) ("the UK Restraint Order").

xxii) On 27 January 2012, the Lithuanian Prosecutor imposed a PRO in relation to Mr. Antonov's ownership rights in an insurance payment due in respect of the funds which he held at the Bank.

xxiii) On 9 May 2012, a second EAW was issued ("the May EAW") on the basis of different facts surrounding the alleged Julius Baer transactions, in particular to remove reference to an intermediary account at Julius Baer.

xxiv) On 10 May 2012, HHJ Peter Clarke QC, sitting in the Crown Court at Blackfriars, ordered continuation of the UK Restraint Order on revised terms.

xxv) On 11 May 2012, at a hearing before the Westminster Magistrates' Court, Mr. Antonov was formally arrested under the May EAW and the November EAW was discharged, with costs awarded in favour of Mr. Antonov.

xxvi) On 18 May 2012 (i.e. approximately 5 months after the initial appointment of Mr. Cooper), as already referred to, an ex parte application was made by the Bank for the WWFO. According to the Bank's evidence, the delay in bringing proceedings was a consequence of the Bankruptcy Administrator's (i.e. Mr. Cooper's) need to initiate and conduct the required forensic investigation and prepare the claim. The cross-undertaking was fortified by the Bank by means of a payment into Court of £5 million.

xxvii) On 30 May 2012, a Parliamentary Commission in Lithuania published findings following an inquiry into the nationalisation of the Bank.

xxviii) On 1 June 20 12, a third EAW was issued which referred to new offences including ones relating to transactions connected with HSBC bank accounts ("the June EAW").

xxix) On 15 June 2012, as already mentioned, the WWFO was extended on amended terms by Popplewell J.

xxx) On 21 June 2012, the Particulars of Claim were served on Mr. Antonov in these proceedings.

xxxi) On 5 July 2012, the third EAW was certified by SOCA.

xxxii) On 27 July 2012, the Westminster Magistrates' Court discharged the May EAW following confirmation from the Lithuanian authorities that the June EAW was intended as a replacement warrant. Costs were awarded in favour of Mr. Antonov.

xxxiii) On 25 September 2012, an order was made by Field J, by consent as between the CPS and Mr. Antonov, whereby the application to continue the UK Restraint Order was stayed, provided that, in the event of the WWFO being varied or discharged, or the Bank's civil claim being compromised, withdrawn or discontinued, the application to continue the Restraint Order would no longer be stayed but should continue until a further inter partes hearing of the application to continue the UK Restraint Order.

13. On 23 February 2012 Mr. Antonov issued judicial review proceedings against SOCA in respect all three EAWs on the grounds that the Lithuanian Prosecutor was not entitled to issue an EAW. I was informed that a "rolled-up" hearing (i.e. one addressing permission and substantive merits) had been fixed for 20 November 2012. I was subsequently informed that the that the proceedings had been stayed pending the outcome of appeals to the Supreme Court in the matters of Ministry of Justice, Lithuania v Bucnys and Sakalis and Larov v Ministry of Justice, Republic of Estonia. Those appeals are listed to be heard by the Supreme Court on 7 and 8 May 2013.
14. The hearing of the extradition application was scheduled for 21 January 2013 for ten days^[3]. Mr. Antonov contests his extradition to Lithuania. In those proceedings, he claims: that the decision to appoint a temporary administrator was motivated by anti-Russian sentiment on the part of the Lithuanian Government and that it was politically motivated; and that he is being persecuted by the Lithuanian Government, including through the actions of the Lithuanian prosecuting authorities. He resists extradition under both section 13(a) and (b) of the Extradition Act 2003 ("the 2003 Act") (extraneous considerations) and also claims that he will not be able to have a fair trial in Lithuania contrary to his rights under the European Convention on Human Rights 1998 (see section 21 of the 2003 Act). In a document entitled "Outline of Defence Case on Substantive Issues" dated 23rd January 2012, it was stated on Mr. Antonov's behalf, for example, that:

"In summary, the defence submits that the attempt by the Lithuanian Prosecutor General to extradite Mr. Antonov and Mr. Baranauskas is politically motivated. The Lithuanian government took groundless steps to bring down a solvent, functioning bank for reasons of self-interest and, having done so, was compelled to make scapegoats of the bank's figureheads via unfounded allegations of fraud and financial mismanagement."

The Stay Application

15. I deal first with Mr. Antonov's application for a stay of the underlying civil proceedings brought by the Bank (including the discrete application for a stay of the Variation Application) until after the final determination of the extradition proceedings currently pending against Mr. Antonov, since this was the first matter argued before me.
16. Mr. Antonov's position in relation to this application, as presented by Mr. James Lewis QC, who argued this aspect of Mr. Antonov's case on his behalf, was, in summary, as follows:

i) It was appropriate to stay the hearing of Mr. Antonov's Variation Application pending the conclusion of the extradition proceedings, if, and to the extent that, in the context of the Variation Application, the Court considered it necessary to determine questions of Lithuanian fair trial procedures or the issues as to whether the criminal proceedings were politically motivated and whether the collapse of the Bank was brought about by the actions of Mr. Antonov and Mr. Baranauskas, or the politically motivated interference of the Lithuanian government. These issues should more properly be considered in the context of the extradition proceedings, where the evidential enquiry would be more extensive. Mr. Antonov would suffer prejudice in the event of the Commercial Court making potentially adverse findings on the basis of a less thorough evidential enquiry than that which would occur in the context of extradition proceedings; the District Judge hearing such proceedings would be likely to be influenced by any such judgment of the Commercial Court. Alternatively, there was a potential risk of conflicting judgments which might inhibit Mr. Antonov's right of appeal.

ii) Furthermore, the entirety of the proceedings in this action should be stayed pending the outcome of the extradition proceedings, including any appeal by either party to the High Court, and, thereafter, to the Supreme Court. In the light of the provisions of the 2003 Act, such stay would not be for a long period of time, as extradition proceedings had to be heard speedily.

iii) Once the extradition proceedings had been determined, the position would be crystallised. Either Mr. Antonov's resistance to the extradition proceedings would have succeeded, in which case there would be no objection to the Bank's civil proceedings continuing in this jurisdiction, since there would be no possibility of a criminal trial in Lithuania; or, alternatively, if his challenge to the extradition proceedings failed, different considerations would apply at that stage as to whether it was appropriate for the civil proceedings to continue in this jurisdiction pending Mr. Antonov's criminal trial in Lithuania, and, indeed, his possible detention there.

iv) The balance of competing interests in the case fell squarely in favour of a stay of the civil proceedings pending the conclusion of the extradition proceedings The key factors weighing in favour of a stay were as follows:

a) There was a real risk that information and evidence provided by Mr. Antonov in these proceedings would be used against him by the Lithuanian Prosecutor, in breach of his privilege against self-incrimination, both in the extradition proceedings and in the criminal proceedings in Lithuania. There were no adequate safeguards which could be put in place to protect him from this risk, other than a temporary stay of the civil proceedings. The reality was that any information provided to the Bank in the civil proceedings would be made available to the Lithuanian Prosecutor; that it was inevitable that that would happen was because of a number of reasons: first, there was a clear identity between the Bank and the Lithuanian state, given its recent nationalisation; second, in any event, the Lithuanian state was a substantial creditor of the Bank in its insolvency^[4] and had effectively five seats out of nine on the creditors committee; third, this was not a situation where the prosecuting authority, i.e. the Lithuanian Prosecutor, was prepared to give, or was in a position to give, any undertaking not to use any information obtained as a result of the civil proceedings in the criminal proceedings; contrast the position in English proceedings, where the SFO or CPS was the prosecuting authority and was able to give an enforceable undertaking in this respect; and fourth, the evidence amply demonstrated that there had been a free flow of information from the Bankruptcy Administrator to the Lithuanian Prosecutor; for example, the evidence served on behalf of the claimant had clearly been provided to the Lithuanian Prosecutor. There was thus no possibility of any realistic or adequate ring fencing provisions that could be put in place to prevent the use in the criminal proceedings of materials disclosed in the civil proceedings. Mr. Antonov's expert evidence of Lithuanian law was to the effect that, as soon as the Bankruptcy Administrator was in possession of relevant information, he might be compelled to provide it to the Lithuanian Prosecutor and other investigating authorities in Lithuania and elsewhere.

b) The provision of any such information would enable the Lithuanian Prosecutor to tailor his case both in relation to the extradition proceedings and also in relation to the criminal proceedings, as indeed he had already done to date in relation to the extradition proceedings.

c) There was a very significant overlap not only between the subject-matter of the civil proceedings and the extradition proceedings (and indeed the criminal proceedings) against Mr. Antonov, but also the issues at stake in each; the extradition proceedings were clearly the more appropriate forum for determination of those issues. It followed that there was a risk of prejudice to Mr. Antonov by virtue of conflicting judgments if the civil proceedings were not stayed pending extradition proceedings.

d) While the privilege against self-incrimination was very important, there was a basic fairness and justice point arising out of general prejudice; namely the prejudice to Mr. Antonov in having to disclose his hand and the unfair advantage which that afforded to the Bank; that was especially acute, in proceedings where, in effect, the Lithuanian state was behind both the civil proceedings and the criminal proceedings. Although counsel for the Bank had attempted to draw fine distinctions between the Bank and the state, so far as counsel for the Lithuanian Prosecutor was concerned, he had expressly said in the restraint proceeding that they were one and the same thing.

e) The concurrency of the proceedings risked Mr. Antonov being placed in a position of being prejudiced in his ability properly to defend the extradition proceedings – with extremely serious consequences – by reason of the time and resources which would have to be devoted to defending the instant proceedings.

f) An order for Mr. Antonov's extradition to Lithuania would overturn the sole basis upon which the High Court was presently a convenient forum to hear this claim, namely his residence in England. It followed that the outcome of the extradition request should take precedence over the civil claim in order that the question of forum non conveniens could properly be addressed in the event that Mr. Antonov was extradited. In those circumstances, a substantial issue would then inevitably arise as to whether Mr. Antonov could fairly defend proceedings in England from prison or detention in Lithuania. In the meantime it would be unfair on Mr. Antonov and disproportionate and unsatisfactory from a case management perspective for him to be required to take further steps in the proceedings and to disclose his defence, in circumstances where ultimately, if he failed to resist extradition, the civil proceedings in this country might be stayed.

v) In further support of these propositions, Mr. Lewis submitted that:

a) Any disclosure by Mr. Antonov of details of the assets which he acquired after he acquired his interest in the Bank in March 2003, could potentially be self-incriminatory since theoretically identification of current assets could provide an audit trail back to original assets allegedly misappropriated from the Bank.

b) Even if the court were to accede to the Variation Application, and to vary the disclosure provisions of the WWFO, so that Mr. Antonov was not required to disclose details of the assets which he acquired after he acquired his interest in the Bank in March 2003, because of the risk of self-incrimination in relation to the criminal proceedings, inherent in the compelled provision by Mr. Antonov of asset disclosure, nonetheless the risk of self-incrimination permeated every other procedural step which Mr. Antonov would have to take in order properly to defend the Bank's claim in the civil proceedings. Any written defence, any disclosure of documents, any witness statement and any answers given under cross-examination would all run the risk of exposing Mr. Antonov either to the real risk of self-incrimination or to that of judgment being entered against him.

c) Such evidence, according to the expert evidence of Mr. Antonov's lawyers, could not only be used to inform the criminal investigation but also as evidence in any criminal proceedings which might in due course be brought against Mr. Antonov. It could also and importantly be used to assist in relation to the current extradition proceedings. In particular, an argument would be run on Mr. Antonov's behalf in the extradition proceedings to the effect that it could be inferred that the criminal proceedings were politically motivated, because of the weakness of the Bank's claim in the civil proceedings, and therefore, consequentially, the claim in the criminal proceedings. In this context, any provision of information in relation to Mr. Antonov's defence could potentially be damaging to Mr. Antonov.

d) It was common ground between the Lithuanian legal experts, that in Lithuania itself no order for the disclosure of Mr. Antonov's assets could be made either in civil or in criminal proceedings, despite the fact that UK Restraint Orders in relation to numerous assets, located both within and without Lithuania, had been made. That was another reason for staying proceedings in the present case, or least for varying the disclosure order. The court should take into account the fact that the Lithuanian Prosecutor had requested the CPS to seek a disclosure order in respect of Mr. Antonov's assets, but that the CPS had declined to do so.

e) The court should also take into account the fact that it was likewise common ground that, in Lithuania, civil proceedings would only follow after the conclusion of the criminal proceedings.

17. The Bank's position in relation to the Stay Application, as presented by Mr. Antony Zacaroli QC, was in summary as follows:

i) The onus was on Mr. Antonov to prove that the hearing by the Commercial Court of the Variation Application (i.e. his application to dispense with the obligation to provide disclosure of his assets) prior to the hearing of the extradition application would give rise to a real risk of serious prejudice that might lead to injustice. In reality, there was no such risk.

ii) Mr. Antonov's application to stay the civil proceedings pending the conclusion of the extradition hearing was in reality, and with one exception, based on arguments that, if the civil proceedings continued, he would be prejudiced in the criminal investigation and criminal proceedings in Lithuania, rather than any particular prejudice in relation to the extradition proceedings.

iii) But, in any event, the grounds alleged by Mr. Antonov did not either separately or cumulatively provide a sufficient basis for staying the civil action particularly when balanced against the prejudice to the Bank and its creditors if the civil claims were stayed pending the conclusion of criminal proceedings in Lithuania, or indeed the conclusion of the extradition proceedings which, together with appeals, might extend into 2014.

iv) Given that there was no compulsion in the civil proceedings to provide incriminating information, since Mr. Antonov was not obliged in the civil proceedings to admit anything, and was entitled to resist disclosure, provision of further information and questions in cross-examination on the grounds that compliance with any such orders might tend to incriminate him, there was no basis for saying that injustice would be caused. In any event Mr. Antonov had already provided substantial details of his positive defence.

v) Moreover, there was no realistic basis for contending that Mr. Antonov would suffer any prejudice if the civil proceedings continued pending the determination of the extradition proceedings. No aspect of any judgment in relation to the current applications could in reality influence the judge on the extradition application. The issues which arose on the extradition application were entirely different from those which arose in the civil proceedings. Thus there would be no real risk of serious prejudice that might lead to injustice.

vi) And finally, even if the court were to conclude that there was a real risk of serious prejudice leading to injustice if civil proceedings were to continue, then the stay requested should nevertheless be refused on the grounds that adequate safeguards could be put in place to minimise the risk of injustice to Mr. Antonov. Thus:

a) The Bank would be willing to accept restrictions on the extent to which any document setting out or referring to the grounds of Mr. Antonov's defence was disseminated beyond the Bank's legal team in England and named individuals at Zolfo Cooper within England; see A-G for Zambia v Meer Care & Desai & Ors [2006] EWCA Civ 390 at [27] –[31].

b) A restriction on the dissemination of such documents would ensure that they were not available within Lithuania, and thus could not, as a matter of fact, be used by the Lithuanian Prosecutor. Such an order would not however, as Mr. Zacaroli made clear in oral argument, prevent the dissemination of information contained in such documents, albeit in breach of a party's obligation only to use disclosed documents for the purposes of the civil proceedings in which they were disclosed.

c) Any hearing in the civil action at which the merits of Mr. Antonov's defence were to be revealed (including the trial) could be ordered to be heard in camera; see Zambia v Meer Care & Desai at paragraph 32; and

d) Any judgment on the merits of the civil claim could itself be embargoed pending conclusion of the criminal proceedings in Lithuania.

Relevant legal principles applicable to the grant of a stay of civil proceedings

18. There was very little difference between Mr. Lewis QC and Mr. Zacaroli QC as to the relevant principles applicable to the grant of a stay of civil proceedings. For present purposes they may be summarised as follows:

i) The court has a discretion to stay civil proceedings until related criminal proceedings have been determined, but it "is a power which has to be exercised with great care and only where there is a real risk of serious prejudice which may lead to injustice"; see R v Panel on Takeovers and Mergers, ex p Fayed [1992] BCC 524, per Neill LJ at p.531E-F; cited with approval in A-G of Zambia v Meer Care & Desai & Ors [2006] EWCA Civ 390.

ii) The discretion has to be exercised by reference to the competing considerations between the parties; the court has to balance justice as between the two parties; a claimant has a right to have its civil claim decided; the burden lies on a defendant to show why that right should be delayed; see Panton v Financial Institutions Services Limited [2003] UKPC 8 (PC) at [11].

iii) A defendant must point to a real, and not merely notional, risk of injustice. As the Privy Council stated in Panton (supra):

"A stay would not be granted simply to serve the tactical advantages that the defendants might want to retain in criminal proceedings. The accused's right to silence in criminal proceedings was a factor to be considered, but that right did not extend to give a defendant as a matter of right the same protection in contemporaneous civil proceedings. What had to be shown was the causing of unjust prejudice by the continuance of the civil proceedings".

iv) The fact that a defendant has a right to remain silent in criminal proceedings, and would, by serving a defence in civil proceedings, be giving advance notice of his defence, carries little weight in the context of an application for a stay of civil proceedings. There is no right to invoke the privilege against self-incrimination in relation to putting in a defence, as compared with the right in civil proceedings to invoke the privilege where a defendant is being interrogated, being compelled to produce documents or cross-examined; see per Waller LJ in V v C [2002] CP Rep 8, at paragraphs 37 and 38. In a civil trial there is no immunity against adverse comment or adverse inference from a failure to provide answers for the trial or to give evidence at the trial; a defendant does not have to put in a defence or give evidence at a civil trial but, if he does not, the court can draw an inference because in a civil trial it is not his "right" not to do so; that is important in the summary judgment context, because, if the claimant can establish his claim (for example on a summary judgment application) without interrogatories or disclosure, then a privilege against self-incrimination is not in fact relevant; see ibid at paragraph 37.

v) Moreover, today, even in criminal proceedings, at least in England and Wales, a defendant is expected to adumbrate a positive defence at an early stage. Thus the disclosure of a defence in civil proceedings is unlikely to disadvantage a defendant in criminal proceedings; see ibid at paragraph 38.

vi) It is also legitimate, when balancing the competing considerations between the parties, to take into account that a positive defence is likely to exculpate, rather than incriminate, a defendant; as Waller LJ said at ibid paragraph 39:

"Third, it is legitimate to start from the position that a positive defence is likely to exculpate rather than incriminate. It is legitimate to expect an explanation on oath as to the nature of the defence that the defendant has so that a court can see (a) whether there is a reason for a trial on the merits; and (b) whether the way in which having to fight the summary judgment application or the trial may impinge on the fair trial of the defendant in a criminal court. In this context, if it is obvious that a full trial must proceed and that an order for production of documents, for example, is going to be met [by] a claim of privilege against self-incrimination, postponement of the civil trial may be appropriate. But if a claimant can establish his case without compelling information or evidence from a defendant, the only relevant impact on the criminal trial to be considered is what the effect of entering a summary judgment will be. The onus is on the defendant at all stages to demonstrate that the civil process should not proceed, and the stronger the case against the defendant in the civil context the higher the onus on the defendant should be."

vii) It is not enough, as Briggs J observed in FSA v Anderson [2010] EWHC 308 (Ch) at [19], that both the civil and criminal proceedings arise from the same facts, or that the defence of the civil proceedings may involve the defendant taking procedural steps such as exchanging witness statements and providing disclosure of documents which might not be imposed upon them in the criminal proceedings.

viii) As Mr. Zacaroli submitted, a defendant thus has a choice between remaining silent in the civil proceedings or risk giving an indication of his defence which may be used by the prosecuting authorities. The harshness of such a choice did not provide a good ground for staying civil proceedings in V v C (supra) or in Jefferson Limited v Bhetcha [1979] 1 WLR 898.

ix) In the event that the court were to be satisfied that there would be a real risk of serious prejudice leading to injustice if the civil proceedings continue, then the proceedings should nevertheless not be stayed if safeguards can be imposed in respect of the civil proceedings which provide sufficient protection against the risk of injustice: see e.g. Re DPR Futures [1989] 1 WLR 778, per Millett J at 790G; A-G for Zambia v Meer Care & Desai & Ors (supra) at paragraphs 30-33.

Discussion and determination

19. I am not persuaded that either:

i) the hearing of the Variation Application; or

ii) the continuance of the civil proceedings generally, would cause a risk of serious prejudice, which might lead to injustice so far as Mr. Antonov is concerned in relation either to the extradition proceedings in this country, or to the criminal investigation or a possible criminal trial in Lithuania. Accordingly I am not prepared to grant a stay of the civil proceedings or the Variation Application. My reasons are set out below.

The application to stay the hearing of the Variation Application pending the conclusion of the extradition proceedings

20. Mr. Antonov had, at the time of the applications before me, already served his evidence and skeleton argument in support of his challenge to the extradition application, as had the CPS. I do not accept that Mr. Antonov will be prejudiced, let alone seriously prejudiced, if I determine the Variation Application prior to the extradition hearing in January 2013.
21. First, I see no reason why I should need, in the context of the Variation Application, to decide the issues as to whether the nationalisation of the Bank, or the criminal proceedings against Mr. Antonov, were politically motivated or trumped up charges. Nor do I see any reason for me to decide, in that context, whether Mr. Antonov could have a fair criminal trial in Lithuania. The questions before this Court and the extradition Court are wholly different. The questions for the extradition Court are likely to be:

i) is extradition barred by reason of extraneous considerations (i.e. is there a serious possibility that the EAW was politically motivated); and

ii) is extradition compatible with Mr. Antonov's Convention rights (i.e. is there a real risk that he will be denied a fair criminal trial in Lithuania).

22. Second, nor do I need to decide, in the context of the Variation Application, whether, as a matter of Lithuanian law, evidence obtained under compulsion in civil proceedings in this country would be available as evidence in criminal proceedings in Lithuania. For the purposes of that application I do need to assess whether there is a risk that this might occur, and if so what, if any, safeguards should be put in place to minimise that risk or whether there should, as a consequence, be no disclosure of assets at all. But I cannot see that any views which I might express in this context will prevent the court hearing the extradition proceedings, on what was common ground would be the more extensive evidence before it, than was before me, from coming to its own conclusion in respect of the matters which it has to decide. Nor do I see that any decision which I may reach on the Variation Application, would have the result that Mr. Antonov's position in the extradition proceedings would be unfairly prejudiced.
23. Third, I see no reason why the outcome of the Variation Application should await the determination of the extradition proceedings. Notwithstanding the timing provisions in the 2003 Act, upon which Mr. Lewis relied, there has to be a real possibility that, if the decision of the District Judge were to be appealed, first to the High Court and then to the Supreme Court, the outcome of the extradition application might well not be known until 2014. If disclosure is going to be ordered in respect of Mr. Antonov's assets in order to make the freezing orders effective, then any delay in relation to the implementation of such order could seriously prejudice the Bank's ability to locate and, if appropriate, freeze assets in relevant jurisdictions.
24. Accordingly I shall give my ruling in relation to the Variation Application and refuse Mr. Antonov's application for a stay in relation to it.

Application to stay the entirety of the civil proceedings pending: (i) the conclusion of the extradition proceedings; and/or (ii) the conclusion of the criminal proceedings in Lithuania

25. As I have already said, although the subject matter of the civil proceedings and the criminal proceedings overlap to a considerable extent, I am not satisfied that there would be a real risk of serious prejudice leading to injustice if the civil proceedings were to continue, pending the conclusion of the extradition proceedings and pending the conclusion of the criminal proceedings in Lithuania. Any such prejudice as there might be in Mr. Antonov having to disclose his defence or participate in the civil proceedings could not, in the circumstances of this case, be characterised as being so serious as to lead to injustice, given that any such prejudice as there might be, can, in my judgment, be adequately addressed by the proposed safeguards to which I refer later in this judgment. Moreover, taking into account, on the other side of the scales, the competing interests of the Bank and its creditors, the prejudice and potential damage caused to the Bank and its underlying creditors as a result of the delay that would inevitably occur, if I were to stay the proceedings, would, in my judgment, considerably outweigh any possible prejudice that Mr. Antonov might suffer through having (metaphorically) to put his cards on the table in the civil proceedings and because of the risk of his rights to a fair criminal trial in Lithuania being compromised.
26. It is necessary to look at the various anticipated stages of the civil proceedings to see how Mr. Antonov could be prejudiced or compromised for having to participate or risk the consequences of summary judgment.
27. The first stage, of course, is service of his defence. It is clear from the evidence and defence statements served on behalf of Mr. Antonov in the context of the extradition and the UK Restraint Order proceedings, that he has already disclosed, in some considerable detail, his defence in relation to a major part, albeit not every aspect, of the civil case. For example, in relation to the Julius Baer allegations, he has variously contended:

i) that he did not transfer or arrange the transfer of securities belonging to Snoras Bank out of its account with Julius Baer for Mr. Antonov's benefit and that

"At no time have any Snoras Bank assets been stolen from its Julius Baer account and Mr. Antonov asserts that the bank statements of that account will show this to be true";

ii) that nothing in certain accounts supported the allegation that the securities in question were ever out of the control of Bank Snoras, since:

"The treasury department of Bank Snoras at all times had control over the accounts in which the securities were placed in Bank Julius Baer";

iii) that the allegedly misappropriated funds were in fact held in accounts at Julius Baer in the Bank's name or under the control of the treasury department, and they were under the day to day management and control of the Bank (although not managed by Mr. Antonov himself);

iv) that executives and officers at both the Bank and Julius Baer regularly met to discuss the details of the bank accounts at Julius Baer; and

v) that in connection with the Julius Baer account, offshore structures were put in place for the benefit of the Bank, set up upon advice received from Julius Baer, and the Bank retained complete control and visibility over all of the Julius Baer accounts and offshore structures.

28. Moreover is clear that his approach is exculpatory, rather than a defence of silence or admission. He has a choice, as is demonstrated from the authorities cited above, as to the extent to which he puts forward a positive defence. I see no reason why he will be unduly prejudiced in either the extradition proceedings or the criminal investigation by the requirement of serving a defence. Mr. Lewis submitted that Mr. Antonov cannot sensibly respond to the allegations of misappropriation in the Particulars of Claim without addressing the question of whether he knew about the particular transactions at that time, and that this would be unfair, because it would, in effect, amount to an admission that he knew about them. I see no unfairness in this. If Mr. Antonov chooses, it is open to him merely to plead a defence of generality as already set out on his behalf in the extradition and UK Restraint Order proceedings, to the effect that he was not involved in day-to-day transactions and put the Bank to proof of the allegations that he was aware or party to the particular transactions in question.
29. As was accepted in argument by Mr. Lewis, it is clear that, because of the recent order of the District Judge, the SFO and the Lithuanian Prosecutor are no longer able to amend or revise the EAWs in the light of any material emanating from Mr. Antonov's defence or otherwise. In this respect therefore, it cannot be said there is any real prejudice to Mr. Antonov, so far as the extradition proceedings are concerned, in requiring him to serve a defence. For example, I cannot see that, in such circumstances, any defence served by Mr. Antonov could aid the Lithuanian Prosecutor in discharging his burden to show that the allegations in question are extradition offences within the meaning of section 64 of the 2003 Act or otherwise in connection with the extradition proceedings. Whether the requesting territory can prove that offences in an EAW extradition are offences depends on the information provided in the warrant itself and any supporting documentation, which has no doubt already been served. I suppose it might be the case that any defence served by Mr. Antonov could theoretically weaken his arguments to the effect that the court could infer that the criminal proceedings were politically motivated, because of the weakness of the case against him, but I see no unfairness or prejudice in that. If the reality is that his pleaded defence in the civil proceedings is weak and undermines any such argument, then so be it.
30. Third, and more generally, I see no unfair prejudice in the context of the criminal proceedings, or indeed in the context of the English civil proceedings, for Mr. Antonov to have to serve a defence. The choice is for him as to the course which he adopts in connection with his defence; he can simply put the Bank to proof of its claims; he can put forward a limited defence; or he can put forward a full and positive exculpatory defence. He is under no compulsion to admit anything or to incriminate himself. Thus, for example, it will be open to him to argue, at a future stage, should the need arise, that there should be no summary judgment pursuant to Part 24, but rather that the matter should proceed to trial, on the grounds that there is a compelling reason for a full trial pursuant to Part 24.2 (b) on the grounds that, because of the potential for self-incrimination in the criminal proceedings in Lithuania, or the difficulties which he faces in the criminal trial, it has not been possible for him to develop a positive defence. Whether such would be an appropriate course, will depend on all the evidence before the court at the time. Neither this judgment, nor any comments made by the court during the course of argument, should be taken as in any way predicating, or indicating, the outcome of any such application, were it to be made.
31. As Mr. Zacaroli submitted, and as the authorities demonstrate, the mere fact that a defendant may lose some tactical advantage in the criminal proceedings by having to disclose his defence early in the civil proceedings is not sufficient to constitute substantial or unfair prejudice or injustice, such as to justify a stay.
32. However, I can see that, if Mr. Antonov is realistically obliged to serve a full defence, because he wishes to avoid the risk of summary judgment proceedings, there is, notwithstanding the above arguments, the risk that his defence, or any information in it, might come into the possession of the Lithuanian Prosecutor and might potentially incriminate him. That might cause him serious prejudice in the criminal proceedings irrespective of whether, or not, provision of a defence, or of an affidavit in response to an application for summary judgment under CPR Part 24, is technically made under compulsion and therefore an erosion of his rights under Article 6 of the European Convention on Human Rights ("the Convention") not to incriminate himself or to a fair trial. Similar considerations apply, for example, to the disclosure stage, where Mr. Antonov will prima facie be under compulsion to provide documents notwithstanding that they may incriminate him, as well as to later stages in the trial, such as requests for further information and to cross-examination.
33. It thus seems to me appropriate and proportionate in the present context, where the Lithuanian state has a considerable economic interest in the outcome of the litigation, where the Bank is now nationalised and where the Bank and the Lithuanian Prosecutor have a common interest in establishing Mr. Antonov's liability in the civil proceedings, that certain safeguards should be put in place in order to protect Mr. Antonov's Convention rights not to incriminate himself ("the proposed safeguards"). An entirely free flow of the information provided by Mr. Antonov in his defence of the civil proceedings from the Bank to the Lithuanian Prosecutor does not, in the particular circumstances of this case, sit altogether happily with the concept of a fair criminal trial, particularly in circumstances where there are allegations of political motivation on the part of the Lithuanian Prosecutor. I make this comment despite accepting, for present purposes, the statements in the Bank's evidence as to the extent of the flow of information between the Bank and the Lithuanian Prosecutor.
34. The proposed safeguards, which I propose to order, will, at least to a limited extent, operate to prevent the use or deployment of Mr. Antonov's defence, and of any information contained in it, in the Lithuanian criminal investigation and in any subsequent trial proceedings. I set out the conditions which I have in mind below since they address not only the defence, but also disclosure, witness statements and other aspects of the proceedings. They reflect and slightly extend proposals made by the Bank in paragraph 56 of the Bank's skeleton argument and amplified by Mr. Zacaroli in the course of argument. They are the type of ring-fencing orders that were put in place A-G for Zambia v Meer Care & Desai & Ors [2006] EWCA Civ 390 at paragraphs 27-31.
35. The next stage in the civil trial process after pleadings will be disclosure. It may be a matter of some debate whether Mr. Antonov will have the right at that stage to resist the compulsory requirements of disclosure and inspection of documents in the civil proceedings, pursuant to either CPR Part 31.3 or the inherent jurisdiction of the court, on the grounds that to do so would adversely affect his rights and not to incriminate himself, and to a fair trial, in the context of the Lithuanian criminal proceedings. Such a claim might be made pursuant to the Human Rights Act 1998 ("the 1988 Act") and/or Article 6 of the Convention; see generally the notes at: CPR 31.3.31 (right against self- incrimination); 31.3.32 (the 1998 Act); 31.3.36.1 (the Convention). The fact that, pursuant to section 14 of the Civil Evidence Act 1968, the common law privilege against self-incrimination in English civil proceedings no longer extends to a liability to foreign criminal proceedings, and that, at least in relation to English criminal proceedings, Section 13 of the Fraud Act 2006 abrogated the privilege against self-incrimination in respect of English civil proceedings relating (inter alia) to fraudulent misappropriation of property^[5], might not necessarily preclude such an application based on an alleged breach of Mr. Antonov's Convention rights. However, more formidable hurdles are likely to be the ECHR decision in Saunders v United Kingdom (19187/91) [1997] BCC 872, and the subsequent English decision of C Plc v P [2007] EWCA Civ 493; [2008] Ch.1; E.R. 1034, CA. In Saunders the Court stated at paragraphs 68 and 69:

"68. The Court recalls that, although not specifically mentioned in Article 6 of the Convention, the right to silence and the right not to incriminate oneself, are generally recognised international standards which lie at the heart of the notion of a fair procedure under Article 6. Their rationale lies, inter alia, in the protection of the accused against improper compulsion by the authorities thereby contributing to the avoidance of miscarriages of justice and to the fulfilment of the aims of Article 6.³⁸ The right not to incriminate oneself, in particular, presupposes that the prosecution in a criminal case seek to prove their case against the accused without resort to evidence obtained through methods of coercion or oppression in defiance of the will of the accused. In this sense the right is closely linked to the presumption of innocence contained in Article 6(2) of the Convention.

69. The right not to incriminate oneself is primarily concerned, however, with respecting the will of an accused person to remain silent. As commonly understood in the legal systems of the Contracting Parties to the Convention and elsewhere, it does not extend to the use in criminal proceedings of material which may be obtained from the accused through the use of compulsory powers but which has an existence independent of the will of the suspect such as, inter alia, documents acquired pursuant to a warrant, breath, blood and urine samples and bodily tissue for the purpose of DNA testing. In the present case the Court is only called upon to decide whether the use made by the prosecution of the statements obtained from the applicant by the Inspectors amounted to an unjustifiable infringement of the right. This question must be examined by the Court in the light of all the circumstances of the case. In particular, it must be determined whether the applicant has been subject to compulsion to give evidence and whether the use made of the resulting testimony at his trial offended the basic principles of a fair procedure inherent in Article 6(1) of which the right not to incriminate oneself is a constituent element.

³⁸ See MURRAY v UNITED KINGDOM and FUNKE v FRANCE, loc. cit."

36. In C Plc v P (a case concerning the seizure under a search order of material in respect of which the privilege against self-incrimination was asserted generally), the Court of Appeal held by a majority that at common law, and even before the enactment of the 1998 Act, the privilege against self-incrimination did not extend to documents and things which had an existence independent of the will of the person relying on the privilege and regardless of whether civil or criminal proceedings were involved. Accordingly there was no privilege in the instant case since the material existed independently of the will of the party asserting the privilege even though obtained as a result of executing the compulsory powers/provisions of the search order. Mr. Lewis submitted, in reliance upon the dissenting judgment of Lawrence Collins LJ (as he then was) at paragraphs 45-51, that if in fact the production of documents entailed what had been described under US law as "testimonial disclosure" - in other words an implied statement as to the person's knowledge of, association with, or control over the documents, then the privilege against self incrimination arose. He accordingly submitted that at common law the protection given may be wider than the minimum required under ECHR jurisprudence. (Leave to appeal to the House of Lords was given; [2008] 1 W.L.R. 153, but the matter does not seem to have been taken any further).
37. But these are not issues which I have to decide at this stage. If and when an application is made by Mr. Antonov to entitle him to refuse to disclose, or provide inspection of, incriminating documents, such an application can be considered on its merits and on the evidence before the court at that time. As Mr. Zacaroli submitted, it might well be that the Bank would not oppose any application by Mr. Antonov to resist disclosure and inspection of incriminating documents, since the Bank might be in a position to prove its case on the basis of its own documents. In any event, the proposed safeguards, which I propose to put in place as a condition of allowing the action to go forward, in relation to documents disclosed by Mr. Antonov, will go a considerable way to reducing the risk of any improper disclosure. In addition, the court hearing any such application could impose additional conditions to ensure that disclosed documents were not used for purposes other than the English civil proceedings and that any compulsorily disclosed documents did not improperly fall into the hands of the Lithuanian Prosecutor.
38. The next stage of the trial process will be the exchange of witness statements. The proposed safeguards will prevent the use or dissemination of witness statements provided by Mr. Antonov and his witnesses other than for the purposes of these civil proceedings, without the prior approval of the court. Thus, with these safeguards in place, I cannot see that the witness statement stage of the trial process is likely to give rise to any prejudice and certainly no serious prejudice so far as Mr. Antonov is concerned.
39. Likewise, if necessary, adequate procedures could be put in place at the trial of this action to provide that Mr. Antonov's evidence, and that of his witnesses, was given in private, so as to prevent any improper use of his evidence in the Lithuanian criminal investigation or at his criminal trial. However, I do not consider that it is appropriate for me at this stage to make any such order governing the trial process. The picture may look very different as the trial date approaches. That will be a matter for the judge hearing the case management conference or the pre-trial review to decide.
40. Other points made by Mr. Lewis, or in Mr. Antonov's evidence, in support of the stay application, were not persuasive. It was suggested that there is a real risk that his ability, and that of his representatives, to present a robust defence to the extradition proceedings would be compromised by the time, resources, effort and focus which his defence to the civil proceedings would inevitably require, and that, accordingly, it would be oppressive for him to be facing parallel proceedings. I cannot accept that having to fight on two fronts will cause such serious prejudice to Mr. Antonov as to lead to injustice. The evidence shows that Mr. Antonov has assets in many jurisdictions round the world and that the disclosed assets in England alone are of considerable value; he is therefore not without adequate funds to instruct lawyers to represent him. He instructed four Counsel to represent him on these applications. It may be inconvenient and stressful for him to have to defend a number of proceedings at any one time, but that per se does not give rise to injustice.
41. His concerns that presently co-operating witnesses will cease to assist him, if they are required to provide assistance in respect of two sets of proceedings, likewise provides no ground for a stay. In any event, as Mr. Zacaroli submitted, it is no more than speculation that witnesses would be, or are being, put off by the potential duplication of proceedings. There could be any number of reasons why witnesses, who originally expressed a willingness to assist, have declined to do so. The allegation that witnesses are being put off because of fear of repercussions in Lithuania similarly provides no basis for a stay of the civil proceedings in this jurisdiction. These are difficulties which, if they are real, he will face at any time.
42. Mr. Antonov contends that there may well be issues of forum non conveniens if he were to be extradited to Lithuania, since he would be imprisoned pending the outcome of an investigation and criminal proceedings, which would be likely to take years. Mr. Lewis submitted that, in those circumstances an issue would arise as to whether, if the Bank were minded to continue proceedings in the United Kingdom, the court would grant a stay on forum non conveniens grounds and because of Mr. Antonov's inability fairly to defend those proceedings from prison in Lithuania. But those issues provide no basis for granting a stay of the civil proceedings at the present time. Mr. Cooper has made it clear that it is the Bank's intention to continue with the civil proceedings in England even if Mr. Antonov is extradited. The stage for the court to consider, if at all, whether or not a stay on such grounds should be ordered, will only arise once the extradition proceedings (including any appeals) conclude. As I made clear in the course of argument, any order refusing a stay would not preclude such an application being made by Mr. Antonov at that stage, in the event that he is extradited to Lithuania. But given the uncertainty as to when the extradition hearing, and any appeals, will finally conclude, it is a possibility that the civil action can be well advanced, if not disposed of, before the extradition proceedings have run their course.
43. Whatever the prejudice to Mr. Antonov in these proceedings continuing, the court also has to take into account the interests of the Bank and its creditors, I have little doubt that a stay, whether until the determination of the extradition proceedings, or worse, until determination of the criminal proceedings in Lithuania which would be highly likely to last for many years, would be seriously prejudicial to them. As Mr. Zacaroli pointed out, Mr. Antonov has yet to be extradited from the UK or charged with an offence in Lithuania. At the time of the hearing before me it was not known whether Mr. Antonov would be ready to commence and complete the extradition hearing in January 2013, or whether he would seek an adjournment in respect of all or some of the points he is raising. Even if the hearing were to be concluded in early 2013, and Mr. Antonov failed in resisting extradition, there would inevitably be an appeal to the High Court and it is reasonable to assume that any appeal from an extradition order made in early 2013 would not be concluded until well into the second half of 2013. There is then the real possibility that Mr. Antonov may seek to make a further appeal to the Supreme Court. Even once Mr. Antonov were extradited to Lithuania, Mr. Antonov's Lithuanian law expert opined that the pre-trial investigation process in Lithuania would be likely to be lengthy. He cited by way of comparison other cases of a complex nature where the pre-trial investigation period had lasted between five and seven years. For the Bank to be prevented from pursuing its remedies against Mr. Antonov, and for its creditors to be kept out of the substantial sums which they had deposited or invested, allegedly lost as a result of the actions of Mr. Antonov (the amount allegedly misappropriated by him is in the region €500 million), for a considerable period of time would be seriously detrimental to them. The lack of recovery for creditors of an insolvent entity such as the Bank is a highly relevant factor, as noted by Millett J in Re DPR Futures Ltd [1989] 1 WLR 778 at 790 G. Such a long delay would also, as Mr. Zacaroli submitted, run the risk of adversely affecting the Bank's ability to present its case at trial. The delay inherent in any stay would give rise to a real risk of witnesses' memories fading, or witnesses dying or becoming unavailable. Most importantly, on the basis of the evidence before me, any stay of the civil proceedings could seriously affect the Bank's ability to locate and freeze sufficient assets, against which it could enforce any judgment which it might obtain against Mr. Antonov.
44. Accordingly, in my judgment, permitting the civil proceedings to continue, pending the conclusion of both the extradition proceedings and the criminal investigation and proceedings in Lithuania, would not, given the proposed safeguards which I intend to order, cause such serious prejudice to Mr. Antonov as to amount to an injustice. In contrast, the prejudice which would be suffered by the Bank, and its creditors, in having to wait years for the opportunity to pursue an action to recover funds allegedly misappropriated from the Bank, outweighs any inconvenience or prejudice to Mr. Antonov from the civil proceedings continuing.

The proposed safeguards

45. The Bank's evidence was to the effect that an order made by an English court prohibiting the Bankruptcy Administrator or any employee or agent of his, from disclosing any documents or information provided by Mr. Antonov in the course of the civil proceedings, to the Lithuanian Prosecutor would be respected by the latter and no attempt would be made to require the Bankruptcy Administrator to provide copies to him. However, in the light of the opposing evidence on this topic from Mr. Antonov's expert, Mr. Zacaroli, for the purposes of this application, realistically approached the matter on the assumption that there was a risk that the Lithuanian Prosecutor would, or could, by the exercise of his powers, have access to any document, or information, held by the Bankruptcy Administrator in Lithuania.
46. In those circumstances, the safeguards which I intend to impose in order to protect Mr. Antonov's position against possible incrimination or other prejudice in the criminal investigation or proceedings as a result of steps taken by him in the civil proceedings, will be along the following lines:

i) without the permission of this court, as to which the parties are to be at liberty to apply, neither Mr. Antonov's defence, nor any document setting out, or referring to, any grounds of his defence, nor any subsequent pleadings served by him, nor any response by him to requests for further information in relation to such defence ("the relevant defence documents"), are to be disseminated beyond named members of the Bank's legal team, Mr. Cooper and named members of his staff in England, and necessary witnesses or experts in the civil proceedings and all relevant defence documents are at all times to remain in England; such restraint will apply to such documents notwithstanding they may be read to or by the court or referred to in any hearing held in public; neither the Bank, nor any members of its legal team, nor Mr. Cooper or any of his staff, will be entitled to provide any third-party with copies of any relevant defence documents; nor, without the prior permission of the court, will any third-party be entitled to apply to the court for a copy of such document;

ii) without prejudice to CPR 31.22, without the permission of this court, as to which the parties are to be at liberty to apply, no documents disclosed by Mr. Antonov to the Bank, including but not limited to any documents read to or by the court or referred to in any hearing held in public, ("Mr. Antonov's disclosed documents") are to be disseminated beyond named members of the Bank's legal team, Mr. Cooper and named members of his staff in England, and necessary witnesses or experts in the civil proceedings; and all copies of Mr. Antonov's disclosed documents in the possession of the Bank and such named parties are at all times to remain in England; neither the Bank, nor any members of its legal team, nor Mr. Cooper or any of his staff, will be entitled to provide any third-party with copies of Mr. Antonov's disclosed documents; nor, without the prior permission of the court, will any third-party be entitled to apply to the court for a copy of such document; this restriction will obviously not apply to documents disclosed by the Bank or obtained from third parties, notwithstanding that they may be the same documents, or copies of the same documents, as those disclosed by Mr. Antonov;

iii) without prejudice to CPR 32. 12 without the permission of the court as to which the parties are to be at liberty to apply, no witness statements served by Mr. Antonov, or on his behalf ("Mr. Antonov's witness statements"), are to be disseminated beyond named members of the Bank's legal team, Mr. Cooper and named members of his staff in England, and necessary witnesses or experts in the civil proceedings; and all copies of Mr. Antonov's witness statements in the possession of the Bank, or such named persons, are at all times to remain in England; neither the Bank, nor any members of its legal team, nor Mr. Cooper or any of his staff, will be entitled to provide any third-party with copies of Mr. Antonov's witness statements; nor, without the prior permission of the court, will any third-party be entitled to apply to the court for a copy of such document;

iv) without prejudice to the above procedure rules, without the permission of this court, as to which the parties are to be at liberty to apply, neither the Bank, nor any members of its legal team, nor Mr. Cooper or any of his staff shall be entitled to use the relevant defence documents, Mr. Antonov's disclosed documents, or Mr. Antonov's witness statements or the information contained in any such documents or witness statements (save to the extent that such information is known to the Bank from its own record or an independent source), save for the purposes of these proceedings, and in particular, but without limit to the generality of the foregoing, they shall not be permitted to use such information for the conduct of investigations and/or civil and/or criminal proceedings in Lithuania or any other country.

47. The above is no more than an outline of the regime which I intend to impose. I shall hear argument from counsel as to the precise drafting of the proposed safeguards; in particular it may be appropriate to give sanction in advance to the Bank to enable it to use the relevant materials in freezing applications intended to made in other jurisdictions. I appreciate that the safeguards are not perfect or exhaustive; that there is a risk that, contrary to the evidence of Lithuanian law currently served on behalf of the Bank, the Lithuanian Prosecutor may not respect the ring-fencing regime imposed by this court; and that, consequently, Mr. Cooper, when in Lithuania, may be subject to a compulsory request by the Lithuanian Prosecutor for information or for documents that come within the above categories. However if that risk materialises, then the Bank, and indeed Mr. Cooper, will be able to apply urgently to this court and it may need to consider the matter afresh. But for the time being I consider that they adequately protect the interests of Mr. Antonov in the Lithuanian criminal proceedings, and balance the competing interests of the Bank and its creditors on the one hand and that of Mr. Antonov on the other.

The Discharge Application

Introduction

48. Mr. Antonov sought to discharge the freezing order on three principal grounds. First, Mr. Ian Mill QC, who presented this part of the argument on behalf of Mr. Antonov, submitted that, on the without notice application for the freezing order, there had been material non-disclosure and/or alternatively, misrepresentation by the Bank in relation to various matters; the nature of such non-disclosures and misrepresentations were highly relevant to (a) the need for relief and the scope of any order; (b) the issue of risk of dissipation; and the issue of delay. Second, he submitted that, by the time of the without notice application, Mr. Antonov was already subject to numerous asset freezing orders and was well aware of the risk of additional orders covering other jurisdictions; accordingly there was no significant risk of asset dissipation such as would entitle the making, or continuation, of a freezing order, and no such risk existed at the time of the discharge application. Third, he submitted that there had been considerable delay since November 2011 when the Bank was contemplating civil proceedings against Mr. Antonov, and 3 May 2012, when the application for the WWFO was made. In all the circumstances, given the culpable non-disclosure on the part of the Bank, the absence of any current risk of dissipation and the clear delay, Mr. Mill submitted that the freezing orders should be discharged and that there was no justification either for the continuation of any such orders or the re-grant of any such orders. Whilst he did not suggest that the alleged non-disclosure and misrepresentation was a dishonest or deliberate tactic on the part of the Bank, he did submit that the nondisclosure demonstrated a high level of culpability coupled with a thoroughly unsatisfactory explanation by the Bank of its failure to disclose certain matters.
49. Mr. Zacaroli, on behalf of the Bank, took issue with each aspect of Mr. Mill's submissions.

Non-disclosure: the relevant legal principles

50. Not surprisingly these were not in dispute between counsel as they are well trodden ground, although Mr. Mill sought to stress passages in Dubai Bank v Galadari [1990] 1 Lloyd's Rep. 120 per Woolf LJ at page 729 at E-F and per Nourse LJ at 738 E-F which he submitted seek to minimise the relevance of what the court would have done anyway if it had known the non-disclosed information.
51. In considering whether there has been any relevant non-disclosure and what consequences should follow, the guiding principles remain those set out in Brinks Mat v Elcombe [1988] 1 WLR 1350 at 1356 per Ralph Gibson LJ:

"In considering whether there has been relevant non-disclosure and what consequence the court should attach to any failure to comply with issues in these appeals appear to me to include the following.

(1) The duty of the applicant is to make "a full and fair disclosure of all the material facts:" see Rex v. Kensington Income Tax Commissioners, Ex parte Princess Edmond de Polignac [1917] 1 K.B. 486, 514, per Scrutton L.J.

(2) The material facts are those which it is material for the judge to know in dealing with the application as made: materiality is to be decided by the court and not by the assessment of the applicant or his legal advisers: see Rex v. Kensington Income Tax Commissioners, per Lord Cozens-Hardy M.R. at P. 504, citing Dalglish v. Jarvie (1850) 2 Mac. & G. 231, 238, and Browne-Wilkinson J. in Thermax Ltd. v. Schott Industrial Glass Ltd. [1981] F.S.R. 289, 295.

(3) The applicant must make proper enquiries before making the application: see Bank Mellat v Nikpour [1985] F.S.R. 87. The duty of disclosure therefore applies not only to material facts known to the applicant but also to any additional facts which he would have known if he had made such inquiries.

(4) The extent of the inquiries which will be held to be proper, and therefore necessary, must depend on all the circumstances of the case including (a) the nature of the case which the applicant is making when he makes the application; and (b) the order for which application is made and the probable effect of the order on the defendant: see, for example, the examination by Scott J. of the possible effect of an Anton Piller order in Columbia Picture Industries Inc. v. Robinson [1987] Ch.38, and (c) the degree of legitimate urgency and the time available for the making of inquiries: see per Slade L.J. in Bank Mellat v. Nikpour [1985] F.S.R. 87, 92–93.

(5) If material non-disclosure is established the court will be "astute to ensure that a plaintiff who obtains [an ex parte injunction] without full disclosure … is deprived of any advantage he may have derived by that breach of duty:" see per Donaldson L.J. in Bank Mellat v. Nikpour, at p 91, citing Warrington L.J. in the Kensington Income Tax Commissioners' case [1917] 1 K.B. 486, 509.

(6) Whether the fact not disclosed is of sufficient materiality to justify or require immediate discharge of the order without examination of the merits depends on the importance of the fact to the issues which were to be decided by the judge on the application. The answer to the question whether the non-disclosure was innocent, in the sense that the fact was not perceived, is an important consideration but not decisive by reason of the duty on the applicant to make all proper inquiries and to give careful consideration to the case being presented.

(7) Finally, it '… is not for every omission that the injunction will be automatically discharged. A locus poenitentiae may sometimes be afforded' per Lord Denning M.R. in Bank Mellat v. Nikpour [1985] F.S.R. 87, 90. The court has a discretion, notwithstanding proof of material non-disclosure which justifies or requires immediate discharge of the ex parte order, nevertheless to continue the order, or to make a new order on terms.

"when the whole of the facts, including that of the original non-disclosure, are before [the court, it] may well grant … a second injunction if the original non-disclosure was innocent and if an injunction could properly be granted even had the facts been disclosed:" per Glidewell L.J. in Lloyds Bowmaker Ltd. v. Britannia Arrow Holdings Plc, ante, pages 1343H–1344A.

52. Slade L.J. usefully added at page 1359:

"The principle is, I think, a thoroughly healthy one. It serves the important purposes of encouraging persons who are making ex parte applications to the court diligently to observe their duty to make full disclosure of all material facts and to deter them from any failure to observe this duty, whether through deliberate lack of candour or innocent lack of due care.

Nevertheless, the nature of the principle, as I see it, is essentially penal and in its application the practical realities of any case before the court cannot be overlooked. By their very nature, ex parte applications usually necessitate the giving and taking of instructions and the preparation of the requisite drafts in some haste. Particularly, in heavy commercial cases, the borderline between material facts and non-material facts may be a somewhat uncertain one. While in no way discounting the heavy duty of candour and care which falls on persons making ex parte applications, I do not think the application of the principle should be carried to extreme lengths. In one or two other recent cases coming before this court, I have suspected signs of a growing tendency on the part of some litigants against whom ex parte injunctions have been granted, or of their legal advisers, to rush to the Rex. v. Kensington Income Tax Commissioners [1917] 1 K.B. principle as a tabula in naufragio, alleging material non-disclosure on sometimes rather slender grounds, as representing substantially the only hope of obtaining the discharge of injunctions in cases where there is little hope of doing so on the substantial merits of the case or on the balance of convenience."

53. In Re Stanford International Bank Ltd [2011] Ch 33 at paragraph 193 Hughes LJ explained that:

"193 … The principal question is not whether the order was obtained as a result of the misrepresentation or non-disclosure but whether the information not disclosed was material to be taken into account in deciding whether or not to grant relief without notice and if so on what terms: see eg Dormeuil Frères SA v Nicolian International (Textiles) Ltd [1998] 1 WLR 1362, 1368. Once that question is answered in the affirmative, once comes to the consequential question whether the order made ought to be discharged. The judge accepted the SFO's submission that the restraint order would have been made even if there had been disclosure of the Antiguan proceedings, but that was to go straight to the consequential question. There could only be one answer to the question whether that non-disclosure was material: it was. The judge did not address separately the treatment of urgency and the civil freezing order, but those too involved material failings of candour."

54. As stated in Gee, Commercial Injunctions 5^th ed. 2004, at 9.002 p.241:

"The duty to disclose applies to matters known to the applicant or his agents, or matters which they would have known, had they made all the inquiries which should reasonably have been made prior to the application."

Thus the fact that a party or his legal adviser has forgotten a material fact affords no excuse for, or defence to, an allegation of non-disclosure: Dubai Bank v Galadari [1990] 1 Lloyd's Rep. 120; Clifton v Robinson (1853) 16 Beavan 355, 51 ER 816. There is a duty on an applicant to set out the "full story" and disclosure may be material, "whether or not deliberate" and irrespective of the existence of a good arguable case, where it gives "a seriously different flavour to the case"; see Dubai Bank v Galadari at 133b and. Gee, supra.

55. It is also important to bear in mind that, as Mr. Zacaroli submitted, it is always necessary for the Court, in deciding what should be the consequences of any breach of duty, to take account of all of the relevant circumstances, including the gravity of the breach, the excuse or explanation offered, and the severity and duration of the prejudice occasioned to the defendant (which will include the question whether the consequences of the breach are remediable and have been remedied). Above all the court must bear in mind the overriding objective and the need for proportionality: see Sidhu v Memory Corp Plc [2000] 1 WLR 1443 per Robert Walker LJ at p.1455E-F.

The allegations of non-disclosure

56. The primary thrust of Mr. Antonov's complaint about non- disclosure was as to the existence and effect of the orders that had previously been made in relation to Mr. Antonov's assets prior to the ex parte order being sought and obtained from Teare J on 18 May 2012, although complaint was also made of many other matters. Mr. Mill submitted that the non-disclosure went to three matters: whether an injunction was required at all; and, if so in what terms; secondly, the risk of dissipation; and thirdly, delay.

Extensive and detailed submissions were made in the evidence, in Mr. Antonov's written arguments, and in Mr. Mill's submissions at the hearing. At the request of the court, Mr. Mill summarised Mr. Antonov's complaints about non-disclosure in a bullet point document, which he amplified by oral submissions. Likewise, Mr. Zacaroli summarised the Bank's factual response in a similar document, likewise amplified by oral submissions.

57. The various heads of complaint, and the Bank's factual response to such complaints, in summary, were the following:

i) The complaint

"The Lithuanian PROs were not put in evidence despite the fact that at least the Orders referring to Lithuanian assets were available through a search of the Register of Property Seizure Acts."

The response

Whilst it is correct that the Lithuanian PROs were not put in evidence, the Lithuanian PROs in relation to assets which were held within Lithuania were specifically mentioned to the judge in the context of an argument that could be made against the Bank to the effect that there was no risk of dissipation because they were already freezing orders in place. PROs were not publicly available documents in Lithuania and only the fact that they had been made was available on the Register. Although the relevant members of Mr. Cooper's staff were aware of the existence of Lithuanian freezing orders over Lithuanian assets, they were not aware that the Lithuanian Prosecutor had obtained Lithuanian orders that purported to have extraterritorial effect. As at the date that the Bank's evidence was completed, on or about 14 May 2012, no details of PROs referring to foreign assets were recorded on the Register. It was not updated until 16 May 2012 in this regard and the fact that it had been updated so shortly before the application was, unsurprisingly, not spotted by Mr. Cooper's staff. The evidence served by the Bank (which for present purposes I accept as truthful^[6]) showed that, contrary to the assertions of Mr. Antonov, there was no free flow of information on a two-way basis between the Lithuanian Prosecutor and the Bankruptcy Administrator and his staff. According to the Bank's evidence, reasonable steps had been taken by Mr. Cooper and his staff to enquire precisely what steps the Lithuanian Prosecutor in relation to assets outside the Lithuanian jurisdiction, but they received no full or satisfactory response. Mr. Zacaroli frankly accepted that he could not have made the submission to Teare J that the Lithuanian PROs did not extend to assets outside Lithuania, had he known about the existence of the PROs applying to assets in other jurisdictions.

ii) The complaint

"The UK Restraint Order was not put in evidence despite the fact that it was known about; a copy was available through a request of the UK Land registry.

The response

Mr. Zacaroli accepted that the Bank could have found out about the UK restraint order and that (in fact) Linklaters (the Bank's solicitors) had known about it in March 2012 when the search was done of the property register. However as at the date of the ex parte application, the relevant solicitor at Linklaters had forgotten the fact that he knew about the English restraint order. Mr. Zacaroli also realistically accepted that the Bank should have done more, whether by way of a search in the Land Registry prior to the date of the ex parte application, or otherwise, for ascertaining whether any English restraint orders had been made although he pointed out that it was surprising, to say the least, that the Lithuanian Prosecutor had not informed the Bank of the fact that such an order had been obtained. But, in the light of the evidence served by the relevant partner at Linklaters, there was no basis for suggesting any deliberate misconduct on the Bank's part. Whilst the Bank was aware of the English extradition proceedings, which take place in public, the restraint order proceedings had not taken place in public.

iii) The complaint

The Latvian Freezing Order was not put in evidence despite the fact that it was known about and referred to in oral submissions before Teare J on the without notice applications. No evidence was adduced of any attempt to obtain a copy.

The response

Mr. Zacaroli accepted that the Latvian freezing order had not been put in evidence on the ex parte application. However it was clear from Schedule 1 to an affidavit, which the judge had been invited to pre-read, that details of the assets subject to the Latvian order were before the court and that some sort of freezing order had been made in Latvia. At the hearing, Mr. Zacaroli told the judge (see page 82 of the transcript):

"There have been freezing orders made in Lithuania, which has extended to Latvia, and in Switzerland"

and whilst this was not a precise description (since the order had originally been made in Latvia rather than having been "extended" from Lithuania) nonetheless the existence of the order had been brought to his attention.

The complaint

"The Swiss Freezing Order was not shown to the Court. It was in an exhibit but not drawn to the Court's attention, other than by passing reference in oral submissions."

The response

Whilst it was correct that this Swiss freezing order was not shown to the court, its terms added little to the information which was brought to the court's attention at the hearing. Thus the existence of the Swiss order was disclosed in Mr. Cooper's first affidavit and its existence was referred to in the transcript of the ex parte hearing at pages 28 and 82. There was in fact an order in the files before the judge on the ex parte application, but it was not drawn to his attention. The order itself added little or nothing to the information.

iv) The complaint

"The court was not informed when the various orders had been identified/obtained by the Bank (or the fact that this had been many months before in the period November 2011 to January 2012)"

The response

It was correct that, in respect of the orders of which it was aware, the Bank did not inform the court of the dates of those orders or when it became aware of them.

v) The complaint

"There was no disclosure of the fact that Mr. Huck had been told on 6 December 2011 that the Lithuanian Prosecutor had obtained or was seeking orders freezing assets worldwide (and that minimal efforts had been made to inquire into the matter). As early as November 2011 and the Lithuanian Prosecutor was reported in the press as saying that he had frozen "Lithuanian and foreign assets of some people involved."

The response

It was correct that the court had not been told this, but it was not correct that only minimal efforts had been made to ascertain the true position. The Bank's evidence fully set out the efforts that had been made by the bankruptcy administrator and his staff.

vi) The complaint

"It was stated that the Lithuanian orders did not apply to overseas assets."

The response

It was so stated. However that was the position which the Bank, and the bankruptcy administrator and his staff, believed to be true at the time. Mr. Zacaroli also referred to the response at i) above.

vii) The complaint

"It was implied that orders of the Lithuanian Prosecutor could not have extra-territorial effect. For example, the evidence of Dr. Agne Tiknuite, Head of the faculty of Civil and Commercial law at Mykolas Romeris University in Vilnius, one of the Bank's experts in relation to Lithuanian law, stated in an affidavit that the Lithuanian freezing orders "… do not, as a matter of Lithuanian law, purport to have any extra-territorial effect." The evidence of Mr. Antonov's Lithuanian law expert Dr. Sulija (which had not been challenged) was to contrary effect."

The response

This was incorrect. Dr. Tiknuite's evidence was given in the context of a defendant outside the jurisdiction of the Lithuanian court. It was in that context that she stated that the orders did not purport to have extraterritorial effect. In other words she was saying no more than that such orders cannot be enforced unless either the person to whom they are addressed is in Lithuania or there is property in Lithuania against which such orders can be enforced. The point was that Mr. Antonov was not in Lithuania, nor were any of the assets, referred to in the orders as being outside Lithuania, by definition in Lithuania. The evidence of Dr. Sulija was not inconsistent with that of Dr. Tiknuite: the former's evidence in this respect was premised on personal jurisdiction being exercised over the person subject to the restraint order.

viii) The complaint

"The misleading impression was given that Dr. Tikniute had examined the Lithuanian orders (whereas her description and explanation of them was no more than a repetition of what she had been told by Eversheds and Linklaters). Although Dr. Tikniute stated in her affidavit that she had exhibited the materials that she had considered and the Lithuanian orders were not included, it is trite law that it is insufficient to refer to material adverse matters in an exhibit and these must be included in the body of an affidavit (more so an expert report): see Re Stanford at paragraph 188 (Hughes LJ)."

The response

Whilst it was correct that Dr. Tiknuite had said in paragraph 29 of her affidavit in support of the ex parte application, in a clumsily drafted sentence, that

"To my knowledge and from the publicly available information in the register of Property Seizure Acts …."

which might have suggested that she was saying that she knew something from her own knowledge - she had listed the documents which she had personally reviewed in an exhibit to her affidavit, and the list did not include the PROs. The fact didn't change the underlying nature of what she had said and did not add anything to the complaint that what she had said was wrong, and there were Lithuanian orders that purported to have extra-territorial effect.

ix) The complaint

"Likewise it was not disclosed that Mr. Cooper also had not examined the freezing orders but rather his account was hearsay (as it appears to have been – even now no proper account is given)"

The response

The only criticism that can be made of Mr. Cooper is that he failed to attribute the source of his knowledge. However, his evidence was submitted in conjunction with that of Dr. Tiknuite, and it was plain that he was reliant on her evidence in this regard.

x) The complaint

"It was implied that the Lithuanian orders were criminal and civil proceedings were not contemplated (which proceedings in Lithuania would be combined with criminal proceedings if pursued)."

The response

This was incorrect. Mr. Cooper correctly described the PROs and the other orders as criminal freezing orders: they were obtained by the prosecutor in the context of a criminal investigation. The orders merely stated that:

"… there are reasonable grounds to assume that in the context of this criminal case a civil claim might be lodged or confiscation of property ordered."

Mr. Cooper also referred to the possibility of civil proceedings in 44.5 of his affidavit.

xi) The complaint

"Failure to give a full and frank account of the true circumstances of the nationalization and insolvency proceedings."

This was said to go to: (a) the credibility of the Bank's case against Mr. Antonov and the merits of his defence; and (b) the circumstances and timing of the ex parte application. Complaints were made under this head to the effect that:

"a) Mr. Cooper had stated in his affidavit in support of the ex parte application that the Insolvency proceedings were based on a report of Mr. Freakley, but, in fact, Mr. Freakley's subsequent affidavit showed that Mr. Freakley had made no decision on solvency;

b) there was no disclosure of the fact that, as Mr. Freakley subsequently stated, the Central Bank was alleging fraud against Mr. Antonov from the outset;

c) there was no disclosure of the fact that, as Mr. Freakley subsequently stated, it was the Central Bank that made decisions as to nationalization and commencement of insolvency proceedings and he had no significant role:

d) there was no disclosure of the fact that Oliver Wyman and Central Bank had had a plan to nationalize the Bank as early as 27 October 2011; and that criminal proceedings against Mr. Antonov had commenced even before Mr. Freakley had been appointed;

e) there was no disclosure of the unlawful nature of the nationalization, which was subject to retrospective legislation."

The response

This complaint was without foundation. Paragraphs 15-19 of Mr. Cooper's affidavit provided a neutral description of the events leading up to his appointment as Bankruptcy Administrator. In paragraph 21 Mr. Cooper specifically referred to the Lithuanian criminal proceedings which had been begun by an arrest in London on 24 November 2011, the implication being that there had clearly been prior work done by the prosecuting authorities before that date. Then in paragraph 23 he gave an account in broad terms of the allegations made by Mr. Antonov of political motivation behind the nationalisation of the Bank. None of this was inconsistent with Mr. Freakley's evidence. Subsequently, on 16 May 2012, Mr. Huck, one of Mr. Cooper's staff, served a second affidavit in which he updated the position in relation to the commencement by Mr. Antonov of arbitration proceedings against the Lithuanian government and pointed out that such claim appeared to be 'supportive to claims by Antonov in the extradition proceedings that the criminal charges against him are politically motivated and the result of "anti-Russian xenophobia in Lithuania"'. As the skeleton argument and the transcript made clear, the court's attention was specifically drawn to the fact that Mr. Antonov was making such allegations. However there was no need for the Bank to go into any great detail about such allegations; the Bank's claim was based on core primary source materials which the Bankruptcy Administrator had collated from the Bank's records, from discussions with former employees and for documents obtained from third parties. It was not based on allegations made by the Lithuanian Prosecutor or the Lithuanian government in the criminal proceedings. Apart from the fact that the Bank was not aware at the time of the ex parte application that Mr. Antonov was going to allege that the Bank, the Lithuanian state and the Lithuanian Prosecutor were effectively one and the same, the allegations that the Lithuanian Prosecutor was politically motivated was no defence to the Bank's claim in the civil proceedings. Moreover nothing that Mr. Cooper said was inconsistent with what Mr. Freakley said about the commencement of the insolvency proceedings such as would affect the issue relating to the delay of commencement of proceedings. The court was well aware that allegations of misappropriation against Mr. Antonov had been made in November 2011 and that he had been arrested then. As Mr. Zacaroli had fairly said to the judge, the fact of Mr. Antonov's arrest in November had undoubtedly put him on notice that there were proceedings of some nature against him or were likely to be. But the point which the Bank had made to the judge that such notice wasn't necessarily sufficient to mean that there was not still a risk of dissipation of assets round the world.

xii) The complaint

"Inadequate explanation of reasons for non-disclosure; in particular:

a) No adequate explanation from Mr. Cooper for his previous statement;

b) no adequate explanation by Mr. Huck about his knowledge about the existence or terms of the Lithuanian PROs or as to what he was informed when; in particular, Mr. Huck did not say that Eversheds (Solicitor acting for the Bankruptcy administrator) only knew what was contained in a public register; there was no explanation as to what was known to relevant individuals at all material times; Eversheds clearly knew more than was on the public register;

c) Mr. Reid of Linklaters only submitted a statement after the discharge application was made as to his knowledge of the UK restraint order; Linklaters' position prior to that was in the letter of 12 June 2012; he implied that the constraint order had been forgotten until 9 July 2012 and failed to refer to its being brought again to Linklaters' attention on 18 May 2012; he failed to explain why nothing had been done about correcting the position until it was referred to in correspondence on 12 June 2012; in particular, he failed to explain why the Bank did not return immediately to Court pursuant to its ongoing obligation to give full and frank disclosure to inform the Court of the existence of the UK restraint order and to provide the Court with a copy."

The response

None of the matters raised, when properly analysed, added to the case for discharge: in particular:

a) Mr. Cooper's source of knowledge in relation to the Lithuanian PROs was plainly Dr. Tiknuite's affidavit which has already been addressed above;

b) although Mr. Huck's evidence in relation to the timing and manner of his awareness of the Lithuanian orders was potentially inconsistent, such inconsistency went nowhere; it was clear that the PROs were not publicly available and that the Bank did not know the true scope of the orders as at the time that the evidence for the ex parte application was settled as described above; there was no inconsistency about his evidence in relation to his awareness of the purported extra territorial effects of the Lithuanian orders and such other complaints as were made were immaterial; the allegation that Evershed's "clearly knew" more than was on the register was unsupported by the evidence; and the Bank acted wholly independently from the Lithuanian Prosecutor and other government entities;

c) it was only on 9 July 2012 that Mr. Reid became aware that he had discovered the existence of the UK restraint order in March 2012; that Mr. Reid's statement explaining that the land registry entry revealing the existence of the UK restraint order was known of by Linklaters, but subsequently forgotten about; that it was only submitted on 10 July 2012 reflects when Mr. Reid remembered that he had known that fact; it does not illustrate that he remembered that he had known of the UK restraint order any earlier; it had already been drawn to the court's attention in Mr. Huck's first witness statement on 14 June 2012; therefore no further information was required in circumstances where Mr. Antonov had already made his discharge application."

Discussion and determination of the Discharge Application

Issues to be determined

58. The issues which I have to decide in relation to the Discharge Application are the following:

i) whether any information was not disclosed, or any misleading account was given by the Bank of any matter, in the course of its ex parte application, as complained of by Mr. Antonov;

ii) whether any non-disclosed information, or misleading account, was, on an objective basis, material enough to be taken into account in deciding whether or not to grant relief without notice and if so on what terms;

iii) whether, if there had been any material non-disclosure or misrepresentation by the Bank, the WWFO should be automatically discharged, or whether, taking into account all the relevant circumstances, including the gravity of the non-disclosure/ misrepresentation, the excuse or explanation offered, and the severity and duration of the prejudice occasioned to the defendant, and the need for proportionality, the order should be continued, or alternatively re-granted as from the date of the hearing of the Discharge Application or some other specific date;

iv) whether, irrespective of issues of non-disclosure or misrepresentation, the WWFO should be continued, given Mr. Antonov's submissions as to the absence of risk of dissipation and delay.

59. Having considered the extensive evidence relating to the alleged non-disclosure and misrepresentation, as well as the respective submissions of counsel, my conclusions in relation to these issues are as follows.

Was there any non-disclosure or any misleading account given by the Bank of any matter, in the course of its ex parte application, as complained of by Mr. Antonov?

60. My conclusions are as follows:

i) Complaint i): I conclude that there was no non-disclosure in relation to the Lithuanian PROs, notwithstanding that the orders themselves were not put in evidence. The Lithuanian PROs in relation to assets which were held within Lithuania were specifically mentioned to the judge in the context of an argument that could be made against the Bank to the effect that there was no risk of dissipation because they were already freezing orders in place. PROs were not publicly available documents in Lithuania and only the fact that they had been made was available on the Register. Although the relevant members of Mr. Cooper's staff were aware of the existence of Lithuanian freezing orders over Lithuanian assets, I accept that they were not aware that the Lithuanian Prosecutor had obtained Lithuanian orders that purported to have extraterritorial effect. As at the date that the Bank's evidence was completed, on or about 14/16 May 2012, no details of PROs referring to foreign assets were recorded on the Register. It was not updated until 16 May 2012 in this regard and the fact that it had been updated so shortly before the application was, unsurprisingly, not spotted by Mr. Cooper's staff. I do not consider that they failed in their duty of disclosure in not checking the Lithuanian register again immediately before the application. Whilst I accept that the Lithuanian state, both as creditor and as shareholder, has a substantial economic interest in the Bank, and that the Bank and the Lithuanian Prosecutor have a common interest in the establishment of Mr. Antonov's liability for misappropriation, whether in the civil or in the criminal proceedings, I do not accept that, for the purposes of these applications, the Bank and the Lithuanian Prosecutor can be regarded as one and the same entity. I accept, for the purposes of these applications, the evidence served by the Bank^[7] which shows that, contrary to the assertions of Mr. Antonov, there was no free flow of information on a two-way basis between the Lithuanian Prosecutor and the Bankruptcy Administrator and his staff, and that, despite the fact that reasonable steps had been taken by Mr. Cooper and his staff to inquire what steps the Lithuanian Prosecutor in relation to assets outside the Lithuanian jurisdiction, they had received no full or satisfactory response. Accordingly I accept that, whilst incorrect, the statements made by Mr. Zacaroli to Teare J, to the effect that the Lithuanian PROs did not extend to assets outside Lithuania, did not amount to a failure on the Bank's part to disclose information which, had it made proper enquiries, it should have disclosed.

ii) Complaint ii): I conclude that, as rightly accepted by Mr. Zacaroli, there was non-disclosure in relation to the UK Restraint Order; it was not put in evidence despite the fact that it was known about at the time, because the relevant partner at Linklaters had genuinely forgotten about its existence. It clearly should have been disclosed and the Bank was clearly under a duty to take reasonable steps to ascertain whether or not any such order had been made. Again as Mr. Zacaroli accepted, a search could have been made of the UK Land registry or other enquiries made to establish whether such an order had been made. However, I do not accept Mr. Mill's submission that there was anything unsatisfactory or inadequate about the subsequent explanation as to why there had been no disclosure; nor do I accept (insofar as the suggestion was made) that there was anything sinister or deliberate about such non-disclosure.

iii) Complaint iii): So far as the Latvian freezing order was concerned, given the fact that details of the assets subject to the Latvian order, and the fact that an order had been made in Latvia were in evidence which the judge had been asked to pre-read and the fact that Mr. Zacaroli told the judge that there had been freezing orders "extended to Latvia", I conclude there was no non-disclosure as such.

iv) Complaint iv): Similarly so far as the Swiss order was concerned. Whilst the actual order was not shown to the court, its terms added little to the information which was brought to the court's attention, both in the evidence which he was asked to pre-read and at the hearing itself. In fact, the order itself was in the files before the judge, although his attention was not expressly directed to it. In those circumstances I conclude there was no non-disclosure as such.

v) Complaint v): I conclude that there was no disclosure of the dates when the various orders had been identified or obtained by the Bank.

vi) Complaint vi): I conclude that the Bank did not disclose the fact that Mr. Huck had been told on 6 December 2011 that the Lithuanian Prosecutor had obtained or was seeking orders freezing assets worldwide. I do not accept that the Bank had only made minimal efforts to ascertain the true position.

vii) Complaint vii): I have already dealt with this at i) above.

viii) Complaint viii): I accept Mr. Zacaroli's submissions that there was nothing in this complaint and that, on analysis, there was no misrepresentation of the position in relation to the extraterritorial effect of the Lithuanian PROs.

ix) Complaint ix): I accept Mr. Zacaroli's submission that no misleading impression was given by Dr. Tiknuite.

x) Complaints x) and xi): Again, I accept Mr. Zacaroli's submissions that there was no non-disclosure or misrepresentation in relation to these complaints.

xi) Complaint xii): I do not accept that there was a failure to give a full and frank account of the true circumstances of the nationalisation and insolvency proceedings or that there was any non-disclosure in this respect. In my judgment, Mr. Cooper's evidence before Teare J on the ex parte application, and Mr. Zacaroli's submissions to the judge on that date, adequately referred to the history of the matter and sufficiently referred to the allegations made by Mr. Antonov of a political motivation for the nationalisation and the criminal proceedings.

xii) Complaint xiii): None of the complaints raised under this head, in my judgment demonstrated non-disclosure, inconsistency or misrepresentation.

Was any information which was not disclosed, or in respect of which a misleading account was given, on an objective basis, material to be taken into account in deciding whether or not to grant relief without notice and if so on what terms?

61. In my judgment, the existence of the UK Restraint Order, and the extent of the assets which it covered, was, on an objective basis, sufficiently material for the court to be told about the order and informed about its terms. The order clearly was relevant to the Court's consideration of the issues of risk of dissipation and delay and the need to grant an injunction on an ex parte basis. It was to be anticipated that, as indeed he has done, Mr. Antonov would be likely to contend that the existence of the UK Restraint Order, together with the restraint or freezing orders in Lithuania, Switzerland and Latvia, meant that there was no risk of dissipation by him of his assets. The fact that the judge might well have concluded (as I would have done) that, for the reasons submitted by Mr. Zacaroli, the existence of the UK Restraint Order, and indeed the other foreign orders, was not a good or compelling reason for not granting the WWFO, is, as the authorities cited above demonstrate, and Mr. Mill submitted, neither here nor there. The judge needed to understand the extent and impact of the orders that had already been made, particularly in this jurisdiction, and to assess their significance, in the context of the Bank's application for both English, and worldwide freezing orders. I deal with the consequences of this non-disclosure in the next section of this judgment.
62. With the exception already mentioned of the UK Restraint Order, I do not regard any of the other matters in respect of which there was arguably non-disclosure as material, or sufficiently material, on an objective basis, to be taken into account in deciding whether or not to grant relief without notice and if so on what terms. Likewise, if contrary to my conclusions as expressed above, there should have been greater disclosure of the matters in respect of which complaint is made, or there was some misrepresentation, or omission, of the true circumstances of the nationalisation or insolvency proceedings or otherwise, as alleged by Mr. Antonov, I conclude that such non-disclosures, misrepresentations or omissions were either not material, or not sufficiently material, to be taken into account in the judge's decision as to whether to grant the relief sought on an ex parte basis. In particular, none of the alleged non-disclosures, misrepresentations or inadequate descriptions of events, of which complaint is made by Mr. Antonov, in any way impacted on the merits of the Bank's claims or on the strength of his possible defences to such claims.

Whether, if there had been any material non-disclosure or misrepresentation by the Bank, the WWFO should be automatically discharged, or whether, taking into account all the relevant circumstances, the order should be continued, or alternatively re-granted, and, if so, from which date?

63. In my judgment, taking into account all the relevant circumstances, including the limited extent of the materiality of the UK Restraint Order, the nature of the Bank's solicitors' careless, but innocent, failure either to recall its existence or to conduct the relevant property searches, it would be wholly inappropriate and disproportionate to discharge the WWFO, or to discharge it, but only to re-grant it from a later date.
64. My reasons may be summarised as follows:

i) The court had well in mind at the ex parte hearing that there were freezing orders in existence as against Mr. Antonov, freezing particular assets in particular jurisdictions. If it had been told about the UK Restraint Order, it would have known, additionally, that there were specific assets in England that had been frozen.

ii) Although the court clearly needed to know the extent and terms of the UK Restraint Order, given its limited materiality, and on any objective basis, once the court had been informed of its terms, it could not have made a difference to its decision that a WWFO should be granted.

iii) Each of the Lithuanian orders and the UK Restraint Order were asset specific. In other words, they related only to known and listed assets of Mr. Antonov and were not of more general extent and application. The orders did not relate to assets held by Mr. Antonov in the relevant jurisdictions which were not known about, nor did they relate to assets in other jurisdictions.

iv) The extensive and detailed evidence provided in support of the WWFO explained the flow of funds misappropriated from the Bank and revealed that funds were paid to, or passed through, a great number of entities owned or controlled by, or connected with, Mr. Antonov, in a number of jurisdictions around the world. These included Austria, the Bahamas, Belize, British Virgin Islands, Cyprus, Denmark, the Dominican Republic, France, Latvia, Panama, Russia, the Seychelles, Saint Lucia, Switzerland and the UK. In addition, details of Mr. Antonov's assets, of which the Bankruptcy Administrator and his staff were currently aware, were set out in the evidence before the judge. It is clear from that evidence that the assets owned or controlled by Mr. Antonov included property located in numerous jurisdictions, as was subsequently confirmed in correspondence with his solicitors. So the fact that the court was not told of UK Restraint Orders that had been made in respect of one jurisdiction was not, in context, that significant.

v) Moreover, the value of the known assets of Mr. Antonov covered by the existing freezing orders in respect of assets within Switzerland, Lithuania, Latvia and the UK was relatively modest, compared to the volume of funds allegedly misappropriated from the Bank. Thus, for example, although the Bank contends that a significant value of the assets, which were allegedly misappropriated from the Bank, passed into Switzerland, the funds from these assets flowed onwards to multiple jurisdictions and would not therefore be caught by the terms of any Swiss restraint order.

vi) The emphasis of the application before Teare J was on the worldwide nature of the freezing order, not on the UK assets. The assets in the UK, Lithuania, Latvia and Switzerland, were, in one respect, of minimal importance; the Bank's case was that, given the nature of the Bank's case, a man who had transacted business around the world and directed the transfer of funds around the world, the necessary injunctive relief was a WWFO.

vii) In particular, in such circumstances the disclosure requirements of the order were of particular importance. For example, the UK Restraint Order did not attach any other assets in the UK owned directly or indirectly by Mr. Antonov. Subsequent to the order made by Teare J, the Bankruptcy Administrator and his staff discovered that Mr. Antonov owns at least two assets in the UK not covered by the UK Restraint Order, namely the "The Firs" in Bromley, Kent, and, via a Jersey registered company, Meadow Cottage Farm, Kings Lane, Englefield Green, Egham, with an approximate value of £5.4 million; neither of these properties were captured by the UK Restraint Order.

viii) The existing restraint orders were obtained by the Lithuanian Prosecutor in the context of the criminal proceedings. The Bank, as I accept, has no means of policing or enforcing those orders.

ix) For all the above reasons I am satisfied that the failure to disclose the UK Restraint Order does not require the court to discharge the WWFO. Although the existence and terms of such order were objectively material to the exercise of the court's discretion at the hearing of the ex parte application, the fact that such an order had been made, on the date which it had been made, would have had no material effect on the judge's decision that there was a risk of dissipation, which required the imposition of a WWFO. Likewise, even if he had been informed of the existence of the UK Restraint order, it would not have persuaded him that the Bank's delay in bringing the proceedings were such as to require him not to make any such order.

Whether, irrespective of issues of non-disclosure or misrepresentation, the WWFO should be continued, given Mr. Antonov's submissions as to absence of risk of dissipation and delay?

Risk of dissipation

65. Mr. Mill submitted that there was no risk of dissipation in this case, given the restraint orders in place, the existence of the criminal proceedings and Mr. Antonov's presence within the jurisdiction. I disagree. Evidence of risk of dissipation was in this case founded principally on the underlying wrongdoing alleged to form the basis of the claim itself. In such a case, the court is required to scrutinise the alleged conduct with care in order to be satisfied that it justifies the inference of risk of dissipation; see Thane Investments v Tomlinson [2003] EWCA Civ 1272 at paragraph 28. However, evidence of alleged prior dishonesty or involvement in fraud may be relevant (and sufficient) if it justifies the inference of risk of dissipation: see VTB Capital plc v Nutrietek International Corp [2012] EWCA Civ 808 at paragraphs 176-178; Jarvis Field Press v Chelton [2003] EWHC 2674 (Ch)
66. The Bank contended before Teare J (and continues to contend) that the nature of the allegations in this case, and the method by which the misappropriation and misuse of assets has allegedly occurred, is precisely the sort of case that was contemplated by Kerr LJ in Banabaft International Co SA and Bassantne [1990] Ch 13 at 33:

"some situations … cry out – as a matter of justice to plaintiffs – for disclosure orders and Mareva injunction type injunctions covering foreign assets of the defendants even before judgment."

and Parker LJ in Derby & Co Ltd v Weldon [1990] 1 Ch 48 at 57: there is every justification for an injunction where:

"… the defendants are clearly sophisticated operators who have amply demonstrated their ability to render assets untraceable and a determination not to reveal them."

67. Those comments apply to the present case. Having read the entirety of the evidence in this matter, I have no doubt that a risk of dissipation remains, notwithstanding Mr. Antonov's presence within this jurisdiction and the restraint orders which have been made. He is a sophisticated operator who remains clearly able to give instructions in relation to transactions affecting his worldwide assets.

Delay

68. Delay in making an application for a freezing order is potentially relevant to whether or not the relief ought to be granted. The relevant authorities in this regard were recently summarized by Eder J in Elektromotive Group v Pan [2012] EWHC 2742 (QB) at [33](h). Delay may impact on whether relief should be granted (or should have been granted) on the basis that it raises the question as to whether there really is an ongoing risk of dissipation and a need for an injunction because secretion may already have occurred.
69. This was an issue that was clearly addressed before Teare J. Although Mr. Cooper was appointed as Bankruptcy Administrator in early December 2011, I am not surprised that it was only many months later that he was in a position to bring the current proceedings against Mr. Antonov. From a largely standing start, his forensic team had to reconstruct the Bank's books and records and ascertain the true position, to the extent it was not recorded in the existing records. The evidence demonstrated that uncovering the detail of the wrongdoing was a significant task. The Bank was clearly entitled and required to make proper enquiries into a claim of fraudulent misappropriation, before launching an application for a WWFO in this jurisdiction. Moreover, as the evidence demonstrated, the issue in relation to obtaining a properly supported cross-undertaking in damages took some time to resolve and required an application at the beginning of April to the Lithuanian court.
70. Teare J's attention was specifically drawn to the delay in making the application. He was also told that:

i) the Application had, in the circumstances, been made as soon as reasonably practicable;

ii) whilst there was plainly a risk that Mr. Antonov would have dissipated assets, litigation in England involving a WWFO might well be unexpected; and

iii) it would assist in preventing any further dissipation and also provide a mechanism to identify Mr. Antonov's global assets.

71. I conclude that the fact that the Bank did not make the application for the WWFO until May 2012 is no reason for not continuing the injunctions.
72. Accordingly I propose to order that the WWFO should be continued against Mr. Antonov until trial.

The Variation Application

Introduction

73. Mr. Antonov seeks an order relieving him of the obligation to provide disclosure of his current assets. This is based principally on his asserted fear that information provided by him will, in breach of his Convention rights, be passed to the Lithuanian Prosecutor, and will be used not merely as evidence against him in any criminal trial, but will also be used by the Lithuanian Prosecutor to assist in the criminal investigation. He claims, in addition, that the criminal proceedings, and investigation, are politically motivated, and that any such assistance provided to the prosecutor will enable the latter to gain an unfair advantage over Mr. Antonov in those proceedings. He also complains that any disclosure would undermine the statutory regime, and the statutory protections, on mutual assistance in criminal matters.
74. The factual position is that the WWFO was made on 18 May 2012. Mr. Antonov was originally ordered to provide a list of his assets worldwide within seven days of the WWFO, and to verify the list by affidavit within 14 days of the WWFO. Mr. Antonov has so far provided disclosure of only a single asset, a property in Switzerland. It is not suggested that this is his only asset of substance. A clue as to the likely scale and whereabouts of his assets was provided in a letter from his solicitors dated 23 May 2012, requesting an extension of time for complying with the disclosure obligations until 11 June 2012. The letter cited, among other things, the need "to marshall [sic] information which is held in many different jurisdictions", and also sought a variation to limit disclosure to any asset with a value of more than £250,000. In the event, no further disclosure has been provided, pending Mr. Antonov's application to vary the disclosure obligation in the WWFO, save that he has provided, but only to his own solicitors, Mishcons, to be held to the order of the court, details of the assets which are funding payment of his current legal fees.
75. Mr. Antonov's real concern is that any disclosure of his current assets will inevitably provide an audit trail that could, at least theoretically, be used by the Lithuanian Prosecutor to demonstrate, by means of a "back calculation," that funds allegedly misappropriated from the Bank have been, directly or indirectly, applied in the acquisition of Mr. Antonov's current assets.

The relevant legal principles

76. The relevant legal principles, as distilled from counsel's submissions and the relevant authorities, can be summarised as follows:

i) Asset disclosure is an integral and essential part of the relief granted to a claimant in order to ensure the effectiveness of a freezing order, without which the remedy is likely to be ineffective: see the cases cited in JSC BTA Bank v Ablyazov [2010] 1 All ER (Comm) 1029 at paragraph 5. The need for disclosure is particularly acute where, as here, the evidence relating to the underlying alleged fraud demonstrates the movement, in a short timescale, of very large sums of money among a large number of accounts or entities, in a variety of jurisdictions, which are owned by, or otherwise connected with, the defendant. As Steyn LJ (as he then was) said in Grupo Torras SA v Al-Sabbagh [1994] CA Transcript, page 159, without disclosure a freezing order would be a "… relatively toothless procedure in the fight against rampant transnational fraud".

ii) The standard form of Commercial Court injunction entitles a defendant not to provide disclosure on the grounds of the privilege against self-incrimination. This relates solely to the risk of incrimination in actual or threatened criminal proceedings in England. However, as referred to above, the decision of the Court of Appeal in C Plc v P [2007] EWCA Civ 493; [2008] Ch.1; E.R. 1034, CA establishes that a person could not, relying on the privilege against self incrimination, refuse to disclose documents which had a prior existence independent of the will of the person relying on the privilege. Moreover in cases of theft, or alleged misappropriation of property by fraud, section 31 of the Theft Act and section 13 of the Fraud Act abrogate the privilege against self-incrimination in civil proceedings, thereby removing the entitlement of defendants to answer questions relating to their assets, but on terms that no statement or admission made by a person in answering a question put or complying with an order, shall, in proceedings for an offence under either Act, be admissible in evidence against that person.

iii) There is no right to withhold disclosure of assets on the basis of a risk of incrimination in relation to actual or threatened criminal proceedings abroad. In such a case, the court instead has a discretion as to whether to grant protection against the risk of incrimination: see Ablyazov (CA) at paragraph 17; and also Brannigan v Davison [1997] AC 238, at 251 per Lord Nicholls of Birkenhead. English courts will therefore take into account the possibility of self-incrimination in respect of foreign criminal proceedings "… in deciding whether and, if so, in what terms a disclosure order should be made": see Arab Monetary Fund v Hashim [1989] 1 WLR 565, 574.

iv) The exercise of that discretion depends in part on the risk of prejudice to the defendant in the foreign criminal proceedings. Lithuania is an EU member state, a member of the Council of Europe and signatory state to the Convention. It is a category 1 territory for the purpose of the Extradition Act 2003. Article 6 of the Convention therefore guarantees the right of a defendant to a fair hearing.

v) The leading Strasbourg decision remains Saunders v UK (1996) 23 E.H.R.R. 313, (supra), in which it was held that the use, in criminal proceedings, of transcripts of the defendant's interviews which had been obtained under compulsion from the defendant in a separate Department of Trade inspection, constituted a breach of his Article 6 rights to a fair trial and not to incriminate himself. Likewise, any information provided by Mr. Antonov under compulsion in the English civil proceedings as to the location and details of his current assets, pursuant to the disclosure provisions of the WWFO, could not be used as evidence against him in his criminal trial because to do so would be in breach of his rights against self-incrimination.

vi) Saunders v UK did not address the somewhat different point as to whether the use by prosecuting authorities of statements compulsorily obtained in civil or regulatory proceedings (for example to inform the criminal investigation or the decision to prosecute), as opposed to any deployment in evidence at a criminal trial, would breach the Convention rights of a suspect or defendant; this is apparent from paragraph 67 of the ECHR's judgment. I was not referred to any authority where this issue was expressly considered, whether by the ECHR or by the English court. However, in Den Norske Bank ASA v Antonatos [1999] QB 271, at 289 A-B (a case in which Saunders v UK was referred to in the judgment), the Court of Appeal clearly considered that, at least so far as the common law privilege was concerned, a witness was entitled to claim privilege, not merely in relation to:

"… any piece of information or evidence on which the prosecution might wish to rely in establishing guilt",

vii) but also in relation:

"… to any piece of information or evidence on which the prosecution would wish to rely in making its decision on whether to prosecute or not";

in other words, the privilege applied not merely to prevent the deployment of self-incriminatory evidence in proceedings, but also the use of such information in the course of a criminal investigation. It may be that a similar assumption was made in Rottmann v Brittain [2010] 1 WLR 67 (CA) at paragraph 14, although, in that case the Court considered that the safeguards that had been put in place in the context of a private examination of a bankrupt, adequately protected the bankrupt's Convention rights in any German criminal proceedings.

viii) The Court should assume that the court of another Member State which is a signatory to the Convention will comply with the requirements of the Convention: see Rottmann v Brittain (supra). In that case, the court rejected a claim to rely on the privilege against self-incrimination in the context of an examination of a bankrupt and parallel criminal proceedings in Germany; at paragraph 16, Ward LJ stated:

"14 Here the judge has sought to alleviate the possibility of harm to the bankrupt by directing that the hearing take place in private with a judge of the High Court having control over the release of the transcripts. The applicant contends that this is insufficient protection, because the biggest creditor in the financial fiasco in Germany is a trust company which is in fact a part of the German Finance Ministry, or at least has the closest possible links to the Finance Ministry, and it is the body which filed the complaint against him and provided the evidence upon which the German authorities had relied in bringing the criminal proceedings against him. He submits that this trust company will inevitably pass to the German prosecution all the material that is made available in the bankruptcy proceedings in England. Even if the prosecutor does not make use of the actual transcript, the nature of the questions that had been asked and the answers that had been given will enable the prosecutor to gain unfair advantage over him in those criminal proceedings, and that, he submits, works to his considerable disadvantage. I regret I do not agree. The bankruptcy court has control over the use to be made of these proceedings since they are proceedings in private. It will, I believe, be a contempt of court to reveal the information in chambers without permission of the court. The fears of the bankrupt are in my judgment unfounded.

15 He submits that in this case the protection given under section 14 of the Civil Evidence Act of 1968 is incompatible now with the guarantee under Article 6. Section 14 provides:

'(1) The right of a person in any legal proceedings other than criminal proceedings to refuse to answer any question or produce any document or thing if to do so would tend to expose that person to proceedings for an offence or for the recovery of a penalty-

(a) shall apply only as regards criminal offences under the law of any part of the United Kingdom and penalties provided for by such law'

16 In so providing the Act is reflecting the law which I have already recited. It seems to me to be fully in accord with the European Convention law, and therein lies what seems to me Mr Rottmann's greatest difficulty. It is in my judgment for the English court to control proceedings before the English court. It is for the judge dealing with the bankruptcy matter to exercise his discretion in allowing or not allowing incriminating questions to be put to and to be answered by Mr Rottmann. But such use as may be made of those answers in Germany is a matter for the German court to control. Germany is a signatory to the Human Rights Convention . The German court will, we must assume, and I assume it without any doubt at all, consider any objection to the use of the transcript which may be made by Mr Rottmann should he ever stand his trial in Germany. That consideration would be by reference to the case of Saunders v United Kingdom, of which Germany no doubt will take full and due and proper notice. It is for the German court to control its proceedings and not for this court to be further concerned about the hypothetical use that may be made in that jurisdiction. The judge, if I may so, bent over backwards to protect Mr Rottmann by acceding to his request that the examination should not be a public examination, that it should be conducted in private. In doing so the judge was exercising the discretion he had under rule 6.175(6). In order to upset his conclusion, Mr Rottmann has to show that he exceeded the generous ambit within which there is reasonable room for disagreement. Far from the judge making any error in the exercise of his discretion, I can see no fault made by him whatsoever."

ix) As a general rule, principles of comity require cogent evidence before an English court can or will conclude that there is a risk that justice will not be done in a foreign court: see Altimo Holdings v Kyrgyz Mobil Tel Ltd [2012] 1 WLR 1804 at paragraphs 89-102. This is particularly so where the foreign country is an EU member and signatory to the Convention: see the extradition cases of Ruiz Jaso v Central Court of Criminal Proceedings No5 of the National Court, Madrid [2007] EWHC 2983 (Admin), [2008] 1 WLR 2798; Symeou v Public Prosecutor's Office, Patras, Greece [2009] 1 WLR 2384 at paragraph 66; Targosinski v Poland [2010] EWHC 1820 (Admin) at paragraphs 5-11.

x) Even if the court concludes that there is a real risk of prejudice, that fact in itself should not necessarily excuse the defendant from providing disclosure of his assets. The Court is entitled to take into account whether measures can be put in place which will sufficiently reduce the risk of self-incrimination in practice: see, for example, Credit Suisse Trust v Cuoghi [1998] QB 818 at 830E-F (per Millett LJ) and 833E (per Lord Bingham of Cornhill CJ). In Ablyazov (where the submissions made by the Defendant regarding the risk to his interests if disclosure was ordered were similar to those made by Mr. Antonov), Teare J noted that, although there was a risk of self-incrimination and prejudice to the defendant, such matters were outweighed by the fact that:

a) disclosure was only to be made (at least until the return date) to the claimant's solicitors and counsel;

b) the Claimant was seeking proprietary remedies;

c) the Claimant had given undertakings not to use any information obtained as a result of the order for the purposes of civil or criminal proceedings in England or any other jurisdiction other than the claim;

d) the Claimant was subject to the implied undertaking that it would not use documents received in the course of the action other than for the purposes of the action;

e) there was a possibility of policing the undertaking by way of sequestration of the claimant's assets held in England; and

f) the Defendant had not identified grounds for suggesting that the claim brought was not a good claim.

It is to be noted that the Court of Appeal upheld the decision of Teare J on the basis that he considered the relevant factors and reached a decision that he was entitled to reach albeit that (in the absence of Particulars of Claim, and where there had been delay in making the application) the failure to identify any defence to the claims was thought to be a factor which was not entitled to much weight (per Pill LJ at paragraphs 27 and 28).

Pill LJ noted at paragraph 27 that:

"On the evidence available to him, he was entitled to attach considerable weight to the need for a disclosure provision to make this freezing order effective".

The exercise of the Court's discretion

77. I propose to exercise my discretion by requiring Mr. Antonov to comply with the terms of the disclosure orders in the WWFO and by declining to make any variation to those orders, other than the limitations on dissemination of the information provided, to which I refer below. My reasons for exercising my discretion in this way are the following:

i) Given the nature and amount of the Bank's claim, and the evidence relating to the manner of the alleged misappropriations by Mr. Antonov, I take the view that this is quintessentially a case where a disclosure order is clearly necessary to make the freezing order effective. The reality is that, in the absence of disclosure of current assets, it will be almost impossible for the Bank to take steps to ensure that any judgment it may obtain will be enforceable. In the absence of a defence from Mr. Antonov, however, I attach little weight to Mr. Zacaroli's submissions as to the strength of the Bank's claim or as to the fact that Mr. Antonov has not chosen to put forward in his evidence any detailed defence to the claim, other than the assertion that the nationalisation of the Bank and the criminal proceedings are politically motivated.

ii) In the absence of cogent evidence to the contrary, I am entitled to assume that Lithuania, as well as Latvia and Switzerland, will honour their obligations under the Convention.

iii) Notwithstanding the evidence adduced by Mr. Antonov, which I have carefully considered, there is no sufficiently cogent evidence before me to suggest that, in relation to this aspect of the matter, the Lithuanian state will not honour its obligations under the Convention to ensure that Mr. Antonov has a fair trial. Thus I am not prepared to assume that, in breach of his rights under Article 6 of the Convention, a Lithuanian court would allow his answers to the disclosure order to be used in evidence against him at any criminal trial in Lithuania. Like the Court of Appeal in Rottmann v Brittain, I consider that, even if the Lithuanian Prosecutor were to obtain any of the information disclosed by Mr. Antonov under the compulsory provisions of the WWFO, it is for the Lithuanian court to control such use as may be made by the Lithuanian Prosecutor in the context of the criminal proceedings, so as to ensure that Mr. Antonov's Article 6 rights are preserved. Similar conclusions apply in relation to Switzerland and Latvia because they are both Convention compliant countries. Moreover, as at present there is no evidence that there is any credible risk of Mr. Antonov's extradition to those countries.

iv) Mr. Antonov has not established on the evidence that the Bank should effectively be treated as equivalent to the Lithuanian Prosecutor and that the former can effectively be regarded as a conduit for passing information on to the latter. In this respect I refer to the evidence which I have summarised at paragraphs 82 - 84 below to demonstrate that the Bankruptcy Administrator acts independently of the Lithuanian government and the Lithuanian Prosecutor.

v) The Bank, its employees, agents and legal advisers, which necessarily includes the Bankruptcy administrator, his staff and agents, are necessarily subject to the standard undertaking that they will not, without the permission of the court, use any of the information disclosed under compulsion by Mr. Antonov pursuant to the terms of the WWFO, other than for the purposes of the current civil proceedings in England, and in particular that they will not use such information "for the purpose of any civil or criminal proceedings, either in England and Wales or in any other jurisdiction". This undertaking of itself should prevent any disclosure by any of the foregoing of the information disclosed by Mr. Antonov about his assets to the Lithuanian Prosecutor, the Lithuanian state, or indeed the prosecuting authorities in Latvia or Switzerland or indeed any other country.

vi) However, nonetheless, there is in my view, and despite such undertaking, a risk that information obtained from Mr. Antonov under compulsion as to his current assets, could, whether inadvertently or otherwise, be communicated to the Lithuanian prosecuting authorities and thus used by the latter for the purposes of the criminal investigation and, in particular, collating the necessary evidence to be used against him in the criminal trial to demonstrate misappropriation or informing their decision as to prosecution. That is so despite the fact that, under Article 6 of the Convention, Mr. Antonov's actual answers could not be relied upon as evidence at any criminal trial in Lithuania. Such a consequence might adversely prejudice Mr. Antonov in the criminal investigation, although I do not make any finding as to whether such prejudice will in fact occur, or whether it would be unfair.

vii) I mention, simply by way of illustration, four examples of how information might become available to be Lithuanian Prosecutor, notwithstanding the undertaking:

a) First, it could be the case that, at a meeting of the Bank's creditors committee, on which the Lithuanian state is represented, there might be discussion of information disclosed by Mr. Antonov as to his assets; if such information was disclosed, for example, for the purpose of obtaining the committee's sanction for continuing finance for the current English proceedings, such disclosure would not necessarily be in breach of the undertaking as it presently appears in paragraph (8) of Schedule B to the order.

b) Second, any reference in a public hearing in the current civil proceedings to such information, might run the risk of the Lithuanian Prosecutor obtaining such information, if he or his representative were to attend court.

c) Third, if permission were obtained to use the information in proceedings in another jurisdiction, in order to freeze Mr. Antonov's assets in such jurisdiction, information might come into the public domain as to the location and details of Mr. Antonov's assets which could be used by the Lithuanian Prosecutor for the purposes of his criminal investigation, and thereby give rise to a train of enquiry, notwithstanding that the answers actually given by Mr. Antonov could not be used in evidence at any Lithuanian criminal trial against him.

d) Fourth, there is a risk, based upon the evidence of Mr. Antonov's Lithuanian law expert, albeit directly contrary to the evidence given by the Bank's expert, that Mr. Cooper, when in Lithuania, might be forced, by means of a compulsory order or requirement, to disclose the information provided by Mr. Antonov. Mr. Zacaroli accepted that such risk existed.

viii) However, in my judgment, the risk that such information may come into the hands of the Lithuanian Prosecutor, and that secondary use may be made of information to assist in the criminal investigation is not a factor, which balancing the competing interests of the Bank and Mr. Antonov, in the exercise of my discretion outweighs the need and obligation for him to provide disclosure under the terms of the WWFO. Such risks can in my judgment be adequately addressed by imposing further safeguards, in addition to those which I have referred to above as the proposed safeguards. These further safeguards would be along the following lines.

a) First, I will make an order clearly setting out that none of the information disclosed by Mr. Antonov as to his current assets pursuant to the compulsory terms of the freezing order ("the current assets information") is, without the prior leave of the court, to be disseminated beyond a limited number of named members of the Bank's legal team, Mr. Cooper and named members of his staff in England. I include Mr. Cooper in the confidentiality ring notwithstanding that, on the basis of Mr. Antonov's evidence (albeit not on the basis of the Bank's), there is a risk that he might, in Lithuania, become subject to a compulsory requirement to provide information notwithstanding an express order of this court prohibiting him from disclosing it. I consider, on the basis of the expert evidence, that such risk is slight. I reach this conclusion notwithstanding the fact that, in a meeting, the Lithuanian Prosecutor orally declined to give a voluntary undertaking to the effect that he would not require the Bank to disclose to him the current assets information, on the basis that, constitutionally, he was unable to restrict himself in a voluntary fashion, because of his obligation to use all means to investigate crime. I take the view that it would be unrealistic, impractical, and prejudicial to the interests of the creditors for Mr. Cooper not to be involved in the litigation strategy for the Bank's claim, in particular since this might involve decisions as to whether to take steps to obtain further freezing orders or other relief in other jurisdictions.

b) Second, I will make an express order (as opposed to accepting a mere undertaking) that the current assets information is only to be used by the Bank for the purposes of the English civil proceedings and not in connection with or for the purposes of any criminal proceedings whether in England, Lithuania, Latvia, Switzerland or elsewhere.

c) Third I will make an express order that any application, whether on notice or without notice, to this court to obtain permission to use the current assets information for the purposes of existing or contemplated civil proceedings in any other jurisdiction, is to be made in private, as opposed to in public.

d) Fourth I will make express order that, without prior agreement between the parties or the prior permission of the court, no reference is to be made in any public hearing to the current assets information.

78. I will of course hear counsel further as to the precise wording of the proposed order, if it cannot be agreed.
79. I shall require disclosure of Mr. Antonov's assets both as at 18 May 2012, and, if, and to the extent that, there is any difference, as at the date of my order. In my judgment Mr. Antonov is not entitled to complain that to do so is unduly onerous, or exposes him to an unfair risk of demonstrating that he has breached the terms of the freezing order, in circumstances where it is his opposition to compliance with the order that has led to the delay.

Mr. Antonov's claim that the WWFO circumvents the 2003 mutual assistance regime

80. Mr. Mill further submitted that a second reason for varying the WWFO to remove the requirement of asset disclosure is that it would undermine the statutory regime, and the statutory protections, on mutual assistance in criminal matters. In this context he submitted, in summary, as follows:

i) the Crime (International Co-Operation) Act 2003 sets out a comprehensive statutory regime for obtaining information for use in criminal proceedings abroad.^[8] Lord Diplock In Rio Tinto Zinc Corporation v Westinghouse [1978] AC 547 at page 633 stated:

"The jurisdiction of English courts to order persons within its jurisdiction to provide oral or documentary evidence in aid of proceedings in foreign courts has always been exclusively statutory."

ii) If the court is satisfied that evidence provided by Mr. Antonov can be obtained by foreign prosecuting authorities and used in foreign criminal proceedings, then it must consider whether an order requiring such disclosure would undermine the protections set out in the 2003 Act.

iii) The Divisional Court has recently held in the context of orders for disclosure based on the exercise of the Norwich Pharmacal jurisdiction (which often overlaps with the Mareva injunction jurisdiction):^[9]

"… the power of the courts to use Norwich Pharmacal proceedings must, in our view, be developed within the confines of the existence of the statutory regime through which evidence in proceedings overseas must be obtained. Norwich Pharmacal proceedings are not ousted, but where proceedings, such as the present proceedings, are brought to obtain evidence, the court as a matter of principle ought to decline to make orders for the provision of evidence, as distinct from information, for use in overseas proceedings. It cannot permit the statutory regime, with the safeguards to which we have referred, and will refer in more detail, to be circumvented." (emphasis supplied)

iv) Although the circumstances were different, the principle that the court must be vigilant to ensure that the exclusive statutory regime is not being circumvented is equally applicable to the present case. In the present case, it is clear that any asset disclosure provided by Mr. Antonov could be obtained by prosecuting authorities in Lithuania, Latvia and Switzerland. Ordering asset disclosure would therefore enable those prosecuting authorities to bypass the 2003 Act, and denies Mr. Antonov the numerous protections and procedures set out by Parliament in that Act to govern the obtaining of for use in foreign criminal proceedings.

v) Therefore, were the Court to order asset disclosure in this case, all of these protections set out in a comprehensive statutory regime would be undermined.

Discussion and determination of Mr. Antonov's further argument based on alleged circumvention of the 2003 Mutual Assistance Regime

81. In my judgment Mr. Mill's arguments under this head take Mr. Antonov's case no further. They are premised on the suggestion that the Bank is, in effect, equivalent to, or is acting in close cooperation with, the Lithuanian Prosecutor and that the former will therefore pass materials received onto the latter. Based upon this factual premise, Mr. Mills seeks to argue that this enables information to be provided in a manner which bypasses the statutory protections relating to mutual assistance in criminal matters set out in the Crime (International Co-operation) Act 2003.
82. But in my judgment, Mr. Mill is unable to establish the primary factual basis for making this submission good. I accept Mr. Zacaroli's submission that there is no sufficient evidential basis to support the proposition that the Bank is to be equated with the Lithuanian Prosecutor (or any other government entity or part of government) for the purposes of these English civil proceedings. Mr. Cooper's evidence sets out in considerable detail that:

i) The Bank remains an independently incorporated entity subject to applicable Lithuanian laws and regulations.

ii) Mr. Cooper retains power and control over the Bank, and his primary responsibility is to the creditors and the Lithuanian court.

iii) He has received no instructions or directions from the Lithuanian government, the Lithuanian Prosecutor or Central Bank in respect of the WWFO, the underlying claim or his role generally.

83. Likewise, Mr. Huck (a member of Mr. Cooper's staff and in charge of the forensic examination into the affairs of the Bank) has confirmed in his evidence that:

i) There is no two-way flow of information between the prosecuting authorities and the Bank. The Bank and the Bankruptcy Administrator's team have provided information to the investigating authorities where required to do so, but have received "very limited" information from the Financial Crime Investigation Service and nothing from the Lithuanian Prosecutor. As Mr. Zacaroli submitted, given that the Bank maintains that it has been a victim of a massive misappropriation of assets, it would be rather surprising if it had not contacted the police. The Bankruptcy Administrator is the custodian of the Bank's books and records.

ii) The Lithuanian prosecuting authorities were not party to any discussions regarding the strategy or preparation of the WWFO application and civil claim, and none of the Bankruptcy Administrator's team works with or for the Lithuanian Prosecutor.

iii) All information passed to the Lithuanian authorities has been information derived from the books and records of the Bank or information obtained voluntarily from third parties.

iv) As far as Mr. Huck and the Bankruptcy Administrator's team are aware, no information has been provided to the authorities in breach of any legal restriction, undertaking or court order and no request to provide information in breach of any such restriction, undertaking or order has been received.

84. Mr. Freakley (the former temporary administrator) has stated that he and his team had no significant involvement with the Bank until shortly before his appointment on 16 November 2011 and that he was not privy to the information or deliberations regarding the nationalisation of the Bank, nor to the decision to place it in bankruptcy, nor did he recommend any particular course of action to the Central Bank in this regard. Mr. Antonov's evidence on this aspect is not sufficient to rebut that of Mr. Freakley.
85. In reaching my conclusion on this topic, I have, as I have stated previously, taking into account the submissions made in Mr. Mill's letter dated 23 November 2012 and in Mr. Zacaroli's reply dated 27 November 2012.

Disposition

86. Accordingly, for the reasons set out above, I refuse Mr. Antonov's applications to stay the civil proceedings, to discharge the WWFO and to vary the relevant paragraphs of the WWFO to remove his disclosure obligations.
87. I am grateful to all counsel for their helpful oral and written presentations. But I must also mention, and commend, the considerable assistance which I received from the provision, by the respective firms of solicitors, of all the numerous documents and files in electronic format.

Note 1    The application notice also sought an order that, in the event that the Variation Application were dismissed, an extension of time for compliance with the disclosure obligations until after the final determination of the Discharge Application; however, as the applications were heard at the same time, this separate head of relief ceased to be of any practical relevance.    [Back]

Note 2    According to the Bank’s evidence, the value of these assets has risen by approximately €10 million since the date of the original transfer.     [Back]

Note 3    I was subsequently advised, by a letter dated 22 January 2013 that the extradition hearing had not taken place, and was now scheduled to start on 8 July 2013, with an estimate of ten day.    [Back]

Note 4    I was informed by Mr. Zacaroli QC that the Lithuanian state, in its capacity as provider of the compensation fund for depositors, amounted to approximately 45% in value terms of all creditors.     [Back]

Note 5    See also section 31 of the Theft Act 1968.    [Back]

Note 6    In adopting this approach I have taken into account these submissions made in Mr. Mill’s letter dated 23 November 2012 and Mr. Zacaroli’s reply dated 27 November 2012.    [Back]

Note 7    In adopting this approach I have taken into account these submissions made in Mr. Mill’s letter dated 23 November 2012 and Mr. Zacaroli’s reply dated 27 November 2012.    [Back]

Note 8    For foreign civil proceedings: The Evidence (Civil Proceedings in Other Jurisdictions) Act 1975.    [Back]

Note 9    Omar v Secretary of State for Foreign and Commonwealth Affairs [2012] EWHC 1737 (Admin) at paragraph 64.    [Back]