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Judgment Enforcement - Claiming Against Accomplices to Asset Dissipation under English Law

A developing area of English Law is the use of economic torts to bring damages claims against individuals or corporate vehicles who assist in the dissipation of the assets of a Judgment debtor or receive the proceeds.

In the 2018 case of JSC BTA Bank v Khrapunov the Supreme Court recognised that contempt of court could amount to an unlawful act sufficient to found a claim of conspiracy to injure by unlawful means in circumstances where an accomplice third party had combined with the primary defendant to dissipate assets in breach of a freezing injunction.

Alternatively,  the recent Judgment of Bryan J in Lakatamia Shipping v Su reinforces the existence of the so called Marex Tort (as originally recognised in Marex Financial Ltd v Sevilleja) pursuant to which a third party may be liable for inducing or procuring the infringement of rights arising under a Judgment debt (analogous to inducement of a breach of contract). 

In the decision in Lakatamia the claimant succeeded in a claim for damages against a relative of a high net worth individual -  and companies linked to him  - who were found by the court to have induced/procured the disposal of his assets (damages were basically equal to the value of the disposed assets). 

A few other notable points coming out of Lakatamia:

1. A thorough summary by Mr Justice Bryan of the applicable principles for assessing evidence of fraud in English law and in particular the approach derived from case law that the court should not compartmentalise events and can look at the cumulative effect of evidence (“a net from which there is no escape” in criminal law terms).

2. The court found that for the purposes Article 4(1) of Rome 2 the governing law of the Tort was English law  - despite the assets being located/dissipated elsewhere. This was because England was the place where the Judgment debt originated and should have been paid. Alternatively under Article 4(3) the tort was manifestly more connected with England.

3. Causation wise, English law will assume the primary defendant would have acted lawfully absent the wrongdoing - so the accomplice cannot not say that the primary defendant would have simply found another accomplice/dissipated in any event and hence the claimant has not suffered a loss. 

4. Adverse inferences for failure to call witnesses require specific definition - i.e. say that a witness has not been called because it would have damaged a party’s case generally is too generic for the court to take as a point.

The Marex tort finds a close, and I consider compelling, analogy with the tort of inducing a breach of contract. There would seem to be no compelling reason why, in circumstances where the law protects against intentional interference by third parties with contractual rights it should not equally protect against intentional interference with rights established by judgments

Tags

fraud, english law, judgment enforcement, dispute resolution

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