High Court transfers US$487m yacht frozen in Dubai to judgment creditor and pierces corporate veil of Liechtenstein anstalt
Yesterday (19th April 2018) Haddon-Cave J handed down his reasoned judgment in the latest phase of Mrs Akhmedova's attempts to enforce the £453 million award obtained against her former husband Farkhad Akhmedov in December 2016. The award has hitherto remained almost entirely unsatisfied. However, an opportunity arose late last year when Mr Akhmedova's yacht M/V "Luna" (worth US$487m and formerly owned by Roman Abramovich) sailed into Dubai waters and was placed in dry dock. Mrs Akhemdova's lawyers obtained a freezing order in the Dubai International Financial Centre in aid of the English judgment and launched substantive proceedings to enforce it; she then successfully sought, in further support, a precautionary attachment in the local Dubai courts in effect arresting the vessel.
At the time of the English judgment in 2016 Luna had been owned by a Liechtenstein Anstalt called Qubo 2, an entity which had been held jointly and severally liable to pay Mrs Akhmedova £350 million under the original judgment. But in breach of a Liechtenstein freezing order Luna had surreptitiously been transferred to a newly created Anstalt called "Straight Establishment" in March 2017. The DIFC freezing order was then defended by Straight Establishment on grounds that there was no judgment against it in London. It was against that backdrop that Mrs Akhmedova applied before Haddon-Cave J, who happened to be sitting in the Old Bailey, on 21 March 2018 under a variety of jurisdictions to obtain ownership of the vessel as well as orders directly against Straight. The orders sought were made on that day, and the reasons are now published.
The judgment will be of interest to civil/commercial fraud and contentious trusts lawyers for four reasons in particular. First, it is thought to be the first judgment since Prest where the court has pierced the corporate veil applying the "evasion principle". Secondly, the court, having considered the conflict of laws position, was prepared to apply English law, the lex fori, to that question notwithstanding that Straight is a Liechtenstein anstalt. Thirdly, the court declared, on grounds of privity of interest, that it had taken Straight to have submitted to the English court's jurisdiction owing to Mr Akhmedov's submission to the jurisdiction. Fourthly, having made orders transferring the vessel to Mrs Akhmedova, the court made an order against Straight under s. 425(1)(d) of the Insolvency Act 1986 that, in default of its effecting the transfer, Straight had to pay Mrs Akhemdova a liquidated sum referable to the capital value of the vessel (US$487m). You can read the full judgment here by clicking the 'download article' button to the right hand side of this page.
Serle Court's Dakis Hagen QC appeared for Mrs Akhmedova.