England and Wales

Enforcement Proceedings by Jurisdiction

Enforcement proceedings in England and Wales relate to persons and entities Tatiana alleges received and/or assisted in transfers of assets to avoid enforcement of the 15 Judgment Debt.

These include.

  • proceedings to recover assets allegedly transferred to Temur Akhmedov
  • proceedings to recover assets allegedly transferred into a Liechtenstein trust structure
  • proceedings to recover funds transferred to Borderedge Limited from the Monetary Assets (previously held at UBS Switzerland by Cotor)
  • committal proceedings again professional trustees associated with the Liechtenstein trust structure

1. Transactions defrauding Tatiana – Claims against Temur Akhmedov1

a. Explanation of the claim

Tatiana has brought claims under s.423 of the Insolvency Act 1986 and s.37 of the Matrimonial Causes Act 1973 against Temur Akhmedov, the eldest son of Tatiana and Farkhad, alleging he has received substantial financial sums and assets from Tatiana in order to “put those assets beyond Tatiana’s reach” and frustrate the enforcement of the divorce award.2

Tatiana’s claims relate to two matters.

First, Farkhad (including his companies and trusts) transferred some of the Monetary Assets to Temur, namely and as asserted in Tatiana’s Particulars of Claim:

(a) US$50 million transferred on 25 August 2015 at a time when a scheme to transfer the Monetary Assets to the United Arab Emirates had been abandoned; and

(b) US$10 million between May and June 2016 in the months leading up to trial.

Second, the Moscow Property was transferred to Temur in 2018 at a time when Tatiana was seeking to enforce the judgment abroad. The transfer was carried out in April 2018 by Sunningdale Ltd, a Cypriot company beneficially owned by Farkhad, transferring its interest in the Moscow Property to Solyanka Servis LLC, a Russian company. In June 2018 Sunningdale transferred its interest in Solyanka Servis to Temur.

Tatiana contends that Temur played a key role – essentially as his father’s lieutenant – in Farkhad’s strategy of evasion, in particular, by devising and executing the schemes.

Tatiana asserts that, for the reasons set out in her Particulars of Claim, the court can infer that at least a purpose of gifting well over US$100 million to Temur was to put those assets well beyond her reach. She points to Farkhad, with Temur’s assistance, having been engaged since about October 2014 in concerted efforts to ensure that all his assets were not amenable to enforcement. She also maintains that Temur has received monies, directly or indirectly from the Liechtenstein trusts in circumstances where, since those trusts were established, Farkhad has received very substantial sums from those trusts (known to exceed US$113 million since 2017) and he has, in turn, transferred well in excess of US$25 million to Temur since 2017.

Source: judgment of Mrs Justice Knowles dated 12 June 2020 at [11]-[14]

b. Temur’s Defence

In his Defence, Temur admits that the English court has jurisdiction to determine Tatiana’s claims and that he has received over US$106 million from Farkhad (and his companies) in addition to (unparticularised) “generalised financial provision”, although he does not admit the provenance of these funds.

Temur contends that, in late 2013, Farkhad told him that he would make available funds so that Temur could invest in the financial markets for his sole financial benefit. Temur denies receiving any direct distributions from the identified Liechtenstein Trusts.

In his Defence, Temur admits that the Moscow Property was ultimately beneficially owned by Farkhad. He contends that, in June 2018, he purchased Solyanka Servis (and thus the Moscow Property) from his father for RUB 50 million (that is, less than £600,000). He admits that the transfer of shares was registered in the Russian state register. However, he offers no explanation as to why the shares were sold to him at an apparent fraction of their true value in 2018, at a time when Tatiana was actively seeking to enforce the judgment abroad.

The factual position relating to the Moscow Property has recently changed

Temur now contends that he failed to pay the purchase price for Solyanka Servis in July 2018 thereby rendering the purchase agreement “forfeit”.

A very short time after Tatiana issued her Particulars of Claim in January 2020, Sunningdale – the company controlled by Farkhad – suddenly commenced proceedings in Moscow against Temur to recover the shares in Solyanka Servis for his supposed failure to pay the purchase price in July 2018.
On 19 May 2020, Temur caused a formal transfer agreement to be executed for the transfer of the Solyanka Servis shares to Sunningdale. The transfer became effective on 26 May 2020. Sunningdale executed a separate share transfer agreement on 3 June 2020 for the sale of the Solyanka Servis shares to Farkhad for RUB 50 million (less than £600,000). This transfer became effective on 9 June 2020.

Source: judgment of Mrs Justice Knowles dated 18 August 2020 at [14]

Tatiana contends that this litigation wasis a transparent and collusive attempt by Farkhad and Temur to move the shares out of Temur’s ownership so that this court cannot grant effective relief in relation to the Moscow Property.now that a claim has been brought against Temur in this jurisdiction.

Source: judgment of Mrs Justice Knowles dated 12 June 2020 at [13], [15]-[16] 

c. Temur’s counterclaims

Temur has included two counterclaims in his Defence.

  • The first seeks an injunction to prohibit the Wife from instructing any lawyers funded, directly or indirectly, from monies paid by Burford Capital on the grounds, it is asserted, that the Wife’s funding arrangements with Burford Capital are contrary to the public policy against champerty.
  • The second is a claim for misuse of private and/or confidential information insofar as the documents provided to the Wife’s lawyers by Mr Henderson relate to the personal, financial or business affairs of Temur.

Source: judgment of Mrs Justice Knowles dated 12 June 2020 at [13], [15]-[16] 

In response, Tatiana sought to strike out the funding counterclaim. Her counsel submitted that “Temur’s applications were nakedly tactical manoeuvres intended to gain an advantage over the Wife by discovering how much funding she has and the terms on which it was provided”.1

As set out below, on 12 June 2020 Mrs Justice Knowles ordered that Temur’s first counterclaim be struck out.

Temur’s applications

In relation to his counterclaims, Temur made two applications.

  • The first application alleged that Tatiana’s funding arrangement with Burford Capital was unlawful because it was contrary to the public policy against the champertous maintenance of litigation. He sought an injunction to prohibit Tatiana from instructing any lawyers funded, directly or indirectly, from monies paid by Burford Capital. He also sought disclosure of documents relevant to the funding.3In response, Tatiana sought to strike out the funding counterclaim. Her counsel submitted that “Temur’s applications were nakedly tactical manoeuvres intended to gain an advantage over Tatiana , by discovering how much funding she has and the terms on which it was provided”.2
  • In addition, Temur applied for a Reporting Restriction Order (RRO) that would prohibit the publishing or broadcasting of ‘confidential material or information relating to [his] personal financial affairs or business activities’, including his tax returns, bank accounts, investment portfolios or any trading activity. He also sought (under cover of the RRO) a wide-ranging collateral use prohibition on documents in the proceedings. Prior to the commencement of proceedings, in-house Counsel for the Guardian Media Group objected to the RRO application in a letter to the Court (representing that these concerns were shared by the BBC, the Financial Times, and the Press Association).4

On 12 June 2020, Mrs Justice Knowles handed down judgment on Temur’s application ([2020] EWHC 1526 (Fam))

Temur’s counterclaims rejected – [2020] EWHC 1526 (Fam) 12 June 2020.

Source: judgment of Mrs Justice Knowles dated 12 June 2020 at [25], [118], [81] 

d. Key events

Trial: A substantive trial of Tatiana’s claims took place on 30 November 2020 to 18 December 2020 before Mrs Justice Knowles

Due to UK guidelines in relation to the COVID-19 outbreak, the majority of the trial was conducted as a remote hearing except for the evidence of fact, which was taken by way of a hybrid hearing. Mrs Justice Knowles heard the oral evidence of Tatiana on 7 to 8 December 2020 and that of Temur on 9 to 11 December 2020, both in person at Court.

Judgment: On 21 April, Mrs Justice Knowles handed down her judgment on Tatiana’s claims.

Temur’s funding counterclaim and applications rejected – [2020] EWHC 1526 (Fam) 12 June 2020: On 12 June 2020, Mrs Justice Knowles handed down a judgment which struck out the funding counterclaim and dismissed each of Temur’s applications:

With respect to Tatiana’s application to strike out the funding counterclaim, Mrs Justice Knowles found Temur had “no entitlement to seek any relief in respect of the Wife’s funding arrangements and has failed to demonstrate that there are reasonable grounds – in the sense of being legally recognisable – for challenging the legality of those arrangements”. Her Ladyship agreed with Tatiana’s counsel that to grant Temur’s counterclaim would be to turn justice on its head.

Given her decision on strike out, Mrs Justice Knowles rejected Temur’s claim for disclosure of documents relating to the relevant funding arrangement.

With respect to the application to be provided the Reviewable Documents, Mrs Justice Knowles noted that Tatiana’s solicitors had or would disclose all (six) of the relevant Reviewable Documents, but he had no right to disclosure of the remainder. Nor was there any need to disclose irrelevant Liechtenstein or Kerman documents.

With respect to the RRO, Justice Knowles ruled that Temur’s order “cannot be justified in the circumstances of this case. It would inhibit responsible reporting of these proceedings” and that it was imperative for the media to have access to and publish information in the proceedings “should that information give rise to serious financial queries, irregularities or improprieties, or even criminal or contemptuous conduct as it has in the past.” Instead, a narrower order was granted, preventing the reporting of specific details (including his address, his bank account numbers, and the reference number of his tax returns).

Source: judgment of Mrs Justice Knowles dated 12 June 2020

Temur sought permission to appeal the judgment. It was rejected by both Mrs Justice Knowles and by the Court of Appeal and is therefore final.

2. Transactions defrauding Tatiana – Claims against Liechtenstein trustees5

a. Summary
Tatiana has brought claims under s.423 of the Insolvency Act 1986 and s.37 of the Matrimonial Causes Act 1973 against Counselor Trust Reg and Sobaldo Establishment, in relation to transactions made for the purpose of putting assets beyond her reach.

b. Explanation of the claim
The claim relates to the Monetary Assets previously held at UBS in Switzerland by Cotor

In December 2016, all those assets were transferred into bank accounts held by Liechtenstein trusts of which Counselor and Sobaldo are trustees. Tatiana’s case is that the purpose of those transfers was to put the Monetary Assets beyond her reach, and she relies on the following.

a) all the Identified Assets were transferred into Liechtenstein trusts in the weeks immediately before trial in December 2016. This took place in a context where Farkhad’s lawyer had described a strategy of moving assets to a jurisdiction which did not enforce English judgments (as is the case in Liechtenstein);

b) following judgment and the initiation of proceedings by Tatiana in Liechtenstein, the trustees took further steps to move the assets into yet further Liechtenstein trusts to make them harder to trace and recover;

c) Haddon-Cave J held that Farkhad has engaged, and continues to engage, in an “elaborate and contumacious campaign to evade and frustrate the enforcement of the judgment debt against him”. Farkhad is said to have described the English court’s judgment as being “worth as much as toilet paper”;

d) The Liechtenstein criminal courts have repeatedly concluded that there is a concrete suspicion of fraudulent bankruptcy and money laundering in respect of these transfers.

Source: judgment of Mrs Justice Knowles dated 12 June 2020 at [9]

c. Counselor / Sobaldo’s defence

Counselor and Sobaldo have presently offered no defence on the merits of Tatiana’s claims. They contend that they are unable to plead to the facts because of Liechtenstein secrecy laws and assert that there should be a stay of these proceedings and/or the court’s powers should not be exercised extra-territorially in this case.

Source: judgment of Mrs Justice Knowles dated 12 June 2020 at [10]

d. Key events

Trial: A substantive trial of Tatiana’s claims took place on 30 November 2020 to 18 December 2020 before Mrs Justice Knowles.

Due to UK guidelines in relation to the COVID-19 outbreak, the majority of the trial was conducted as a remote hearing except for the evidence of fact, which was taken by way of a hybrid hearing

Interim applications: On 15-18 and 29-30 June 2020, a hearing was held before Mrs Justice Knowles regarding the following applications.

  • an application by Counselor and Sobaldo for a stay of Tatiana’s claims;
  • an application by five Liechtenstein entities (including Counselor and Sobaldo) to vary orders previously issued by this court in December 2016, March 2018 and August 2019, including to remove the obligations to transfer assets to Tatiana, on the grounds that compliance would be a violation of the law of Liechtenstein; and
  • an application by Tatiana for disclosure against Counselor and Sobaldo in respect of her proceedings.

On 14 August 2020, Mrs Justice Knowles handed down judgment, which.

  • Refused Counselor and Sobaldo’s application for a stay of the proceedings.
  • Refused the five Liechtenstein entities’ application to vary the English courts orders.
  • Granted Tatiana’s application for disclosure against Counselor and Sobaldo. Mrs Justice Knowles found that:

The balancing exercise in this case given the above conclusion falls squarely in favour of making orders for disclosure against Counselor and Sobaldo. The absence of the material in question would very substantially interfere with Tatiana’s ability to pursue her claim and would clearly hamper this court’s ability to determine the proceedings fairly.

Source: judgment of Mrs Justice Knowles dated 14 August 2020

An application for permission for leave to appeal was refused by Mrs Justice Knowles. An application to the Court of Appeal for permission to appeal against Mrs Knowles judgment, and for an extension of time to appeal against the December 2016 Order and March 2018 Order, has been filed.

Judgment: On 21 April, Mrs Justice Knowles handed down her judgment on Tatiana’s claims.

3. Transactions defrauding Tatiana – Claims against Borderedge

a. Summary

Tatiana has brought claims under s.423 of the Insolvency Act 1986 and s.37 of the Matrimonial Causes Act 1973 against Borderedge in relation to a transaction which she claims was carried out for a purpose of putting assets beyond her reach.

b. Explanation of the claim

The claim relates €27.5 million which formed part of the Monetary Assets [hyperlink underlined words to Assets, Enforcement and Recovery > Monetary Assets] which were previously held at UBS in Switzerland by Cotor. In November 2016, Borderedge received a sum of €27.5 million from the Genus Trust, a Liechtenstein trust of which Counselor is the trustee [hyperlink underlined text to Liechtenstein Trust Structure page]. Tatiana contends that the €27.5 million derived from the Monetary Assets and formed part of Farkhad’s scheme to put the Monetary Assets beyond her reach.

c. Borderedge’s defence

In its Defence, Borderedge admitted to receiving the €27.5 million but did not admit the provenance of those funds, nor did it admit the purpose of the transfer. Borderedge also contended that:

a) the transfer was made for good consideration;

b) the transfer itself was in good faith and without notice of any intention to defeat Tatiana’s entitlements; and

c) it would be oppressive and unreasonable for the court to grant a remedy against it as it had changed its position since receiving the €27.5 million.

d. Key events

Trial: A substantive trial of Tatiana’s claims took place on 30 November 2020 to 18 December 2020 before Mrs Justice Knowles.

Due to UK guidelines in relation to the COVID-19 outbreak, the majority of the trial was conducted as a remote hearing except for the evidence of fact, which was taken by way of a hybrid hearing.  Temur gave evidence as the witness of fact for Borderedge

Judgment: On 21 April, Mrs Justice Knowles handed down her judgment on Tatiana’s claims.

4. Committal proceedings – against Liechtenstein trustees5

a. Summary

Tatiana has made applications to commit Straight, Qubo 1, Counselor and Sobaldo, as well as a number of individuals who hold status as directors or former directors of Counselor, WalPart and Sobaldo, for breach of various court orders. Her applications are summarised as follows.

  • An application filed on 21 May 2019 against Straight, as well as the individual directors of Counselor, the sole director of Straight, namely Dr Schurti, Urs Hanselmann, Dr Ernst Walch, Dr Barbara Walch, and Dr Moritz Blasy in relation to the failure of Straight to comply with the Order of Mrs Justice Knowles dated 26 March 2019 (primarily, the failure to provide various confirmations in respect of the Luna not moving from Dubai)
  • An application filed on 6 June 2019 against Qubo 1, WalPart Trust, along with the individual directors of WalPart Trust, namely Dr Schurti, Urs Hanselmann, Dr Ernst Walch, Dr Barbara Walch, and Dr Moritz Blasy in respect of the failure to transfer the Artwork; and
  • An application filed on 24 September 2019 against Straight, Counselor, as well as the individual directors of Counselor, namely Dr Schurti, Urs Hanselmann and Dr Moritz Blasy in relation to the failure of Straight to transfer the Luna in accordance with the Order of Mr Justice Haddon-Cave dated 21 March 2018.
  • An application filed on 8 November 2019 against Counselor, Sobaldo, as well as the individual directors of Counselor, namely Dr Schurti, Urs Hanselmann Dr Moritz Blasy and Dr Ernst Walch, in relation to the failure to comply with the Order of Mrs Justice Knowles dated 15 August 2018 regarding disclosure.

b. Background – relationship between the Liechtenstein trusts and individuals

Mrs Justice Knowles described the relationship between these entities and the individuals in her judgment dated 2 October 2019.

34. Counselor and WalPart are both Liechtenstein licensed trust companies. They share the same directors who, until recently, were: Dr Ernst Walch, Dr Andreas Schurti, Urs Hanselmann, Dr Moritz Blasy and Dr Barbara Walch. I note that Dr Ernst Walch and Dr Barbara Walch resigned as directors in June/July 2019. WalPart’s brochure describes itself as “a medium-sized governmentally licensed trust company based in Vaduz”. Amongst the services offered by WalPart are “Liechtenstein and foreign trusts and foundations”. It notes that “fields of particular interest and expertise are estate planning, asset protection as well as the setup and management of corporate, foundation and trust structures”. It would appear that Counselor performs similar services although, given its lower public profile, Ms Dilnot suggested that it was used for more ‘sensitive’ engagements.

35. WalPart and Counselor are both closely related to Walch & Schurti, a Liechtenstein law firm. All the directors of Counselor and WalPart, apart from Urs Hanselmann, are or were at the material time, also partners of Walch & Schurti. Walpart, Counselor and Walch & Schurti are all registered at the same address in Vaduz, which is a substantial office building bearing the names of Walch & Schurti and WalPart.

36. These entities are all known to be closely involved in providing asset protection structures to Farkhad or for his benefit. Thus:
a. Mr Kerman identified Walch & Schurti as the Liechtenstein lawyers who drew up the trust documents relating to the transfer of the Artwork to Qubo 1 shortly before the trial took place in England;
b. it appears that Dr Schurti and Dr Blasy, both partners of Walch & Schurti, were granted powers of attorney to represent Cotor;
c. Counselor is the sole director of Straight, which is the Anstalt to which the Vessel was secretly transferred from Qubo 2 in March 2017 (that is, after Qubo 2 had received the English and Liechtenstein orders);
d. WalPart is the sole director of Qubo 1 and Qubo 2 (that is, the entities to which the Artwork and the Vessel were transferred shortly before trial);
e. and it is now also known that Counselor is the trustee of at least four Liechtenstein trusts which have been involved in taking steps to put the Monetary Assets beyond Tatiana’s reach. Sobaldo, whose registered address is c/o WalPart and shares three directors in common with it, is the trustee of the fifth.

37. Further information has also been obtained as a result of a declaration made by Dr Schurti (on behalf of Straight and Qubo 2) in the Marshall Islands enforcement proceedings and his subsequent deposition. Though the veracity and completeness of Dr Schurti’s evidence is disputed, he has revealed that, firstly, Counselor is the trustee of the “Simul Trust” which holds Qubo 1 and Qubo 2. Farkhad and his family, among others, are the beneficiaries of that trust and Farkhad is a director (one of four) of the protector (which has power to add and remove trustees, and to veto key decisions).

38. Secondly, Dr Schurti explained that he had decided to move the Vessel from Qubo 2 to Straight (and, simultaneously, to a new trust known as the “Navy Blue Trust”) in part because he saw the English proceedings as “a hostile attack on the trust structure which had been properly established and administered by ourselves, in a cynical attempt by Farkhad’s ex-wife to acquire a share of his postmarital success” and wanted to protect the Vessel “from further efforts to enforce the judgment of the English court, which had been entered against Qubo 2 without notice or proper jurisdiction, and which was in conflict with a prior Russian divorce that had been demonstrated to us by official documents”. He considered these actions to be his “duty”.

c. First committal proceedings – against Straight and the individual directors

The claim relates to the orders made against Straight  in the relation to the Artwork and the Monetary Assets.

d. Second committal proceedings – against Qubo 1, WalPart Trust, and the individual directors

The claim relates to the orders made against Qubo 1 in the relation to the Artwork and the Monetary Assets.

It has been over three years since Qubo 1 was emailed a copy of the 20 December Order, and approximately two years since service was effected in accordance with Liechtenstein law. However, the terms of the 20 December Order and obligations on Qubo 1 to transfer legal and beneficial ownership of the Modern Art Collection to Tatiana and deliver up the same, remain unsatisfied.

Tatiana’s claim against WalPart is based on its role as the sole member of the Board of Directors of Qubo 1, with individual signature rights. Therefore, Qubo 1’s legal representative and sole corporate director is WalPart.

Tatiana’s claim against the directors of WalPart is based on the fact that Qubo 1 can only act through WalPart (its sole director), and in turn WalPart can only act through one of its directors. The directors of WalPart were (at the relevant time) Dr Andreas lgnaz Schurti, Urs Daniel Hanselmann, Dr Ernst Joseph Walch, Dr Barbara Johanna Martin Walch, and Dr Moritz Rolf Blasy).

Source: Akhmedova v Akhmedov & Ors [2020] EWHC 2235 (Fam) (14 August 2020)at [34]

e. Third committal proceedings – against Straight, Counselor, and the individual directors

The application for committal relates to the orders made against Straight dated 21 March 2018, in relation to the Luna,

Paragraph 9 of the March 2018 order transferred the Yacht into Tatiana’s name pursuant to s. 24(1) of the MCA, s. 423(2) and s.425(1)(a) of the IA, such that Tatiana held absolute beneficial title to the Yacht. By that paragraph, Farkhad and Straight were to effect all necessary steps and formalities for the proper vesting of the Yacht in and the transfer of the title to Tatiana. Tatiana was declared to be the legal and beneficial owner of the Yacht with immediate effect. That order also declared that Straight was the alter ego of Farkhad, alternatively his privy, and through Farkhad, it had submitted to the court’s jurisdiction. Straight was also declared to be Farkhad’s nominee and the assets previously held in Straight’s name belonged beneficially to Farkhad. Further, pursuant to s. 423 (2) and s. 425(1)(a), paragraph 10 of the March 2018 order provided that, if the Yacht was not transferred within seven days of the date of the order, Straight was to pay a cash sum to Tatiana representing its capital value.

Source: judgment of Mrs Justice Knowles dated 14 August 2020 at [108]

f. Fourth committal proceedings – against Counselor, Sobaldo, and the individual directors

The application for committal relates to the orders made against Counselor and Sobaldo dated 15 August 2019, requiring that Counselor and Sobaldo give disclosure ancillary to the freezing order against them.

The August 2019 order provided, ancillary to a freezing order, that Counselor and Sobaldo should provide, to the best of their ability, information to Tatiana’s solicitors within seven days of service of the order. That order was made at a without notice hearing to Counselor and Sobaldo and paragraph 28 permitted them to apply to the court to vary or discharge the order at any time. On 2 October 2019, at a hearing on notice to Counselor and Sobaldo, the court upheld the requirement for Counselor and Sobaldo to provide the information set out in paragraphs 20-22 of the August 2019 order and paragraph 19 of the October 2019 order so provided. Once more paragraph 26 of the October order provided the right to seek variation or discharge at any time.

Source: judgment of Mrs Justice Knowles dated 14 August 2020 at [110]

In her 14 August 2020 judgment, Mrs Justice Knowles stated that:

The balancing exercise in this case given the above conclusion falls squarely in favour of making orders for disclosure against Counselor and Sobaldo. The absence of the material in question would very substantially interfere with Tatiana’s ability to pursue her claim and would clearly hamper this court’s ability to determine the proceedings fairly.

Source: judgment of Mrs Justice Knowles dated 14 August 2020 at [178]

g. Key events

Trial: The hearing of Tatiana’s committal applications is presently listed to take place on 15 to 17 June 2021 before Mr Justice Mostyn.

Case management applications: On 15-18 and 29-30 June 2020, a hearing was held before Mrs Justice Knowles, which included an application by five Liechtenstein entities (including Qubo 1 and WalPart) to vary the English courts orders issued in December 2016, including to remove the obligations to transfer assets to Tatiana, on the grounds that compliance would be a violation of the law of Liechtenstein.

At the completion of the hearing, Mrs Justice Knowles reserved her judgment.

In her judgment of 14th August 2020, Mrs Justice Knowles refused the application to set aside and vary the final orders made in December 2016 and March 2018.

Source: Judgment of Mrs Justice Knowles, [2020] EWHC 2235 at 157