This section summarises the real and purported ownership history of the Luna and transfers between several entities.
While the Luna was originally in Farkhad’s name, it is now registered in the name of Straight Establishment.
This is the result of a number of transfers (real and purported) of the Luna’s registered ownership, each of which the English court has found was made for the purpose of evading Tatiana’s enforcement against the Luna, and are demonstrated in an extract of an organigram attached to the 19 April 2018 judgment of Haddon-Cave J.
Transfer to Avenger
Farkhad assigned the M.V. “Luna” to Tiffany. In December 2014 and, significantly, after Tatiana says that the marriage finally came to an end, Tiffany ‘sold’ the Luna to Avenger.2 Farkhad owned Avenger and the funds for this purported ‘purchase’ came from Farkhad’s own bank account.3
On 15th December 2014, Avenger received the sum of €260,000,000 from Farkhad’s bank account in order to ‘purchase’ M.V. “Luna” from Tiffany, despite the fact that Tiffany was just another Farkhad-owned company and had received an assignment of the contract to acquire the yacht directly from Farkhad himself. Avenger’s registered agent and Cotor Investments SA’s registered address were the same. Cotor Investments SA was Farkhad’s nominee.
Source: judgment of Mr Justice Haddon-Cave dated 19 April 2018 at [17]
Haddon-Cave J’s conclusion on this transfer was:
In the circumstances, I find and hold that the transfer by H of €260 million to Avenger, and the payment of that sum by Avenger to Tiffany, was a deliberate mechanism by which H tried falsely to pretend that the ownership of M.V. “Luna” was held notionally by a Panamanian company, rather than by an Isle of Man company (where enforcement is possible). The timing of the alleged change in ownership is telling, i.e. at the end of 2014 after it was clear that the marriage finally ended (Judgment, paragraphs 38 and 50).
He granted an order on 21 March 2018, pursuant to which he pierced the corporate veil of Avenger and declared it to be Farkhad’s alter ego, and ordered that it pay Tatiana €260,000,000.
- To “pierce the corporate veil” means that the Court has set aside an entity’s separate legal personality where it is being abused by someone to avoid their legal obligations (in this case, Farkhad, who is the person actually controlling ownership of the Luna through Straight).
Transfer from Avenger to Qubo 2 (via Stern Management Corporation)
However, unbeknown to Tatiana and the English court, during the trial in December 2016, Avenger did not, in fact, continue to hold title to M.V. “Luna”. It transpired that Farkhad had taken a rapid series of further surreptitious steps to attempt to place his yacht further beyond the reach of enforcement. The sequence of events was as follows:
- On 30th November 2016 (i.e. the second day of the trial before Haddon-Cave J), M.V. “Luna” was transferred from Avenger to another Panama entity, Stern Management Corporation (“Stern”).
- On 1st December 2016, M.V. “Luna” was transferred by Stern to Qubo 2.
On 20th December 2016, this Court found that Qubo 2 was no more than H’s ‘cipher’ and alter ego and made an order that Qubo 2 was jointly and severally liable to W for the sum of £350 million.
On 28th December 2016, the Lichtenstein Court made a freezing order against Qubo 2 prohibiting the disposal of M.V. “Luna” and made payment orders against Qubo 2.
Source: judgment of Mr Justice Haddon-Cave dated 19 April 2018 at [22]
Transfer from Qubo 2 to Straight Establishment
On 8 March 2017 – apparently in response to the English and Liechtenstein orders made against Qubo 1 and Qubo 2 – Qubo 2 transferred the Vessel to Straight Establishment, another Liechtenstein Anstalt of which Counselor is the sole director.
On any view, the transfer was undertaken by Qubo 2 at a time when Qubo 2knew that it was subject to an English judgment as well as a Liechtenstein payment order which it could only satisfy using the value of the Vessel. The transfer was undoubtedly intended to prevent enforcement of the English and Liechtenstein orders against the Vessel as has subsequently been admitted by one of Counselor’s directors, Dr Schurti:
…Dr Schurti admitted that the purpose of this transfer was to prevent enforcement of the English orders which he saw as a “hostile attack” from “fake proceedings” which it was his “duty” to protect the assets against [see his written deposition dated 26 February 2019].
Source: judgment of Mrs Justice Knowles dated 2 October 2019 at [73]
Haddon-Cave J concluded that the transfer of the Vessel to Straight was “part of H’s continuing campaign to defeat W by concealing his assets in a web of offshore companies”,6 and that “In my judgment, there is an irresistible inference that these actions were taken at H’s instruction, and in a deliberate attempt to place M.V. “Luna” beyond the reach of the orders that the English court had made against Qubo 2 and which W was threatening to execute in Liechtenstein.”7
Haddon-Cave J therefore granted further orders on 21 March 2018, pursuant to which he (a) pierced the corporate veil of Straight Establishment, (b) declared Straight to be Farkhad’s alter ego, (c) ordered that the Luna be transferred to Tatiana, and (d) granted an order requiring Straight to pay the judgment debt up to the (then current insurance) value of the Luna to Tatiana.8
Mrs Justice Knowles stated:
I record that, in contempt of court, the Husband and Straight have failed to transfer the Vessel to the Wife and have paid no monetary equivalent to her. In fact, the Husband and his associates appear to be doing all they can to prevent the enforcement of the English court’s orders including challenging all attempts to restrain the Vessel in Dubai and opposing the enforcement proceedings in the Marshall Islands.
Source: judgment of Mrs Justice Knowles dated 2 October 2019 at [14](f), (g)