High Court judgment in Kazakhstan Kagazy group v Arip

The court held that four UK properties, located in and around London with a combined net value of over £50 million, together with £72 million held in a Swiss Bank account, are the Claimants’ property and the Claimants can use those assets (the “Assets”) to part-satisfy the outstanding judgment debt.

The Claimants had argued that:

(a) The Assets belonged to the Claimants as they were the traceable proceeds of the funds misappropriated from the Claimants;

(b) That if the Assets do not belong to the Claimants, they belong to Mr Arip; and

(c) That if the Assets do not belong to the Claimants or Mr Arip, Mr Arip’s disposals of the Assets were transactions defrauding the Claimants in breach of s.423 of the Insolvency Act

The Defendants argued that the Assets were owned by trusts and/or by Mr Arip’s family members, such that the Claimants were not permitted to enforce their judgment against them.

In his judgment, Mr Justice Henshaw granted all of the Claimants’ claims, holding that (a) the Assets belong beneficially to the Claimants; (b) if they do not belong to the Claimants, they belong to Mr Arip so the Claimants can enforce their judgment against them; and (c) if they do not belong to either the Claimants or Mr Arip, Mr Arip had disposed of them in breach of s.423 of the Insolvency Act.

The Claimants’ conduct of the proceedings against Mr Arip has been funded by Harbour Litigation Funding (“Harbour”) since 2015. In 2018, the High Court appointed Harbour as attorneys for the Claimants to conduct the proceedings on the Claimants’ behalf. 

Harbour will now proceed to sell the English properties and receive the £72 million to part satisfy the outstanding judgment debt. Harbour will also be continuing enforcement against Mr Arip and his associates for payment of the remaining outstanding amount of the judgment debt.

Ellora MacPherson, Managing Director and Chief Investment Officer at Harbour, said “Harbour’s appointment as the Claimant’s attorney to conduct the proceedings was an innovative step in the circumstances. It is a prime example of how Harbour’s expertise in these situations has been essential in effectively enforcing the Judgment and achieving recoveries.” 

Mark King, Senior Director of Litigation Funding at Harbour, said “This is a momentous milestone in successfully enforcing a very valuable judgment. The Judgment is testimony to the firepower provided by Harbour in funding and conducting the enforcement which has thwarted a sophisticated fraudster and his associates’ hard fought attempts to disregard the High Court’s orders for them to pay damages of  US$300 million. Without Harbour’s efforts, there would have been no enforcement proceedings and Mr Arip would have escaped with his ill-gotten gains.”

Richard Lewis, partner at Hogan Lovells, the Claimants’ solicitors, said “This is a hugely important decision for the Claimants and a notable one for fraud claimants in England more generally. By finding in favour of the Claimants on all issues in the case, the English court has shown that it will not permit fraudsters to shield themselves from enforcement by parking their assets in supposed trust structures or with family members.”