Court of Appeal finds Monaco lawyer liable for breach of English freezing order made against its client

The Court of Appeal in Lakatamia Shipping Co Ltd v Nobu Su/Hsin Chi Su (aka Su Hsin Chi; aka Nobu Morimoto) & Ors [2025] has unanimously held that a Monaco lawyer who followed his client's instructions to transfer funds in breach of an English worldwide freezing order was liable in a damages claim for unlawful means conspiracy.

Worldwide freezing orders typically contain a standard provision, known as the Babanaft proviso, which states that the order's terms "do not affect or concern anyone outside the jurisdiction of this court" save for the respondent to the order, and certain other specified exceptions.

Reversing the High Court's decision, the Court of Appeal held that while the Babanaft proviso prevents a third party outside the jurisdiction from being directly bound by the order, it does not give the foreign third party a defence to a civil claim against them for participating in an unlawful means conspiracy.

Lakatamia background

The litigation between Lakatamia Shipping Co Ltd and Mr Su, together with various companies and individuals associated with him, has a complex history spanning over 15 years in the English courts. A worldwide freezing order had been in place against Mr Su since August 2011, and judgments totalling over US$47.6 million in favour of Lakatamia had been entered against him in 2014 and 2015, with the judgment debt, including interest and costs, now standing at more than US$60 million.

While enforcing that judgment debt, Lakatamia uncovered information relating to the sale of two villas in Monaco. The villas were owned by Cresta Overseas, a company of which Mr Su was the beneficial owner, and were sold in October 2015 for €65.1 million, with approximately €27.1 million of the proceeds held, temporarily, in the client account of Maître Zabaldano, a Monaco lawyer acting for Cresta Overseas.

In February 2017, Mr Su, acting through another individual, Mr Chang, instructed Maître Zabaldano to transfer those funds to UP Shipping Corporation, a company owned and controlled by Mr Su's mother and of which Mr Chang was a director. By the time the Monaco courts recognised Lakatamia's liability judgments against Mr Su in July 2017, the money had already been dissipated. Mr Su was subsequently committed to prison for 21 months for contempt of court over the dissipation.

In 2023, Lakatamia brought claims against three defendants: Mr Su, Mr Chang Tai-Chou and Maître Zabaldano. These were for unlawful means conspiracy and inducement of a breach of rights existing under a judgment (the so-called 'Marex tort'), arising from the transfer of funds that ought to have been frozen under the worldwide freezing order.

The High Court decision

As between Mr Su and Maître Zabaldano, the first instance court found that that the elements of the tort of unlawful means conspiracy were established. The judge found that it was more likely than not that, at the time when Maître Zabaldano ordered the transfer of the proceeds of sale of the villas to UP Shipping, he knew that Mr Su was bound by the freezing order and that the judgment debt had not been discharged; and that he knew also of Mr Su’s ultimate beneficial ownership of Cresta Overseas. 

However, the judge found that the Babanaft provision in the freezing order meant that Maître Zabaldano could not be liable for unlawful means conspiracy. He was also not satisfied that Mr Chang knew of the freezing order or the judgment debt. The unlawful means conspiracy claims against all three defendants therefore failed, given that Mr Su could not conspire on his own. Lakatamia appealed. 

The Court of Appeal decision

The Court of Appeal overturned the High Court, drawing on Court of Appeal and Supreme Court authority in JSC BTA Bank v Ablyazov (No 14) [2018] UKSC 19, [2020] AC 727. In that case, Mr Ablyazov had breached a freezing order by dealing with his assets contrary to its terms, assisted by a Mr Khrapunov (a third party outside the English jurisdiction). The Supreme Court held that, although the Babanaft proviso meant that a foreign party cannot be committed to prison for contempt of court, they may be civilly liable for unlawful means conspiracy.

The Court of Appeal held that the lower court's reasons for distinguishing Ablyazov were untenable. The first distinction that neither defendant was within the territorial jurisdiction of the English court when any relevant act occurred was dismissed as irrelevant, since the location of the conspiracy in Ablyazov was material only to a separate jurisdictional argument and had no bearing on the Babanaft proviso. The second distinction that Ablyazov addressed only the position of the contemnor, Mr Ablyazov, rather than the alleged assister was rejected as a misreading of the case, since the Supreme Court's decision was concerned entirely with Mr Khrapunov, the foreign party who had the benefit of the proviso.

The Court of Appeal held that the Babanaft proviso gave no defence to unlawful means conspiracy. The claim against Mr Su had failed at first instance only because the deputy judge had found that neither Mr Chang nor Maître Zabaldano was liable in conspiracy, meaning Mr Su could not be liable for conspiring alone. Since the Court of Appeal found that the claims against both co-defendants should have succeeded, it followed that Mr Su was also liable. 

Osborne Clarke comment

This decision confirms that, while a party outside the English court's jurisdiction cannot be in contempt of court for breaching a worldwide freezing order, they may still be liable in tort for assisting a respondent's breach.  In our view, the Court of Appeal's decision puts the law in this area back on track after a surprising High Court judgment.

The decision is a favourable one for judgment creditors, and serves as a reminder that English worldwide freezing orders remain a powerful tool for preventing asset dissipation. Respondents to freezing orders cannot avoid their effects by seeking assistance from parties located outside England and Wales. While such parties may not be guilty of contempt of the English court, they can be exposed to civil liability in damages if they assist a respondent in breaching an order to which they are subject. 

Foreign lawyers approached to assist a respondent to an English worldwide freezing order in dealing with assets caught by its terms would be wise to take English-law advice before acting.