There was a minor but interesting twist in the complex PrivatBank saga[1] in late February 2025: the English court set aside its own earlier order granting a request from a Ukrainian court for disclosure of documents relating to the Bank of England’s recognition of PrivatBank’s bail-in in 2021. The court considered that the disclosure request posed too much of a threat to the bank’s confidentiality obligations.
Background
PrivatBank was founded in 1992 by Igor Kolomoiskiy and his partner Gennadiy Bogolyubov – it was one of the first commercial banks in Ukraine after the fall of the Soviet Union. In 2016 the National Bank of Ukraine and its owners were in negotiations on a restructuring because of the bank’s financial difficulties, but in December 2016 the bank was declared insolvent and nationalised. In late 2017 PrivatBank obtained a freezing order in the context of proceedings brought by it against Mr Kolomoiskiy and Mr Bogolyubov for misappropriating c. USD 1.9bn though “sham” loans. The 14-week trial finished in November 2023, but judgment is still awaited.
Bail-in
On 26 December 2016, as part of the nationalisation and recapitalisation measures, the administrators of PrivatBank and the National Bank of Ukraine wrote down and converted to equity certain obligations of PrivatBank which were considered to be owed to PrivatBank’s connected persons (a process known as bailing in). All equity in PrivatBank was then purchased by the government of Ukraine for a nominal sum.
One of these “connected” creditors was UK SPV Credit Finance Ltd. It loaned money to PrivatBank, funding those loans by issue of over USD 0.5bn in loan notes: the holders of some of these notes were, it appears, Messrs Bogolyubov and Kolomoisky or entities they controlled.
Note-holders’ challenge of bail-in
The bail-in was recognised by the Bank of England so as to give it legal effect in the UK in 2021 under the Banking Act 2009.
The note holders affected have attempted to challenge the bail-in both in the London Court of International Arbitration (a challenge which failed on the basis that the Bank of England had recognised the bail-in), and in Ukraine. As part of the challenge in Ukraine, an application was made to the Ukrainian court for a letter of request under the 1970 Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters for disclosure of a copy of the request for recognition of the bail-in received by the Bank of England from the National Bank of Ukraine.
Letters of request
Obtaining evidence abroad is a process that often turns out to be surprisingly difficult. Where the person from whom evidence is requested is not party to the relevant proceedings, and does not provide evidence voluntarily, the 1970 Hague Convention provides a route for one state’s court to request another state’s court to assist by making an order for disclosure of documents or the taking of testimony.
The English court’s jurisdiction to grant such requests is given by the Evidence (Proceedings in Other Jurisdictions) Act 1975, passed so as to give effect to the 1970 Hague Convention. That provides the court with discretion to grant requests, provided that the request is for a step that would be possible when obtaining evidence for civil proceedings in the English court. This discretion is, on its face, wider than that provided for by Article 12 of the Hague Convention, which allows the execution of letters of request to be refused in the UK “only to the extent that” (a) the execution does not fall within the functions of the UK judiciary; or (b) the UK considers that its sovereignty or security would be prejudiced by the execution, albeit Article 9 allows the receiving court to “apply its own law as to the methods and procedures to be followed”.
The court’s decision
On 16 January 2025 the court made an order (without a hearing), granting the Ukrainian court’s letter of request for disclosure of the request for recognition of the bail-in received by the Bank of England from the National Bank of Ukraine.
However, on 28 February 2025, after hearing Counsel for the Bank of England, it set aside that order, on the basis that the Bank of England was prohibited from disclosing the document by section 348 of the Financial Services and Markets Act 2000, which prohibits disclosure of confidential information by the Bank of England without the consent of the sender of the information (in this case the National Bank of Ukraine), or the person to whom it relates (PrivatBank). Neiter of these consented to the disclosure in this case. The court also held that disclosure might hamper the ability of the Bank of England “to interact in confidence with other central banks and resolution authorities would be hampered, which, in turn, risks prejudicing the sovereignty of the United Kingdom”. The request for disclosure could additionally, therefore, be refused under Article 12 of the 1970 Hague Convention.
The court cited arguments made by PrivatBank in a letter to the effect that the potential effect (if not the intention) of the disclosure might be to advance the interests of Messrs Kolomoisky and Bogolyubov, albeit this was not a factor in the decision.
This decision is an interesting illustration of how disclosure requests can work across borders. Making the request for disclosure by the Bank of England, although it was unsuccessful, was an original idea, and illustrates the remarkable tenacity with which Mr Kolomoisky, who is in prison in Ukraine, has fought back against the nationalisation of PrivatBank. Dramatic and hard-fought cases such as this are typical of CIS-related disputes and are part of the reason England and Wales has come to such prominence as a forum for international dispute resolution in recent decades.
Deliya Meylanova