Background
The Commercial Bank Privatbank obtained a judgment against Igor Kolomoisky and Gennadiy Bogolyubov for approximately US$3 billion in November 2025. The charging order included ring-fencing provisions (paragraph 3E) designed to protect the defendants’ ability to fund their appeals and cover living expenses. The ring-fenced funds comprised cash, securities, and designated bank accounts (the “New Enyo Accounts”) and were restricted to specific permissible uses, including reasonable legal costs for prosecuting an appeal.
Following dismissal of the appeal by the Court of Appeal on 22 May 2026, a dispute arose concerning whether legal fees incurred but not yet paid before the appeal’s dismissal could still be discharged from the ring-fenced funds. The defendant argued such costs should remain payable as they had been incurred during the protective period. The bank contended that ring-fencing protection only extended to fees actually paid before dismissal, after which it became entitled to enforce against all ring-fenced assets.
The Court’s Holding
Justice Trower ruled that the ring-fencing provisions terminated entirely upon dismissal of the appeal. The operative language of paragraph 3E(6) provides that the ring-fencing purposes “shall no longer apply” and the bank becomes “at liberty to take any enforcement step it considers appropriate” against the ring-fenced funds. The court held this language is not ambiguous: it refers to the moment the payment is made, not the moment the legal obligation is incurred.
The judge rejected the defendant’s argument that the ring-fencing should continue for work already done but unpaid. He found no textual support for a retrospective continuation of protections after the disapplication event. The court also noted that allowing unpaid costs to remain ring-fenced would create inherent uncertainty about the exact quantum of assets the bank could enforce against, which the parties would have expressly provided for had that been intended.
Additionally, Justice Trower ruled on specific costs claims, finding a proposed £500,000 payment to Linkilaw unreasonable, but recognizing up to £250,000 as reasonable for Supreme Court permission application costs. He rejected certain payments to Austrian lawyers and a third-party entity as not qualifying as legal fees or disbursements under the order.
Key Takeaways
- Ring-fencing provisions in charging orders are construed strictly according to their text and cease to protect funds upon occurrence of specified trigger events.
- Legal fees must be invoiced and paid before a disapplication event to benefit from ring-fencing protection; incurring work before the event does not create an ongoing right to payment from protected funds.
- Courts will not read unstated limitations into enforcement rights granted by court orders, even where commercial fairness arguments favour a defendant.
- The timing of payment, not the timing of work performance, determines whether legal costs benefit from ring-fencing provisions.
Why It Matters
This judgment clarifies the temporal scope and limits of protective orders issued to preserve defendants’ ability to fund appeals. It establishes that ring-fencing provisions operate as a completed transaction—once the triggering event occurs, the protection ends and is not revisited for obligations incurred within the protective period but unpaid at the moment of termination. This has significant consequences for defendants’ legal teams, who must ensure payment of fees before appeals conclude or risk losing priority to secured creditors.
The decision reinforces that commercial reasonableness and fairness arguments will not override express contractual or court order language. The ruling also provides guidance on assessing the reasonableness of legal costs claims, particularly where multiple providers are engaged or work extends to potential Supreme Court proceedings.