It is not unusual for commercial parties to agree that their disputes should be arbitrated in London, pursuant to English law, even where the parties themselves are foreign and the underlying transaction has little or no connection to England. The Commercial Court’s judgment in State Oil Company of the Republic of Azerbaijan & Ors v Mansimov & Ors [2026] EWHC 2102 (Comm) is a reminder that those choices can have consequences beyond the arbitration itself. In particular, an award creditor may be able to invoke the English court’s assistance to prevent steps designed to frustrate enforcement of an award, including by seeking relief in respect of transactions at an undervalue under ss.423 and 425 of the Insolvency Act 1986 (the “Act”) and, where the necessary elements are made out, by pursuing claims against those alleged knowingly to have procured the violation of rights established by an award or judgment.
Summary of the material facts
In 2020 and 2021, the claimants, the State Oil Company of the Republic of Azerbaijan (“SOCAR”) and companies it directly or indirectly controls, obtained London-seated arbitral awards against Mr Mansimov and companies in the Palmali Group, which he founded.
Alongside enforcement measures in other jurisdictions, the claimants issued proceedings in England against defendants including Mr Mansimov and companies within the Palmali Group. The claims included: (a) a claim under s.423 of the Act; (b) a claim in what has become known as the Marex tort; and (c) unlawful means conspiracy.
The claimants alleged that various restructurings of the Palmali Group in 2018, which took place at a time when the arbitrations were either imminent or already on foot, were undertaken for the purpose of putting assets beyond the reach of creditors. The defendants contended that the Palmali Group was under severe financial pressure and that the restructurings were legitimate measures driven by its creditors. It was common ground that the restructurings had taken place outside the jurisdiction, between parties who were not domiciled or incorporated in England, and that the contracts effecting the transfers were not governed by English law.
s.423 Insolvency Act 1986
Section 423 of the Act applies to transactions entered into at an undervalue, including gifts, transactions for no consideration, and transactions where the consideration received is significantly less than the value provided by the transferor. If the court is satisfied that the transaction was entered into for the purpose of putting assets beyond the reach of a person who is making, or may make, a claim, or otherwise prejudicing that person’s interests in relation to such a claim, the court has wide powers under s.425 to restore the position or protect the victim of the transaction.
Where the impugned transaction is foreign, the claimant must establish a sufficient connection with England and Wales before relief under s.423 will be available. In these proceedings, the key connections relied upon included that the underlying contracts were governed by English law, required disputes to be resolved in London-seated arbitration, and had resulted in awards which the claimants sought to recognise and enforce in England.
Birt J held that those connections were sufficient for the purposes of the s.423 claim. Referring to Integral Petroleum SA v Petrogat FZA & Ors ([2021] EWHC 1365 (Comm) and [2023] EWHC 44 (Comm)), the judge reasoned that, if the restructurings were undertaken for the purpose alleged, they were directed at frustrating enforcement of awards likely to be made in London-seated arbitrations and ultimately capable of being reflected in English judgments. That was enough, at the jurisdictional stage, to found a sufficient connection with England and Wales.
The Marex tort
The tort of knowingly inducing or procuring a party to act in wrongful violation of a claimant’s rights under a judgment originates in the judgment of Knowles J in Marex Financial Ltd v Sevilleja [2017] EWHC 918 (Comm). Its rationale is that, just as the law protects contractual rights from intentional third-party interference through the tort of inducing breach of contract, it should also protect rights established by judgments from intentional interference by third parties.
Per Bryan J in Lakatamia Shipping Co Ltd v Su [2021] EWHC 1907 (Comm), the elements of the Marex tort are that:
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- A judgment has been entered in the claimant’s favour;
- There has been a breach of the rights existing under that judgment;
- The defendant has procured or induced that breach;
- The defendant knew of the judgment; and
- The defendant realised that the conduct being induced or procured would breach the rights owed under the judgment.
The defendants accepted, for the purposes of the application, that the Marex tort could apply to arbitral awards as it does to judgments. However, they contended that an essential element of the tort was missing: there was no judgment or award in existence at the time of the alleged restructuring. Birt J accepted that submission. That did not mean that a claimant has no rights before judgment or award: the Judge noted, for example, the potential availability of contractual rights and accessory liability in tort against those who intentionally induce breaches of contract. But the Marex tort itself requires the relevant judgment or award right to have come into existence before the alleged procurement of its violation.
Conclusion
Although the claimants did not succeed on the Marex tort, Birt J upheld the order permitting service out of the jurisdiction in respect of the s.423 claim and the unlawful means conspiracy claim which depended on it. Although the decision arose following a challenge to permission to serve out of the jurisdiction, rather than after a full trial, Birt J observed that the sufficient-connection issue involved little factual dispute and was not obviously one that would look materially different after trial. The judgment therefore provides a significant indication of how the Commercial Court is likely to approach attempts to invoke s.423 in support of enforcement of English arbitral awards where the alleged asset-stripping activity took place abroad.
Practical takeaway
The practical lesson is simple. Parties who choose English law and a London seat should not assume that the foreign nature of the parties, assets or transactions will place subsequent restructuring activity beyond the reach of the English courts. In these proceedings, the alleged transfers took place outside England, between foreign parties, pursuant to foreign-law transactions. Nevertheless, the court concluded that there was a sufficient connection with England because the underlying disputes arose under English-law contracts, were to be resolved by London arbitration, and had resulted (or were likely to result) in awards capable of enforcement in England. For award creditors, the decision reinforces the usefulness of s.423 as part of a broader international enforcement strategy. For award debtors and those who advise them, it serves as a reminder that steps said to have been taken to frustrate payment of English arbitral awards may attract scrutiny in the English courts notwithstanding their overwhelmingly foreign character.
