The State Oil Company of the Republic of Azerbaijan v Mansimov & Ors [2026] EWHC 2102 (Comm) 7 August 2026 Mr. Justice Birt

The central issue was whether SOCAR and its subsidiaries could bring English proceedings against Mubariz Mansimov and Palmali group members over alleged corporate restructurings intended to frustrate enforcement of substantial arbitration awards, even though the defendants and most of the transactions were outside England.

Summary

The defendants failed to set aside permission to serve outside the jurisdiction, except for the claim in the “Marex tort”. The claims under section 423 of the Insolvency Act 1986 (transactions defrauding creditors) and for unlawful means conspiracy survived the challenge. This judgment was not a final determination that the alleged asset transfers were fraudulent or unlawful.

The judgment is important for three reasons:

1. English courts can hear claims concerning foreign corporate restructurings where there is a sufficient connection with England, including attempts to frustrate enforcement of English arbitration awards.

2. Section 423 can potentially reach transactions involving foreign companies and assets, if its substantive requirements and the necessary connection with England are established.

3. The Marex tort is temporally limited: the judgment or award must already exist, or be imminent and known to the defendant, when the alleged inducement or procurement occurs.

1. Background and material facts

The claimants were four companies in the SOCAR group, including the State Oil Company of the Republic of Azerbaijan. The defendants were Mr. Mansimov, several Palmali-related companies, his partner Ulviya Gasimova and an investment company.

SOCAR and Palmali had a commercial relationship dating from 2007. Their arrangements included long-term oil transportation agreements and two substantial loans.

2. The underlying arbitration awards

• T&SD award – This was a London-seated LMAA arbitration award dated 26 January 2021. Personal indemnity and obligations arising from the Termination and Settlement Deed.

• PCG award – This is a London-seated UNCITRAL arbitration award dated 3 February 2021. Guarantee for the approximately $120 million loan made to Palmali International Holding Company Limited.

• Separate SOS award – This was a Dubai-seated LCIA arbitration award dated 5 November 2020, related to a $30 million loan. This award formed part of the wider background but was not the subject of the present asset-restructuring claims.

The three awards ordered payment of approximately $240 million in total, plus interest and costs. The present proceedings concerned alleged asset-stripping transactions and principally the two English awards.

The claimants alleged that the defendants had reorganised the Palmali group’s ownership to put assets beyond creditors’ reach. The defendants maintained the restructurings were commercially necessary given the group’s financial difficulties and Turkish banks’ demands.

The awards remained largely unpaid. SOCAR had also sought recognition and enforcement in Turkey, Malta and Azerbaijan.

3. The procedural questions before the judge, Mr. Justice Birt

The defendants applied to set aside Jacobs J’s 6 June 2025 order granting permission to serve the claim form outside the jurisdiction.

For permission to serve out, the claimants had to establish:

1. A serious issue to be tried on the merits — a real, rather than fanciful, prospect of success.

2. A good arguable case that the claim fell within one or more of the jurisdictional gateways in Practice Direction 6B.

3. That England was the appropriate forum for the proceedings, applying the relevant jurisdictional and forum principles.

The judge considered each cause of action separately. The distinction is that he was deciding whether the proceedings could progress, not the ultimate merits after a trial.

4. Section 423 Insolvency Act 1986: the principal substantive issue

This was the most significant part of the judgment.

Section 423 allows the court to grant relief for transactions at an undervalue entered into for a prohibited purpose. The requirements included:

1. The transaction was at an undervalue.

2. It was entered into to put assets beyond the reach of a person making, or who might make, a claim, or otherwise to prejudice that person’s interests.

3. The claimants had been, or could be, prejudiced.

4. The relief sought was appropriate under sections 423(2) and 425.

5. There was a sufficient connection with England and Wales to justify the jurisdiction.

The defendants challenged the first, second and fifth requirements.

A. Were the transfers transactions at an undervalue?

The court found a serious issue to be tried. It was common ground that the transfers were for no or nominal consideration. The real question was whether the shares had any substantial value at the relevant times.

The defendants relied on Palmali’s 2014 and 2015 audited accounts to argue the group was in deep financial distress, on the brink of insolvency, and that its equity had little or no residual value.

The claimants relied on evidence from Alexander Scott, Clifford Chance’s Global Head of Forensic, who analysed those accounts and concluded the assets transferred had substantially more than nominal value. The judge rejected the suggestion that Scott’s evidence could be dismissed because he was employed by the claimants’ solicitors rather than being an independent accountant. His analysis of the financial statements was sufficient to establish a real issue to be tried, even without relying on his expertise as such.

The defendants also argued the evidence was merely a snapshot of the group’s position in 2014 and 2015. The judge observed that these were the very accounts the defendants relied on and the Palmali’s last published financial statements.

The judge declined to resolve the conflicting financial evidence at this interlocutory stage.

Significance: a transfer for nominal consideration does not automatically establish an undervalue if the asset transferred was itself of negligible value, but evidence of financial distress does not dispose of the question of value. The shares’ value at the relevant date remained a factual issue for trial.

B. Was there a prohibited purpose?

Again, the judge held that a serious issue was to be tried.

The defendants argued the restructurings preserved the group’s operations and met Turkish banks’ requirements. They said the group was under substantial financial pressure and that the banks wanted to enforce security over its fleet under Turkish law, requiring a Turkish corporate holding structure.

The judge identified a significant evidential difficulty: there was no contemporaneous documentary evidence of the alleged banking demands. The defendants’ explained that discussions with banks commonly oral and not routinely recorded.

The judge found it surprising that a large shipping group would undertake significant restructurings at its bankers’ behest without any documentary record of the demands.

The claimants, meanwhile, relied on a combination of circumstances:

1. The absence of an adequately evidenced commercial or legitimate rationale for the transfers.

2. The fact that the transfers took place against the background of claims by SOCAR and its subsidiaries.

3. The alleged pattern of conduct designed to obstruct enforcement.

4. Mansimov’s evidence in the earlier arbitration that he had not intended to perform the Termination and Settlement Deed but needed the cash flow.

The judge distinguished between knowledge of a claim and the purpose required by section 423. He accepted that a debtor who knows that a claim exists is not presumed to have acted for a prohibited purpose unless proven otherwise, relying on the judgment in JSC BTA Bank v Ablyazov [2018] EWCA Civ 1176.

However, the claimants did not rely on notice of the claims alone, but as one factor in a wider evidential case from which a prohibited purpose could potentially be inferred.

At this stage, the judge could not determine that the defendants’ banking rationale was genuine. There was a serious issue to be tried as to whether the transactions were instead intended to put assets beyond creditors’ reach or otherwise prejudice creditors.

Significance: section 423 requires the relevant prohibited purpose, not merely a prejudicial effect. That purpose may be inferred from the surrounding circumstances, including the lack of a convincing commercial explanation, the timing and structure of the transactions and the parties’ conduct.

C. The territorial reach of section 423

This was arguably the judgment’s most important jurisdictional contribution.

The defendants contended that the claim had insufficient connection with England because:

1. The parties were predominantly foreign.

2. The shares transferred were in Turkish and Maltese companies.

3. The transactions took place abroad.

4. The defendants had no assets in England.

5. The court accepted the governing principle that section 423 can have extraterritorial effect, but that the court must be satisfied that there is a sufficiently close connection with England and Wales. The breadth of the power means the court must exercise particular care before applying it to foreign transactions.

The judge considered the principles in the judgments In re Paramount Airways Ltd [1993] Ch 223 and Orexim Trading Ltd v Mahavir Port and Terminal Pte Ltd [2018] EWCA Civ 1660. The former identifies a range of potentially relevant factors, including the parties’ residence, their connection with the debtor, the nature and purpose of the transaction, the location of the property and the position under any relevant foreign law. No single factor is necessarily decisive.

The claimants’ key argument was that if the transfers were made to put assets beyond their reach, their purpose was to frustrate enforcement of awards from London-seated arbitrations, ultimately reflected in English judgments. The judge accepted this as providing a sufficient connection with England.

He relied in particular on the judgment in Integral Petroleum SA v Petrogat FZE [2021] EWHC 1365 (Comm), where the Commercial Court recognised that an attempt to frustrate an English arbitral award could provide a sufficient English connection despite foreign elements. He also considered the post-trial decision in Integral Petroleum SA v Petrogat FZE [2023] EWHC 44 (Comm), which supported the relevance of English-law contracts and London arbitration to the territorial connection.

The court did not treat the foreign location of the assets and transfers as determinative. The alleged objective of frustrating enforcement of English awards was central to the connection with England.

The judge therefore held that there was a serious issue to be tried on sufficient connection for section 423 purposes.

D. Why the timing of the transactions mattered

The restructurings occurred in 2018 and 2020, while the awards were issued between November 2020 and February 2021. The judge distinguished cases in which assets were moved after a judgment, or when judgment was imminent.

For section 423, the claimants’ case was that the transactions were designed to frustrate enforcement of claims and awards expected to arise from existing disputes. The judge did not require them to establish at this stage that an award was already in place at each transfer. This distinction becomes crucial for the separate Marex tort claim, which the judge treated as having a different temporal requirement.

5. The Marex tort: the claim that failed

The claimants advanced a claim based on the tort identified in Marex Financial Ltd v Seville [2020] UKSC 31, alleging the defendants induced or procured non-payment of the arbitration awards. It failed at the jurisdictional stage because the judge found no serious issue to be tried on the pleaded facts.

The central legal difficulty

The judge assumed the Marex tort could apply to arbitration awards as well as court judgments, without needing to decide that question definitively.

The difficulty was the chronology: the last restructuring relied upon occurred in February 2020. The awards were made later, between November 2020 and February 2021.

The judge considered the elements of the tort, including a judgment in the claimant’s favour, the defendant’s knowledge of it, and conduct the defendant knows will breach the rights it establishes.

He concluded that the tort required the relevant judgment or award to be in place, or imminent in circumstances known to the defendant, when the alleged procurement or inducement occurred.

At the time of the restructurings, no relevant award was in place or imminent in that sense, and the defendants’ possible anticipation of future liability under the underlying contracts did not solve this.

The judge also noted that the claimants had not adequately explained how the tort’s requirements could be satisfied on the facts, or how their proposed extension would fit with the established tort of inducing breach of contract. He therefore concluded the Marex tort claim had no real prospect of success on the facts pleaded.

Practical significance

This judgment is an important warning when pleading claims over asset transfers designed to defeat creditors. A claim that a transaction was meant to frustrate an anticipated arbitration award may be pursued under section 423, but the same transaction may not support a Marex tort claim. The timing and legal character of the claimant’s rights are critical.

6. Unlawful means conspiracy

The claimants also alleged that the defendants combined to carry out the restructurings and frustrate enforcement of the awards by unlawful means, namely the transactions falling within section 423 and the conduct said to constitute the Marex tort.

The defendants argued that the conspiracy claim could not survive if its underlying unlawful-means claims failed. The judge rejected that argument in part.

The claim survived insofar as it relied on section 423: there was a serious issue to be tried, and the defendants had advanced no independent argument sufficient to defeat it at this stage.

It failed insofar as it relied on the Marex tort. With no serious issue to be tried on that tort, it could not provide the necessary unlawful means. The conspiracy claim therefore survived in part, rather than being dismissed entirely.

Jurisdictional gateways

The judge also considered the procedural basis for serving the conspiracy claim on defendants outside England.

1. The section 423 claim fell within Practice Direction 6B, paragraph 3.1(20), which covers claims brought under an enactment permitting proceedings to be brought.

2. The conspiracy claim fell within paragraph 3.1(4A), which permits a further claim arising from the same or closely connected facts as another claim falling within a specified gateway. The judge also considered paragraph 3.1(3), concerning necessary or proper parties.

The defendants did not materially contest the application of those gateways once the section 423 claim survived.

Significance: a conspiracy claim can potentially continue where one of several alleged unlawful means conspiracies survives, even if another alleged unlawful means conspiracy is rejected. The claim must still satisfy the substantive requirements for conspiracy at trial.

7. Was England the appropriate forum?

This was the other major issue in the judgment.

Under CPR 6.37(3), the claimants had to establish that England and Wales was clearly or distinctly the most appropriate forum for the dispute. The judge applied the principles in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460.

The judge held that England was clearly the most appropriate forum.

The principal reasons

1. The awards and underlying contracts had substantial English connections: the parties chose English law and London-seated arbitration, and the claims sought relief for alleged attempts to evade payment of the resulting awards.

2. The awards had been converted into English judgments. The judge recognised that this occurred around the time the present proceedings were issued, but it nevertheless strengthened the connection with England.

3. The wider dispute had already generated extensive proceedings in England. The court had developed familiarity with the underlying commercial relationship, the awards and the parties’ conduct.

4. The international character of Palmali’s operations weakened the suggestion that the dispute belonged exclusively in Turkey. The corporate structure and relevant interests spanned several jurisdictions, including Malta and St Kitts and Nevis.

5. The defendants had themselves engaged in London proceedings. In particular, Palmali had brought a related London-seated arbitration in which its claims were dismissed as an impermissible collateral attack on the earlier awards. This was relevant to the defendants’ arguments about the practical difficulties of litigating in England.

6. The judge also considered the defendants’ proposal to undertake to submit an equivalent section 423 claim to the Turkish courts. He rejected it as insufficient to alter the forum analysis because the undertaking was narrow: it did not cover the conspiracy claim, was limited to the three pleaded restructurings, and left uncertainty about what would count as an equivalent Turkish cause of action.

7. That uncertainty risked generating further litigation about the scope of the undertaking.

The key point: the court did not require the transfers themselves to have taken place in England. The question was whether, taking all the circumstances together, England was the appropriate place to try the claims. The English awards, English-law contracts and the alleged objective of defeating their enforcement were decisive factors.

Conclusion

In my view, there are four particularly important takeaways for commercial litigators and arbitration practitioners.

1. Section 423 is potentially an important enforcement tool after arbitration

Where there is evidence that assets have been transferred at an undervalue for the purpose of defeating creditors, section 423 may offer a route to relief against the transactions and relevant participants.

That is especially important where the debtor’s assets have been reorganised across multiple corporate entities and jurisdictions.

2. English arbitration clauses can have consequences beyond the arbitration itself

Parties choosing English law and London-seated arbitration may create a meaningful English connection for later proceedings concerning attempts to frustrate enforcement of the resulting awards.

That does not mean every foreign restructuring affecting a foreign debtor becomes amenable to English jurisdiction. The court must still assess the totality of the circumstances and not exercise its extraterritorial powers oppressively or unreasonably.

3. Documentary evidence of a commercial rationale matter

Where a debtor asserts that banks required a restructuring, the absence of contemporary evidence of those requirements can become significant. It is not conclusive proof of a prohibited purpose, but it may contribute to an inference when considered with the other evidence.

For creditors, this reinforces the value of obtaining corporate records, financial statements, transaction documents and communications relating to the rationale for the restructuring.

4. The Marex tort should not be treated as a general asset-dissipation tort

The judge’s treatment of the Marex claim is a useful counterweight to the broad jurisdictional reach recognised under section 423.

A claimant alleging that a debtor has deliberately arranged its affairs to avoid a future award must identify the correct cause of action. The requirements for a transaction at an undervalue, conspiracy and the Marex tort are not interchangeable.

In particular, this judgment indicates that a Marex claim based on an award requires close attention to whether the award existed, or was imminent in the legally relevant sense, at the time of the alleged conduct.