“… one which is more than barely capable of serious argument, but not necessarily one which the judge considers would have a better than 50 per cent chance of success.”
“34. I find it striking that Haddon-Cave LJ’s judgment in… Morimoto makes no reference to Kazakhstan Kagazy plc v Arip (making it unclear whether the views of Longmore and Elias LJJ were cited); and that Haddon-Cave LJ said at [35] that the “good arguable case” test was “not a particularly onerous one” and referred to Gee on Commercial Injunctions (6thed., 2016) at §12-026, which endorsed the Mustill J approach. 35. It therefore seems to me not at all clear that Haddon-Cave LJ intended to have the transformative effect for which Ms dos Santos contends. Notwithstanding Harrington & Charles Trading, I am not aware that many observers have come to this conclusion. Subsequent editions of the White Book and of Gee on Commercial Injunctions (7thed., 2020, inc. 1st supp. 2022) both still endorse the formulation in The ‘Niedersachsen’. Indeed, in its current edition, not only does Gee on Commercial Injunctions §12-033 state at some length that the jurisdictional approach of Brownlie, Goldman Sachs and Kaefer is not applicable in the freezing order context, it positively cites Lakatamia Shipping Co. Ltd. v Morimoto as supporting this conclusion. 36. My own view is aligned with that of Butcher J; essentially for the reasons that he gives, but especially because of Haddon-Cave LJ’s reference to Gee on Commercial Injunctions in his judgment at [35] – which cannot easily be reconciled with an intention to approve a test different from the one espoused in that text. 37. However, I cannot help but note that the law is in a confused state, which cries out for a definitive answer from the Court of Appeal. The reality is that Haddon-Cave LJ’s judgment deals with this point briefly, elliptically and ambiguously. This is not at all surprising: the Court of Appeal in that case was not being asked to decide a live point on “good arguable case” on the merits (this was not one of the grounds of appeal – see at [39]). The real focus of the case was all on risk of dissipation. When first instance judges are asked to work out the significance of Haddon-Cave LJ’s judgment in relation to “good arguable case”, we are inevitably drawn into opining as to what Haddon-Cave LJ ‘really meant’ at [35] and [38]. This leads to much effort being spent on whatever minute linguistic indicia can be found within those two paragraphs. In my view, it is not productive to keep trying to squeeze more meaning from the few words uttered by Haddon-Cave LJ on the subject. It would be much better to consider the point afresh and from first principles. But only the Court of Appeal can have the luxury of doing this.”
“…under the three-limb Brownlie test, the court must not merely try to decide who has the better of the argument. If it can decide who has the better of the argument, it must also try to gauge the reliability of its conclusion on that point. This is a feature of the three-limb test that (in my view) makes it difficult to apply satisfactorily to any question going to the merits of the claim, as opposed to a question that will not arise at trial. This has been my experience in this case, hence the observations at the end of this judgment.”
“47. The ACCL is the general source of law for Angolan commercial companies. Accordingly, among other things, it provides the framework for the duties owed by directors to such companies, as well as for the claims that companies can make against their directors for breach of those duties and the circumstances in which such claims can be brought.”
“ARTICLE 80 (Indemnity action) 1. The company can only file an indemnity action after a shareholder resolution is passed on it and it must be filed within a period of six months counting from the date of the approval of the said resolution, with the shareholders being permitted to nominate special representatives for that purpose. 2. During the meeting at which the yearend accounts are appraised, resolutions can be approved on an indemnity action and the dismissal of managers or directors whom the meeting considers responsible, even though these matters do not appear on the convening notice, with the managers or directors whom the meeting considers responsible being prevented from voting on those resolutions. 3. The approval of the resolution referred to in the previous number prevents those managers or directors from being elected again while the indemnity action is pending.”
“53. Article 80 as a whole is concerned with the circumstances in which the company can file an action for an indemnity claim against a manager or directors, and the effect of this on the manager or directors affected and their capacity to act for the company. 54. The company can only file such a claim after a shareholder resolution is passed, and must do so within six months of the shareholder resolution. The company would normally act by its directors (or persons to whom they have delegated), but in this situation must be enabled to act through persons other than the defendants to the indemnity claim. The last two lines of Article 80(1) therefore empower the shareholders to nominate special representatives for the purpose of filing the claim. 55. Article 80(1) does not look like a limitation provision. It does not seem likely that it is intended to cut across or otherwise affect the limitation period provided in Article 175. It is concerned, rather, with the company's capacity to file a claim against the manager and/or directors. The company only has such capacity if it is created by a shareholder resolution; and it then has a shelf-life of six months from the date of the shareholder resolution.”
“57. Ms dos Santos's case is that the requirement in Article 80(1) that the indemnity action be "filed" within six months of the shareholder resolution was not satisfied by Unitel merely issuing and filing its application to join Ms dos Santos; it required her actually to be joined to the proceedings, as Second Defendant, which did not happen until1 June 2023 . Unitel's case is the opposite. This is the principal point on which I have to decide whether Unitel has a "good arguable case". 58. Unitel's Angolan law expert, Prof. Vicente, stated that proceedings are "filed" under Angolan law/procedure, including for the purposes of Article 80(1), when the claimant's initial application is received at the court registry. He said that the purpose of Article 80(1) is to ensure that it is certain, within six months, whether the company wishes to assert its rights per the shareholder's resolution; such certainty being necessary both for the company and for the manager/directors affected. He said that Unitel's act of issuing and filing the joinder application of3 October 2022 achieved this certainty and thus fulfilled the purposive requirement of Article 80(1). 59. He said that the fact that a decision of the Court was necessary, before the joinder could be made effective, does not derogate from this; and that, in some circumstances, even in Angola, the filing of legal proceedings does not mean that the defendant is party to them or that they will proceed against the defendant; they may be rejected by the court. 60. Ms dos Santos's Angolan law expert, Prof. Dr. Ribeiro, stated Article 80(1) could only be satisfied by issuing a joinder application in England if this were procedurally equivalent to filing an action in Angola. She addressed this by considering whether a judge would have to authorise it, and whether the company would then have to take any further steps for the action to be considered as filed. She said that, because the joinder of Ms dos Santos required both the decision of the Court (i.e., the Order of HHJ Pelling KC of25 May 2023 ), and then the service of the Amended Claim Form and Amended Particulars of Claim on1 June 2023 , it was not procedurally equivalent to the filing of an action in Angola. 61. Both the experts then served further reports. Prof. Vicente accepted that it was legitimate to consider whether the joinder application was equivalent to filing an action in Angola, and opined that it was. Prof. Ribeiro repeated her view that it was not.”
“…I agree with Prof. Vicente's view that the joinder application of3 October 2022 was equivalent to filing an action in Angola, for the purposes of Article 80(1). In reaching that view, I note Prof. Vicente's evidence that when an action is filed in Angola, the Court does not have to accept it, and further acts may be required of the company. 64. It also strikes me that, in considering the question of procedural equivalence, it is necessary to have in mind the purpose of Article 80(1), because this must shed light on how such equivalence is to be measured. On the basis that Article 80(1) is concerned with the capacity of the company to act on the shareholder’s resolution, issuing and filing a joinder application in England seems to me precisely the decisive exercise of this capacity that Article 80(1) requires. Furthermore, because foreign companies effectively have to litigate in England via solicitors, who have to be instructed to go onto the record and act for the company, issuing and filing the joinder application meant that Unitel’s solicitors, Addleshaw Goddard LLP, then had actual and/or ostensible authority to conduct the litigation thereafter – even after the expiry of the six-month period under Article 80(1), their appointment having been made before this. Looking at the question in this way supports the view of Prof. Vicente. 65. I therefore have a clear view as to which party has the better of the argument: Unitel does.”
“66. What I find much more difficult is gauging the reliability of this decision. It is essentially a question of foreign law, on which I am largely but not wholly dependent on information from the two experts. I need the experts to say what the relevant foreign law provisions are, and to explain their meaning and effect, but am able to use my own critical faculties as well. However, I have not had the benefit of seeing and hearing the experts give oral evidence. At trial, they will have to deal with the cut-and-thrust of cross-examination; and they will develop their respective positions, in the way that invariably happens during the trial process. 67. I know that I have been deprived of the benefit of seeing this dynamic process unwind, but I cannot say what if any difference it would have made. I am aware of some important questions that Counsel and I would have wished them to address, if the experts had been giving evidence before me, and have in mind that I do not know what their answers might have been. I am also conscious that the trial process invariably throws up further evidence and fresh points, which cannot be predicted in advance but which may turn out to be significant. 68. I therefore feel uncomfortable saying whether this is a limb (ii) case or a limb (iii) case, because there is no metric by which to measure the reliability of my conclusion on Article 80(1). I know that it is not as reliable as the conclusion that the trial judge will in due course reach on the same point, but I cannot say by how much. I would feel less inhibited in assessing the reliability of my conclusion if I knew that it concerned a point that will not fall to be determined finally at trial, when there is bound to be more information. 69. What I can say is that, if this is a limb (iii) case, Unitel has a plausible (albeit contested) evidential basis for its case. 70. It follows that, on either approach to the meaning of “good arguable case” in this context, Unitel’s case on Article 80(1) of the ACCL is a “good arguable case”.”
“111. I noted above that I would feel less inhibited in assessing the reliability of my conclusion on Article 80(1) if I knew that it concerned a point that will not fall to be determined finally at trial, when there is bound to be more information. The fact that it concerns a merits point, which will undoubtedly need to be determined at trial, has troubled me. This prompts the following observations. 112. First, if I were to express a settled view as to the reliability of the evidence I have received, and particularly if I were to say that it is so reliable that the strength of Unitel’s case on the point is above 50%, I would be trampling over turf that should be left pristine for the trial judge. 113. Second, if applicants for freezing orders are told that they must provide evidence that reliably demonstrates that their prospects are above 50%, they will feel obliged to give the court as much evidence as they can muster. In a case like the present, which turns on a point of foreign law, they will say (with some justification) that the court should hear oral evidence from the rival experts, and decide the point – in effect, as a preliminary issue. I suspect that Mr Sinclair KC might well have asked me to allow oral evidence from the Angolan law experts, if he had known in advance what Mr Hill KC would say about the meaning of “good arguable case”
“1. In relation to interim injunctions generally, costs are reserved when an injunction is granted in favour of the applicant. That is summarising the law somewhat unfairly broadly for two reasons. One is that in that context it may be difficult to say who the winner and the loser is because the merits are not considered in any detail but on the basis of the balance of convenience. And the second is because winning is in any event provisional because what happens at the interlocutory stage may be undone at trial. 2. In the context of freezing injunctions, the position is not quite the same. The merits are looked at in a different way, not on the basis of a serious case to be tried but on the basis of good arguable case, whatever that means, and I will come back to that point. But also because the provisional nature of the relief that is granted is also different. The freezing injunction, even if the claimant wins, will often not be turned into a final injunction; conversely, if the claimant loses, the freezing injunction will be discharged, because it no longer has any purpose. By contrast, the basis on which ordinary interim injunctions are either made into permanent injunctions or not is more directly related to the merits when decided at trial. So, it is both easier to say, even at the interim stage, who the winner is and who the loser is in the context of a freezing injunction. And also not quite right to say that the success is only provisional. 3. All that having been said, it also seems to me not right for anyone to suggest that in the context of a freezing injunction there is any strict or general rule that the winner should get their costs because the circumstances in which the matter comes before the court may well vary. 4. As I briefly said in the course of submissions, it may depend on whether the application is made without notice, how much time the respondent has to consider it at the return date if that is the point at which issue is joined. Or whether as here, the application comes about on notice or indeed separately, whether as in some circumstances an injunction is made and is held at the return date and then there is a subsequent and discreet application to discharge it. 5. All of those situations might be different and the responsibility that the unsuccessful respondent has for costs being incurred will vary according to those different circumstances. In this case, because (unusually) this was an application for a freezing order on notice, this respondent has had a very long time to evaluate the case that was being made against it on the application and then to prepare its own case in response, and then a further period within which to consider its position before the hearing occurred. 6. For that reason, this respondent has a greater responsibility for costs being incurred in an application where it has lost than in many other freezing order cases. But it is also significant that, as part of the argument that I have had to deal with, the case of the respondent has been that the meaning of the good arguable case test should be approached in a way that means that the court has to conduct a relative assessment of the two parties’ positions as on the merits. For the reasons that I explained in my judgment, I have approached it on that basis as well as also considering what the outcome would be on the other basis. 7. I have therefore conducted a more searching enquiry into the merits of the case, as best I could, than would happen in an ordinary application for an interim injunction. No matter whether (1) the law is as Ms dos Santos has argued in relation to the meaning of good arguable case or (2) it is not but because that was the argument that she made, there has been both a clearer and a more demanding examination of the merits, which justifies doing something different from what would be the norm in the standard interim injunction situation.”
“So, I will make an order of costs in favour of the claimant but I emphasise that I do so because of the circumstances in which this application has come about rather than because of general views about what is appropriate in the general category of freezing orders.”
“It is, no doubt, difficult to say precisely what test must be passed for an applicant to make it sufficiently appear that the case is a proper one. I do not wholly like the expression "a prima facie case", for, where leave to serve has been given ex parte under Ord. 11 and application is then made under Ord. 12 to set the proceedings aside, a conflict may arise in which the question is not so much whether a prima facie case has been made out as whether upon all the materials then before him, the judge is of opinion that the case – I can find no better word – is a proper one to be heard in our courts. The description "a good arguable case" has been suggested and I do not quarrel with it.”
“The phrase is a composite one and it is not elucidated by taking it to pieces; but it seems to me clear that the use of the word "sufficiently" in this context shows that it is not necessary that the judge should be satisfied beyond reasonable doubt as to the existence of the qualifying conditions. Further, a case does not sufficiently appear to be a proper case for the purposes of this Order unless on consideration of all admissible material there remains a strong argument for the opinion that the qualifying conditions are indeed satisfied.”
“"Made sufficiently to appear" is an awkward expression which can, I think, be conveniently and accurately expressed as "satisfied" without it being thought that he thereby meant that it had to be "proved" as issues require to be proved at a trial. My Lords, I agree with the analysis of ord. 11 which has been made by my noble and learned friend Lord Radcliffe and his statement of the principles according to which it should be applied, but I find nothing therein inconsistent with the view I have endeavoured to express that the cogency of the evidence required to justify an order for leave to serve out of the jurisdiction may vary with regard to the different matters which fall to be considered before such an order can be made.”
“I would not myself limit the discretion of the court to cases so plain that the plaintiff can get judgment under Order 14. We have all had experience of summonses under Order 14. The defendant may put in an affidavit putting forward a specious defence sufficient to get him leave to defend, conditional or unconditional. But when the case actually comes to the court for trial, he throws his hand in. It is then seen that the affidavit was simply filed in order to gain time. So under this new procedure a defendant may put forward a specious defence, just so as to remove his assets from the jurisdiction. The weakness of the defence may not appear until later. So I would hold that an order restraining removal of assets can be made whenever the plaintiff can show that he has a "good arguable case." That is a test applied for service on a defendant out of the jurisdiction: see Vitkovice Horni a Hutni Tezirstvo v Korner[1951] AC 869 : and it is a good test in this procedure which is appropriate when defendants are out of the jurisdiction. It is also in conformity with the test as to the granting of injunctions whenever it is just and convenient as laid down by the House of Lords in American Cyanimid Co v Ethicon Ltd[1975] AC 396 .”
“I consider that the right course is to adopt the test of a good arguable case, in the sense of a case which is more than barely capable of serious argument, but not necessarily one which the judge considers would have a better than 50 per cent chance of success.”
“It is also important to remember that the phrase which reflects the concept ‘good arguable case’ and the other phrases in Korner’s case “a strong argument” and “a case for strong argument” were originally employed in relation to points which related to jurisdiction but which might also be argued about at the trial. The court in such cases must be concerned not even to appear to express some concluded view as to the merits, e.g. as to whether the contract existed or not. It is also right to remember that the ‘good arguable case” test, although obviously applicable to the ex parte stage, becomes of most significance at the inter partes stage where two arguments are being weighed in the interlocutory context which, as I have stressed, must not become a ‘trial’. ‘Good arguable case’ reflects in that context that one side has a much better argument on the material available. It is the concept which the phrase reflects on which it is important to concentrate, i.e. of the court being satisfied or as satisfied as it can be having regard to the limitations which an interlocutory process imposes that factors exist which allow the court to take jurisdiction.”
“This is not a matter of deferring to the commercial judge, but it must be remembered that applications for freezing injunctions made on the basis of a good arguable case come before the commercial judges all the time. Derived from their time in practice they have developed what is perhaps best described as an instinct as to what is well arguable and what is not. That instinct should be respected by those in this court without the everyday experience of granting and refusing freezing injunctions unless it is plain that the judge is wrong: see Stuart v Goldberg[2008] 1 WLR 823 paragraph 76 per Sedley LJ and paragraph 81, Sir Anthony Clarke, Master of the Rolls.”
“(1) The Chabra jurisdiction may be exercised where there is good reason to suppose that assets held in the name of a defendant against whom the claimant asserts no cause of action (the NCAD) would be amenable to some process, ultimately enforceable by the courts, by which the assets would be available to satisfy a judgment against a defendant whom the claimant asserts to be liable upon his substantive claim (the CAD). (2) The test of "good reason to suppose" is to be equated with a good arguable case, that is to say one which is more than barely capable of serious argument, but yet not necessarily one which the Judge believes to have a better than 50% chance of success.”
“In the case of purely factual questions, I consider that it is sufficient for the claimant to meet the traditional test laid down by Mustill J in The Niedersachsen that the claimant needs to show a good arguable case in the sense of a case which is more than barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50% chance of success. Indeed I would regard it as wholly invidious in a case of this type, which is likely to turn largely on the credibility of the principals on each side and their recollections of oral conversations, for a judge faced with nothing other than the pleaded cases and assertions that each side's pleaded case represents the truth, to have to form a view as to where the better of the argument on such issues might lie, let alone where much the better of the argument might lie. I find myself completely incapable, and indeed I would regard it as wholly inappropriate, to judge such matters on the basis of what are at this stage hotly disputed allegations on each side.”
“…it is sensible to provide a word of explanation about the key conceptual dispute between the parties. This concerned the asserted difference between an absolute test and a relative test. It is argued that an absolute test is one where the Claimant, to found jurisdiction, need only surmount a specified evidential threshold which does not involve the Court otherwise assessing the relative merits of the competing arguments. In contrast it is argued that a relative test does involve the court in looking to the merits in a relative sense to see whose arguments are stronger. In this context a test which is set by reference to a fixed standard (e.g. arguability) is an absolute test, because provided the Claimant surmounts this hurdle, it is irrelevant that the Claimant's arguments, even at the interim stage, may be (relatively) weaker than the Defendants arguments: an argument might be arguable but still wrong. It follows that an absolute test is easier to establish and therefore one which claimants will prefer; and a relative test is harder to meet, and one which defendants will prefer.”
“In my view, provided it is acknowledged that labels do not matter, and form is not allowed to prevail over substance, it is not significant whether one wraps up the three-limbed test under the heading "good arguable case".”
“I am in something of a fog as to the difference between an "explication" and a "gloss". But whatever the niceties of language involved, it is sufficiently clear that the ultimate test is one of good arguable case. For that purpose, however, a court may perfectly properly apply the yardstick of "having the better of the argument" (the additional word "much" can now safely be taken as consigned to the outer darkness). That, overall, confers, in my opinion, a desirable degree of flexibility in the evaluation of the court: desirable, just because the standard is, for the purposes of the evidential analysis in each case, between proof on the balance of probabilities (which is not the test) and the mere raising of an issue (which is not the test either).”
“The basic legal principles for the grant of a WFO are well-known and uncontroversial and hardly need re-stating. It nevertheless is useful to remind oneself of the succinct summary of the test by Peter Gibson LJ in Thane Investments Ltd v Tomlinson (No 1)[2003] EWCA Civ 1272 at [21] where he stated that, before making a WFO, the court must be satisfied that: "… the applicant for the order has a good, arguable case, that there is a real risk that judgment would go unsatisfied by reason of the disposal by the defendant of his assets, unless he is restrained by the court from disposing of them, and that it would be just and convenient in all the circumstances to grant the freezing order."” "… the applicant for the order has a good, arguable case, that there is a real risk that judgment would go unsatisfied by reason of the disposal by the defendant of his assets, unless he is restrained by the court from disposing of them, and that it would be just and convenient in all the circumstances to grant the freezing order."”
“[Green LJ] observed at [59] that a test intended to be straightforward "had become befuddled by 'glosses', glosses upon gloss, 'explications' and 'reformulations'". The central concept at the heart of the test was "a plausible evidential basis" (see paragraphs [73]-[80]).”
“Thus there may be cases where the balance of convenience is so clear, and the outcome of the hearing of the application for the interlocutory injunction should be so plain to the parties, that the court should conclude that an order should be made against the defendant for wasting time and money in fighting the issue (whether or not the defendant eventually concedes)”
“Where an interim injunction is granted the court will normally reserve the costs of the application until the determination of the substantive issue ( Desquenne …) However, the court's hands are not tied and if special factors are present an order for costs may be made and those costs summarily assessed (Picnic at Ascot)…”
“39. The quest for the successful and unsuccessful party in such cases is usually fruitless. The respondent to the application, like the appellant in the present case, denies that the claimant is entitled to any relief, because the underlying cases of the parties on disputed facts are diametrically opposed. The applicant for the grant of interim relief, even if the court holds that the claimant has a good arguable case or is more likely to succeed than not, the applicant still has to persuade the court that the balance of convenience makes the grant of an interim injunction or other related relief more appropriate than its refusal. 41. ...Whenever a claimant successfully seeks an interim injunction preventing the defendant from doing something (whether using a right of way, working for a competitor or infringing a patent) the defendant will be stopped from doing whatever it is for the time being. That was precisely the case in both Desquenne and Picnic at Ascot. However, the judge's decision that he was unable to resolve the merits of the disputes means that the basis on which those orders were obtained and continued, without objection from the appellant, may prove in the end to have been unfounded. “Success” of this type is only a provisional one. On the other hand, a “costs reserved” order does not mean that claimants generally, or these respondents in particular, will never recover the proper proportion (if not all) of their claimed costs: the matter is open and the costs have been neither won nor lost by either side at this stage.”
“(6) By analogy, where, for example, a defendant brings an application for reverse summary judgment against the claimant and fails, it is no answer to the claimant's claim for costs that the defendant may ultimately be the successful party at trial on the balance of probabilities. (7) Indeed, were it otherwise, a defendant would have a free shot at opposing a freezing order continuance on a return date on the good arguable case ground, knowing that it would not have to bear costs if it ultimately succeeded at trial, or unless and until the trial took place and had been decided.”
“223. In the case of interim or interlocutory injunctions the starting position is now well established that the costs of the application will usually be reserved, though there may be factors, or as it has been put, special factors (which I do not consider to amount to exceptional factors) justifying some other costs order (see [those three cases]).”
“252. As regards interim injunctions granted under the American Cyanamid principle, it is no answer to an application for the costs of the application to be reserved to say that the respondent failed to establish that there was not a serious issue to be tried and that whatever the position at trial the respondent has failed on the assessment of the merits test as they stand and apply at the interim stage. Indeed, that was the flawed approach adopted in cases such as Melford Capital Partners. The reason is because the claim has not then been established. In my judgment, the same is true in principle as regards a freezing injunction. The court has simply decided that there is an arguable claim, not that the claim succeeds. If the claim fails at trial, then the freezing injunction should (with the benefit of hindsight) not have been made.”
“In short, the tests under American Cyanamid and for a freezing order are different but in my view they are sufficiently analogous and are sufficiently dealing with the same position that the starting costs position should be the same notwithstanding (a) the tests are in slightly different terms and (b) the holding of the ring is in a slightly different manner. So far as it is suggested that in a freezing injunction application that succeeds the court can say who has won, the answer is that at that stage the court cannot say who has won. The decision is interim.”
“(1) The court has discretion as to— (a) whether costs are payable by one party to another; (b) the amount of those costs; and (c) when they are to be paid. (2) If the court decides to make an order about costs— (a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but (b) the court may make a different order.”
“27. …it seems to me that, while it is correct to say that a freezing order holds the ring, it also seems to me that it is correct to say – and I accept the submission of Mr McQuater in this respect – that a freezing order holds the ring in a different way. In my judgment, in a substantially different way to an interim injunction. 28. As Mr McQuater pointed out, in the case of an interim injunction what is generally happening is that a court is allowing one party to enforce or rely on a right, or an obligation the existence of which has yet to be established. So, in that sense the court is allowing one party to behave as if the right has been established, in circumstances where the right still has to be established at trial and may not be established at trial. 29. In the case of a freezing order, things are rather different. The freezing order, as Mr Grant quite correctly pointed out, is an ancillary order in aid of the relief which is sought in the relevant case. There is no such thing as a final freezing order. Once the freezing order has been granted, and subject to any subsequent application to vary or discharge, the freezing order then remains in place until trial. It may well be that the freezing order is obtained on a basis which is found not to be well founded at trial, but that, it seems to me, does not go directly to the question of whether the freezing order was correctly granted; rather it relates to the underlying relief which is sought.”
“But that seems to me to miss the essential point, which is that if the general principle is that the costs of an application for a freezing order should be reserved, then the defendant does know that it is going to be able to oppose the freezing order, and possibly cause both parties to run up very considerable costs in relation to the freezing order, without having to face the day of reckoning in relation to those costs, assuming that it is unsuccessful, until a trial, which may come along at a much later stage, or may not come along at all, which may in turn leave the parties to negotiate what is going to happen in relation to the reserved costs. In litigation there is a very substantial difference between a set of costs which must be paid there and then by a party, and a set of costs which are reserved off to an indeterminate date in the future.”
“The interest protected by a freezing injunction is the (usually prospective) right to enforce through the court’s process a judgment or order for the payment of a sum of money. A freezing injunction protects this right to the extent that it is possible to do so without giving the claimant security for its claim or interfering with the respondent’s right to use its assets for ordinary business purposes. The purpose of the injunction is to prevent the right of enforcement from being rendered ineffective by the dissipation of assets against which the judgment could otherwise be enforced.”
“It is true that in adopting the good arguable test Mustill J was following the decision of Lord Denning in [Pertamina][1978] QB 644 , and Lord Denning had in turn adopted it in the context of a freezing order because he thought that the jurisdiction test was appropriate, at least where the case involved a foreign defendant (see p.661G). But there have been developments in the law relating to jurisdiction since, and although a claimant in both jurisdiction and freezing order cases must establish a "good arguable case", the policy considerations are different in the two situations and it is far from obvious that this inherently flexible concept must have the same meaning in each context. Indeed, even in jurisdiction cases the good arguable case test only goes to the question whether the claim falls within one of the grounds set out inPD6B para.3.1. We are concerned with the merits of the case, and so far as they are concerned, a claimant in a jurisdiction case has only to show that there is a serious issue to be tried: see Seaconsar Ltd v Bank Markazi [1994] 1 A.C.438, 457 per Lord Goff of Chieveley.”
“Moreover, even if the analogy with ordinary interlocutory injunctions were accepted, it would not lead to ‘a good arguable case’ as the test. The Cyanamid case teaches that the court should not attempt to weigh the merits except to ascertain at the outset that the plaintiff’s case is not derisory, and then to employ it as a factor of last resort if all other considerations are equal. The standard of ‘a good arguable case’ seems to have no place here. The analogy with proceedings under RSC Ord 11 also seems rather distant. It is true that the service of a writ out of the jurisdiction commands a foreigner to appear, against his will. But he need not comply, if he does not choose. The Mareva injunction, by contrast, bites directly on the defendant’s assets; he must come in and defend, or lose them. Moreover, it is now the law, which was not so when the Pertamina case was decided, that the Mareva injunction applies to persons resident within the United Kingdom, so the relationship with Ord 11 seems even more remote.”
“Although other, and perhaps slightly stronger. words have been used in other cases, the defendants did not challenge this formulation [“good arguable case”] of the present appeal. We respectfully agree with it, but would add that this aspect of the evidence before the court should not be looked at in isolation when deciding whether or not to exercise the discretion to grant a Mareva injunction. The ultimate basis for this jurisdiction is now to be found insection 37 of the Supreme Court Act 1981 . Subsection (1) provides: “The High Court may by order (whether interlocutory or final) grant an injunction … in all cases in which it appears to the court to be just and convenient to do so.”
“The power of High Court under subsection (1) to grant an interlocutory injunction restraining a party to any proceedings from removing from the jurisdiction of the High Court, or otherwise dealing with, assets located within that jurisdiction shall be exercisable in cases where that party is, as well as in cases where he is not, domiciled, resident or present within that jurisdiction.”
“In the present case the judge correctly applied the two tests which fell to be considered on the facts, and there is no basis for criticising the conclusion which he reached in exercising his discretion.”
“It is only by a narrow margin that KK's case is strong enough to support their entitlement to a freezing injunction.”
“This "good arguable case" test was accepted by Kerr LJ in the Court of Appeal in that case as the minimum which a claimant must show (see[1983] 1 WLR 1412 , 1417) and whilst there was no express approval of Mustill J's explanation of what that test involved, the court expressed no disagreement with it. Moreover, that particular formulation was recently cited with approval by Longmore LJ in the Lakatamia Shipping case (para. 25). I am far from satisfied that it is the same as the "much the better of the argument" test adopted by the judge.”
“The next question that was argued was what the Claimants need to show so far as the merits of their substantive claims are concerned. There are actually two parts to this question: (1) Is it enough, as Mr Trace submits, for the Claimants to demonstrate that there is a serious issue to be tried (as is the usual threshold test for the grant of any interlocutory injunction: see American Cyanamid Co v Ethicon Ltd[1975] AC 396 at 407G per Lord Diplock); or do the Claimants have to show a good arguable case (as is the case for a freezing injunction: see The Niedersachsen[1983] 1 WLR 1412 at 1417E per Kerr LJ)? (2) If the test is a good arguable case, what does this mean?”
“Although a notification injunction is in principle less invasive than a freezing injunction, it is still an invasive order and I think justifies more than a serious issue to be tried which, as appears from Lord Diplock's judgment in American Cyanamid, only really serves to cut out the frivolous or vexatious case. For the reasons I have already given the principles underlying the grant of a notification injunction are closely tied to the principles underlying the grant of a freezing injunction, and in my judgment what is needed to justify a freezing injunction in terms of the merits of the substantive claim is also needed to justify a notification injunction. I therefore hold that the Claimants need to demonstrate a good arguable case.”
“The test of whether a claimant has shown a "good arguable case" for the purposes of obtaining a freezing injunction was recently confirmed by the Court of Appeal in [Morimoto]” and then cited [37] and [38] of the judgment of Haddon-Cave LJ. I went on to say at [171]: “During the course of argument, I indicated that I was satisfied that, despite the arguments raised by the first to fourth defendants as to the arguability of the claimants' case, the claimants could show a "good arguable case" applying that test. Taking a realistic approach, Mr McGrath QC did not seek to persuade me to the contrary.”
“To justify obtaining a freezing injunction, a claimant has to show a good arguable case on the merits. In Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft GmbH ("The Niedersachsen") [1983] 2 Lloyd's 600 at 605, Mustill J (as he then was) described a good arguable case for these purposes as "one which is more than barely capable of serious argument, but not necessarily one which the judge considers would have a better than 50 per cent chance of success". It can immediately be seen that this either is the same test as "serious issue to be tried" for the purpose of resisting a strike out application or, if there is any difference between the two tests, it is an imperceptible one.”
“I accept the submission of Mr Higgo that the law has moved on from a simple 50% test of good arguable case. It seems to me that, in applying the test of good arguable case, I should take account of the analysis of Green LJ in Kaefer, and the three limbed test as reformulated by Lord Sumption in Goldman Sachs.”
“I accept that there is a distinction between jurisdictional challenges, where the question of jurisdiction falls to be decided once and for all, and freezing orders where there is no final determination of the merits and it is always possible to have the order set aside. That said, given the serious consequences of a freezing order – which is after all one of the law's "nuclear weapons" and carries penal sanctions – I have some doubts as to whether it would ever be appropriate to grant a freezing order, particularly in a claim asserting fraud, unless the court was satisfied that the claimant had the better of the argument as compared with the defendant. As it is, I have found myself able to reach a conclusion on the relative merits of the respective cases such that limb (iii) becomes moot.”
“A requirement that the court must form the provisional view that the claimant will probably succeed at trial would be inconsistent with an approach which enables the court to achieve “its great object viz. abstaining from expressing any opinion upon the merits of the case until the hearing”…”
“Normally if a judge of the Commercial Court decides that a claimant has a good arguable case, this court would not interfere with that conclusion unless (which is unlikely) he makes an error of law in coming to that conclusion.”
“The judge has here made an evaluation of a mass of material and this court should not interfere with that evaluation unless it is obviously wrong or the judge has misdirected himself in some way. Commercial judges have great experience in assessing what is and is not a good arguable case; indeed this judge has expressly (and justifiably) relied on his own long experience as a solicitor in one of the leading City firms in coming to his conclusions.”
“…But at this stage of the law’s development it is possible to go further and to recognise that a freezing injunction is not, on a true analysis, ancillary to a cause of action, in the sense of a claim for substantive relief, at all. 84. It is understandable that the House of Lords should have made that assumption in The Siskina at a time when the Mareva injunction was a novelty and no proper rationale for it had yet been worked out. The assumption was compatible with the rationalisations then advanced which sought to justify the grant of Mareva injunctions on the basis either of an interest in the assets frozen or a right to the sum claimed in the action: see Mercedes Benz[1996] AC 284 , 300. In Channel Tunnel the question did not arise, as the interlocutory injunction sought in that case was what might be termed an orthodox interlocutory injunction granting – on a temporary and provisional basis – the substantive relief claimed by the applicant, albeit that the claim for final relief was being pursued before another tribunal. It has been clear, at least since Mercedes Benz, that a freezing injunction is different in character. As Lord Mustill observed in the judgment of the Board in Mercedes Benz, at p 299B, “the Mareva injunction does not enforce anything, but merely prepares the ground for a possible execution by different means in the future”
“… the relief granted bears no resemblance to an orthodox interlocutory injunction, which in a provisional and temporary way does seek to enforce rights, or to the kind of interim procedural measure which aims to make more effective the conduct of the action or matter in which the substantive rights of the plaintiff are ascertained. Nor does the Mareva injunction enforce the plaintiff’s rights even when a judgment has ascertained that they exist, for it merely ensures that once the mechanisms of enforcement are set in motion, there is something physically available upon which they can work.” (Emphasis added)
“That there have been developments in the law on the test to be applied in relation to jurisdiction gateways does not mean that there has or should have been a change in the law in relation to the test to be applied in relation to freezing injunctions. As Longmore LJ said in Kazakhstan Kagazy v Zhunus at [25]: 'But I see no reason why that test [viz that which was applicable in the jurisdictional gateway context] should apply to freezing injunctions where ex hypothesi (or subject to any jurisdictional challenge) the defendant is properly before the court.' While it is correct that Longmore LJ was there considering a test in the context of jurisdictional gateways of 'much the better of the argument', which was subsequently refined to 'the better of the argument', that refinement is immaterial to the question here. What is significant is that in Kazakhstan Kagazy v Zhunus Longmore LJ identified that there was no reason why the test for those purposes should be that for freezing orders.”
“27. There appear to me to be good reasons why the three-fold test applied in those cases should not be applied in the context of freezing orders. That test, at least as to the first two limbs, involves a relative assessment of the parties' positions. The making of such a relative assessment is liable to draw the parties and the court into the conduct of 'mini-trials'. A relative assessment encourages the parties to bring forward at this early stage, every piece of evidence which might suggest that they have the better of the argument. This is likely to lead to more of the court's resources being absorbed in interlocutory hearings brought on, very often, on an urgent basis. This is deprecated in the authorities, and would place an even greater burden on the court, where the number and scale of urgent applications is already causing strains. Moreover, to apply such a test in the context of freezing orders would widen, without apparent reason, the gap between the merits test to be applied in relation to interlocutory applications for proprietary injunctions, which is the American Cyanamid test of a serious issue to be tried (see, for example Haque v Hussain[2020] EWHC 2739 (Ch) , and Gee on Commercial Injunctions (7th ed), 2-022, 12-027), and that applicable to applications for freezing orders. 28. Further, I apprehend that to adopt a test which involves a relative assessment of the parties' positions, at least at the first two stages is to put the merits bar too high to serve the interests of justice. In the type of cases in which freezing orders are very often sought, including cases of alleged fraud, dishonesty, bad faith and the like, it may be difficult for an applicant to demonstrate, at an early stage and prior to disclosure, that it has the better of the argument on the merits. While I fully recognise that the gravity of a freezing order requires a merits test markedly higher than simple arguability, I consider that there is a danger that the adoption of the Brownlie test in relation of freezing orders may deny to victims of wrongdoing the interim protection which the freezing jurisdiction is designed to provide.”
“the test on the strength of the merits needed for Mareva relief is not the test used to ascertain whether the claimant has brought itself within a jurisdictional gateway.”
“a reasonably arguable case on legal as well as factual matters.”
“The phrase ‘a good arguable case’ has a long history. Its provenance may have been in the judgment of Mustill J, as his Lordship was then, in Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft mbH & Co KG[1984] 1 All ER 398 , 404. The phrase has been treated as the equivalent of the general law requirement explained by Gaudron, McHugh, Gummow and Callinan JJ in Cardile v LED Builders Pty Ltd [1999] HCA 18;(1999) 198 CLR 380 at [68] that the applicant must establish that it has a reasonably arguable case on legal and factual matters…”
“to facilitate the enforcement of a judgment or order for the payment of a sum of money by preventing assets against which such a judgment could potentially be enforced from being dealt with in such a way that insufficient assets are available to meet the judgment.”
“So unless the material available to the court at the hearing of the application for an interlocutory injunction fails to disclose that the plaintiff has any real prospect of succeeding in his claim for a permanent injunction at the trial, the court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that is sought.”
“This is not a demanding test, and it really only serves to exclude the case where the claim is frivolous or vexatious, or otherwise demonstrably bad.”
“The question is whether the material available to the court shows that the claimant has a real prospect of succeeding in its claim for a permanent injunction. If so, the court proceeds to consider the balance of convenience.”