In this article, 4 New Square Chambers’ Seohyung Kim analyses a recent Court of Appeal judgment that restates and clarifies the law regarding freezing injunctions.
In a judgment published this Monday, the Court of Appeal has restated and clarified the law on freezing injunctions: Isabel dos Santos v Unitel [2024] EWCA Civ 1109. The relevant test for obtaining a freezing injunction is now the same as the test for interim injunctions generally: the question is whether there is a serious issue to be tried.
This is a surprising result not least because the focus of the appeal was on whether the merits test for a freezing injunction was (or was not) the same as the test of a good arguable case in relation to jurisdictional gateways. That is to say, the submissions (and the bulk of Flaux LJ’s judgment) concerned whether the test for obtaining a freezing order is for the applicant to show ‘there is a good arguable case’ or that the applicant has ‘the better of the argument’, as had been held in two recent commercial court judgments (Harrington[1] and Chowgule[2]). It is apparent that there was no real focus on whether the test of ‘good arguable case’ should be treated the same as ‘serious issue to be tried’ before the (first) hearing, and that following the first hearing the Court invited submissions on the distinction between ‘good arguable case’ vs. ‘serious issue to be tried’ to be heard at a second hearing: see [106]-[107] of the Judgment. Furthermore, it had been considered that ‘a good arguable case’ required something more than ‘serious issue to be tried’, in that the latter test was thought to filter out only the frivolous or vexatious case and was too lenient for freezing orders.[3]
Nevertheless, it is unlikely that using the ‘serious issue to be tried’ test is likely to have any real effect on the practice of obtaining freezing injunctions. This is not least because, in the context of the American Cyanamid test, whether an applicant has a good arguable case has become increasingly synonymous with whether the claim has a real prospect of success, and it cannot be realistically suggested that the test for summary judgment is somehow less stringent than what has been understood by ‘a good arguable case’ (if different at all).
More importantly, what the Court of Appeal judgment achieves is an extension of the restatement of the jurisdictional footing for freezing orders set out in Broad Idea.[4] Historically, freezing injunctions against a prospective defendant (i.e. Mareva injunctions) or a non-party (Chabra orders) as well as interim injunctions (from the American Cyanamid case) have been developed incrementally by English courts faced, at each juncture, with a specific set of facts and submissions. While freezing orders have been described as one of the law’s ‘nuclear weapons’, it is not inherently more invasive and in fact is just as necessary a tool as interim injunctions are to protecting a substantive right or interest before a trial can be mounted. That these historically disparate but substantively similar forms of interim relief are brought under the same umbrella of ‘a serious issue to be tried’ is a helpful clarification indeed.
There remain other areas of interim remedies in a fraud practitioner’s toolkit that require such reassessment. For example, there is currently a jurisdictional restriction on Norwich Pharmacal orders such that a party wishing to obtain information in England for use in foreign proceedings is forced to resort to the ancient letters of request regime under the Evidence (Proceedings in Other Jurisdictions) Act 1975. It remains to be seen whether the courts will grasp the nettle and restate the juridical basis and powers for interim orders more broadly.
The judgment can be found here.
[1] Harrington & Charles Trading Co. Ltd. v Mehta [2022] EWHC 2960 (Ch)
[2] Chowgule & Co Pte. Ltd. v Shire [2023] EWHC 2815 (Comm)
[3] Holyoake v Candy [2016] EWHC 970 (Ch); [2018] Ch 297, per Nugee J, as he then was
[4] Broad Idea v Convoy Collateral [2021] UKPC 24
