England and Wales High Court (Commercial Court) Decisions

"a hearing, or any part of it, must be held in private if ...

(a) publicity would defeat the object of the hearing; ...

(e) it is a hearing of an application made without notice and it would be unjust to any respondent for there to be a public hearing; ...

(g) the court ... considers this to be necessary ..." in the interests of justice.

and Head of Treasury of NMC plc. He joined the NMC Group in 2000. In his role as deputy CFO he was regularly in contact with the Bank in relation to lending arrangements. He left the UAE around 26th February 2020 per the evidence of one of the Administrators, Mr Davis, who I shall come on to. The sixth defendant, Mr. Shenoy, also a Chartered Accountant, was appointed CFO of NMC plc in August 2017 having been appointed deputy CFO in 2016. He was a director of NMC Healthcare from 2018. His role, as described in the NMC plc 2017 annual report described him as having "rounded experience in corporate finance, managing business collaborations/overseas subsidiaries, Treasury, foreign exchange, risk management, business strategy, preparing business plans and evaluation of investments opportunities". Again, Mr. Davis's evidence is that Mr. Shenoy left the UAE in January 2020.

Board" is not "not truly independent" and "the relationship with its auditor, Ernst & Young, raises flags" and "insiders have cashed out approximately 300 million of stock net".

Waters had been emailing enquiries to an employee in NMC Group's Public Relations Department who had taken instructions on the responses to those enquiries from employees who have since left UAE, whether or not they have fled the UAE or whether they have other reasons for leaving the UAE.

bank accounts as if they were a single group of companies under common ownership, which they were not.

NMC that I have already foreshadowed which is Mr. Zo'mot's affidavit at Schedule 5, which I have also had regard to.

"... that the applicant for the order has a good, arguable case, that there is 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."

That quote of the test comes from Lakatannia Shipping v Morimoto [2020] 2 All ER (Comm) 359 at [33].

senior management as part of a conspiracy involving directors and principal shareholders of the plc to falsify its accounts in breach of their fiduciary duties. The Bank ultimately acted upon the representations in Abu Dhabi, from where the relevant loan funds were drawn down by NMC Healthcare.

"... the law applicable to a non-contractual obligation arising out of dealings prior to the conclusion of a contract, regardless of whether the contract was actually concluded or not, shall be the law that applies to the contract or that would have been applicable to it had it been entered into."

they give their evidence, that evidence is, at first blush, credible and supports a good arguable case of fraud in relation to the deceit claims.

Accordingly, and set against the backdrop of the material that I have identified, the evidence of Mr. Davis, the evidence of Mr. Frangulov as recounted by Mr. Zo'mot, for the reasons that I have given, I am satisfied that there is a good arguable case whether under English law or under the relevant provisions of UAE law in the Civil Code, including under Article 282 generally in relation to acts of harm and for deceit under Article 285.

"(i) The claimant must supply a plausible evidential basis for the application of a relevant jurisdictional gateway;

(See the breakdown and application of the test in the Court of Appeal decision of Kaefer Aislamientos SA de CV v AMS Drilling Mexico SA de CV [2019] 1 WLR 3514 at [70] to [80].

"It is fair to say that the statutory effect which section 1140 has been held to have or assumed to have is surprising, albeit when the wording of the section is read, it is easy to see why such findings or assumptions have been made, I have decided to follow those judgments at first instance."

The most recent case that is relied upon is a decision of Waksman J in Republic of Mozambique v Safa, unreported, 30th July 2020 at [5] to [13] where, in robust terms, he also concluded that there was jurisdiction under section 1140 of the Companies Act even in circumstances such as those identified in the prior authorities.

Zo'mot by way of full and frank disclosure, i.e. that Mr Shetty denies that he is party to the fraud. But, I am satisfied there are real issues to be tried in respect of deceit and conspiracy under either applicable law. This is not one of those cases where a party is sued only for the purpose of bringing in others. So I am satisfied that there is a real issue to be tried.

Shetty himself who brought NMC's business to London to take advantage of the opportunities that such a profile allows. Indeed, at the time of the listing itself in 2012 he was explaining that the listing in London was to "allow the company to develop existing and new facilities as well as expanding to new high growth markets ... We have specifically chosen London for the IPO given its deep pool of capital and global profile". I have already noted that Mr. Shetty held senior roles within NMC plc including as CEO, Managing Director and Chairman and was one of its principal shareholders over the period in which the alleged fraud took place through, amongst other things, the creation and dissemination of false accounts.

to determine all the issues, and all matters need to be tried together. Of course, the loss claimed is the same and it is claimed on a joint and several liability.

Syndicated and Club Facilities are "in respect of a contract governed by English law".

It is said that that reflects the appropriately broad construction that should be applied to the phrase "in respect of" in the preamble to this gateway. It is said that English law governed the syndicated facility agreements which were the main means by which the victim was separated from its money.

"... unless the claimant is suing in order to assert a contractual right or a right which has arisen as a result of the nonperformance of a contract, his claim is not in this context properly to be regarded as one made in respect of a contract. I think it likely that ordinarily such claims can only be made in respect of contracts to which the intended defendant is party" which, of course, is not this case."

"... it must be a rare case in which this head of jurisdiction can avail against a defendant who is not party to the relevant contract and who has not thereby participated voluntarily in creating the nexus to this jurisdiction which the gateway assumes nor, at least on the current pleaded case, can it be said that this is a claim in which the claimants seek to enforce their performance interest under a contract against a non-party."

often use offshore structures as part of the normal and legitimate way in which they deal with their assets. Such legitimate reasons may properly include tax planning, privacy and the use of limited liability structures. It is said here, though, in the context in particular of the Treasury Department within NMC plc and the associated entities and movement of money that that is not such a case.

"... it would have been right for the judge to take into account a finding of a good arguable case that Mr. Malofeev had been engaged in a major fraud, and that he operated a complex web of companies in a number of jurisdictions, which enabled him to commit the fraud and would make it difficult for any judgment to be enforced. We would regard such factors as capable of providing powerful support for the case of a risk of dissipation."

"If there is a good arguable case in support of an allegation the defendants acted fraudulently or dishonestly or with unacceptably low standards of morality giving rise to a feeling of uneasiness about the defendant (Thane Investments Ltd v Tomlinson [2003] EWCA (Civ) 1277 at 28) then it is often unnecessary for there to be any further specific evidence of dissipation for the court to be entitled to take the view that there is a sufficient risk to justify granting Mareva relief."

NMC Group's appearance of prosperity. I take into account that the complex and opaque nature of his corporate holdings was such that as at 24th February 2020, and based on the evidence of Mr. Zo'mot at paragraph 63.4, Mr. Shetty himself could not readily explain his own (and associated) total interests in NMC plc and the exercise was said to require "a legal review". It is said that that has all the hallmarks of a structure being deliberately difficult to understand, rather than efficiently structured for any legitimate reason. It is also pointed out that despite that apparent complexity over 2018 and 2019 Mr. Shetty had felt able to pledge large numbers of shares in transactions with lenders, including a Goldman Sachs collar transaction. And it is submitted that Mr. Shetty is likely to adopt methods to place assets out of the reach of enforcement action.

might be thought, at least at first blush, that the evidence was less detailed than in relation to the other defendants, that he was involved in the aftermath of the Muddy Waters report by telling the Bank that the contents of the report were (and this is based on Zo'mot 1, paragraph 91): "all short seller noise and that the NMC Group was in good financial health".

already granted, but it appears only in a specific jurisdiction and not for anywhere near the amount of money as is sought in relation to this worldwide freezing order. I do not consider that such other freezing relief means that there is no requisite risk of dissipation. I should add that I do not in any event have sufficient information about those other injunctions to know what has happened to them and whether or not they are still in place. I do not consider that any of that detracts from the risk of dissipation.

"I am satisfied that there is a special need for urgency when a without notice freezing order has been made which meets the test of special circumstances where service under an applicable convention might delay the point at which the order is formally served on the respondent" (paragraph 51).

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