Freezing orders - risk of dissipation
Before : |
Sir Timothy Le Cocq, Bailiff, sitting alone |
Between |
OWH SE i.L |
Plaintiff |
And |
RTI Ltd
|
Defendant |
Advocate R. S. Christie for the Plaintiff.
Advocate W. A. F. Redgrave for the Defendant.
judgment
the bailiff:
1. On 18 November 2024, I granted a worldwide freezing and disclosure order (-WWFDO-) on an ex parte basis in favour of OWH SE i.L. ("the Plaintiff") against RTI Ltd ("the Defendant").
2. The Defendant applies to set aside this order on a number of bases which I will refer to below. Pending the determination of this application, the disclosure requirements set out in the WWFDO were suspended, although the freezing order remains.
3. It is not necessary to go into the full background of this matter. Suffice it to say, the Plaintiff, which is a substantial financial institution incorporated under the laws of the Federal Republic of Germany, is in solvent liquidation. The Defendant is a company incorporated under the laws of Jersey.
4. In 2019, the Plaintiff and the Defendant entered into a number of agreements which were guaranteed by United Company Rusal ("Rusal").
5. Following the Russian Federation's invasion of Ukraine on 24 February 2022, the international community imposed economic sanctions on the Russian Federation and on Russian banks. This led to the Plaintiff issuing a number of margin calls to the Defendant which led to the Plaintiff claiming that a failure to pay a margin call on 25 February 2022 was an Event of Default under a relevant agreement.
6. Matters then led to an arbitration in London. I do not herein set out the details of the arbitration, but on 25 September 2024, the Tribunal found in the Plaintiff's favour holding, amongst other things, that:
(i) The Defendant was estopped by convention from contending that service of the default notices was contractually invalid;
(ii) The Defendant was not entitled to rely on a "relevant sanctions event" as having the consequence that no Event of Default arose;
(iii) The Defendant did not give prompt notice of Illegality in order to preclude termination of all transactions under "the relevant agreement" on the basis of non-payment Event of Default.
7. As a consequence, the Plaintiff was awarded €213,770,661.77 against the Defendant as principal debtor and Rusal as guarantor, to be paid "forthwith".
8. Neither the Defendant nor Rusal have made any payment towards the settlement of the arbitration award, and it is the enforcement of that award that is the subject matter of the Order of Justice which I signed on 18 November 2024.
9. There were disclosure obligations contained in the WWFDO placed on the Defendant and any bank that was holding assets for the benefit of the Defendant. It is those requirements that were suspended pending the outcome of this hearing.
10. The essence of the Defendant's argument before me is that the Plaintiff did not satisfy the appropriate tests in seeking a freezing order and, in particular, did not make full and frank disclosure and did not provide sufficient or any evidence of any risk of dissipation. The Defendant also resists the disclosure requirements.
11. The Defendant informs the Court that it is in the process of challenging the enforceability of the arbitral award on public policy grounds and explained to the Court the basis on which it is doing so.
12. A number of authorities have been put before me as relevant to the legal tests and principles that I should apply in considering whether or not to grant or maintain a freezing injunction. I do not refer to all of them.
13. The Defendant concedes, as I think it must, that the existence of the arbitral award in favour of the Plaintiff is itself sufficient to justify the prima facie case part of the test for interim relief and the Defendant does not seek to undermine the grant of the Court order on the basis that such an award is insufficient to meet that requirement. The Defendant's main argument is directed towards the evidence of the risk of dissipation.
14. In Goldtron Limited v Most Investment Limited [2002] JLR 424 paragraph 26, Deputy Bailiff Birt, as he was, said:
-However, the fact that a particular Mareva injunction is made post- judgment in order to aid enforcement is clearly a material factor for the court when considering the exercise of its discretion. In such cases, the plaintiff has established judicially that he is owed money by the defendant. It is therefore comparatively straightforward for the court to make an order freezing assets and requiring accompanying disclosure so as to ensure that the court's order is given effect and the judgment is not rendered nugatory. Conversely, in a pre-trial case, a plaintiff merely asserts a claim. The court does not know whether the claim is well founded. It may be that the defendant will show in due course that he does not owe the money claimed. The threshold for obtaining a Mareva injunction in the latter case will clearly be much higher than in the case where the court has already held that the amount is due, and it is simply a question of enforcement.-
15. And, at paragraph 30:
"We consider that Mr. Thompson was correct in submitting that injunctions in this case are in aid of the enforcement of an arbitration award and that the applicable principles are those for post-judgment injunctions rather than pre-trial relief. The threshold is therefore considerably lower, as was made clear by Donaldson, M.R. in Deutsche Schachtbau."
16. As to risk of dissipation the learned judge went on to say at paragraph 32 of the judgment:
"(e) As to the question of dissipation of assets, it is often the case that there is no concrete evidence of an intention on the part of a defendant to remove assets from the jurisdiction. The case of Third Chandris Shipping Corp. v. Unimarine S.A. (5) and the comments of Bingham, J. in Siporex ([1986] 2 Lloyd's Rep. at 439) make it clear that the facts that the party against whom a Mareva injunction is sought is a company which has no published accounts and about which nothing is known in relation to its business or financial position may be sufficient grounds for granting such an injunction. That is the position here. This is an application to set aside a Mareva injunction. One might have expected the defendant to produce evidence to the court that it was quite wrong for an injunction to be granted because the company was clearly willing and able to meet the award if upheld on appeal. Yet nothing of this nature was produced. The affidavit is not even sworn by an officer of the company, merely by the Russian lawyer who represents the interests of the defendant. We are told nothing of the nature of the defendant's business. Was this the only transaction into which it entered or is it a substantial holding or trading company? What is the nature of its financial position? We have not been shown any balance sheet or other accounts and have been told nothing about the nature, location or substance of its assets. Nor has the defendant put forward any particular grounds of hardship. Mr. O'Connell made the point that any freezing of a company's account is, by definition, an interference with its right to deal with its assets as it thinks fit and gives rise to hardship. Nevertheless, in a case such as the present where, on the face of it, in the light of the arbitration award, the defendant owes a substantial amount of money to the plaintiff, the defendant has only itself to blame if it says nothing about any particular hardship it will suffer, e.g. the funds are committed to bona fide trading activities.
(f) In our judgment, given that this is a case of post-award relief, the complete absence of any evidence about the financial position of the defendant or the nature of its business or the offer of any security (whether in whole or in part) for the award is sufficient for us to conclude that there is a risk of dissipation of assets in the event of the injunction being lifted."
17. In Crociani v Crociani and Ors [2019] JRC 028B at paragraph 30 the Royal Court said:
"It is a requirement for the grant ex parte of a freezing order that the applicant show evidence of a real risk that assets will be dissipated so as to frustrate any judgment in favour of the applicant - see, for example, Numbers 12 and 13 Britannia Place Limited v J and G (Property) Limited & Ors [1989] JLR 34 and Crociani v BNP Paribas Jersey Trust Corporation Limited [2016] (2) JLR 543. The applicant must adduce -solid evidence- to support the assertion that there is a real risk that the judgment will go unsatisfied, which risk is judged objectively - Holyoake v Candy [2018] Ch 297 per Gloster LJ at paragraph 34."
18. The English Court of Appeal judgment in Les Ambassadeurs Club Ltd v Yu [2021] EWCA Civ 1310 was put before me in support of an argument that the law in England and Wales had developed since Goldtron. The English Court of Appeal stated as follows:
-14. The purpose of a freezing injunction is to ensure that a judgment in the applicant's favour will not go unsatisfied by reason of assets that would otherwise be available to satisfy it being dealt with in a manner that will make them unavailable by the time the judgment comes to be enforced. It is designed to protect against the frustration of the process of the court by depriving the claimant of the fruits of any judgment obtained in his favour. It is not intended as a safeguard against insolvency, nor as a means of providing security for a claim, however strong that claim may be and however large a sum of money may be involved. Nor is it just another standard means of securing enforcement of a judgment in favour of the applicant, like a charging order or third party debt order. It is a potent weapon in the armoury available for dealing with those individuals and companies who may seek to make themselves judgment-proof.-
-16. In view of the drastic interference with a person's right to do as they please with their own property that a freezing injunction entails, (quite apart from the reputational damage that it may cause), the courts must remain vigilant to ensure that such orders will only be granted in cases in which the evidence suffices to establish that there is a real risk of the judgment going unsatisfied by reason of what Gloster LJ in Holyoake v Candy [2017] EWCA Civ 92, [2018] Ch. 331 ("Holyoake") elegantly termed -unjustified dissipation,- and where it is just and convenient to make the order.
17. It makes no difference in terms of the risk that must be established whether the freezing injunction is sought before or after judgment, though post-judgment injunctions may be easier in practice to obtain. The policy of the law is to enforce judgments, and for that reason it may be right that when a judgment creditor has satisfied the court there is a real risk of dissipation, it would require particularly strong grounds for refusing to grant him a freezing order on the basis of justice and convenience, as Teare J suggested in Great Station Properties SA and another v UMS Holding Ltd and others [2017] EWHC 3330 (Comm) at [63].
18. However, I respectfully disagree with the suggestion made by Leggatt J in Distributori Automatici Italia v Holford General Trading [1985] 1 WLR 1066 at 1073, and cited with apparent approval by Teare J in that same paragraph, that it may be easier to infer a risk of dissipation in a post-judgment case. An adverse judgment may provide more of an incentive to the defendant to put his assets beyond the reach of the claimant than a mere claim, but that tells one nothing about whether the evidence establishes a real risk that he may do it.
19. In this context, there is an important distinction to be drawn between a defendant who can pay but refuses to pay his debts until he is forced to do so, and a defendant who is so determined not to pay that he would take active steps to frustrate the recovery of sums due to his creditors by transferring or concealing assets or by some other form of unjustified dissipation. In order to avoid the undesirable situation in which, as Gloster LJ put it in Holyoake at [58] -the nuclear remedy of a freezing order .. would become a commonplace threat-, there must be cogent evidence from which it can at least be inferred that the defendant falls into the latter category. The distinction is one which the Judge had at the forefront of his mind when he refused to make the freezing order in the present case.-
19. And subsequently, at paragraph 44:
-...it does not necessarily follow from the fact that someone is able but unwilling to pay voluntarily that they will take steps to frustrate the enforcement of a judgment in favour of the creditor. Nevertheless, an unwillingness to pay an undisputed debt when you have the means to pay is a relevant factor, and the Judge treated it as such.-
20. As to the burden of proof for such an application the English Court of Appeal held in Candy & Ors v Holyoake & Anor [2017] EWCA Civ 92:
-50. ...it is critical to remember that the burden is on the applicant to satisfy the threshold. The court will of course decide on the basis of all the evidence before it. However, in practice, if an applicant has not adduced sufficient evidence, the application will fail. The respondent's evidence will be immaterial - unless, unusually, it lent support to the application.-
[...]
-59(b). Several cases have emphasised that there is nothing implicit in complex, offshore corporate structures which evidences an unjustifiable risk of dissipation. As Arnold J put it in VTB Capital plc v Nutritek International Corpn [2012] 2 BCLC 517, para 233 (approved by the Court of Appeal [2012] 2 BCLC 437, 574-575, para 174) - -It is not uncommon for international businessmen, and indeed quoted UK companies, to use offshore vehicles for their operations, particularly for tax reasons. This may make it difficult to enforce a judgment. But in that respect claimants such as VTB have to take defendants such as Mr Malofeev as they find them. More is required before the court will conclude that there is a risk of dissipation-. Similarly, in Mobil Cerro Negro Ltd v Petroleos de Venezuela [2008] 2 All ER (Comm) 1034 at [62], Walker J rejected that there was anything unusual about the ready transferability of assets within a corporate structure...-
21. In Nomihold Securities Inc v Mobile Telesystems Finance SA [2011] EWHC 337 (Comm) the Court held:
-39. It seems to me that the provision of security is irrelevant in most cases because, of course, there being a judgment debt that would amount, in fact, to the paying of that judgment debt. In this case Mr Salzedo said he is not expecting the Defendant to pay up, because he knows that the Defendant does not have any money. So it would inevitably be the provision of the security by the parent company. And that could be held until after the resolution of the section 66 application, which is to be adjourned, pursuant to which he is confident that registration of the judgment in this country by way of enforcement will survive and he can then enforce against that guarantee.-
-40. I conclude that that is not where post-judgment freezing orders have got to. They do not legitimise interference in ordinary commercial transactions simply because a judgment debtor is not paying up quickly enough. There has, in my judgment, to be some element of impropriety. In this case, I do not see any impropriety. It was a public declaration that there would be a default and that steps had to be taken, not least in the interest of a number of third parties, if that was not going to have catastrophic consequence. I do not conclude, even if one were to extend the ambit of Stuart-Smith LJ's enunciation of the jurisdiction, that it would go so far as to say that a judgment creditor can interfere in any transaction which would render it more likely that he would be paid a judgment which otherwise the judgment debtor is determined not to pay, particularly where the pressure is thus put on a third party, in this case the parent.-
22. In Canada Inc v Sovereign Finance Holdings Ltd & Ors [2024] EWHC 2170, citing paragraph (9) of Gee on Commercial Injunctions in relation to factors that may support risk of dissipation and absence or evasiveness of answers, at paragraph 29 the Court said:
-The defendant's behaviour in respect of the claimants, including that in response to the claimant's claims; a pattern of evasiveness or unwillingness to participate in litigation or arbitration; or raising thin defences after admitting liability; or total silence; or promises to pay and persistent default with implausible excuses; or running up liabilities and not paying them; or incurring liabilities beyond his means; or transferring assets; or engaging in other conduct which may prevent enforcement. An offer of an undertaking may indicate an absence of risk. Failure to give proper disclosure of assets under a court order is indicative of risk.
23. It is perhaps at this point useful to observe that disclosure falls to be considered separately from a freezing order. In Africa Edge Sarl v Incat and Others [2008] JRC175 at [8] the Court said:
-The remaining part of the application refers to an application for worldwide disclosure. On this aspect I have been referred to a number of cases. The first one is Apricus Investments and others v CIS Emerging Growth Limited [2003] JRC 151. The significance of that case is that it made clear that this Court adopts the principles set out in the judgment of Coleman J in Gidrxsime Shipping Co Ltd v Tantomar-Transportes Maritimos Lda (1994) 4 All ER 507. That judgment was also approved and applied by this Court in the case of Goldtron Limited v Most Investment Limited 2002/148. It is clear that the approach of the Court is rather different post-judgment to pre-judgment. Furthermore, Coleman J made it clear that, even in cases where a court was not minded to grant a worldwide Mareva injunction, it nevertheless had jurisdiction to order worldwide disclosure in aid of execution. Two of the relevant passages quoted were as follows, first of all at page 519:-
-Where, by contrast, one has the position that a judgment has already been obtained or an award made and where a Mareva injunction in aid of execution is justified, the jurisdiction to make a disclosure order arises both as a power ancillary to and in support of the injunction and, independently of the injunction, as a power in support of the execution of the judgment or award. It follows that whereas it may on the facts of the case in question be inappropriate to extend the Mareva injunction to assets outside the jurisdiction-and it is clear from the two authorities cited that such extensions are likely to be rarely justified-very different considerations may apply to disclosure orders in aid of execution. That being so, there is, in my judgment, a very firm jurisdictional basis for an order, made post-judgement or post-award, which includes both a Mareva injunction confined to assets within the jurisdiction and a disclosure order in respect of worldwide assets-.
And later on he went on to say, on page 521:-
-In my judgment, quite different considerations apply in the case of a post-judgment or post-award disclosure order. In such cases it is just and convenient that the judgment or award creditor should normally have all the information he needs to execute the judgment or award anywhere in the world-.
24. On the matter of public policy, the Royal Court does not appear to have previously interpreted the meaning of that term in Article 44(3) of the Arbitration (Jersey) Law 1998. However, Article 44(3) is in identical terms to Section 103 (3) of the UK Arbitration Act 1996 and they provide that enforcement of a New York Convention award (such as the award in this case) may be refused -if it would be contrary to public policy to recognise or enforce the award-. The weight given to this appears to be restrictive.
25. In Deutsche Schachtbau- und Tiefbohrgesellschaft MbH v Ras Al-Khaimah National Oil Co [1987] 2 Lloyd's Rep 246, at page 254 Sir John Donaldson MR said -
-Considerations of public policy can never be exhaustively defined, but they should be approached with extreme caution. As Burrough J remarked in Richardson v Mellish (1824) 2 Bing. 229, 252, -It is never argued at all, but when other points fail.' It has to be shown that there is some element of illegality or that the enforcement of the award would be clearly injurious to the public good or, possibly, that enforcement would be wholly offensive to the ordinary reasonable and fully informed member of the public on whose behalf the powers of the state are exercised.-
26. This approach was reaffirmed by the Court of Appeal in RBRG Trading (UK) Ltd v Sinocore International Co Ltd [2018] EWCA Civ 838 at para. 25(1) in which the Court held that the public policy ground for refusing enforcement -
-... should be given a restrictive interpretation. This is recognised in the English law authorities - for example, Sir John Donaldson MR in Deutsche Schachtbau v National Oil [1987] 3 WLR 1023 at p1035D - "Considerations of public policy can never be exhaustively defined, but they should be approached with extreme caution"; Gross J in IPOC (Nigeria) v Nigerian National Petroleum [2005] 2 Lloyd's Rep 326 at [11] - "...there can be no realistic doubt that section 103 of the Act embodies a pre-disposition to favour enforcement of New York Convention Awards, reflecting the underlying purpose of the New York Convention itself; indeed, even when a ground for refusing enforcement is established, the court retains a discretion to enforce the award - Mustill & Boyd, Commercial Arbitration, 2nd edn, 2001 Companion, at page 87".-
27. In Alexander Brothers Limited v Alstom Transport SA [2020] EWHC 1584 (Comm), the Court summarised the authorities on the public policy ground as follows -
-68. First there is the public policy in favour of enforcement. The basic and fundamental policy underlying both the New York Convention and the relevant parts of the Arbitration Act is to promote enforcement of New York Convention awards: -section 103 of the Act reflects and embodies the predisposition in favour of enforcing New York Convention awards that runs through the New York Convention itself.- Carpatsky Petroleum Corp v PJSC Ukrnafta (No 1) [2018] EWHC 2516 (Comm) | [2019] 1 Lloyd's Rep. 296 [39], Carpatsky (No 2) [2020] EWHC 769 (Comm) [39].
69. That is reflected in the dictum from IPCO (Nigeria) v NNPC [2005] EWHC (Comm) 726, [2005] 2 Lloyd's Rep 326 that the section is -not intended to furnish an open-ended escape route for refusing enforcement of New York Convention awards-.
70. In order to resist enforcement, a party must show that one of the grounds in sections 103(2) or 103(3) of the Arbitration Act is established. If none is established, section 103(1) makes clear that enforcement of the Award -shall not be refused.- Where a ground for refusing enforcement is established, the Court retains a discretion, albeit a narrow one, to enforce the Award; Carpatsky (No 2) [40].
71. -Public policy- as referred to in section 103(3) of the Arbitration Act means the public policy of England and Wales (as the country in which enforcement is sought) in maintaining the fair and orderly administration of justice. The classic formulation as to what is seen as contrary to public policy is - -contrary to the fundamental conceptions of morality and justice- of the forum. IPCO (Nigeria) v NNPC [2005] EWHC (Comm) 726, [2005] 2 Lloyd's Rep 326 [13], Deutsche Schachtbau v SIP Ltd [1987] 2 Lloyd's Rep 246, 254.
72. The public policy exception in section 103(3) of the Arbitration Act is given a -restrictive interpretation.- - -the public policy exceptions are a safety valve that should only be invoked in a clear case and which must be approached with extreme caution.- Carpatsky (No 1) [41]...-
28. The Plaintiff argues that its approach is supported by Africa Edge Sarl v Incat and Others [2008] JRC 175 at paragraph 9 where in relation to a world-wide disclosure order, Birt, DB (as he was then) said -
"I consider that this case is akin to a post-judgment or post-award case. It is true of course that there is no judgment in Jersey as yet, but there was a judgment in Belgium as long ago as 2002, to which both defendants submitted. It is therefore a case where, applying normal principles of private international law, one would expect that judgment to be capable of enforcement in this jurisdiction without reinvestigation of the merits. I am told that some application has been made in Belgium to set aside or challenge the judgment, but for the moment it seems to me the Court must proceed on the basis there is a valid judgment."
29. Similarly, in ENRC-v-Zamin Ferrous Limited [2015] JRC 217 at paragraph 38 a judgment was subject to an appeal and application for stay of execution. In relation to a disclosure order, the Royal Court said that:
"The existence of an application for leave to appeal the judgment and for a stay does not mean that the disclosure order should be watered down in any way."
30. In Dresser-Rand BV v Al Rushaid et al [2021] JRC 321 the Court said, at paragraph 24:
"Court's jurisdiction
24. The existence and availability of discovery in aid of enforcement post-judgment or award has been well recognised in Jersey. Its purpose is to assist a plaintiff in whose favour a judgment or award has been obtained to identify assets against which it might be able to bring enforcement proceedings. Post-judgment or award discovery has a low threshold, because the merits of the obligation have already been adjudicated upon in favour of the plaintiff."
31. At paragraph 25, the Court went on to refer to Goldtron as follows:
"29. In this case, we are dealing with a Convention award, i.e. a foreign award, but one which is capable of enforcement in Jersey in the same way as a domestic arbitration. The clear policy of the 1998 Law is that such awards should be satisfied and enforced in the same way as judgments. The comments of Colman, J., referred to above, are just as apposite in respect of the facts of this case.
.....
30. .... We consider that Mr Thompson was correct in submitting that the injunctions in this case are in aid of the enforcement of an arbitration award and that the applicable principles are those for post-judgment injunctions rather than pre-trial relief. The threshold is therefore considerably lower, as was made clear by Donaldson, M.R. in Deutsche Schachtbau.-
32. And, at paragraph 30:
"Solvalub was, of course a pre-judgment case, in which a Mareva injunction was made against a non-Jersey resident defendant who had a bank account in Jersey restraining that defendant from dealing with the bank account. In a well-known passage, Le Quesne JA said at page 369:
-If the Royal Court were to adopt the position that it was not willing to lend its aid to courts of other countries by temporarily freezing the assets of defendants sued in those other countries, that in my judgment would amount to a serious breach of the duty of comity which courts in different junctions owe to each other. Not only so but the consequence of such an attitude would be that Jersey would quickly become known as a safe haven for persons wishing to evade liabilities imposed on them by the courts to which they are subject. This is exactly the reputation which any financial centre strives to avoid and Jersey so far has avoided with success. These local circumstances, in my judgment, explain why the law on the particular point under consideration should have developed as it appears to have developed in the authorities to which I have referred.-
33. In Apricus Investments & others v CIS Emerging Growth Limited [2003] JRC151, the plaintiffs obtained Mareva injunctions against the defendant to help enforce arbitration awards. When the defendant failed to comply with the injunctions, the plaintiffs sought additional disclosure orders. These were granted, and quoting from the judgment of Sir Philip Bailhache, then Bailiff, at paragraphs 17 - 18:
-17. We need only refer to extracts from the judgment of Coleman J in Gidrxslme Shipping v Tantomar-Transportes (1994) 4 All ER, 507 at 519 where the learned Judge stated:-
-Where, by contrast, one has the position that a judgment has already been obtained or an award made and where a Mareva injunction in aid of execution is justified, the jurisdiction to make a disclosure order arises both as a power ancillary to and in support of the injunction and, independently of the injunction, as a power in support of the execution of the judgment or award. It follows that whereas it may on the facts of the case in question be inappropriate to extend the Mareva injunction to assets outside the jurisdiction - and it is clear from the two authorities cited that such extensions are likely to be rarely justified - very different considerations may apply to disclosure orders in aid of execution. That being so, there is, in my judgment, a very firm jurisdictional basis for an order, made post-judgment or post-award, which includes both a Mareva injunction confined to assets within the jurisdiction and a disclosure order in respect of worldwide assets.'
18. The learned judge continued at page 521:-
-In view of the outstanding and unsatisfied awards against the defendants, amounting in aggregate to $US 357,349.47 plus interest and costs, the first award having been converted into a judgment for US$ 284,392.47, it is, in my judgment, entirely just and convenient in aid of execution of those awards that the defendants should be required to tell the plaintiffs where their assets are, whether inside or outside the jurisdiction of the English Courts.'
19. And later on the same page the learned Judge continued:-
-In my judgment, quite different considerations apply in the case of a post-judgment or post-award disclosure order. In such cases it is just and convenient that the judgment or award creditor should normally have all the information he needs to execute the judgment or award anywhere in the world.'-
34. It appears from the above cases that the view taken by the courts of England and Wales relating to a risk of dissipation has evolved to some extent since the statements made by this Court in Goldtron and others. In my judgment, this Court is bound by previous statements of this Court and there are to my mind good reasons in law and indeed in policy which militate against any evolution of the principles as reflected in the English cases if I have understood them correctly.
35. In my judgment, factors such as a delay in making any material payment against a judgment which is indefensible, the advancing of arguments that were not raised at the time or were disposed of, and the general behaviour of a defendant in a case such as this is capable of providing evidence and support for a plaintiff's case on risk of dissipation. They may not be sufficient in themselves and it will depend on the circumstances of each case, but in principle, where an application is made post-judgment and there has been a protracted failure on the part of an unsuccessful defendant to pay the debts when they are due post-judgment, then this may indicate a real risk of dissipation and certainly the evidentiary burden on the plaintiff to establish a risk of dissipation if not removed is certainly lighter than it would have been pre-judgment. I believe that that is the thrust and import of the authorities of the Jersey Court which are binding upon me, and with which I agree.
36. As I indicated at the beginning of this judgment, the essence of the Defendant's attack on the WWFDO is that there is not a sufficient evidentiary basis to point to a risk of dissipation and that, on ordinary principles, the injunction should accordingly be raised. To a significant extent that argument is based upon the submission that the law has developed or has been further clarified in English judgments that post-date Goldtron and other Jersey cases, and that those case law developments should be persuasive to this Court. The Defendant also argues, however, that should the Court feel constrained to rely entirely upon the approach taken in Goldtron, there is some, and presumably sufficient, information about the Defendant and the Rusal Group of which it is a member to set against any want of information that might support a risk of dissipation. In particular, it points out that it is well-known by the Plaintiff what business the Defendant is in and that Rusal filed public accounts. Furthermore, the Plaintiff is already aware, so it is argued, of some of the Defendant's bank accounts from its own commercial dealings with the Defendant. The Defendant argues that the Plaintiff chose to enter into a multi-million Euro contract with the Defendant without knowing what assets it had which is why the Plaintiff required guarantees from Rusal which is a public company.
37. The Defendant sets out the following facts as counting against the establishment of any risk of dissipation:
(i) The Defendant initiated the arbitration proceedings and participated fully throughout the arbitration;
(ii) It has engaged with the Plaintiff since the award was handed down;
(iii) It instructs lawyers in the jurisdiction it operates in including Jersey;
(iv) The Defendant has not said it will not pay the award, nor has it threatened to dissipate assets. It seeks a ruling as to whether the award should be enforced which is a proper reason not to pay;
(v) The Plaintiff has not adduced evidence of the Defendant having a history of dishonouring its debts; and
(vi) The Defendant fought the arbitration as it was entitled to do as it believed it had a good defence to the non-payment of collateral. The fact that a party vigorously advances or defends claims is not a factor that is suggestive of dissipation.
38. In essence the Defendant also argues on the basis that it should be protected by public policy reasons from the enforcement of the Plaintiff's claim.
39. For its part, the Plaintiff argues that there were risk factors relating to dissipation present when the WWFDO was applied for and others that have come into effect. These, without intending to be comprehensive, may be summarised as follows:
(i) There was evidence of recent actual dissipation which does not appear to have a commercial rationale or justification. In March 2024, the Defendant issued a comfort letter to another Rusal Group company saying that it waived its rights over a loan in the amount of $166 million if that company was unable to repay the sum.
(ii) Under the arbitration rule, the Defendant gave an undertaking to carry out the arbitration award immediately and without delay and its obligation to pay the award was not suspended by its consideration of either an application to appeal the arbitration award or matters relating to interest and costs. It has accordingly been in breach of the undertakings given since it received the award in October 2024.
(iii) The Defendant has not responded to demands for payment nor offered any security.
(iv) Very little is known about the financial position of the Defendant which is part of the Rusal Group which manages its assets through sophisticated international structures.
(v) Rusal was migrated to Russia from Jersey in 2020 and it would accordingly be difficult, if not impossible, to enforce against Rusal and the Defendant in relation to assets in Russia and, indeed, in certain other jurisdictions.
(vi) The underlying dispute relates to non-payment of a sum due. The Defendant had not pursued a ruling from the arbitral tribunal relating to any alleged "legitimate concerns" about possible breaches of sanction. The tribunal had, in fact, made the following finding with regard to the Defendant's argument that it was entitled not to make payment due to the risk of US secondary sanctions - "In our view, taking the expert evidence as a whole, it cannot be said that there was a realistic risk of [the Defendant] being subject to US derivative sanctions if it had made payment of the 25th February 2022 margin call in euros to [the Plaintiff's] Target 2 account".
40. In terms of additional risk since the freezing order was granted, the Plaintiff argues that the following factors are of concern:
(i) The Defendant has changed its position on why it cannot pay the award in a manner strongly suggestive of evasiveness. As at 7 November 2024, Rusal and the Defendant's English lawyers maintained that they needed to take advice from those representing them in various jurisdictions as to the risk of being exposed to sanctions. Within three days of its instructing Jersey lawyers in November 2024, the Defendant's Jersey advocates set out in a letter to the Plaintiff's advocates the Defendant's case that it would resist enforcement of the award on public policy grounds;
(ii) The Defendant has now evidenced an intention to resist enforcement of the award;
(iii) The Defendant has also refused to answer legitimate questions about its assets and it will neither confirm nor deny it has sufficient assets to satisfy the award;
(iv) The Defendant continues to refuse to provide security.
41. As already indicated, I do not intend to set out all of the arguments both as to the risk of dissipation or to any extent other than mentioned above on the public policy argument.
42. In my judgment, there is more than enough information before the Court to be satisfied that there is in this case a material risk of dissipation, either at the standard set out in Goldtron or the arguably higher standard set out in the English judgments based on the position prior to the grant of the WWFDO which have been extended by matters arising since. Similarly, adopting the principles set out in the case law set out above, I can see no basis for refusing to grant appropriate disclosure. Additionally, I did not consider that there were persuasive public policy arguments, and while I was in the process of finalising this judgment, I have been informed that the Defendant's application to set aside enforcement of the arbitral award on public policy grounds has very recently been dismissed by Commissioner Birt for the reasons set out in a separate judgment.
43. In the light of the authorities as I understand them, the principles in Goldtron, as cited in Dresser-Rand BV and other cases with approval, remain a correct statement of the law of Jersey.
44. The fact is that it was not disputed that there is a valid arbitration award, and that the Defendant has taken no steps over a significant period to discharge it. I was not persuaded by the arguments relating to the inappropriateness of enforcing the claim raised by the Defendant, to the extent that I should forebear from taking the appropriate interlocutory steps to assist the Plaintiff in eventually enforcing its judgment (and noting again that, as stated above, the Defendant's challenge to enforcement on public policy grounds has now also been separately dismissed by Commissioner Birt).
45. In the circumstances, I reject the Defendant's application to raise the interim injunction and I lift the stay on the disclosure orders.
46. I order that the Plaintiff should receive the costs of and incidental to this present application, to be taxed if not agreed.
Authorities
Goldtron Limited v Most Investment Limited [2002] JLR 424.
Crociani v Crociani and Ors [2019] JRC 028B.
Les Ambassadeurs Club Ltd v Yu [2021] EWCA Civ 1310.
Candy & Ors v Holyoake & Anor [2017] EWCA Civ 92.
Nomihold Securities Inc v Mobile Telesystems Finance SA [2011] EWHC 337 (Comm).
Canada Inc v Sovereign Finance Holdings Ltd & Ors [2024] EWHC 2170.
Gee on Commercial Injunctions.
Africa Edge Sarl v Incat and Others [2008] JRC 175.
Arbitration (Jersey) Law 1998.
Arbitration Act 1996.
Deutsche Schachtbau- und Tiefbohrgesellschaft MbH v Ras Al-Khaimah National Oil Co [1987] 2 Lloyd's Rep 246.
RBRG Trading (UK) Ltd v Sinocore International Co Ltd [2018] EWCA Civ 838.
Alexander Brothers Limited v Alstom Transport SA [2020] EWHC 1584 (Comm).
ENRC-v-Zamin Ferrous Limited [2015] JRC 217.
Dresser-Rand BV v Al Rushaid et al [2021] JRC 321.
Apricus Investments & others v CIS Emerging Growth Limited [2003] JRC151.