Commercial Court clarifies scope of standard undertaking not to enforce worldwide freezing order abroad without court’s permission

The Commercial Court has recently considered the scope of the standard undertaking provided in connection with worldwide freezing orders, which requires the applicant to seek the court’s permission before seeking to enforce the order outside England and Wales, or seeking an order of a “similar nature”: Akcine Bendrove Bankas Snoras v Antonov [2018] EWHC 887 (Comm).

The court held that the claimant bank was not in breach of its undertaking by obtaining orders in Lithuania and Switzerland seizing certain of the respondent’s assets, as the foreign courts had independent jurisdiction to make the orders which did not derive from the making of the worldwide freezing order in England.

This decision provides welcome clarification as to the scope of the standard undertaking, and should provide some comfort to those seeking to secure assets abroad based on a separate and independent right or jurisdiction, where they have also obtained an English freezing order.

The decision also suggests that, where there has been a breach of the undertaking, the court may be inclined to grant retrospective permission and continue the freezing order unless the respondent can present clear evidence that the foreign order has had an oppressive or prejudicial impact.

Gareth Keillor and Rosanna Pinker in our disputes team consider the decision further below. Continue reading

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Notable increase in interim privacy injunctions sought and obtained in the second half of 2017

In March 2018, the Ministry of Justice published quarterly provisional civil justice statistics for England and Wales.

These statistics include interesting details regarding the increase in court applications for privacy injunctions in 2017. The guidance to the Civil Justice Statistics Quarterly bulletin published in December 2017 notes that the statistics provided in respect of privacy injunctions relate to “applications concerned with data protection and rights to respect for private and family life protected by Article 8 of the European Convention on Human Rights (ECHR), whether the injunction is sought by an individual, a public authority, or a company.” It is important to note that the statistics only relate to civil proceedings in the High Court at the Royal Courts of Justice and the Court of Appeal.

According to the statistics, over the course of 2017, 14 applications were made for new interim privacy injunctions, over double the number that were made in 2016. Of the 8 new interim privacy injunction applications made in the last six months of 2017, all 8 were granted (a significantly higher success rate than in the first six months of the year).

The figures also show a steady increase in the number of applications for privacy injunctions made from 2015 onwards after the number of such applications being brought fell dramatically in 2014. While the previous decline may be attributed to a number of factors (including the growth of social media platforms over this period and the use of those platforms to circumvent such injunctions), the increasing number of applications made for privacy injunctions in 2017 together with the significant success rate that parties achieved pursuing such applications in the last six months of 2017, suggest that the privacy injunction constitutes a valuable and viable option available to parties in their attempts to protect their Article 8 rights.

For more information contact Neil Blake or Christopher Cox in our disputes team. Continue reading

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Court of Appeal upholds order for payment of US$70 million under cross-undertaking in damages

The Court of Appeal has confirmed the court’s approach to issues of causation where a defendant applies to enforce a cross-undertaking in damages: SCF Tankers Ltd (formerly Fiona Trust & Holding Corp) v Privalov [2017] EWCA Civ 1877.

A party that obtains an interim injunction (including a freezing injunction) will typically be required to provide a cross-undertaking to the court to compensate the other party if the injunction is later found to have been wrongly granted. The present decision confirms that a party seeking to enforce a cross-undertaking in damages must establish a prima facie case that its loss would not have been suffered “but for”‘ the injunction. It is then for the party who gave the undertaking to rebut the case on causation. When considering such applications, the court should adopt a “common sense” approach to issues of causation, mitigation and remoteness.

The case shows that, in resisting an order to enforce a cross-undertaking, a claimant will not necessarily be able to rely on an argument that the defendant should have applied for a variation to permit transactions and avoid its losses. While each case will turn on its own facts, the decision recognises that there can often be real practical and commercial difficulties in applying for a variation to a freezing injunction.

The decision provides a stark reminder to claimants of the potential for very significant consequences if an injunction is later found to have been wrongly granted. In this case, claimants who were seeking damages of US$850 million ended up being ordered to pay over US$70 million to the parties they had sued.

Gareth Keillor, a senior associate in our disputes team, considers the decision below. Continue reading

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High Court prevents in-house lawyer acting against former employer due to risk of subconscious use of confidential information

The High Court has granted an injunction preventing an in-house lawyer from acting in proceedings adverse to her former employer: Western Avenue Properties Ltd v Soni [2017] EWHC 2650 (QB).

The judge accepted that the defendant was well aware of her professional responsibility of continuing confidentiality and was unlikely to have any conscious intention to breach it. However, that did not avoid or reduce the risk of her subconsciously using the claimants’ confidential information. An injunction was therefore appropriate.

It was common ground between the parties that the principles established in Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 apply to in-house lawyers as well as those in private practice. Accordingly, where an in-house lawyer was in possession of material confidential information of a former employer, an injunction would be granted unless he or she could establish that there was no real risk of disclosure or misuse.

This is in contrast to Generics (UK) Limited v Yeda Research & Development Co Ltd [2012] EWCA Civ 726 (considered here) in which the Court of Appeal expressed uncertainty as to whether the Bolkiah principles applied in the in-house context, or whether it was up to the former employer to satisfy the court that an injunction was appropriate – though it did not have to decide the point as on the facts of that case there was no real risk of disclosure. Yeda was not referred to in the judgment in the present case. Continue reading

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Cross-Border Litigation – international perspectives

We are pleased to publish the second issue of our periodic publication “Cross-Border Litigation”, designed to highlight legal and practical issues specific to litigation with an international aspect.

Tapping into the expertise of the firm’s leading commercial litigators across the globe, the publication gives readers the benefit of their hands-on experience and flags key developments that should be on commercial parties’ radars.

The topics covered in this issue include:

  • Highlights of recent developments from across the globe
  • The Singapore International Commercial Court
    Has it lived up to the hype?
  • Cross-border litigation and Brexit
    What we know so far
  • Partner Spotlight on Helmut Görling
    His journey from a police detective to head of our corporate crime team in Frankfurt
  • Using disclosed documents for multiple proceedings
    Recent judgments suggesting a restrictive approach
  • Jurisdiction disputes
    When will the English courts take into account politics, corruption and other obstacles to justice in foreign jurisdictions?
  • India related commercial contracts
    Getting your dispute resolution and governing law clauses right

To download the publication, click here.

To read the previous Issue 1 (March 2017), click here

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Court of Appeal clarifies test for establishing existence of assets for freezing injunctions

The Court of Appeal has held that, to obtain a freezing injunction, an applicant must establish either a “good arguable case” or “grounds for belief” that assets exist. It rejected the higher threshold of a “likelihood” that assets exist, but held that it is not enough for the applicant to assert that the respondent is apparently wealthy and must have assets somewhere: Ras Al Khaimah Investment Authority & Ors v Bestfort Development LLP & Ors [2017] EWCA Civ 1014.

This decision provides greater clarity as to the test for the existence of assets, though it is not helpful that the Court of Appeal referred to either a “good arguable case” or “grounds for belief”. Although Longmore LJ indicated a preference for “grounds for belief”, and commented that “there is, no doubt, not much difference between the two”, introducing two potentially different thresholds risks creating uncertainty.

The decision also suggests that the courts may be willing to be more lenient than had previously been thought in relation to delays in applying for a freezing injunction. However, an applicant would be wise to treat this with extreme caution and always to apply as soon as possible. Not only does delay risk allowing the respondent actually to dissipate the assets before an injunction has been obtained, but (notwithstanding the comments in this case) on different facts a lengthy delay may well be a basis for refusing an injunction.

Gareth Keillor and Tom Brown consider the decision further below. Continue reading

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Court of Appeal clarifies test for setting aside judgment for fraud

The Court of Appeal has clarified the test that must be met when seeking to set aside a judgment on the grounds that it was obtained by fraud: Takhar v Gracefield Developments Ltd and others [2017] EWCA Civ 147.

The decision confirms that the court must be satisfied that evidence of the fraud was not available to the innocent party at the time of trial and could not with reasonable diligence have been uncovered then.

This resolves the uncertainty that had arisen from conflicting lower court authority as to whether the "reasonable diligence" requirement extends to cases involving fraud or whether fraud cases were excepted from the rule on the basis that "fraud unravels all". It confirms that, in this context, the public policy in favour of finality of litigation takes precedence over the desire to do justice in individual cases to the extent that they conflict – at Court of Appeal level at least. While this may operate harshly against innocent parties in some cases, there remains scope for a court to exercise its judgment as to what the standard of "reasonable diligence" requires in any particular case.

As a practical matter, parties to litigation who suspect some element of fraud should be aware of the limitations on re-opening litigation, and should ensure that they take all reasonable steps to investigate their suspicions and raise any such allegations within the proceedings if they wish to pursue them.

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Court of Appeal clarifies test for risk of dissipation of assets for notification injunctions

The Court of Appeal has held that a notification injunction (an order requiring a respondent to give notice of any dealings with or disposal of assets or other transactions that fall within the scope of the order) drawn in wide terms is, in effect, a modified version of a conventional freezing order, rather than a distinct type of injunction, such that the same test in relation to the risk of dissipation of assets applies: Candy & Ors v Holyoake & Anor [2017] EWCA Civ 92.

This judgment provides clarity as to the proper classification of notification injunctions, and the risk of dissipation that applicants must demonstrate in order to succeed. A party seeking a notification injunction in wide terms must show a real risk, supported by solid evidence, that a future judgment would not be met because of unjustifiable dissipation.

The position may, however, be different in relation to notification injunctions which are not in wide terms. The judge suggested, albeit only obiter, that where the applicant seeks a simple order requiring notice to be given of a proposed disposition of a specific property, there may be a different test.

James Allsop, a senior associate, and James Leadill, an associate, in our dispute resolution team consider the Court of Appeal's decision further below.

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Court of Appeal finds third party who conspired with defendant to breach freezing order could be liable for tort of conspiracy to injure by unlawful means

In a claim by JSC BTA Bank against the son-in-law of its former Chairman alleging conspiracy to injure by unlawful means, the Court of Appeal held that breach of the terms of a freezing order could qualify as the requisite unlawful means: Khrapunov v JSC BTA Bank [2017] EWCA Civ 40.

The decision serves as a reminder that those who are not themselves parties to litigation or subject to court orders may remain exposed to claims in conspiracy where they assist in the breach of a court order.

Gary Milner-Moore and Kate Emanuel from our disputes team consider the decision further below.

The judgment is also of interest for its consideration of jurisdictional issues in economic tort claims and, in particular, where the event giving rise to damage takes place in a claim for conspiracy to injure by unlawful means. That part of the decision is considered in a separate blog post here.

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Springboard injunction granted for misuse of confidential information relating to production process

The High Court has recently considered when, and for how long, injunctive relief should be granted as a remedy for breach of confidence: Kerry Ingredients (UK) Limited v Bakkavor Group Limited and others [2016] EWHC 2448 (Ch).

Here the confidential information related to the method of production of the claimant's edible infused oils. The decision acts as a reminder that a claim for breach of confidence may succeed even if the relevant information could be gleaned from reverse engineering or from a process of trial and error – the question is whether the information is freely available to the public or whether it would require a significant amount of work to obtain it.

Where the misuse of such information has served as a "springboard" for the defendant, allowing it to get a head start in developing some competing business, an injunction is likely to be granted for a limited period calculated to deprive the defendant of the head start gained.

Neil Blake and Dan Kenny, a partner and associate in our dispute resolution team, consider the decision further below.

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