Granting interim relief in support of foreign proceedings: the expediency test revisited
Will the English courts grant claimants a worldwide freezing order ("WFO") or other interim relief in support of foreign proceedings, even if a defendant has no assets in the jurisdiction?
The courts have emphatically re-affirmed that the answer to that question is "yes", provided it is not inexpedient for the court to exercise its discretion in that way.
In the recent case of Royal Bank of Scotland -v- FAL Oil Company Ltd and others, Gloster J continued a WFO and disclosure orders against the defendants despite them having no assets within the jurisdiction. The order had originally been granted in support of proceedings in the UAE pursuant to the court's powers, under section 25 of the Civil Jurisdiction and Judgments Act 1982 (the "1982 Act"), to grant interim relief in support of foreign proceedings.
Section 25(2) of the 1982 Act provides: "On an application for any interim relief…the court may refuse to grant that relief if, in the opinion of the court, the fact that the court has no jurisdiction apart from this section in relation to the subject-matter of the proceedings in question makes it inexpedient for the court to grant it." In her judgment, Gloster J pulled together the principles and guidelines from various authorities which are relevant to the question of expediency under section 25 of the 1982 Act. In summary, these are as follows:
- The court should be willing in principle to grant appropriate interim relief even if its role is only ancillary.
- It is most appropriate for protective measures to be granted by those courts best able to make their orders effective.
- The court has to be extremely cautious in granting ancillary WFOs where substantive proceedings were commenced elsewhere.
- It is a "strong thing" to restrain a defendant who is not resident within this jurisdiction or who does not have close ties in England from disposing of his assets outside the jurisdiction.
- The court must carefully consider whether there is any real connecting link between the subject matter of the interim measures sought and the territorial jurisdiction of the court before which the measures are sought. This includes considering the power of the court to police the enforcement of its orders.
- It is likely to be inexpedient to make WFOs against foreign defendants with tenuous links to the jurisdiction where such defendants are likely to disobey the orders and there are no real sanctions available to enforce compliance.
- It is not inexpedient for the courts to make WFOs or disclosure orders simply because the primary court hearing the substantive dispute has no jurisdiction or power to make a similar order.
- There are five further points that the court should take into account when considering the question of expediency:
- Will making the order interfere with the management of the case in the primary court?
- Is it the policy of the primary court not to make WFOs?
- Will the orders made give rise to disharmony or confusion or risk conflicting or overlapping orders in other jurisdictions?
- Is there at the time the order is sought likely to be a potential conflict regarding jurisdiction which makes it inappropriate and inexpedient to grant a WFO?
- Will the court be able to enforce any WFO made if jurisdiction is resisted and/or disobedience is expected?
Applying the above to the facts of this case, Gloster J held that it was clearly expedient and appropriate to continue the orders on the basis that the defendants had a "real link or connection" with the jurisdiction. Gloster J stated that, in her view, "having chosen to obtain substantial credit facilities and operate bank accounts in this jurisdiction, under the auspices and structure of loan agreements subject to English law, and English exclusive jurisdiction clauses, it is not open to the Defendants, when it suits their purposes to do so, to deny that they have any relevant connection or link with this jurisdiction."
It is evident from the above that the English courts will give very careful consideration to any applications for WFOs or disclosure orders against defendants with relatively few links to and/or no assets within the jurisdiction. Clearly the decision will depend largely on the application of the facts to the above principles and guidelines. However, the admirable willingness of the English courts to assist, where possible, foreign proceedings remains a potent tool in any claimant's armoury.
  EWHC 3628 (Comm)
 Credit Suisse Fides Trust -v- Cuoghi  QB 818
 Motorola Credit Corporation -v- Uzan and others  EWCA Civ 752
 Motorola and Mobil Cerro Negro Ltd -v- Petroleos de Venezuela SA  EWHC 532 (Comm)
 Cuoghi and Motorola