“Volaw Trust” - A strengthening of the privilege against self incrimination from requests for pre-existing documents?
In July 2017 the Court of Appeal considered what test should be applied to determine whether a Respondent has sufficient assets which would be caught by a freezing injunction to justify the granting of such an injunction.
The case of Ras Al Khaimah Investment Authority & Others v Bestfort Development LLP & Others involves claims brought by six entities which were established at a time when the Republic of Georgia had commenced a widespread privatisation programme. The Claimants were established for the purpose of investing the sovereign wealth of Ras Al Khaimah (a State in the UAE) in Georgia. Claims were brought in Georgia and the UAE against numerous entities and two individuals, Mr Mikadze and Dr Massaad, who are accused of breaches of the fiduciary duties they owed to the Ras Al Khaimah entities. In particular Mr Mikadze was alleged to have diverted the Claimants’ funds to his own bank accounts and given contracts to companies which effectively belonged to him.
The English Court was asked to grant a freezing injunction over the assets of, and appoint receivers over 14 Limited Liability Partnerships registered in England and Wales which were said to be connected to Mr Mikadze. The application was made in support of the proceedings issued in Georgia and the UAE. No claims are being pursued in England. Some of the 14 Respondents are Defendants to the proceedings brought in Georgia and the UAE whereas others are included because they are beneficially owned by Mr Mikadze and the assets they hold may be required to satisfy judgments made against him elsewhere.
When the application came before the English Court the Judge considered whether the facts would warrant the relief sought if the claims had been brought in England. She concluded that there was a good arguable case and that not only were all the claims arguable but also that any assets held by the Respondents were assets of or controlled by Mr Mikadze.
The Judge went on to consider whether the Respondents had any available assets which would make the grant of a freezing injunction worthwhile and whether those assets were of sufficient value to make such an injunction proportionate to the likely costs involved. She found that there was insufficient evidence of any substantial assets which would be caught by a freezing injunction.
In respect of the risk of dissipation, the Judge found that whilst there was a risk, it was negated by the Respondents’ compliance with costs orders and the Applicants’ delay in bringing the application.
Finally, the Judge found that it was not expedient to grant the application as there was insufficient evidence of the decisions of the Georgian Court and whether a worldwide freezing injunction would encroach on the jurisdiction of the Georgian Court.
The Judge at first instance therefore declined to grant the relief sought.
The Applicants appealed, arguing that:
The Court of Appeal found that:
The Court of Appeal therefore granted the freezing injunction in respect of those Respondents for whom there was evidence of assets on which a freezing injunction could bite, and referred the application for receiverships back to the lower Court.
This case offers a helpful clarification on the test for establishing the existence of assets sufficient to justify the granting of a freezing injunction. It is also useful to have the Court of Appeal’s view of the effect of delay on such an application.
What the case leaves open is the issue of the availability of existing assets. The question which remains to be answered is whether a parallel criminal action involving restraint orders over assets, or a freezing injunction granted in favour of a prior claimant, would be considered as rendering a freezing injunction futile in circumstances in which the Court will not make an order which is futile.
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