Discharge of worldwide freezing injunction granted in support of foreign proceedings where underlying litigation exhausted

Anna Caddick

In Joint Stock Company Ukrisbbank v Polyakov, Mr Justice Blair discharged a worldwide freezing injunction granted under section 25 of the Civil Jurisdiction and Judgments Act 1982 (“CJJA”) in support of proceedings in the Ukraine on the basis that the claimant had not shown a good arguable case that it would get judgment against the defendant.

This was an unusual application of the tests under section 25 of the CJJA for the reason that the underlying litigation brought by the claimant against the defendant had been exhausted following an unsuccessful appeal by the claimant to the Supreme Court of the Ukraine. The claimant’s case was that there was a further appeal avenue available at the behest of a third party co-surety (through its liquidator) and that the status quo of the freezing injunction should be maintained pending that process.

The case concerned various loan agreements made by the claimant bank to the AIS group of companies, of which defendant was one of the ultimate beneficial owners, and which stood in default. The defendant (a Ukrainian citizen and Member of the Ukrainian Parliament) had given a personal guarantee. The agreements were all subject to Ukrainan law and jurisdiction. A worldwide freezing order had originally been granted by the English court on the basis that the claimant had at the time shown a “very strong case on the merits of the dispute”.

Before Blair J there was opposing expert evidence (which had been filed out of time) as to the likelihood of the co-surety’s application succeeding. In the circumstances, Blair J concluded that the question of whether the claimant had a good arguable case had been answered by the Ukrainian courts in the negative. While there remained the possibility that the third party application could ultimately result in success for the claimant, that was not enough; the claimant’s predictions to date had not been correct and the matters in issue in the third party application were effectively the same as had previously been unsuccessfully litigated by the claimant.

On that basis, Blair J did not go on to decide whether the fact that the substantive proceedings by the claimant against the defendant were at an end meant that the court no longer had jurisdiction under section 25 of the CJJA in any event. Blair J did, however, consider that it would be “inexpedient” to continue the injunction, albeit that he recognised that there could be situations in which although the substantive proceedings had been decided against a claimant, there was cogent evidence that within a short period an appeal would be likely to succeed which would put the proceedings back on foot such that it would not be “inexpedient” within the meaning of section 25(2) of the CJJA to continue the injunction.

Joint Stock Company Ukrisbbank v Polyakov [2014] EWHC 4292 (Comm). The judgment in this case is available to LexisNexis subscribers.

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