Findings of fact in an arbitration can amount to sufficient evidence for the High Court to grant a Worldwide Freezing Order

Zoe Homer

In Great Station Properties SA & Another v UMS Holding Ltd & Others the Commercial Court relied on findings of fact in an arbitration holding there to be sufficient evidence of risk of dissipation to grant a Worldwide Freezing Order (“WFO”).

The original case concerned two disputes following the breakdown of the commercial relationship between Mr Lukyanenko and Mr Grigorishin, the beneficial owners of the Claimant and Respondent companies. One dispute related to alleged diversion of profits in breach of a Joint Venture Agreement and the other pertained to breach of an Option Agreement.

Pursuant to an arbitration award, the Respondents were liable to pay the Claimants US$305.8 million plus interest and costs. On 5 October 2017, Teare J dismissed the Respondents’ challenge to the award and granted permission to enforce the award. The judgment debt had not been satisfied and nor had proposals been advanced for payment.

The Claimants sought a WFO to aid enforcement of the award. The principal issue became whether the Claimants could establish the necessary risk of dissipation of assets by the Respondents.

High Court decision

Teare J held findings of fact from the arbitration constituted solid evidence of a risk of dissipation. These findings had included the existence of an “illicit scheme” through which Mr Grigorishin had directed profits that should have been paid to the Claimant companies to companies within his control. The Respondents submitted this scheme was of “historical interest only” but Teare J rebutted this referring to Mr Grigorishin’s “strenuous efforts” to challenge the award. The judge believed there to be “a real risk that he will be prepared to manipulate his companies to seek to ensure that the Claimants do not recover damages in respect of the loss caused by his action or the sum of $250 million due to the Claimants”.

Moreover, Mr Grigorishin was said to have exhibited a lack of probity having previously submitted misleading information about the ultimate beneficial ownership of his companies to the Ukrainian authorities. Teare J concluded this trait of the key witness “add[ed] to the real risk of dissipation”.

The court rejected arguments that the WFO should not be granted in light of the Claimants’ delay bringing the action, the Claimants’ conduct and the absence of assets in England. The court also refused to allow an amendment to the standard form freezing order allowing the respondents to deal with assets worth less than US$100,000.

Comment

This judgment compliments the recent decision of Campbell v Campbell [2017] EWHC 2747 (Ch) which held a previous finding at trial that a party had misappropriated other relevant assets could establish a risk of dissipation. The case reinforces the notion that “the policy of the law is to enforce judgments” and freezing orders are available to assist with this endeavour.

Great Station Properties SA & Another v UMS Holding Ltd & Others

 

 

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