The Lewis Silkin Dispute Resolution team, together with Maitland Chambers, secure the continuation of a £90m freezing order and defeat interim challenges

Our client, Cancrie Investments Limited (“Cancrie”) is the assignee of the benefit of a judgment debt of approximately £82m arising from a judgment in the United Arab Emirates (“UAE”).

Cancrie is enforcing this debt through proceedings in the High Court of England and Wales against the Defendant, Mr Haider, who resides in London. As part of that strategy, Cancrie obtained a worldwide freezing order to the value of £90m (“WFO”) over Mr Haider’s assets. 

Cancrie applied to continue the WFO. Mr Haider immediately applied to strike out Cancrie’s claim and, then shortly before the substantive return date, applied for a reverse summary judgment, both of which were opposed by Cancrie.

The High Court recently considered these applications ([2024] EWHC 1876 (Comm)), and found in Cancrie’s favour on all points, ordering a continuation of the WFO and dismissing Mr Haider’s applications for strike out and summary judgment. 

In reaching this important decision, the court considered some key areas of law relating to (i) the interplay between strike out and summary judgment applications and the test to be applied for each; (ii) the meaning of “good arguable case” in the context of a freezing injunction; and (iii) the application of the principle in Vallée v Dumergue (1849) 154 ER 1221, that if a defendant agrees to a particular method of service (such as service at an address in a foreign country) and service is effected according to that agreed method, then it is immaterial that the defendant did not receive actual notice of the proceedings.

Strike out and summary judgment applications defeated

Mr Haider’s application to strike out the claim was made in July 2023, based on two points of UAE law relating to the assignment of the judgment debt. However, in a further witness statement dated April 2024, it was stated that the application was no longer being made based on these points, but instead on another point – that the UAE judgment had been obtained in proceedings which were contrary to natural justice. It was said that this was because Mr Haider was not served with or otherwise notified of the UAE proceedings. 

In April 2024, days before the listed hearing, Mr Haider also issued an application for reverse summary judgment on the same grounds as that of the strike out application. 

The court was critical of Mr Haider’s approach to the applications. It was deemed unsatisfactory that the strike out application notice had been drafted in general terms to simply refer to the Defence as being the basis for the application. That position was made worse by the state of the Defence, which did not plead a defence of natural justice or specifically identify which facts were relied upon in support. Nor did it give particulars of UAE law – as required by the Commercial Court Guide. The court made clear that, “A respondent to an application is entitled to know precisely the basis on which the application will be made and the nature of the evidence which will be relied on in support of the application”.

The judge also criticised the failure to include the Claimant in correspondence with the court asking for the late summary judgment application to be listed for hearing at the same time as the strike out and continuation application. 

Despite this, the court decided to determine both applications because the judge did not consider Cancrie was disadvantaged. Had he, he made clear that the hearing would have been adjourned and directions given to amend the application notice, amend the Defence and to allow time for evidence in response to be served.

There was an issue between the parties as to whether the legal test for strike out and summary judgment was the same. The court considered the inter-relationship between the two applications and the test to be applied for each at paragraphs 54 to 69 of the judgment. 

CPR 3.4(2)(a) provides that the court may strike out a statement of case if it appears to the court that it discloses no reasonable grounds for bringing or defending the claim. Under CPR 24.3, the court can award summary judgment against a claimant or defendant on the whole of a claim or on an issue if (a) it considers that the party has no real prospect of success on the claim, defence or issue and (b) there is no other compelling reason why the case or issue should be disposed of at a trial.

The court summarised, “Under Rule 3.4(2)(a), the focus is on a party's statement of case and whether, assuming the facts stated to be true, there are reasonable grounds for bringing or defending the claim. In contrast, if there are factual issues apparently in dispute but which can be addressed on a summary basis, the more appropriate application is an application under Rule 24.3.” 

On a review of the rules and authorities, the court noted that if a defendant is entitled to summary judgment because the claimant has no realistic prospect of success, then the statement of claim discloses no reasonable grounds for bringing the claim and should be struck out.

Therefore, although the two tests are distinct, a party who wishes to contend that the opponent’s case has no real prospect of success on the facts may apply for strike out or summary judgment and may adduce appropriate evidence in support of whichever rule is relied upon. 

The judge concluded: “It is … open to the Defendant in the present case to apply under rule 3.4(2)(a) to strike out the Particulars of Claim on the basis that assuming the facts stated therein are true, then the claim cannot succeed. It is also open to the Defendant to adduce appropriate evidence to show that the Claimant has no real prospect of success and to apply under both rule 3.4(2)(a) and Part 24.” The court was happy to consider both applications together on this basis and further found that the approach of the court when determining both applications would be the same.

Ultimately, the judge concluded that Cancrie has realistic prospects of success in establishing its claim to enforce the UAE judgment and therefore dismissed the applications for reverse summary judgment and strike out. 

Assessment of the meaning of “good arguable case”

In considering Cancrie’s application to continue the WFO, the court provided some careful analysis on the meaning of “good arguable case” in the context of a freezing injunction.  

In order to continue a WFO, it is necessary to establish: (i) a good arguable case on the merits, (ii) a real risk of dissipation of assets, (iii) that there is reason to believe that the respondent has assets within or without the jurisdiction and (iv) that it is, in all the circumstances, just and convenient to grant the order.

Mr Haider accepted that limbs (ii) and (iii) of the test were satisfied but argued that (i) and (iv) were not, and that full and frank disclosure had not been given. 

The meaning of “good arguable case” has been the subject of recent confusion. The established test in The Niedersachsen case [1983] 2 Lloyd's Rep. 600 (upheld on appeal [1983] 1 WLR 1412) is whether the case is “more than barely capable of serious argument and yet not necessarily one which the judge believes to have a better than 50% chance of success”. However, in 2020, the court appeared to adopt a higher threshold. In Lakatamia Shipping Co. Ltd v Morimoto [2020] 2 All ER (Comm) 359 the Court of Appeal seemed to align the test for a good arguable case in freezing injunctions with the three-stage test for a good arguable case used in relation to jurisdictional gateways relevant to serving proceedings out of the jurisdiction. This test involves a comparative exercise, requiring the court to assess which party has the better of the argument. 

The judge in our case preferred the approach in The Niedersachsen. He did not consider it “immediately obvious” that the judge in Lakatamia was intending to harmonise the test for freezing injunctions with the test in the context of jurisdictional challenges. Other parts of that judgment suggest the judge did intend to apply The Niedersachsen test – points that had been echoed in other judgments since. The judge also relied on two more recent cases which found the established test was the proper one and that judgments which had proceed on the alternative basis were wrong. 

However, and in any event, given the “divergent state of the authorities”, the judge also considered the evidence against the three-stage jurisdictional gateways test. 

Weighing up the evidence before it, the court concluded that Cancrie has a good arguable case whichever test was applied and successfully established that the WFO should continue. The suggestion that the obligations of full and frank disclosure had not been met was rejected. 

It is clear that the Court of Appeal needs to clarify the test for “a good arguable case”, to avoid uncertainty and the need for the lower courts to apply two tests in light of the confusion.  

Analysis of the Vallée principle 

In reaching its conclusions, the court considered the principle established in Vallée v Dumergue (1849) 154 ER 1221 that, if a defendant agrees to a particular method of service (such as service at an address in a foreign country) and service is effected by that agreed method, it is immaterial that the defendant did not receive actual notice of the proceedings. This was relevant to Mr Haider’s natural justice argument.

Mr Haider argued for a narrow interpretation of the principle, which precluded its application in cases where the relevant contract provided for a specific address for service but service was conducted by other means – even if those other means were permitted under local law. However, the court disagreed and accepted Cancrie’s submissions that Mr Haider was seeking to apply the principle “too restrictively” as it had a “wider ambit”. The court explained: “If a person has agreed to the jurisdiction of a foreign court and service is effected in accordance with the relevant foreign law then where actual notice of the proceeding was not given, the question will be whether substantial injustice was caused by the lack of notice, including whether the Defendant has a remedy in the foreign court.” 

The court ultimately concluded that Cancrie has a good arguable case that there has been no breach of natural justice which prevents it from enforcing the UAE judgment for the purposes of the application before it. 

Cancrie can now continue its High Court claim for the judgment debt, with the protection of a substantial WFO to prevent dissipation.

For a discussion of any issues arising from this judgment, please contact one of the Lewis Silkin team acting for Cancrie - Fraser Mitchell, Benjamin Smith and Charlotte Barbour. Counsel for Cancrie were George Hayman KC and Duncan McCombe of Maitland Chambers.