By judgment delivered on 30 March 2020 Mr Justice Henshaw dismissed the attempt of the Arcelormittal Group (“AMUSA”) to obtain a freezing order – exceptionally sought on notice – in the sum of US$1.5 billion against the assets of a holding company within the Essar Steel conglomerate, together with the assets of one of its founding members and a further associate.
Once a freezing order is sought, it can be difficult to stop the momentum which gathers, especially where that order is sought against a global company and in a very substantial sum. However, this judgment serves as a cautionary warning of the need for applicants to ensure a sound basis and a genuine risk of dissipation, and to act promptly, if they are not to be stopped in their tracks.
The case concerned the viability of a conspiracy said to have taken place from 2012, with the alleged intention of preventing AMUSA from enforcing a liability in damages arising from the failure of a steel project in Minnesota. The project failed in 2016 and was the subject of an arbitral award granted in 2018. However, by its claim and as part of the alleged conspiracy, AMUSA sought to rely on a series of events which preceded 2016, and in particular on an accounting restatement which took place in respect of these events in 2016, to allege both good arguable case and a real risk of dissipation.
AMUSA’s application failed. Having carefully considered the acts alleged, Mr Justice Henshaw determined that no coherent claim in conspiracy had been made out, and that the accounting restatement could not be said to have prevented AMUSA from enforcing the arbitral award or otherwise to have been an act of dissipation. The Judge also found that AMUSA had materially delayed in making its application, and that, having regard to the balance of convenience, no order should be made.
Permission to appeal was refused by Lord Justice Newey on 20 April 2020.
Paul Stanley QC and David Peters acted for the corporate defendant, Essar Global Finance Limited, instructed by Quinn Emmanuel, and Paul McGrath QC and Ruth den Besten for the individual defendants, instructed by Stephenson Harwood LLP.