The Court of Appeal has ruled that the “good arguable case” test to be applied for freezing injunctions should be equated with the (previously thought to be lower) “serious issue to be tried” threshold applied in American Cyanamid injunctions, marking a significant shift in the law on this issue.
Background
Ms dos Santos, the daughter of the former President of Angola, is the founder, former beneficial owner and former director of Unitel, Angola’s largest mobile telecommunications company. Her stake in Unitel (and various other shareholdings) has been appropriated by the Angolan state. Ms dos Santa also owns and controls Unitel International Holdings B.V (“UIH”), the First Defendant in these proceedings.
Between May 2012 and August 2013, Unitel made a series of loans to UIH amounting to USD 43 million and slightly under EUR 323 million. From late 2019, UIH stopped paying the interest on these loans, prompting Unitel to issue proceedings. In May 2023, Ms dos Santos was joined as a defendant in the proceedings, and in December 2023, a worldwide freezing order was made against her by Bright J).
Ms dos Santos appealed against the freezing order. In granting permission to appeal, Arnold J noted that “the law [applicants have to satisfy to be granted a freezing order] is in a confused state, which cries out for a definitive answer from the Court of Appeal”.
Issues for the Court of Appeal
In Dos Santos v Unitel SA [2024] EWCA Civ 1109, the Court of Appeal was asked to rule on two issues:
- the meaning of the “good arguable case” element of the test required for a freezing injunction to be granted and whether Unitel did have a good arguable case ; and
- whether there is a general rule that the costs of a worldwide freezing order application should be reserved to be dealt with at the conclusion of the substantive proceedings.
Judgment
In relation to the first issue, Sir Julian Flaux, Chancellor of the High Court, held that the test of “good arguable case” in the context of freezing injunctions should be equated with the “serious issue to be tried” test in American Cyanimid in the context of interlocutory injunctions generally. The Chancellor considered Unitel had satisfied this threshold.
Further, Lord Popplewell cited the obiter comments of Nugee LJ in Planon Ltd v Gilligan when addressing the test of “serious issue to be tried”, stating, “This is not a demanding test, and it really only serves to exclude the case where the claim is frivolous or vexatious, or otherwise demonstrably bad.”
On costs, the Chancellor held that as a general rule, a party who contests every point of an interlocutory or procedural application, thereby causing the successful party to incur costs that would otherwise not be incurred, should be ordered to pay the successful party’s costs at the conclusion of the application. Ms dos Santos was therefore ordered to pay Unitel’s costs of the freezing injunction application.
Comment
This decision marks a notable shift in the test to be applied by the court when considering the threshold question in freezing injunction applications. Given that the “good arguable case” test was previously understood to impose a higher threshold to be met by freezing order applicants than the “serious issue to be tried” test under American Cyanamid, the Court of Appeal’s judgment will potentially make it easier for applicants to satisfy the court a freezing order should be granted.
The Court of Appeal judgement is available here.
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