Introduction

The case of dos Santos v Unitel SA ([2024] EWCA Civ 1109) before the England and Wales Court of Appeal (Civil Division) addresses pivotal issues concerning the criteria for granting Worldwide Freezing Orders (WFOs). Central to this appeal are two primary matters:

1. The interpretation of the "good arguable case" component in the test for granting a freezing injunction, specifically whether the judge correctly identified Unitel's case as having a "good arguable case."
2. The appropriateness of reserving costs in applications for WFOs, challenging the judge's decision to order Ms. dos Santos to bear these costs.

The appellant, Ms. dos Santos, an entrepreneur and former director of Unitel, contests both the threshold applied for the freezing order and the consequent cost allocation. The respondent, Unitel SA, seeks to uphold the lower court's judgment, emphasizing established precedents and legal principles.

Summary of the Judgment

The Court of Appeal affirmed the lower court's decision granting the Worldwide Freezing Order against Ms. dos Santos. The judge's determination was primarily based on the interpretation of the "good arguable case" test, adhering to the standards set forth in The Niedersachsen [1983] 2 Lloyd's Rep 600. The court concluded that Unitel SA had established a sufficiently arguable case to justify the freezing injunction. Additionally, the court upheld the decision to allocate the costs of the WFO application to Ms. dos Santos, recognizing the circumstances under which the application was made and contested.

Analysis

Precedents Cited

The judgment delves deeply into various precedents to frame its reasoning:

• The Niedersachsen [1983] 2 Lloyd's Rep 600: Established the "good arguable case" test for freezing orders.
• Lakatamia Shipping Co. Ltd. v Morimoto [2019] EWCA Civ 2203: Initially interpreted the "good arguable case" test but was later critiqued.
• Kazakhstan Kagazy plc v Arip [2014] EWCA Civ 381; [2014] 1 CLC 451: Differentiated between the tests for jurisdictional gateways and freezing orders.
• Brownlie v Four Seasons Holdings Inc [2017] UKSC 80 and Goldman Sachs International v Novo Banco SA [2018] UKSC 34: Introduced a three-limb test affecting the interpretation of "good arguable case".
• Harrington & Charles Trading Co. Ltd. v Mehta [2022] EWHC 2960 (Ch) and Chowgule & Co Pte. Ltd. v Shire [2023] EWHC 2815 (Comm): Applied the jurisdictional gateway test to freezing orders, which the current judgment deemed incorrect.
• Magomedov v TGP Group Holdings [2023] EWHC 3134 (Comm): Contradicted the jurisdictional gateway approach, adhering to the Niedersachsen test.

These precedents collectively highlight a tension between maintaining established thresholds for freezing orders and adapting to newer interpretations of the "good arguable case" standard.

Legal Reasoning

The Court of Appeal's decision hinged on reaffirming the Niedersachsen test over the more recent three-limb Brownlie test proposed by Supreme Court decisions. The judge analyzed the evolving interpretations of "good arguable case" across various cases and jurisdictions, ultimately concluding that the longstanding Niedersachsen formulation remains authoritative in the context of freezing orders.

Key points in the legal reasoning include:

• The "good arguable case" should not be conflated with the "serious issue to be tried" test used in other interlocutory injunctions.
• The three-limb test introduced in earlier Supreme Court rulings should not override the established norms for freezing orders.
• The distinction between different types of interlocutory applications (e.g., jurisdictional gateways vs. freezing orders) necessitates specific interpretations of legal tests.
• International perspectives, particularly from Commonwealth jurisdictions, generally support the Niedersachsen test, reinforcing its validity.
• The court emphasized that assessing the "good arguable case" involves evaluating the overall plausibility of the applicant's claims without delving into a relative assessment of the parties' arguments.

Regarding costs, the court reasoned that reserving costs in applications where the respondent actively contests the injunction and loses is justified. The judge's discretion to award costs is supported by the nature of the application and the conduct of the parties involved.

Impact

This judgment solidifies the adherence to the Niedersachsen test for freezing injunctions, rejecting the more stringent three-limb approach. It clarifies that the "good arguable case" standard for freezing orders remains less onerous than absolute or relative thresholds, ensuring that legitimate claims are not unduly hindered by procedural complexities.

Future cases involving freezing orders will likely reference dos Santos v Unitel SA to bolster the application of the Niedersachsen test, ensuring consistency across the judiciary. The decision also underscores the limited circumstances under which costs can deviate from standard protocols, potentially influencing how courts handle the allocation of costs in similar applications.

Complex Concepts Simplified

Good Arguable Case

The term "good arguable case" refers to a threshold that an applicant must meet to obtain a freezing order. It requires more than a mere possibility of success; the applicant must present a case with sufficient merit to be seriously considered, though it does not necessitate a better than 50% chance of winning.

Freezing Order (Worldwide Freezing Order - WFO)

A WFO is a judicial order that prevents a defendant from disposing of or dealing with their assets to ensure that if the claimant wins, there are assets available to satisfy the judgment.

Jurisdictional Gateways

These are legal thresholds that determine whether a court has the authority to hear a case involving parties or assets outside its usual jurisdiction. Different tests have been applied to assess whether a claim enters this jurisdictional space.

Three-Limb Test

Introduced in the Brownlie and Goldman Sachs cases, this test assesses whether:

1. The applicant has a good arguable case on the merits.
2. There is a real risk of asset dissipation.
3. It is just and convenient to grant the freezing order.

This test was considered for freezing orders but ultimately rejected in favor of the traditional Niedersachsen approach.

Conclusion

The dos Santos v Unitel SA decision serves as a pivotal reaffirmation of the established legal standards governing freezing orders. By upholding the Niedersachsen test and dismissing the three-limb approach, the Court of Appeal ensures consistency and predictability in the application of "good arguable case" criteria. This not only preserves the balance between protecting claimant interests and safeguarding against unwarranted asset dissipation but also aligns UK jurisprudence with broader Commonwealth standards.

Moreover, the affirmation of cost allocation principles in contested WFO applications underscores the judiciary's commitment to fairness and accountability in legal proceedings. The judgment provides clear guidance for future cases, emphasizing the importance of adhering to established legal tests while allowing judicial discretion in the allocation of costs.

Overall, this case reinforces the foundational principles of freezing orders, ensuring that they remain effective tools for safeguarding assets in the face of legitimate claims, while preventing misuse through speculative or unfounded applications.