Isabel Dos Santos v Unitel S.A.

Hearing dates: 13 June and 26 July 2024

Approved Judgment

This judgment was handed down remotely at 10.00am on Monday 30 September 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives

Introduction

This appeal concerns two issues arising out of a Worldwide Freezing Order (“WFO”) made by Bright J against the appellant, Ms dos Santos: (1) the meaning of the “good arguable case” element of the test required for the grant of a freezing injunction and whether (whatever the test) the judge was right to find that the respondent Unitel had a good arguable case; and (2) whether there is a general rule that the costs of a WFO application should be reserved.

Factual and procedural background

Ms dos Santos is an engineer and entrepreneur, and daughter of the former President of Angola, José Eduardo dos Santos. She founded Unitel, Angola's largest mobile telecoms company, in 1998. She was a director of Unitel from its inception until August 2020; and was also beneficial owner of 25% of the company via Vidatel Limited (a BVI company), until late 2020. Her stake (and various other stakes) have since been appropriated by the Angolan state. The First Defendant, Unitel International Holdings B.V. (“UIH”) was incorporated in 2012 in the Netherlands, and is owned and controlled by Ms dos Santos. Between May 2012 and August 2013, Unitel made a series of loans to UIH amounting to €322,979,711 and US$43 million (the “Facilities”) secured by promissory security. From late 2019/early 2020, UIH stopped paying interest on the Facilities. On the basis of these and other alleged defaults, Unitel gave notice of acceleration on 1 September 2020 and demanded repayment.

On 26 October 2020, Unitel issued proceedings against UIH in this jurisdiction (“the UIH Claim”). Sometime in March/April 2022 (the precise date is disputed), Unitel's shareholders passed a resolution to make a claim against Ms dos Santos personally (the “Approval Resolution” – dated 4 March 2022, but said by Unitel to have been passed on 6 April 2022). On 3 October 2022, Unitel applied to join Ms dos Santos to the UIH Claim and amend its statements of case and also applied on notice for a WFO against her. On 16 January 2023, it applied for permission to serve the proceedings out of the jurisdiction. The joinder, amendment and service applications were granted (in part) by HHJ Pelling KC on 25 May 2023. The claim against Ms dos Santos was then served on 1 June 2023. Permission to appeal against the order of HHJ Pelling KC was refused by Males LJ on 4 October 2023.

It was agreed between the solicitors that the WFO application would be listed at least three months after the hearing of the joinder application. The WFO application was heard by Bright J on 29 and 30 November 2023. On 20 December 2023, the judge handed down judgment granting the WFO application and ordered that the costs of the application be paid by Ms dos Santos with a payment on account. He refused permission to appeal, but permission was granted by Arnold LJ on 12 March 2024 on the basis that both grounds of appeal raise important issues of law on which there has been divergence among High Court judges, and that the appellant has a real prospect of success.

The judgment below

Having set out details of the parties, the claim and the procedural background, the judge explained at [21] to [24] that Ms dos Santos' assets are already affected by several other freezing orders obtained in other jurisdictions by the Angolan state, by PT Ventures SGPS S.A., a Portuguese company owned by the Angolan state oil company Sonangol, and by Unitel.

The judge then set out the legal principles. At [25] he said that it was common ground that an applicant for a freezing order had to show: (1) a good arguable case on the merits; (2) a real risk, judged objectively, that a future judgment would not be met because of an unjustified dissipation of assets; and (3) that it would be just and convenient in all the circumstances to grant the freezing order.

Much of the dispute on the application related to the first limb. The judge set out the rival arguments. At [27] he summarised Unitel's case, presented before him by Mr Knowles, that the meaning of “good arguable case” is as explained by Mustill J in Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft GmbH (“The Niedersachsen”) [1983] 2 Lloyd's Rep 600 at 605, as: “… one which is more than barely capable of serious argument, but not necessarily one which the judge considers would have a better than 50 per cent chance of success.” Mr Knowles acknowledged that some recent cases suggest that the effect of the decision of the Court of Appeal in Lakatamia Shipping Co. Ltd. v Morimoto [2019] EWCA Civ 2203; [2020] 2 All ER (Comm) 359 (at [38] per Haddon-Cave LJ) was to equiparate the “good arguable case” test as applied in the freezing order context to that applied in the context of jurisdiction, most recently in Kaefer Aislamientos SA de CV v AMS Drilling Mexico SA de CV [2019] EWCA Civ 10. However, he submitted that this was not the Court of Appeal's intention in Morimoto and that Mustill J's well-known formulation in The Niedersachsen remains good law. Unitel relied on the decision of the Court of Appeal in Kazakhstan Kagazy plc v Arip [2014] EWCA Civ 381; [2014] 1 CLC 451, where Longmore LJ at [25] said that the test in the freezing order context was different from that in the context of jurisdiction; see also at [67] per Elias LJ.

At [28] the judge noted that Ms dos Santos' case was that Morimoto has indeed changed the law, and that the Niedersachsen approach is no longer appropriate. It was submitted that Haddon-Cave LJ's judgment in Morimoto at [38] is based entirely on Kaefer, such that the three-limb approach first propounded by Lord Sumption JSC in Brownlie v Four Seasons Holdings Inc [2017] UKSC 80 (and repeated in Goldman Sachs International v Novo Banco SA [2018] UKSC 34) should be adopted. This is the approach which was considered by the Court of Appeal in Kaefer where Green LJ gave guidance about how to apply the test at [72] to [80] and made it clear that it is, essentially, a relative test. The court must try to form a view as to which party has the better of the argument. Only if the court “finds itself simply unable to form a decided conclusion on the evidence before it” does limb (iii) arise, in which event the court can fall back on considering whether there is “a plausible (albeit contested) evidential basis” for the applicant's case.

The judge noted at [29] the decisions of Edwin Johnson J in Harrington & Charles Trading Co. Ltd. v Mehta [2022] EWHC 2960 (Ch) and of Dias J in Chowgule & Co Pte. Ltd. v Shire [2023] EWHC 2815 (Comm) that the “good arguable case” test in the context of freezing orders is now the same as in the context of jurisdiction. At [30] he noted on the other side the decision of Butcher J (handed down after the hearing before Bright J) in Magomedov v TGP Group Holdings (SBS) LP [2023] EWHC 3134 (Comm), where Butcher J came to the opposite conclusion to that of Edwin Johnson J and decided the test in freezing injunction cases remained that in The Niedersachsen.

He also noted that most of the cases where the Court had had to apply the test in the freezing injunction context since Morimoto had not considered the effect of Haddon-Cave LJ's judgment and had continued to follow the Mustill J approach. It was only in those three cases that the point had been considered head on.

His conclusion on this part of the case was at [34] to [37]:

“34. I find it striking that Haddon-Cave LJ's judgment in… Morimoto makes no reference to Kazakhstan Kagazy plc v Arip (making it unclear whether the views of Longmore and Elias LJJ were cited); and that Haddon-Cave LJ said at [35] that the “good arguable case” test was “not a particularly onerous one” and referred to Gee on Commercial Injunctions (6th ed., 2016) at §12–026, which endorsed the Mustill J approach.

35. It therefore seems to me not at all clear that Haddon-Cave LJ intended to have the transformative effect for which Ms dos Santos contends. Notwithstanding Harrington & Charles Trading, I am not aware that many observers have come to this conclusion. Subsequent editions of the White Book and of Gee on Commercial Injunctions (7th ed., 2020, inc. 1st supp. 2022) both still endorse the formulation in The ‘Niedersachsen’. Indeed, in its current edition, not only does Gee on Commercial Injunctions §12–033 state at some length that the jurisdictional approach of Brownlie, Goldman Sachs and Kaefer is not applicable in the freezing order context, it positively cites Lakatamia Shipping Co. Ltd. v Morimoto as supporting this conclusion.

36. My own view is aligned with that of Butcher J; essentially for the reasons that he gives, but especially because of Haddon-Cave LJ's reference to Gee on Commercial Injunctions in his judgment at [35] – which cannot easily be reconciled with an intention to approve a test different from the one espoused in that text.

37. However, I cannot help but note that the law is in a confused state, which cries out for a definitive answer from the Court of Appeal. The reality is that Haddon-Cave LJ's judgment...