Clarifying the good arguable case test in freezing injunctions: Isabel dos Santos v Unitel

The judgment handed down by the Court of Appeal in Isabel dos Santos v Unitel [2024] EWCA Civ 1109 provides significant clarification on the test for obtaining a freezing injunction. This decision aligns the test for freezing orders with the principles governing interim injunctions generally, bringing much-needed consistency to this area of law.

What is a freezing order?

Freezing orders are granted to prevent respondents (defendants) from dissipating or diminishing the value of their assets before a judgment is made. These orders are effective from the moment the respondent is notified and can apply to various types of assets, including: 

1. bank accounts 
2. shares (both public and private) 
3. tangible and intangible property. 

Failure to comply with a freezing order may result in contempt of court proceedings, underscoring the seriousness of such measures. 

What does an applicant need to show for a freezing order?

An applicant seeking a freezing order will have to satisfy the court of the existence of: 

1. A good arguable case 
2. A real risk of dissipation of assets 
3. The assets are concerned with the jurisdiction of the court 
4. It is just and right to grant the freezing order.  

The meaning of “a good arguable case” has been the subject of uncertainty, with the judgment in Isabel dos Santos v Unitel offering long-awaited clarification. 

What is a good arguable case – judgment in Isabel dos Santos v Unitel

In the judgment, the Court of Appeal held that a “good arguable case” required something more than a “serious issue to be tried”, a standard too lenient for freezing orders. The court endorsed the test found in Ninemia Maritime Corp v Trave Schiffahrts GmbH & Co KG (The Niedersachsen) [1983] 1 W.L.R. 1412 (Niedersachsen) and rejected the three-limb test adopted in Brownlie [v Four Seasons Holdings Inc].

Niedersachsen held that a “good arguable case” should be defined 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.” The Niedersachsen test is analogous to the “serious issue to be tried” standard derived from the American Cyanamid test. This approach ensures that the threshold for a “good arguable case” strikes an appropriate balance, offering sufficient protection to applicants while avoiding undue interference with respondents’ rights.

Jurisdictional Gateways: A separate consideration

Importantly, the Court of Appeal clarified that the Niedersachsen test should not apply to arguments relating to jurisdictional gateways for service out of the jurisdiction. These matters require separate consideration under their distinct legal framework.

Conclusion

The judgment in Isabel dos Santos v Unitel marks a pivotal moment in the law governing freezing orders. By refining the definition of a “good arguable case” under the Niedersachsen test, the Court of Appeal has provided clarity and consistency, ensuring that the stringent nature of freezing orders is preserved. Practitioners must now carefully assess the strength of their cases against this standard when seeking or contesting freezing orders.