Court clarifies the scope of the standard undertaking not to enforce a worldwide freezing order or seek an order “of a similar nature” outside of England and Wales

• United Kingdom

• Financial services disputes and investigations
• Litigation and dispute management - Freezing Orders

03-06-2018

A v A [2018] EWHC 997 (Comm)

Facts of the case

– An applicant for a worldwide freezing order must typically provide certain undertakings to the court. The standard form order annexed to PD 25A includes an undertaking that the applicant will not, without the permission of the court, seek to enforce the order outside of England and Wales or “seek an order of a similar nature”.

– In 2012, the applicant bank (“A”) obtained a worldwide freezing order against a shareholder (“R”), in relation to his alleged misuse or misappropriation of A’s funds (the “WFO”). A’s application for the WFO included the above undertaking (the “Undertaking”). 

– In 2017, A issued proceedings against R in a foreign jurisdiction, and obtained orders seizing R’s assets in that and another foreign jurisdiction (the “Foreign Orders”). The facts relied upon in support of the Foreign Orders overlapped with those underpinning the WFO.

– A applied for a declaration that the Foreign Orders were not a breach of the Undertaking, or alternatively retrospective permission for the Foreign Orders and continuance of the WFO. 

The decision

– The court held that the Foreign Orders did not breach the Undertaking. 

– The court considered previous case law which held that the main purpose of the Undertaking was to prevent “inappropriate or oppressive extension of the [WFO] through its enforcement abroad or its duplication. It is not directed at precluding the pursuit of different and independent rights … that may be available abroad” (In the matter of an LMAA Arbitration E, F, G v M (F v M) [2013] EWHC 895 (Comm)). 

– The court held that:

– The Undertaking was intended to prevent A from relying on the WFO when seeking foreign enforcement of it by seeking foreign orders of a “similar nature” where that foreign enforcement would be more far-reaching, or have a wider and different effect than would be available in England. The English court’s concern is to prevent its own orders being used to oppress R. 

– The Undertaking was not concerned with the Foreign Orders because the courts in the foreign jurisdictions were using their own independent jurisdiction which did not depend on or derive from the English court’s WFO.

– Alternatively, if the above findings were incorrect, retrospective permission would have been granted and the WFO continued in any event.

Analysis and practical advice

– It is now clear that an undertaking not to “seek an order of a similar nature” will not prevent an applicant for a WFO from seeking to seize assets in support of an independent claim in a foreign jurisdiction if that action does not depend on or derive from the English WFO (even if based on the same factual matrix). 

– The alternative analysis offered to the court (that the Undertaking was designed to prevent foreign orders of “a similar nature” to the WFO) would require a comparison of the English and foreign orders affecting a respondent and would be much more complex to review.