Global menu

Our global pages

Close

High Court rules that the meaning of a money judgment for the purpose of making a freezing order should not be narrowly construed and could include an order for the payment of money to a third party

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

07-08-2017

Latin American Investments v Maroil Trading & Anor; Oceanic Trans Shipping v Maroil Trading & Anor [2017] EWHC 1254 (Comm)

Facts of the case

– Maroil Trading (“D1”), Latin American Investments (“C1”) and Ocean Trans Shipping (“C2”) were shareholders in two joint venture companies (the“JVs”). The JVs were made available to Sea Pioneer Shipping Corporation (“D2”) under the shareholder agreement.

– A dispute arose between the JVs and a third-party which D1 and D2 settled. C2 alleged that the dispute was settled, among other things, in breach of the shareholder agreement and at under value, and that it had suffered loss as a result of (i) a diminishment in the value of its shareholding and (ii) a failure to receive, whether by dividend or otherwise, payments owed to the JVs. C2 was granted a freezing order in respect of its claim over the Ds’ assets.

– On the return date, the Ds objected to the freezing order being continued. Their arguments included that a freezing order is only available for enforcing a money judgment which is the subject of the substantive claim.

The decision

– Tear J agreed that a freezing order is only available in respect of an anticipated money judgment. However, he went on to hold that the meaning of a money judgment is not narrowly construed and could include an order for the payment of money to the JVs (whether by way of specific performanceor damages), notwithstanding that it would not require any money to be paid to C2.

– In coming to this conclusion, Tear J appeared to rely on the statement in Gee on Commercial Injunctions that “[t]here are no constraints … on the types of monetary relief which [the claimant] may seek: his claim may be for payment of a debt, or damages, or an account, or for statutory compensation.”

– Tear J therefore continued the freezing order until trial.

Analysis and practical advice

The decision is a reminder of the wide-ranging nature of freezing orders and that they are available in circumstances where the underlying dispute may not relate to the payment of sums directly to the claimant. For example, a freezing order could in principle be sought by the FCA where it is bringing a claim on behalf of customers, e.g. in the context of an application for a restitution order under the Financial Services and Markets Act 2000 (“FSMA”) where a person or firm has breached a requirement of FSMA (or been knowingly concerned in a breach),or engaged in, or required or encouraged others to engage in, market abuse (sections 382 and 383 of FSMA respectively).