Grupo Torras SA & Anor v Al-Sabah & Ors

Following the discharge of freezing orders on appeal, cross-undertakings in damages and undertakings to meet third-party costs remain enforceable for the period during which the orders operated. The court may require those undertakings to be reinstated, or impose equivalent injunctions, where they formed the consideration for the relief originally obtained and continued protection is appropriate. Orders restricting foreign proceedings should ordinarily permit applications for leave to the Commercial Court. Information obtained under a freezing order may be used to enforce the judgment and trace assets or wrongdoers where the undertaking permits that use. A substantial interim payment on account of costs may be ordered where recovery is inevitable, but the court must allow for uncertainties such as duplication and detailed assessment.

The claimants obtained extensive freezing orders during fraud proceedings against Sheikh Khaled. At trial, Mance J found him liable, but on 2 November 2000 the Court of Appeal allowed his appeal and discharged the orders and related undertakings. The court’s order deferred consequential questions for further argument.

The parties disputed whether undertakings should continue or be reinstated, whether security and notification obligations should remain, how information obtained under the orders could be used, and whether Sheikh Khaled should receive further interim costs and interest. The central issues concerned the consequences of discharging the orders and the appropriate costs relief.

1. Undertakings and security. The original cross-undertakings in damages and undertakings to pay third-party costs covered the whole period before discharge and remained enforceable. Fresh undertakings were unnecessary. The claimants were discharged from continuing security obligations because there was little evidence of loss and the claimants’ financial position provided adequate reassurance.

2. Foreign proceedings. Undertakings given as the price of worldwide freezing orders operated as injunctions once given. The court therefore had jurisdiction, after allowing the appeal, to require their reinstatement or impose equivalent orders. In the circumstances, the claimants were restrained from beginning or continuing proceedings elsewhere concerning the same subject matter without leave of the Commercial Court. The order was not an outright anti-suit injunction.

3. Use of information. The existing undertaking could remain in force in its varied form. It permitted the use of information obtained under the orders to enforce the judgment and to trace and recover money or identify wrongdoers in relation to the same subject matter. That use did not depend on a finding that Sheikh Khaled was a wrongdoer, since comparable disclosure orders could have been made against him without such a finding.

4. Notification. The claimants were required to take all reasonable steps to notify persons or companies who had received notice of the orders, or who had reasonable grounds for supposing that they might act on them, that the orders had ceased to have effect.

5. Costs. An application for pre-judgment interest on costs was dismissed as being made too late. A further interim payment on account was appropriate because Sheikh Khaled had succeeded and was bound to recover more than the sum already paid, but the court allowed for possible duplication and other matters arising on detailed assessment. A further payment of £1 million was ordered.

• High Court, Queen’s Bench Division, Commercial Court: Mance J handed down judgment on 24 June 1999, finding Sheikh Khaled liable and making substantial monetary, costs and freezing-order provisions.
• Court of Appeal (Civil Division): On 2 November 2000 the court allowed Sheikh Khaled’s appeal and discharged the orders against him, deferring consequential matters for further argument.
• Court of Appeal (Civil Division): On 30 July 2001 the court determined the deferred consequences, including undertakings, notification, foreign proceedings and interim costs.