Motorola Credit Corporation v Uzan & Ors

A disclosure order will normally accompany a worldwide freezing order because disclosure enables the order to be policed effectively. The court may stay disclosure while a challenge to the freezing order is pending, but the applicant need not establish further exceptional circumstances merely because disclosure cannot later be undone.

When considering a stay, the court should take a broad approach. It should assess the respective risks of prejudice without deciding the issues reserved for the substantive discharge application. An appellate court will interfere with that discretionary assessment only where the judge exceeded the generous ambit within which reasonable disagreement is possible.

Motorola obtained worldwide freezing orders in the Commercial Court under section 25 of the Civil Jurisdiction and Judgments Act 1982 in aid of United States fraud proceedings. The orders required the first and fourth defendants to disclose their worldwide assets and confirm the information by affidavit.

The defendants applied to discharge the orders. Pending those applications, David Steel J and Toulson J refused to stay the disclosure requirements, although the defendants accepted that the freezing restraints should remain. The defendants appealed against those refusals. The central question was whether disclosure should be suspended until their challenges to the worldwide orders had been determined.

1. Appeals dismissed. Waller LJ, with whom Lord Woolf CJ agreed, held that David Steel J had neither misdirected himself nor exercised his discretion outside the permissible range. Toulson J's consequential refusal of a stay therefore also stood.

2. A disclosure requirement is ordinarily an important part of a freezing order. Its purpose is to enable the claimant to police the restraint. Once the defendants accepted that the worldwide freezing orders should remain temporarily, the prima facie position was that the accompanying disclosure provisions should also remain effective. The court nevertheless retained power to separate the two where the circumstances justified a stay.

3. The defendants did not have to establish some further category of exceptional circumstances before disclosure could be ordered. The approach in Grupo Torras SA v Sheikh Fahad Mohammed Al-Sabah was applied. Although disclosure invades privacy and cannot be undone if the freezing order is later discharged, suspending it may render a worldwide freezing order substantially ineffective during lengthy jurisdictional proceedings and appeals.

4. The relevant circumstances justified immediate disclosure. Motorola had a strong preliminary case of fraud and a strong case that assets might be dissipated. The defendants had not complied with the United States order requiring replacement of the shares or their value and had offered no security. The possible prejudice from disclosure was outweighed by the likely greater prejudice to Motorola if it could not police the freezing orders.

5. Lord Woolf CJ added that stay applications require a broad-brush assessment. The court should avoid deciding on the stay application the issues reserved for the later discharge hearing.

6. Sedley LJ disagreed with the majority's approach. In his view, when a without-notice order returned before the court on notice, the claimant bore the burden of showing that mandatory disclosure should continue. The court should consider proportionality because disclosure affected private life. He accepted, however, that the majority's conclusion determined the appeals.

1. Court of Appeal (Civil Division): The appeals were dismissed. The refusals to stay the asset-disclosure requirements were upheld: [2002] EWCA Civ 989.

2. High Court, Queen's Bench Division, Commercial Court: David Steel J refused the first defendant's application to stay disclosure pending his application to discharge the worldwide freezing order. Toulson J subsequently refused the fourth defendant's corresponding application.

3. High Court, Queen's Bench Division, Commercial Court: Moore-Bick J had made worldwide freezing and asset-disclosure orders without notice in aid of United States proceedings. Earlier domestic freezing relief against the first defendant had been granted by Cresswell J.