Fundo Soberano De Angola & Ors v dos Santos & Ors

On a without-notice application for a freezing order, the applicant must make proper inquiries and present the evidence and argument fairly in all material respects. Serious and culpable failures concerning matters central to the claim ordinarily justify discharge and refusal of fresh relief, even if an order might otherwise have been available.

A freezing order requires solid evidence of a real, objectively assessed risk that a judgment will be defeated by unjustified dissipation. A good arguable case of dishonesty, the use of offshore structures, or ordinary legitimate dealings with assets does not suffice.

For jurisdiction, investment-management services are performed where the management activity occurs, not where a chosen custodian holds accounts. A proprietary claim not based on personal liability does not fall within Article 5(3) of the Lugano Convention.

The Angolan sovereign wealth fund and its subsidiaries alleged that their former chairman, a business associate and companies in the Quantum group had dishonestly arranged and managed investments totalling US$5 billion. On 27 April 2018, Phillips J made a worldwide freezing order and proprietary injunction up to US$3 billion.

At the return-date hearing, the claimants sought continuation of that relief. The defendants sought its discharge, challenged jurisdiction and relied on arbitration agreements. The court considered the Lugano Convention, the appropriate forum, the merits threshold for selected causes of action, material non-disclosure, risk of dissipation, and the balance of convenience for proprietary relief.

1. The worldwide freezing order and proprietary injunction were set aside. No fresh freezing order was granted. The claimants’ without-notice presentation was materially unfair in eight respects. The omissions concerned matters central to the alleged dishonest conspiracy, including Quantum’s earlier selection and experience, oversight of the fund, the partnership structure, conflicts, fees, and Northern Trust’s position.

2. The duty on a without-notice applicant is not satisfied by locating material somewhere within a large body of evidence. The application must be presented fairly and even-handedly in all material respects. The applicant and its lawyers must make proper inquiries, particularly where the application alleges dishonesty and seeks relief of exceptional scale. The cumulative failures were serious and culpable, although the judge did not find a deliberate abuse by the legal team. The interests of justice therefore required discharge and refusal of renewed relief.

3. The claimants had not shown, by solid evidence, a real risk of unjustified dissipation by any respondent. A good arguable case of dishonesty did not itself establish that risk. Nor did the ordinary use of offshore structures. There was no evidence of a threatened change from legitimate existing dealings, and Northern Trust’s assurances removed any material dissipation risk in respect of more than two thirds of the sum frozen.

4. Under the Lugano Convention, QGIM’s investment-management services were performed in Switzerland, where the investment decisions were made, rather than in London, where the custodian accounts happened to be held. The fiduciary-duty claim was also a matter relating to contract because the alleged duties arose from the investment management agreement. A proprietary claim to property held irrespective of fault was not a claim in tort, delict or quasi-delict under Article 5(3).

5. The claimants failed to show that England was clearly and distinctly the appropriate forum for the non-Lugano claims. Angola, Mauritius and Switzerland had materially stronger connections. Most claims subject to the relevant arbitration agreements had to be stayed under Arbitration Act 1996, section 9. The court left outstanding the proposed case-management stay for the limited remaining claims.

6. The lawful-means conspiracy claim did not meet the merits threshold. A predominant intention to benefit conspirators cannot also be a predominant intention to injure the claimant merely because injury is inevitable or intended.

High Court (Commercial Court): Phillips J granted a worldwide freezing order and proprietary injunction on 27 April 2018. On the adjourned return date, Popplewell J set aside that relief and refused fresh relief.