Fundo Soberano De Angola & Ors v dos Santos & Ors

An applicant for without notice freezing or proprietary relief must make proper inquiries and present the evidence and competing arguments fairly. Disclosure buried in documents does not cure a misleading presentation. The duty rests on the applicant, and its lawyers must explain and supervise compliance. Serious and culpable breaches can justify discharge and refusal of fresh relief even where relief would otherwise be justified. The sanction serves a public interest in deterrence.

A freezing order requires solid evidence of a real risk of unjustified dissipation, assessed separately against each respondent. Arguable dishonesty or the use of offshore structures alone is insufficient. Legitimate dealings cannot be restrained merely to provide preferential security. For jurisdiction under the Lugano Convention, investment management services are performed where investment decisions are made. Custody of the assets elsewhere does not establish performance there.

Fundo Soberano de Angola, Angola’s sovereign wealth fund, and seven subsidiaries alleged a dishonest conspiracy involving José Filomeno dos Santos, the fund’s former chairman, and Jean-Claude Bastos de Morais, his friend and business associate. Mr Bastos owned and controlled the Quantum group, whose companies managed the fund’s investments. The allegations concerned Quantum’s appointment, contractual fees, investment structures and investments in projects connected with Mr Bastos.

The fund entrusted US$5 billion to investment management arrangements. US$2 billion formed a liquid portfolio managed by the Swiss company Quantum Global Investment Management AG. US$3 billion formed a private equity portfolio held through Mauritian limited partnerships, with the claimant subsidiaries as limited partners and Quantum companies as general partners. The Northern Trust Company, a neutral custodian, held accounts at its London branch. Approximately US$2.27 billion remained there subject to assurances against movement without joint instructions or prior notice.

Phillips J granted a worldwide freezing order and proprietary injunction for US$3 billion without notice. At the adjourned return date, the claimants sought continuation and the defendants sought discharge. The defendants also challenged jurisdiction, the merits thresholds and the risk of dissipation. Arbitration agreements and overseas proceedings raised further questions about stays and the appropriate forum.

1. The worldwide freezing order and proprietary injunction would be set aside, and fresh relief refused. Serious and culpable failures of full and frank disclosure independently justified that result. The evidence also failed to establish a sufficient risk of dissipation, and the balance of convenience opposed a proprietary injunction ([85]–[92]).

2. An applicant must disclose material facts after proper inquiries and present anticipated opposing arguments fairly. Applying Brink’s Mat Ltd v Elcombe and Memory Corporation v Sidhu (No 2), disclosure within documents was insufficient where an unfair summary obscured its significance. The applicant itself owed the duty. Its lawyers had to explain the obligation and supervise compliance. The gravity of the allegations and scale of relief required adequate investigation and document review ([50]–[53], [75], [83]).

3. The presentation was materially unfair concerning selection, qualifications, supervision, partnership structures, disclosed conflicts, fees, the custodian’s assurances and the relief sought against the individuals. These matters affected the central allegations. The failures were highly culpable, although deliberate breach by the legal team was not established. The interests of justice included the penal and deterrent purpose of refusing renewal; establishing that an order would otherwise have been justified was insufficient ([54]–[85]).

4. A freezing order required solid evidence, separately against each respondent, of a real risk that unjustified dissipation would defeat enforcement. Dishonesty required scrutiny for its connection with dissipation, including arguable answers to the allegations. Offshore structures could serve legitimate purposes. Normal legitimate dealings could not be restrained merely to provide security. The custodian’s assurances protected most of the disputed capital, and no sufficient evidence supported dissipation by any respondent ([78], [86]–[89]).

5. The proprietary claim’s merits were assumed without decision. The absence of evidence that Mr dos Santos held relevant property, the lack of threatened mismanagement of investments and the serious restriction on Mr Bastos’s mixed funds opposed an injunction. The entire transferred capital could not be treated as loss. The recoverable amount, including whether fee losses comprised all fees or only excess fees, remained undetermined ([29]–[30], [90]–[91]).

6. Under article 5(1) of the Lugano Convention, investment management occurred in Switzerland, where decisions were made; instructions to a London custodian did not establish performance in London. Contract-derived fiduciary duties also concerned contract. Article 5(3) concerned personal liability and excluded the pure proprietary claims. Dishonest assistance liability was personal rather than proprietary ([24]–[27]).

7. Lawful means conspiracy required a predominant intention to injure. Predominant self-benefit did not satisfy that requirement, even where injury was intended or inevitable. In the absence of contrary evidence, foreign law was assumed to correspond with English law. Knowing receipt was sufficiently arguable. Proprietary, reflective loss and cross-partnership issues remained undecided; late contractual invalidity and rescission arguments were refused as prejudicial ([29]–[36]).

8. Claims within the identified arbitration agreements required stays under section 9 of the Arbitration Act 1996, insofar as jurisdiction otherwise existed. Applying Spiliada Maritime Corporation v Cansulex Ltd, England was not clearly and distinctly the appropriate forum for the non-Lugano claims. Foreign laws, conduct, evidence and proceedings outweighed the slight custodial connection ([37]–[44]).

9. Only the limited partners’ unlawful means conspiracy, dishonest assistance and knowing receipt claims against the Swiss investment manager, and those causes of action by all claimants against Quantum Global Alternative Investments AG, remained within jurisdiction without mandatory arbitration stays. Case management stays, the effect of jurisdiction on injunctive relief and the form of order were reserved ([45]–[48], [92]).

• High Court (Commercial Court): At the adjourned return date, Popplewell J discharged the worldwide freezing order and proprietary injunction and refused fresh relief. He determined jurisdiction and mandatory arbitration stay issues, while reserving case management stays and the form of order: [2018] EWHC 2199 (Comm) .
• High Court (Commercial Court): Phillips J granted a worldwide freezing order and proprietary injunction without notice on 27 April 2018, restraining dealings with assets up to US$3 billion.