Arcelormittal USA LLC v Ruia & Ors

A worldwide freezing injunction requires more than an arguable claim. The applicant must show a good arguable case, a realistically quantifiable loss, and solid evidence of a current, objectively assessed risk that a judgment will be defeated by unjustified dissipation. Alleged dishonesty, offshore structures and past conduct do not suffice without a demonstrated connection to present dissipation. The court must also decide whether relief is just and convenient, balancing the parties’ interests and the practical impact on innocent third parties. A freezing order is not security for a claim and must not unnecessarily interfere with ordinary business or secured-creditor rights.

AMUSA applied on notice for a worldwide freezing injunction and ancillary disclosure orders against Ravi Ruia, Prashant Ruia and Essar Global Fund Limited. It claimed damages exceeding US$1.5 billion for an alleged unlawful means conspiracy designed to frustrate liabilities arising from an iron ore supply agreement and an ICC arbitral award against Essar Steel.

The application followed enforcement proceedings in several jurisdictions and earlier English injunction proceedings against Essar Steel. The central questions were whether AMUSA had a good arguable case, whether the alleged loss was sufficiently identifiable, whether there was solid evidence of a current risk of dissipation, and whether relief would be just and convenient, particularly in light of the likely effects on the Essar group and VTB Bank.

The application for a worldwide freezing order was dismissed.

1. Merits and loss. A good arguable case means more than a case barely capable of serious argument, but not necessarily a case more likely than not to succeed. An unlawful means conspiracy requires a combination or agreement, unlawful conduct causing loss, and an intention or expectation that loss would result. The allegations must be clearly pleaded and supported by convincing evidence. AMUSA’s case concerning the 2012–2013 restructuring, the 2016 accounting change, the VTB subordination deed, the Essar Steel UAE transaction and the Algoma transaction did not meet that standard. The claimed US$1.5 billion loss was also inadequately supported, particularly given uncertainty about the value and enforceability of any claim against EGFL and the effect of the subordination deed.
2. Risk of dissipation. The court applied the approach in National Bank Trust v Yurov [2016] EWHC 1913 (Comm), Fundo Soberano de Angola v Jose Filomeno dos Santos [2018] EWHC 2199 (Comm) and Lakatamia Shipping Co Ltd v Morimoto [2019] EWCA Civ 2203. AMUSA had to establish a real current risk, by solid evidence, that each respondent would unjustifiably put assets beyond reach. The evidence showed matters of concern, but not the necessary present risk.
3. Balance and third parties. The order was not intended to provide security or restrain ordinary business. Its proposed scope created a serious risk of prejudice to VTB, an innocent secured lender, and could severely impair the operations and value of a multinational trading group. The undertaking in damages did not justify imposing that interference.
4. Delay and conclusion. Delay was not an automatic bar, but the nine-month period after AMUSA knew the principal ingredients of its conspiracy case weakened the application. Taking the merits, risk of dissipation, loss, delay, third-party prejudice, the foreign elements and the limited English connection together, it was not just and convenient to grant relief.

not stated in the judgment.