Ziyavudin Magomedov & Ors v TPG Group Holdings (SBS) LP & Ors

On an application for a freezing or notification injunction, a good arguable case is one that is more than barely capable of serious argument; it need not have a better than 50 per cent prospect of success. The three-limb approach used for jurisdictional gateways is not the merits test for freezing relief. Risk of unjustified dissipation must be assessed objectively. Serious allegations may support an inference, but a general adverse impression or feeling of uneasiness is insufficient without evidence or a properly grounded inference. Any notification order must be tailored to its utility, with appropriate thresholds, asset limits and confidentiality safeguards.

The claimants sought a notification injunction against Transneft in support of claims arising from an alleged conspiracy to deprive them of an interest in Novorossiysk Commercial Sea Port. The application had been adjourned at an earlier hearing and was returned for determination on the merits threshold, risk of unjustified dissipation, and whether relief was just and convenient. Transneft disputed the claimants’ evidence and argued that the delay, the alleged conspiracy and its asset position did not justify relief. The court also considered the appropriate scope of any order and whether the cross-undertaking in damages should be fortified.

Application granted in principle. The court held that a notification injunction should be made, with the precise terms and the question of fortification of the cross-undertaking reserved for further submissions.

1. The merits test for a freezing order is the established Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft GmbH (The Niedersachsen) test [1983] 2 Lloyd’s Rep 600: the case must be more than barely capable of serious argument, but need not have a better than 50 per cent chance of success. The three-limb test developed for jurisdictional gateways in Brownlie v Four Seasons Holdings Inc [2017] UKSC 80, Goldman Sachs International v Novo Banco SA [2018] UKSC 34 and Kaefer Aislamientos SA de CV v AMS Drilling Mexico SA de CV [2019] EWCA Civ 10 did not apply as the merits test for freezing relief. Harrington v Mehta [2022] EWHC 2960 (Ch) and Chowgule v Shirke [2023] EWHC 2815 (Comm) were wrong to that extent.
2. Risk of unjustified dissipation must be assessed objectively. Allegations of fraud, dishonesty or comparable conduct may provide a basis for an inference of risk, as illustrated by The Nicholas M [2008] EWHC 1615 (Comm) and Baldwin v Sheikh Saud Al-Thani [2012] EWHC 3156 (QB). They do not justify a general adverse impression that the respondent is the type of person likely to dissipate assets, or reliance on a feeling of uneasiness without further evidence or a properly grounded inference.
3. The claimants’ case passed the good-arguability threshold, though only narrowly. The evidence concerning the alleged threat, the subsequent sale at the same price, the absence of evidence explaining the substantial price reduction and evidence of analogous state conduct were sufficient at the interlocutory stage. The court also found a real risk of dissipation, principally because of the redomiciliation strategy and a letter which had prevented funds being used to satisfy an undisputed debt owed to a company associated with the claimants.
4. The fact that enforcement against Russian assets might be difficult did not itself establish dissipation, but Transneft’s Russian assets could not provide a complete answer where enforcement was doubtful. A notification order had to be tailored to utility and prejudice. Advance notice was appropriate for reorganising or altering Transneft’s capital structure, but not generally for acquisitions, debt facilities or litigation. Financial thresholds, disclosure confined to assets outside Russia and confidentiality measures were appropriate.
5. The delay was potentially relevant to the merits but did not strongly weigh against relief. The issue of fortifying the cross-undertaking was deferred so that Transneft could provide realistic evidence of damage caused by the order’s final terms.

This was a first-instance interlocutory application. It had been adjourned at the 10 October 2023 hearing and returned on 10 November 2023. The court directed that it be read with the October Judgment, [2023] EWHC 2655 (Comm).