LAX SA v JBC SA

An applicant for a freezing injunction may be required to disclose assets as a condition of obtaining or maintaining relief where it lacks assets within the jurisdiction and cannot fortify its cross-undertaking in damages. The order must balance the applicant’s need to provide assurance against the respondent’s privacy and confidentiality interests. The court should limit disclosure to what is proportionate and useful. Fortification requires an intelligent estimate of the loss which the respondent might suffer, supported by a good arguable case that the loss will occur.

LAX obtained a worldwide freezing order under Arbitration Act 1996, section 44, in support of contractual claims against JBC. LAX had no assets in England and Wales and was unable to fortify its cross-undertaking in damages during a financial restructuring. JBC applied to vary the injunction by requiring fortification and asset disclosure.

The court found that JBC had not established a good arguable case of loss or provided material enabling an intelligent estimate. The remaining issue was whether LAX should nevertheless provide asset disclosure as an alternative form of assurance.

1. The application was granted in part. JBC had not established a sufficient present risk of loss to justify fortification, although a further application remained possible if the drilling project produced clearer evidence of loss.

2. The ordinary practice is for an interim-injunction applicant to provide evidence of its ability to honour the cross-undertaking in damages. Where the applicant lacks sufficient assets within the jurisdiction and cannot provide conventional fortification, asset disclosure may properly be required as a condition of relief.

3. The court must balance the respondent’s privacy and confidentiality interests against the need to mitigate the applicant’s inability to provide assurance. The applicant is less well placed to object to disclosure where it seeks coercive relief without assets in the jurisdiction or available fortification.

4. The disclosure order should be proportionate. LAX was required to disclose worldwide assets exceeding US$10,000, subject to a cap once it disclosed assets with a cumulative unencumbered equity value of US$1 million. Disclosure was limited to brief descriptions and estimated values, excluded equipment, and was subject to an undertaking restricting use to the proceedings.

5. The injunction would lapse if the disclosure was not provided by 4pm on 6 September 2024.