Worldwide freezing order against Saudi national discharged

In Les Ambassadeurs Club Ltd v Albluewi [2020] EWHC 1313 (QB), the High Court discharged a worldwide freezing order (WFO) obtained by a casino against its high net wealth customer in finding that the claimant had failed to establish a real risk of dissipation of assets and that there had been material non-disclosures which were directly relevant to the risk.

Background to application for freezing injunction

The Claimant, Les Ambassadeurs Club Limited is the owner of a casino based in Mayfair, London and issued proceedings against the Defendant, one of its customers, Sheikh Salah Hamdan Albluewi, a Saudi Arabia national, for the sum of £2,000,000 plus contratual interest arising out of the dishonour of 17 cheques issued between 7 to 9 September 2019 (and returned unpaid on 25 September 2019) pursuant to a cheque cashing facility and/or a loan for the same sum which was said to be suspended until or unless the cheques were dishonoured.

The Claimant did not allege dishonesty however relied on the fact that the cheques had been dishonoured and also on subsequent assurances from the Defendant that the cheques would be honoured.

Justice Freedman held that the Claimant had a good arguable case but noted that the proceedings were defended and furthermore the Defendant argued that the debts comprised illegal gambling debts.

What is a freezing order or injunction?

A freezing order or freezing injunction (formerly known as a Mareva injunction) is an order that is used by a creditor who is concerned that a company may sell their assets and fail to pay the amount due to the creditor. The order can freeze almost any asset including: a company bank account, property, land or investment and shares.

Claimant’s application for worldwide freezing order

On 6 February 2020 applied without notice for a worldwide freezing order (“WFO”) against the Defendant, which WFO was granted. On 17 February 2020, the Claimant applied for the continuation of the WFO.

In justifying the basis for a WFO, the Claimant claimed that there was no reason to believe that he had sufficient assets within the jurisdiction, and there was a reasonable inference that he had assets outside of England and Wales and not simply in Saudi Arabia.

The Claimant made submissions as to the real risk of dissipation which would then make enforcement of a judgment impossible or more difficult. The Defendant had allegedly returned to Saudi Arabia in the middle of his default of the loan agreement, which the Claimant stated was an indication of his intention to remove assets and enforcement of a ‘gambling debt’ in Saudi Arabia, where the Defendant resided would not be possible.

Defendant’s Challenge to worldwide freezing order

The Defendant made a discharge application on 9 March 2020 on the basis that:

• there was no real risk of dissipation of assets;
• it was not just and convenient to have a WFO; and
• the Claimant failed to make full and frank disclosure in its application.

Court’s discharge of worldwide freezing order

The Court dismissed the Claimant’s application and discharged the WFO in holding there was no real risk of dissipation of assets and the Claimant had failed to give a fair presentation to the Court as to the real risk of dissipation of assets i.e. there had been material non-disclosures regarding the risk therefore a WFO would not be just and convenient.

Although the Defendant had returned to Saudi Arabia in the middle of his default of the agreement with the Claimant, the Judge held this coincided with his return to that country. The Judge found that the Defendant had substantial connections with London which were contrary to the Claimant’s conclusion that the Defendant would remove all his assets to Saudi Arabia and that he owned assets which exceeded the value of the sums owed to the Claimants in jurisdictions that would be amenable to enforcement.

Read the full judgment here.

Importance of full and frank disclosure in application for worldwide freezing order

The duty of full and frank disclosure extends to all material facts and not just those known to the applicant but also those which would result from enquiries which would be expected to be made in the course of applying for a freezing order.

Any breaches of the duty of full and frank disclosure can result in a costs order being made against the applicant.

How to apply for a freezing order?

The following documents should be completed which will be best prepared by a solicitor to ensure the best chances in obtaining the freezing order:

• Application Notice along with evidence in support if the application.
• A draft Order – which will set out the terms for the freezing Order.
• Ancillary Orders (only sometimes needed) – this may include an order for cross-examination, delivery of passport, or order for a company receiver.

If a freezing order is then granted at a hearing it will usually be made for a specific amount of time and a return date will be fixed for a full hearing. At the full hearing the court will determine whether the injunction should be continued, varied or discharged.

Specialist Injunction Solicitors in London

Our London Private Prosecution and Injunction Lawyers are proud of being able to mobilise with speed and act as tenaciously as the client’s needs and case demands. This is one of the reasons for the firms location adjacent to the Royal Courts of Justice in Central London. We have for example obtained an out of hours emergency worldwide freezing injunction for one of our clients in circumstances which required overnight preparation of affidavits and attendance upon a Judge at his private residence followed by immediate enforcement action and further attendance the next morning at the High Court.

We ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense.