• The Three-Limb Test involved a relative assessment of the parties’ positions – i.e., it considered whether the applicant’s case was relatively stronger than the respondent’s case. Relative assessments have the potential to draw the parties and the court into the conduct of mini-trials because they encourage parties at a very early stage in the proceedings to bring forward every piece of evidence which might suggest that they have the better of the arguments (which is not the case if all that is required is for a set evidential threshold to be discharged). The conduct of mini-trials would place an even greater burden on the court, where the number and scale of urgent interlocutory applications is already causing strain.
• A relative test would put the merits bar too high to serve the interests of justice. Freezing orders are commonly sought in cases alleging fraud and dishonesty, and it may be difficult in those cases for an applicant to demonstrate, at an early stage in the proceedings and prior to disclosure, that it has the better of the arguments on the merits. Adopting a relative test could therefore deny victims of wrongdoing the interim protection that freezing orders are designed to give.
• In his judgment in Lakatamia, Haddon-Cave LJ explained at paragraph 33 that “the basic legal principles for the grant of a [worldwide freezing order] are well-known and uncontroversial and hardly need restating”, which suggested that he had not intended to effect any significant change in the test for freezing orders.
• The test of a “good arguable case” in relation to jurisdiction relates to the issue of whether there is an available gateway and is not a merits test. There is no reason why the test in relation to gateways should be applied as the merits test in relation to freezing orders.

Two weeks later, Mr Justice Bright handed down his judgment in Unitel SA in which he agreed with the conclusion that Mr Justice Butcher had reached. In his final observations, Mr Justice Bright agreed that the effect of adopting the Three-Limbed Test in freezing order cases would be to significantly lengthen the hearings. In particular, he explained that had the Three-Limb Test applied in Unitel SA, he would have permitted the parties to adduce oral evidence because the relative nature of that test meant that the parties must be permitted to answer it with the best available evidence to them. Mr Justice Bright explained that had oral evidence been adduced, the hearing would likely have taken four days, as opposed to two.

In his judgment, Bright J explained that “the law is in a confused state, which cries out for a definitive answer from the Court of Appeal” [para 37]. He also explained that if the issue of the meaning of a “good arguable case” in the freezing order context was determinative of the outcome of the application in Unitel SA, then he would feel bound to grant permission to appeal. Therefore, while both High Court judgments firmly rejected the contention that Lakatamia has changed this area of the law, it is highly likely that the issue will come before the Court of Appeal soon.

Client Alert 2024-075