In the March 22 2018 decision in JTrust Asia PTE Ltd v Mitsuji Konoshita and APF Group Co Ltd, the BVI Commercial Court provided helpful guidance as to the threshold for a good arguable case, dismissing the defendants' application to discharge a worldwide freezing injunction obtained by claimant JTrust in December 2017.
The defendants sought to discharge the freezing injunction, arguing that JTrust did not have a good arguable case. In opposing the application, JTrust highlighted the first defendant's track record of dubious commercial conduct, which included being subject to:
- the largest Financial Services Authority fine in Japanese history in July 2017 for price manipulation and releasing false information; and
- allegations of fraud and false accounting by the Thai Securities and Exchange Commission (TSEC) in October 2017, which led to the defendant being banned from holding directorship and executive roles.
A 'good arguable case' was defined in the UK Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft GmbH decision as "one which is more than barely capable of serious argument, but not necessarily one which the judge considers would have a better than 50 per cent chance of success". Expanding on this, the BVI court held that its function is not to launch a mini-trial of the issues; instead, what is required is "no more than a preliminary appraisal of the claimant's case". The court noted the first defendant's conduct and untrustworthy characteristics and was satisfied that the claimant's arguments demonstrated a good arguable case, holding that the TSEC evidence was of itself "sufficient evidence that there is a good arguable case".
Relying on the principles in AH Baldwin & Sons Ltd v Sheikh Saud al Thani, the court held that where there is a good arguable case that a defendant has acted fraudulently or dishonestly, or with "unacceptable low standards of morality giving rise to a feeling of uneasiness about the defendant", further evidence is often unnecessary to justify a freezing injunction.
The decision is good news for those seeking to freeze defendants' assets where there is evidence of fraudulent or dishonest conduct. The defendants have appealed.
For further information on this topic please contact Ian Mann or Jennifer White at Harneys' Hong Kong office by telephone (+852 5806 7800) or email ([email protected] or [email protected]). Alternatively, contact Peter Ferrer at Harneys' Tortola office by telephone (+1 284 494 2233) or email ([email protected]). The Harneys website can be accessed at www.harneys.com.
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