Arms Dealing And Wheeler Dealing ' Injunctions In Support Of Insolvency Proceedings

• Published date: 26 May 2023
• Subject Matter: Litigation, Mediation & Arbitration, Insolvency/Bankruptcy/Re-structuring, Insolvency/Bankruptcy, Trials & Appeals & Compensation
• Law Firm: Appleby
• Author: Mr Andrew Willins and Gr'inne Hussey

In Parles .A.S. et al v Winsley Finance Limited (Parles)¹, Mangatal J was recently called upon to consider the boundaries to the Court's power to grant "Chabra relief".

That form of relief, derived from the English decision in T.S.B. Private Bank International S.A. v. Chabra² decided that the Court had power to restrain a third party (a so-called NCAD) from dealing with its assets, where those assets might be available to meet a judgment against the cause of action defendant (the CAD).

Chabra relief is typically available where:

1. it supports or is an ancillary proceeding to a substantive claim or intended claim, against the CAD;

2. there is a good reason to suppose that assets in the possession of the NCAD would be amenable to satisfy a judgment or enforcement mechanism;

3. there is a real risk that the assets held by the NCAD are at risk of dissipation;

4. the Court is able to join or has joined the third party to the substantive proceedings - a task which would appear to be made easier by forthcoming changes to the Civil Procedure Rules (see our article HERE);

5. it is just and convenient for the Court to grant such an injunction.

Factual Background

Winsley Finance Limited (Winsley) was a BVI company which had successfully sold a long range missile system to the Croatian Government. The sole shareholder of Winsley was a Mr Pernicka until at least February 2022. At that stage, Mr Pernicka claims to have divested himself of his shareholding in Winsley in a transfer which one of the Applicants (Parles) alleged to have been a sham.

Parles' claim was that alongside a Mr Perner (the Applicants), they were owed a total of around $9.5m by Mr Pernicka. Parles alleged that it extended a loan, guaranteed by Mr. Pernicka, for the purpose of enabling the settlement of a historic legal claim against the Croatian Government for the sum of $200million in respect of missiles delivered in 1995 (the Croatian Claim). Mr. Perner also loaned funds to Mr. Pernicka in early 2010, which were acknowledged in two separate notarial deeds signed by Mr. Pernicka in 2018 and 2022. The Applicants initially obtained injunctive relief to restrain dissipation of $1.2m, which would have protected significantly more than the total value of their claims. By the return date, a Mr. Kab'tek and a Mr. Ryb'r (the Proposed Applicants) sought to be joined to the proceedings, claiming to have significant claims against Mr Pernicka, bringing the total debts to around $12m. It was accepted by the...