What Is The Test For "A Good Arguable Case" In A Freezing Order Application? An Issue Crying Out For Clarification

• Published date: 20 February 2024
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation
• Law Firm: Herbert Smith Freehills
• Author: Mr Jeremy Garson and Jan O'Neill

Following several recent High Court decisions, there are now two directly conflicting lines of authority on the question of what test a judge should apply when assessing whether an applicant for a freezing injunction has met the requirement to have a "good arguable case" on its substantive claim. The judge in the most recent High Court decision considered that this issue was crying out for a definitive answer and should be addressed from first principles by the Court of Appeal.

Essentially, the faultline between the conflicting authorities is whether:

• the test remains the long-established "Niedersachsen test" - under which the applicant's case does not necessarily have to have a better than fifty per cent chance of success but needs to be "more than barely capable of serious argument"
  or
• that test has been replaced by the three-limb approach that applies when assessing whether there is a good arguable case that one of the jurisdictional gateways for service out of the jurisdiction applies (derived from the Supreme Court's decision in Brownlie v Four Seasons Holdings International [2017] UKSC 80 - discussed here). That approach will ordinarily involve a comparative assessment of the parties' arguments, and may be more difficult for an applicant to satisfy.

While the difference between the competing tests may in many cases not affect the outcome of the application, parties will wish to consider the potential impact on their case. It may be appropriate for parties to address the issue when: (i) framing their submissions - particularly on without notice applications where there is a duty of full and frank disclosure and (ii) deciding what evidence they should adduce - bearing in mind a suggestion in the recent caselaw that the Brownlie-derived approach may require more extensive evidence than is typically involved in such applications (though that view may not be shared by other judges).

The competing tests

Historically, the meaning of "good arguable case" in this context has been generally accepted to be as stated by Mr Justice Mustill in Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft GmbH ("The Niedersachsen") [1984] 1 All ER 398) - namely, that the applicant's claim must be

"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" (the Niedersachsen test)

The trigger for the current uncertainty was the Court of Appeal's 2019 decision in Lakatamia...