What standard of merits must an applicant satisfy to obtain a worldwide freezing injunction (WWFI)? In Dos Santos v Unitel [2024] EWCA Civ 1109, the Court of Appeal was invited to jettison the established Niedersachsen test (“more than barely capable of serious argument”) in favour of the more rigorous Brownlie standard (“better of the argument”) derived from the jurisdiction cases. The Court declined the invitation. In doing so, it reaffirmed the distinction between interim remedies and jurisdictional gateways, and usefully rationalised the nomenclature of interlocutory relief.
The appellant, Ms Dos Santos, argued that the requirement for a “good arguable case” on the merits should be aligned with the three-limb test formulated by Lord Sumption in Brownlie v Four Seasons Holdings Inc [2017] UKSC 80. This would require the court to be satisfied that the applicant had “the better of the argument” - a standard significantly higher than the traditional formulation in The Niedersachsen [1983] 2 Lloyd’s Rep 600, which demands a case “more than barely capable of serious argument” but not necessarily one with a greater than 50 percent chance of success. The appellant relied on dicta of Haddon-Cave L.J. in Lakatamia Shipping v Morimoto [2019] EWCA Civ 2203 to suggest the law had already shifted.
The Court of Appeal unanimously rejected this contention. Sir Julian Flaux (with whom Popplewell and Phillips L.JJ. agreed) held that the Niedersachsen test remains the correct standard. Furthermore, the Court suggested that, to avoid future confusion, the merits threshold for freezing injunctions should henceforth be described as a “serious issue to be tried” - harmonising it with the American Cyanamid principles.
It is suggested that the judgment is manifestly correct for three reasons.
The functional distinction
Sir Julian Flaux correctly rejected the appellant’s attempt to conflate the tests for jurisdiction and freezing orders. His Lordship reasoned that they served distinct functional purposes. The jurisdictional inquiry determines conclusively whether a defendant can be brought before the English court (at [99]). It serves a ‘gatekeeping’ function. Conversely, a WWFI is an interlocutory protective measure granted pending a future trial. By keeping these two tests separate, the court correctly prevents the respondent to a WWFI from using the interlocutory proceedings to set it aside through exhaustive evidentiary battles over the “merits” under the guise of a jurisdiction challenge.
Misreading Lakatamia
Sir Julian Flaux then dismantled the appellant’s reliance on Lakatamia. His Lordship clarified that Haddon-Cave L.J. had not intended to import the Brownlie test into the freezing jurisdiction (at [103]). However, it is not clear, on a close reading of Lakatamia, that Sir Julian Flaux’s contention stands. Haddon-Cave L.J. expressly referenced the Brownlie “good arguable case” test in the context of freezing injunctions in the passage immediately preceding it (at [38]). On the other hand, Haddon-Cave L.J. also referenced the test in the “context of jurisdictional gateways”. It would appear ambiguous.
Notwithstanding the above, Sir Julian Flaux correctly reasoned that Lakatamia does not expressly support a conflation of the merits test for jurisdiction in the context of freezing injunctions.
The balance of safeguards
A further argument in support of the lower threshold for freezing injunctions is the panoply of safeguards absent in the jurisdiction context. The applicant must give a cross-undertaking in damages - often fortified - and owes a “high duty” of full and frank disclosure (Alliance Bank JSC v Zhunus [2015] EWHC 714). These mechanisms militate against the “invasive nature” of the WWFI. To superimpose a heightened merits threshold would tilt the balance unduly in favour of a potentially elusive respondent.
Terminological Rationalisation
Perhaps the most enduring contribution of Dos Santos is its tidy-up of the vocabulary. Sir Julian Flaux noted that the difference between the Niedersachsen “good arguable case” and the American Cyanamid “serious issue to be tried” is “imperceptible” (at [106]). Popplewell L.J. agreed, finding them “no different in substance” (at [122]). Thus, Sir Julian Flaux reasoned “the two tests should be equated” (at [106]).
This is a sensible clarification. The proliferation of labels - “more than barely capable of serious argument”, “serious issue to be tried”, “realistic prospect of success” - obscures the reality that these tests aim at the same conceptual target: a claim with “substance and reality”. As Popplewell L.J. concluded, it is preferable to restrict the phrase “good arguable case” to the specific context of jurisdictional gateways where it now bears a technical meaning under Brownlie. For freezing injunctions, “serious issue to be tried” is the safer, and now orthodox, label.
