In late 2014, Gerald Metals SA (“GM”) entered into a contract (essentially a form of financing arrangement) with Timis Mining Corp (SL) Ltd (“Timis Mining”). Timis Mining was owned by Mr Timis, whose business interests were in turn owned by the Timis Trust (the “Trust”). Before entering into the contract, GM obtained a guarantee from the trustee, Safeguard Management Corp. (“Safeguard”). The guarantee was governed by English law and provided for disputes to be referred to arbitration in London under the rules of the London Court of International Arbitration (“LCIA”).

There were defaults under the contract, which led to negotiations and further agreements between the parties. GM subsequently claimed that certain conditions that had been agreed had not been met, and arbitration proceedings were commenced under the guarantee.

In seeking to prevent assets being dissipated prior to obtaining a final ruling from the arbitral tribunal, GM opted for a two-pronged approach. In early August 2016, GM: (a) applied for a worldwide freezing order against Mr Timis in the High Court; and (b) commenced arbitration proceedings and applied to the LCIA Court for the appointment of an emergency arbitrator so that it could then seek an order preventing the Trust from dissipating its assets.

The Trust responded by giving undertakings not to dispose of any assets other than for full market value and at arm’s length, and to give seven days’ notice before disposing of certain assets. Following the provision of these undertakings, the LCIA Court rejected GM’s application for the appointment of an emergency arbitrator.

On 22 August 2016, GM issued proceedings in the High Court, seeking urgent relief under section 44 of the Arbitration Act 1996 (“AA96”), including that a freezing order be made against the Trust. Notwithstanding the LCIA Court’s decision, GM argued that the Court should grant such an order because although the LCIA Court had decided the matter was not sufficiently urgent to warrant the appointment of an emergency arbitrator under the LCIA Rules, the circumstances still fulfilled the criteria of “urgency” under section 44(3) AA96.

The Court’s decision regarding the High Court application against Mr Timis

The Court noted that, in applying for a freezing injunction, the first requirement was for GM to show that it had a ‘good arguable case.’ The Court considered the claims advanced by GM and concluded that it was unable to satisfy this requirement: the application for a freezing injunction was not successful.

The Court’s decision regarding the section 44 AA96 application against the Trust

The Court then addressed GM’s application for orders under section 44 AA96.

Relevant law

Section 44 Arbitration Act 1996

  • governs the power of the court to make orders in support of arbitral proceedings.
  • subsection 3 gives the court the power to make such orders as it considers necessary to preserve evidence or assets in cases of urgency.

Article 9A LCIA Rules:

  • provides that any party may apply to the LCIA Court for the expedited formation of the arbitral tribunal, in the case of “exceptional urgency”.

Article 9B LCIA Rules:

  • permits parties to apply to the LCIA Court for the immediate appointment of an emergency arbitrator to conduct emergency proceedings pending the formation or expedited formation of the arbitral tribunal, in case of emergency.
  • provides that it shall not prejudice any party’s right to apply to a state court or other legal authority for any interim or conservatory measures before the formation of the arbitral tribunal; and that it shall not be treated as an alternative to or substitute for the exercise of such right.

The Court observed that it was common ground that:

  • the test of urgency is to be assessed by reference to whether the arbitral tribunal has the power and practical ability to grant effective relief within the relevant timescale; and
  • there can be situations where the need for relief is so urgent that the power to appoint an emergency arbitrator is insufficient, and the court may properly act under section 44 AA96 - for example if the application was one that needed to be made ‘without notice’ to the other parties.

The question in this case was whether, despite the LCIA Court’s decision not to appoint an emergency arbitrator, the circumstances were sufficiently urgent to warrant the Court making a freezing order against the Trust prior to the formation of the arbitral tribunal.

The Court concluded that it could not, in this instance, make the orders sought by GM. In reaching this conclusion, the court reasoned as follows:

  • the “obvious purpose of Articles 9A and 9B is to reduce the need to invoke the assistance of the court in cases of urgency by enabling an arbitral tribunal to act quickly in an appropriate case”;
  • it would be “uncommercial and unreasonable” to interpret the LCIA Rules as creating a gap in respect of cases that are not emergencies or of such exceptional urgency to justify the expedited formation of the tribunal, but nevertheless fall within the meaning of urgency under section 44(3) of the AA96;
  • when considering the question of urgency, a similar interpretation of the LCIA articles needed to be adopted as had been given to section 44(3) of the AA96 – namely, whether effective relief could not otherwise be granted within the relevant timescale;
  • accordingly, it is only in cases where the powers of a tribunal constituted in the ordinary way are inadequate, or the practical ability is lacking to exercise those powers, that the court may act under section 44 AA96.


The Court’s consideration of the relationship between the Emergency Procedures contained within the LCIA Rules (2014), and the court’s powers to make orders in respect of arbitral proceedings, suggests that in order for a party to succeed with an application under section 44 AA96, it will need to demonstrate that the Emergency Procedures under the LCIA Rules (or other institutional rules) do not provide an adequate solution.

For parties facing the threat of a freezing order, this case also illustrates the importance of considering what might reasonably be promised by way of an undertaking, since timely undertakings may mitigate any arguments that assets might otherwise be dissipated, and could potentially neutralise a freezing order application.

Our previous Law-Now on freezing orders.