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.
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