Court of Appeal in England clarifies 'good arguable case' test for freezing injunctions
Published on 18th March 2025
The ruling returns the threshold for obtaining this important pre-trial protective relief to a lower standard
Applicants for a freezing injunction must show a "good arguable case" on the merits of the claim. The Court of Appeal has now confirmed the correct threshold to be applied by the court is to be equated with (and should be reframed as) "serious issue to be tried", reversing a recent shift in High Court cases towards a higher threshold.
A freezing injunction restrains the respondent from moving, hiding or otherwise unjustifiably dissipating its assets and is an important tool in a claimant's arsenal in fraud claims and enforcement or recovery matters.
When applying for a freezing injunction to preserve assets pending judgment, an application must satisfy the court that it has a good arguable case on the merits, there is a real risk that a future judgment may not be fulfilled due to unjustified dissipation of assets and it is just and convenient to grant the freezing injunction.
In the case of Isobel Dos Santos v Unitel SA (2024), the English Court of Appeal has confirmed that the test to establish whether an applicant has a "good arguable case" for the purpose of a freezing injunction application should be equated with the lower threshold "serious issue to be tried" test from American Cyanamid Co v Ethicon Ltd (1975) for interim injunctions generally, instead of a higher threshold test recently applied in two High Court cases.
Less stringent test
The decision clarified that a "good arguable case" in the context of a freezing injunction application should be interpreted 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". This aligns it with the test articulated in Ninemia Maritime Corp v Trave SchiffahrtsGmbH & Co KG [1983] WLR 1412.
In coming to this decision, the court held that, a "good arguable case" in the freezing injunction context was not to be assessed by reference to the stricter requirement that a claimant must show that it has the "better of the argument" (that is, a better than 50% chance of success) as articulated in Brownlie v Four Seasons Holdings Inc (2017). The Brownlie test is applied by the court when determining whether a claim falls within a jurisdictional gateway in the context of an application for permission to serve out of the jurisdiction.
Rectifying the divergence in case law
Prior to the decision in Dos Santos, an inconsistency had emerged in the case law on whether the Niedersachsen test or Brownlie test applied when determining whether the applicant for a freezing injunction had a "good arguable case".
This inconsistency was driven by the Court of Appeal's judgment in Lakatamia Shipping Co Limited v Toshiko Morimoto (2019), which, although far from clear on this point, was interpreted by some as moving away from the Niedersachsen test in favour of the Brownlie test. This interpretation of the decision in Lakatamia was then followed in two High Court cases that favoured the Brownlie test but rejected in a third High Court case that favoured the Niedersachsen test.
The court in Dos Santos considered that the two High Court cases that relied on the judgment in Lakatamia in favouring the Brownlie test had departed from the established line of authority. It determined that a "good arguable case" could, and should, be given a different meaning depending on whether the court was hearing an application for a freezing injunction (that is, the Niedersachsen test) or an application for permission to serve out of the jurisdiction pursuant to one or more of the jurisdictional gateways (the Brownlie test). Furthermore, the Court of Appeal expressed doubt that the Lakatamia judgment intended to change the test in relation to "good arguable case" for freezing injunctions, commenting that the judgment had considered the matter only "briefly, elliptically and ambiguously".
The court reasoned that the lower threshold Niedersachsen test is appropriate in the context of a freezing injunction, where the merits of the case will ultimately be revisited and determined at trial. In contrast, the specific question of whether an applicant's claim falls within any of the jurisdictional gateways will not be tested again later in the proceedings, and the applicant should therefore be required to meet a more stringent Brownlie test in those circumstances.
Alignment of interim injunction tests
The court in Dos Santos considered whether, following this clarification, any meaningful distinction remained between the "good arguable case" test from Niedersachsen for freezing injunctions and the "serious issue to be tried" test applied in the context of interim injunction applications generally pursuant to the principles set out in American Cyanamid. The court confirmed that the difference was "imperceptible" and the two tests should be equated.
On this basis, Lord Justice Popplewell's judgment proposed that the phrase "good arguable case" should be confined to jurisdictional gateways cases, with the "serious issue to be tried" test being adopted for freezing injunction applications.
Osborne Clarke comment
The ruling provides welcome clarification to a divergence in judicial views on the threshold for a "good arguable case" for a freezing injunction, and helpfully consolidates two substantially equivalent tests.
Freezing injunctions are often sought pre-action or at an early stage of proceedings before the parties' respective cases have crystallised. The decision in Dos Santos provides comfort to any applicant seeking a freezing injunction that it will not be required to make out the merits of its case to too high a standard at this early stage. In doing so it reinforces the utility of freezing injunctions as a pre-trial tool to safeguard a claimant's ability to enforce a judgment against a defendant's assets should it succeed at trial.
