High Court finds that foreign lawyer is not liable in tort for involvement in breach of English freezing order
Published on 18th March 2025
The judgment will be welcomed by foreign lawyers but its focus will likely be the subject of Court of Appeal rulings
The English High Court in Lakatamia Shipping Company Ltd v Su and others [2024] has dismissed two tort claims seeking to impose personal liability on a Monaco lawyer who was involved in the transfer of assets in breach of an English freezing order in circumstances where he was found to have understood that he was not acting unlawfully (based on the wording of the order). This judgment is the latest in a string of judgments in the case of Lakatamia v Su.
In 2023, the High Court ruled that England is the appropriate forum in cross-border conspiracy claim in the defendants' unsuccessful jurisdiction challenge in Lakatamia [2023].
The claimants pursued claims in unlawful means conspiracy and the Marex tort against a judgment debtor and his Monaco lawyer in connection with the dissipation of the proceeds of a property sale in breach of an English freezing order on the assets of the judgment debtor. The trial was largely uncontested but the judge nevertheless subjected the claims to considerable scrutiny.
The freezing order contained the standard wording (known as the Babanaft proviso) that "the terms of this Order do not affect or concern anyone outside the jurisdiction of this Court."
The claimants alleged that the Monaco lawyer, Maître Zabaldano, was liable in tort for his involvement in transferring monies to companies outside of the jurisdiction connected with the judgment debtor.
The court found that Mr Zabaldano, on instruction from the judgment debtor, transferred frozen assets at a time when he knew that the judgment debtor was bound by the freezing order and that the judgment debtor's instructions to transfer the assets would be a breach of the order.
However, the court concluded that the standard wording in freezing orders that protects foreign third parties (the Babanaft proviso) precludes tortious liability from arising as a result of third parties outside of the jurisdiction assisting the person subject to a freezing order to breach it.
Separately, the court also found that a claim based on the Marex tort of intentionally and knowingly inducing a violation of rights in a judgment also failed against Mr Zabaldano. The court found that, while it could be said that Mr Zabaldano facilitated a violation of the claimant's rights under the judgment by frustrating enforcement, he did not have the necessary intention because he honestly believed that he was entitled to take the action he did.
Osborne Clarke comment
The judgment will be considered by many to be surprising as there is significant authority to support the proposition that the Babanaft proviso wording only prevents sanctions for contempt of court being imposed on foreign third parties, rather than preventing tortious claims for intentional wrongdoing. Further, there seems to have been no comment in the judgment on the fact that agents appointed by power of attorney are affected by the injunction, even if overseas.
It appears that the judge was particularly concerned by the notion of foreign lawyers being found liable for judgment debtors' wrongdoing when they believed they were entitled to act as they did. This judgment will be welcomed by foreign lawyers. However, it seems likely that this point will be the subject of further judgments in the Court of Appeal in the future.
