Does it have sharp teeth? Breadth of ancillary disclosure orders - Al Saud v Gibbs
It is widely accepted in the BVI, Cayman Islands and Bermuda courts, as well as other common law jurisdictions, that an asset disclosure order is an ancillary order which gives a freezing injunction “its teeth” and the purpose for which they are made is to police that freezing order. But how is the court persuaded to bite?
The Commercial Court of England and Wales in the case of Al Saud v Gibbs considered this point when it ruled on the claimant's application for variation and ancillary disclosure orders in support of an existing worldwide freezing order (WFO) against the defendant’s assets. The WFO included provisions preventing the defendant from removing any of his or the non‑cause of action respondent's assets in England and Wales up to the specified value, and from disposing or dealing with or diminishing the value of their assets worldwide up to the same value.
The claimant sought disclosure of the defendant's bank statements, bank statements of his group of companies, and bank statements of the account to which the proceeds of sale of the defendant's apartment were paid, in order to assist in the enforcement, and prevent breaches, of the WFO.
Mr Justice Culver opined that the test in granting an ancillary disclosure order to police a freezing order is whether the further disclosure is necessary to make the freezing order effective. Therefore, before granting such an order the court must be persuaded that there is a practical utility in requiring such evidence; that it is for a proper purpose and that the order is proportionate.
The application was granted on the basis that identification of the bank accounts and the disclosure of the bank statements were necessary to make the WFO effective. That would enable the claimant to investigate the nature and extent of the defendant's breaches of the WFO to date as they were the only way of seeing where monies had been paid. The court also found that the further disclosure order would enable the claimant to identify further hidden assets which needed to be frozen, which was important in circumstances where the defendant had successfully disposed of some of his assets already despite the WFO being in force and where he had mostly failed or refused to provide details of where the proceeds had gone.
English decisions are persuasive in the offshore courts and are therefore of interest in the BVI, Cayman Islands and Bermuda where freezing orders and ancillary disclosure orders are frequently sought in support of both domestic and foreign proceedings.
