Four London Law firms in ArcelorMittal's plea for a worldwide freezing order against Essar, Ruias

A London Commercial Court has dismissed ArcelorMittal USA's application seeking a worldwide freezing order Essar promoters Ravi Ruia, Prashant Ruia and Essar Global Fund Ltd in connection with a claim of over US$1.5 billion. (ArcelorMittal USA vs Ravi Ruia & Ors).Ruias and Essar were represented by Stephenson Harwood and Quinn Emmanuel Urquhart & Sullivan UK LLP, while the Russian Bank VTB was represented by Dechert LLP. Arcelor Mittal was represented by Mishcon de Reya..Pursuant to the COVID-19 Protocol, the judgment was handed down by the judge remotely by circulation to the parties’ representatives by email..The date and time for hand-down was deemed to be March 30, 2020 at 2:00 pm..The judgement was passed by Justice Henshaw of the High Court of Justice, Business and Property Courts of England & Wales, Queen’s Bench Division, Commercial Court, London..ArcelorMittal USA (AMUSA) had moved the London Court seeking a worldwide freezing injunction and ancillary disclosure orders against the Ravi Ruia, Prashant Ruia and Essar Global Fund Ltd (EGFL), the principle holding company of the Essar Group..The freezing order was sought in support of AMUSA’s claim for damages in excess of US$1.5 billion in connection with an ICC arbitral award against Essar Steel Limited and liabilities under a 10-year iron ore supply contract entered into between AMUSA and three companies in the Essar group,.AMUSA, inter-alia, argued that pursuant to a conspiracy, the Ruias and other Defendants had undertaken a series of steps/ transaction to strip Essar Steel of its assets worldwide, thus posing a serious risk of dissipation of Essar Steel’s assets..As an instance, AMUSA pointed out that in 2012, EGFL initiated restructuring of Essar Steel to reduce the total value of the assets and equity by an amount equal to the value of its interest in Essar Steel India. In the same year, Essar Steel also assigned the US$1.38 billion promissory note to EGFL in consideration of a “future capital reduction”..AMUSA also claimed that in 2016, a change in accounting treatment was introduced to facilitate dissipation of assets..It was added that subsequently, Essar Steel entered into a 'Deed of Subordination' with its main lender, Russian Bank, VTB. .These steps, AMUSA argued, were undertaken in order to prevent it from enforcing any claim against EGFL for US$1.5 billion..In view of the submissions put forth by AMUSA, the Court noted that in the present case, AMUSA's allegations as to the underlying events had to be considered not only in the context of "the good arguable case" hurdle but also in the context of the risk of dissipation hurdle. .A case that might narrowly pass the former test will not necessarily provide sufficient foundation for finding there to be solid evidence of a risk of dissipation. It depends on the nature and strength of the case and the totality of the evidence said to demonstrate risk of dissipation.London Court.The Court opined that at the present interlocutory stage, it was not persuaded that AMUSA had a good arguable case on its claim..After individually dealing with each of the allegations levelled by AMUSA, the Court said, "I am not persuaded that AMUSA has a good arguable case of a claim for US$1.5 billion, or any other currently quantifiable sum. In addition to my view on the merits of the claim per se, I do not consider that a claim can be made out, or therefore any freezing order justified.".Observing that an applicant for a freezing injunction must establish a real risk of unjustified dissipation of assets demonstrated by solid evidence, the Court opined, ."..whilst I would accept that .. there have been aspects of the Essar group’s conduct that give rise to concern, I am ultimately not persuaded that there is solid evidence of a risk of dissipation such as might justify the imposition of a freezing order over the respondents’ assets."London Court.Ultimately, the Court considered the likely impact of a freezing order in order to ascertain where the balance of justice lied..In view of the adverse impact on Essar's main lender VTB, as well other third parties such the persons employed with the Essar conglomerate, its contractors, financers etc, the Court opined that it would not be just and convenient to grant a worldwide freezing order against any of the respondents..It was also observed that there was a delay, at least between March and November 2019, in bringing the application and that the freezing order was sought against persons out of the jurisdiction, in respect of assets outside the jurisdiction, and in relation to matters with relatively limited links with England & Wales..AMUSA’s application for a worldwide freezing order was thus dismissed..AMUSA was represented by Anthony Peto QC, Peter Head, Andrew Scott, Isabel Buchanan and Timothy Lau (instructed by Mischon de Reya LLP)..Anthony Peto QC, Peter Head, Andrew Scott, Isabel Buchanan and Timothy Lau (instructed by Mischon de Reya LLP) represented Arcelor Mittal.Ruias were represented by Paul McGrath QC and Ruth Den Besten. London headquartered Stephenson Harwood represented the Ruias. EGFL was represented by Paul Stanley QC and David Peters with along with Quinn Emmanuel Urquhart & Sullivan UK LLP.VTB was represented by Adrian Beltrami QC & Ian Higgins led by law firm of Dechert LLP. .Read the Order: