CL-2015-000047 - [2025] EWHC 1837 (Comm)

BASIS OF THE CLAIMANTS’ APPLICATION

The Claimants, members of the Arcadia Group, commenced proceedings in 2015 alleging a substantial and sustained fraud by the Defendants, in connection with 144 crude oil purchase and sale transactions between April 2007 and May 2013 relating to oil originating in West Africa.

At the outset of the proceedings, on 12 February 2015, Teare J granted the Claimants a worldwide freezing order against the Defendants covering assets worth up to US$335 million, containing the usual undertaking in damages. The order was continued by an order of Flaux J of 1 July 2015, and in substance remained in place until February 2025.

On 22 January 2025 I handed down judgment, following a ten-week trial, concluding that the Claimants’ claims should be dismissed and that certain counterclaims made by the First Defendant (“D1”) and the Second Defendant (“D2”) (together “D1/D2”) succeeded. The active Defendants by this stage were D1, D2, the Fifth Defendant, Mr Kelbrick (“D5”), and the Ninth Defendant Attock Oil International Limited, Mauritius.

In the course of that judgment, I found that several of the allegations which had been central to the Claimants’ case had been entirely unsustainable and lacked any coherent basis. Those allegations had also, naturally, been central to the evidence that the Claimants adduced in order to obtain and maintain the freezing order.

At the hearing of consequential matters on 10 February 2025, I dismissed the Claimants’ claims, upheld certain counterclaims and made various costs orders. In addition, I made an order, which was unopposed by the Claimants, directing that the Claimants’ undertakings in damages in connection with the freezing injunction be enforced and there be an inquiry into damages (“the Inquiry”), to be heard at a 2-week trial not before March 2026.

D1/D2 on 14 March 2025 served Particulars of Loss and Damage in the Inquiry, seeking compensation for loss of the oil trading business they say they would, but for the freezing order and its effects, have established, and which they alleged would have made profits of the order of US$500 million. Alternatively, they claim for lost job opportunities, from which they say they would have earned of the order of US$113 million. D1/D2 also seek compensation for lost investment opportunities and lost investment gains on assets they had to sell; together with injury to reputation, distress and invasion of personal liberty, for which they claim aggravated damages.

As part of their Particulars, D1/D2 allege that allegations which the Claimants made in support of the freezing order were false and were, when made, known to be false (through, in particular, Mr Fredriksen, Mr Trøim, Mr Hannas and/or Mr Adams, all of whose knowledge is said to be attributable to the Claimants).

In addition, D1/D2 served Particulars to Set Aside Judgments for Fraud, alleging that, in the context of their jurisdiction challenge in the course of the proceedings (including appeals to the Court of Appeal and the Supreme Court), the Claimants consciously and deliberately made dishonest representations to the court. On that basis, D1/D2 seek the setting aside of eight costs orders made against them in the course of the jurisdiction challenges, and repayment of the relevant sums paid by way of costs.

D5, on 14 March 2025, served Points of Claim in Relation to the Inquiry, seeking compensation on two main bases. He alleges that, but for the freezing order and its effects on Attock Dubai (in which he had a 50% interest), he would have received substantial sums from Attock Dubai in his capacity as trader/employee, director and ultimate 50% shareholder. Further or alternatively, he alleges that, but for the effect of the freezing order, he would have become a senior employee of Vitol Dubai and would have received substantial sums by way of a sign-on bonus, annual salary, annual bonus and share scheme participation. He also claims for lost investment opportunities and lost investment gains on assets he had to sell, together with upset, stress and loss of reputation.

Like D1/D2, D5 alleges in his Points of Claim that allegations that the Claimants made in support of the freezing order were false and were, when made, known by the Claimants to be false.

The Claimants apply to strike out the allegations that the freezing order was obtained dishonestly. The starting point, they say, is that an inquiry into damages is not generally concerned with whether the injunction was properly granted (see, e.g., Gee on Commercial Injunctions, 7^th ed., § 11-037 citing Norwest Holst Civil Engineering Ltd v Polysius Ltd, The Times, 23 July 1987). The Claimants submit that the dishonesty allegations are arguably relevant only to two matters, namely (i) the Defendants’ contention that if the freezing order was obtained dishonestly, then they can recover without regard to foreseeability, and (ii) D1/D2’s application for repayment of the costs which they were ordered to pay, and paid, in connection with their jurisdiction challenge. The Claimants seek an order striking out the dishonesty allegations conditionally upon the Claimants (a) amending their own statements of case in the Inquiry so as to concede the foreseeability point (which the Claimants accept is arguable) and (b) repaying the relevant costs of the jurisdiction challenge.

The application is put forward under CPR rule 3.4(2)(a) and/or (b), under which the court can strike out part of a statement of case if it discloses no reasonable grounds for bringing or defending the claim, is an abuse of the court’s process, or is otherwise likely to obstruct the just disposal of the proceedings. The Claimants refer to Warby J’s summary in HRH The Duchess of Sussex v Associated Newspapers Ltd [2020] EWHC 1058 (Ch) at [33]-[34]:-

“[33] …

(2)

An application under CPR 3.4(2)(a) calls for analysis of the statement of case, without reference to evidence. The primary facts alleged are assumed to be true. The Court should not be deterred from deciding a point of law; if it has all the necessary materials it should “grasp the nettle”: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725…

(3)

Rule 3.4(2)(b) is broad in scope, and evidence is in principle admissible. The wording of the rule makes clear that the governing principle is that a statement of case must not be “likely to obstruct the just disposal of the proceedings”. Like all parts of the rules, that phrase must be interpreted and applied in the light of the overriding objective of dealing with a case “justly and at proportionate cost”. The previous rules, the Rules of the Supreme Court, allowed the court to strike out all or part of a statement of case if it was “scandalous”, a term which covered allegations of dishonesty or other wrongdoing that were irrelevant to the claim. The language is outmoded, but I agree with Mr White that the power to exclude such material remains. Allegations of that kind can easily be regarded as “likely to obstruct the just disposal” of proceedings.

(4)

“Abuse of process” is a sub-set of category (b). An abuse of process is a significant or substantial misuse of the process. It may take a variety of forms. Typical examples are proceedings which are vexatious, or attempts to re-litigate issues decided before, or claims which are “not worth the candle” (Jameel v Dow Jones & Co Inc [2005] EWCA Civ 75 [2005] QB 946). But the categories are not closed…

34.

In the context of r 3.4(2)(b), and more generally, it is necessary to bear in mind the Court’s duty actively to manage cases to achieve the overriding objective of deciding them justly and at proportionate cost; as the Court of Appeal recognised over 30 years ago, “public policy and the interest of the parties require that the trial should be kept strictly to the issues necessary for the fair determination of the dispute between the parties”: Polly Peck v Trelford [1986] QB 1000, 1021 (O’Connor LJ). An aspect of the public policy referred to here is reflected in CPR 1.1(2)(e): the overriding objective includes allotting a case “an appropriate share of the court’s resources, while taking into account the need to allot resources to other cases”.”

Alternatively, the Claimants seek an order staying the same parts of the pleadings in reliance on CPR r 3.1(2)(g). If necessary, they also rely on the court’s general power under CPR r 3.1(2)(p) to “take any other step or make any other order for the purpose of managing the case and furthering the overriding objective”.

The Claimants cite Akenhead J’s statements in Charter UK Ltd v Nationwide Building Society [2009] EWHC 1002 (TCC) at [16] that it is generally wrong to plead a matter which does not support or relate to any of the remedies sought, and that the court has wide powers to strike out parts of a pleading if it contains immaterial matter; and the similar statement of Sara Cockerill QC (sitting as a Deputy Judge of the High Court) in Ventra Investments Ltd v Bank of Scotland plc [2017] EWHC 199 (Comm) at [41] that:

“The basis on which strike out applications are capable of being made is set out in the CPR. Cases may fall into one or more of the categories within those rules. The starting point for an application is for the party complaining of the pleading to set out how it says that the document or passages fall within one or more provisions of the rule. It is the function of the Court simply to weigh the complaint or complaints against the particular pleading and the facts of the particular case and decide whether an allegation is sufficiently irrelevant or incomplete or in breach of the rules – or a combination thereof - that it is appropriate to order its removal from the pleadings.”

In striking out certain allegations there, the judge noted that they would have had “a real tendency to inflate and overcomplicate trial preparation”.

The Claimants add that the dishonesty allegations here are having, and will (if not struck out) continue to have, a significant impact on the Inquiry, increasing the scope of the issues, the necessary disclosure, potentially the likely length of the trial, and the costs. The Claimants note that the dishonesty allegations occupy about half of the Defendants’ pleaded cases in the Inquiry, and that in the List of Issues for Disclosure, the Defendants seek disclosure on 19 issues/sub-issues from 15 custodians in relation to the dishonesty allegations.