Vol 13 (2016) - Issue 3

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In Ras Al Khaimah Investment Authority and others v Bestfort Development Limited LLP (and 13 others) [2015] EWHC 3383 (Ch)

The applicant entities (collectively 'RAK') formed part of the arrangements for investing the sovereign wealth of the state of Ras Al Khaimah. They applied to the English court for a freezing order and various ancillary relief, including the appointment of receivers over the assets of 14 respondent LLPs registered in England and Wales. The respondent companies were said to be connected to a Mr Mikadze, a Georgian national, who had been director of the 4th – 6th applicants between 2008 and 2013, and held senior management positions within those applicants. The application was made in support of claims issued by RAK in both the Republic of Georgia and the UAE, pursuant to s.25 of the Civil Jurisdiction and Judgements Act 1982 ('CJJA'). No relief was sought against Mr Mikadze personally, because (a) he was not present in the jurisdiction; and (b) he was not thought to have any assets in the jurisdiction, other than his interests in the Respondent LLPs.
The application was not successful.
Whilst the case did not establish any new principles, it provides a useful illustration of the possible breadth of the Court’s jurisdiction to grant ancillary relief, including the power to appoint receivers; and guidance as to the circumstances in which such relief will be granted, and the evidence that may be required if an application is to succeed.

Background
The substantive proceedings
A Dr Massaad was put in charge of Ras Al Khaimah’s decision to pursue investment opportunities in Georgia. He was given wide powers to pursue investments, including the power to appoint whomever he considered fit to assist him meet the state’s objectives. He appointed Mr Mikadze to become the emirate’s partner in developing investment opportunities in Georgia.
RAK asserted that Mr Mikadze and Dr Massaad both abused the trust placed in them, and acted in serious breach of fiduciary duties. Mr Mikadze was alleged to have, inter alia, diverted moneys to his personal bank accounts, and caused the Ras Al Khaimah companies for whom he was supposed to be working to enter into lucrative contracts with contractors that were in fact his creatures, and which did not in fact provide any services in return for the substantial remuneration paid.
Mr Mikadze vigorously disputed the claims. The English Court took the view that he had prima facie defence which would require the trial court to thoroughly examine all the facts, but concluded that there were good arguable claims against him.

The English application
There were two groups of respondents:

– The 1st, 3rd, 5th and 9th Respondents were defendants to some of the claims brought by RAK in Georgia or the UA.
– The remaining Respondents were not parties to any claims. Relief was sought against them on the basis that they were beneficially owned by Mr Mikadze, such that their assets would be available to satisfy any judgment against Mr Mikadze in those countries. In TSB Private Bank International v Chabra [1992] 1 WLR 231 Mummery J held that, although the court had no jurisdiction to grant an interlocutory injunction in favour of an applicant who had no good arguable cause of action against a sole defendant, it had power to grant such an injunction against a co-defendant against whom no cause of action lay, provided that the claim for the injunction was incidental and ancillary to the cause of action against the other co-defendant. RAK relied on this jurisdiction in bringing its claim against these Respondents.
– RAK also relied on the Chabra jurisdiction against the Respondents who were defendants in the foreign proceedings, on the basis that their assets were beneficially owned by Mr Mikadze. The freezing order was thus sought up to the total amount of damages claimed against Mr Mikadze, irrespective of the Respondents’ status as defendants to any proceedings (or not).