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Commercial Court discharges $3 billion freezing order in relation to Angolan sovereign wealth fund

On 16 August 2018, Mr Justice Popplewell discharged a $3 billion proprietary and freezing injunction (“WFO”) against the Defendants, Mr José Dos Santos, Mr Jean-Claude Bastos de Morais (“Mr Bastos”), and the Quantum Global group of companies.  This is a very important judgment on the requirements for freezing orders, especially the duty of full and frank disclosure and demonstrating that there is a real risk of “unjustified” dissipations.

The Quantum Global group, owned by Mr Bastos, has managed the sovereign wealth fund of Angola for several years under long-term contractual commitments. Following the election of President Lourenço in 2017, the Angolan government has sought to unwind these arrangements. 

The Claimants, Fundo Soberano de Angola (the “FSDEA”) obtained a WFO in April 2018 over $3 billion of assets managed by the Quantum Global group.  The FSDEA alleged that there was a dishonest conspiracy between the Defendants to take control of the funds and to dissipate them by means of unjustifiable fees to the Quantum Global group.  The focus of the FSDEA’s claims was Mr Bastos, as the owner of the Quantum Global group and the alleged lead conspirator.

Mr Justice Popplewell held that the FSDEA had committed numerous material non-disclosures and failed to present the case fairly at the ex parte hearing in April.  The judgment contains an important summary of the duty of full and frank disclosure and fair presentation, the obligations placed on lay clients and lawyers, and the vital importance of this duty to the administration of justice (paragraphs 51-53). Mr Justice Popplewell accepted the submissions by Mr Bastos’ counsel that there were eight separate breaches of this duty by the FSDEA going to the very heart of their case. The lack of fair presentation covered the appointment, track record and suitability of Quantum Global and Mr Bastos; the transparency, supervision and structure of the sovereign wealth fund; and the level of fees charged. These breaches were so serious and culpable that the Court was justified in discharging the WFO and not granting fresh relief (paragraph 85). 

Mr Justice Popplewell also held that there was no risk of dissipation.  The judgment explains that an applicant for a freezing order must provide solid evidence of an “unjustified” dissipation, and that a freezing order is not intended to stop a defendant from dealing with its assets in the normal course of business.  If a defendant is not threatening to change the existing way of handling their assets, it will not be sufficient to show that such continued conduct would prejudice the applicant’s ability to enforce a judgment (paragraph 86).  Applied here, the FSDEA had failed to provide solid evidence of a risk of dissipation – it was not enough to rely upon the ongoing payment of fees to Quantum Global under extant contracts.  There was no suggestion that Mr Bastos or Quantum Global had received any sums other than those to which they were contractually entitled (paragraph 88).

The judgment also held that the English Court did not have jurisdiction in respect of almost all the claims (including all the claims against Mr Bastos) as England was not clearly and distinctly the appropriate forum for this dispute (paragraph 44). Moreover, the Court held that several of the claims were subject to binding arbitration clauses in the relevant contracts. 

Stephen Auld QC and Alexander Brown appeared for the Second Defendant, Mr Bastos, instructed by Grosvenor Law LLP.  You can view the full judgment here