Freezing Injunctions in the Isle of Man – Practice and Procedure

A review of practice and procedure on Isle of Man freezing injunctions

Isle of Man law is significantly – but, procedurally, not fully – aligned with English law on freezing injunctions. For example, the Isle of Man does not currently have the equivalent of the mandatory English model freezing injunction. Representing both applicants and respondents in high-value Isle of Man freezing injunction proceedings, Advocate Steven Coren of Coren Law sets out some key pointers from recent Isle of Man cases.

Jurisdiction to order a freezing injunction

Rule 7.16(1)(f) of the Rules of the High Court of Justice 2009 enables the Isle of Man court to grant:  “an order (a “freezing injunction”) – (i) restraining a party from removing from the jurisdiction assets located there; or (ii) restraining a party from dealing with any assets whether located within the jurisdiction or not”. This second limb (ie. “assets… whether located within the jurisdiction or not”) is a rare example of the Isle of Man court asserting extraterritorial jurisdiction. Not for nothing is the freezing injunction known as: “one of the law’s two nuclear weapons” (LM Moore SP Investments Ltd & another v SV Company Ltd et al (2DS 2011/21) (24.11.11) (§ 75)). In addition to Rule 7.16(1)(f), the High Court Act 1991 includes the following statutory jurisdictions: s 42(1) (court’s power to grant interlocutory or final injunctions); s 56A (power to grant interim relief pending trial or appeal); and s 56B (power to grant interim relief: “where proceedings have been or are to be commenced in a country or territory outside the Island”).

Key requirements

A freezing injunction application in the Isle of Man must be supported by an affidavit: para 3(1), Schedule 7.2 of the RHCJ 2009. In Bitel LLC v Kyrgyz Mobil et al (ORD 2011/48) (04.08.11) (§ 5), Acting Deemster Moran QC summarised the key requirements to obtain a freezing injunction / worldwide freezing order (“WFO”) (and asset disclosure order) on a without notice basis:

“(1) The court must have jurisdiction over the respondents…

(2) The applicant must demonstrate a good arguable case on the merits…

(3) The applicant must demonstrate a real risk that a judgment or award may go unsatisfied…

(4) The applicant must adduce solid evidence that such a risk exists…

(5) The court must be satisfied that the defendant has some assets… A freezing injunction operates in personam and can be granted in relation to the assets of the defendant wherever situated…

(6) … such relief is… exceptional and should only be granted on cogent evidence…

(7) … the court must be satisfied that it is “just and convenient” to grant the injunction… The court should be satisfied before granting the relief that the likely effect of the injunction will be to promote the doing of justice overall, and not to work unfairly or oppressively…

(8) As on all ex parte applications, the applicant must make full and frank disclosure…

(9) The applicant must proffer an undertaking in damages, which should be backed by security if and to the extent appropriate”.

The “Bitel checklist” remains good law. Later Isle of Man cases have clarified, and developed, key elements of, and associated with, the Bitel checklist.

The Chabra jurisdiction

Several High Court decisions have considered the Chabra jurisdiction in the context of a freezing injunction application. In Illumination International, LLC v VHGL & others (ORD 23/0034) (09.01.24) (§§ 19-21), Acting Deemster Gough held (at § 19, applying Cruz City, below):

“… The Chabra jurisdiction may be exercised where there is good reason to suppose that assets held in the name of a Defendant against whom the Claimant asserts no cause of action (the NCAD) [Non-Cause of Action Defendant] would be amenable to some process, ultimately enforceable by the courts by which the assets would be available to satisfy a judgment against a Defendant whom the Claimant asserts to be liable on his substantive claim. The test of “good reason to suppose” is to be equated with good arguable case and in such cases the jurisdiction will be exercised where it is just and convenient to do so. The jurisdiction should be exercised with caution and should not operate oppressively against innocent third parties who are not substantive defendants and who have not acted to frustrate the administration of justice”); Cruz City 1 Mauritius Holdings Ltd v Unitech Ltd & another (CHP 2013/66) (06.02.15) (§§ 17-31)

Policing the injunction

The court’s jurisdiction to make ancillary order(s) to police a freezing injunction was considered in IOTA Violet, LLC v Woman, LLC (ORD 2015/39) (26.06.17) (§§ 47, 68-71, 74) and VTB Bank (PJSC) v Campino Ltd & others (2DS 2020/16) (19.10.20) (§ 36) (“… the court has jurisdiction to make any orders ancillary or necessary to ensure a freezing order is effective”). In Tugushev v Orlov (CHP 2018/87) (30.01.19), Deemster Corlett stated (§ 18): “… this court can and should police its own orders. But in my view, it should not, unless perhaps specifically requested by that court, police or enforce the orders of another jurisdiction. The enforcement and policing of the [WFO] granted by the English High Court is in my view a matter for the English court”.

As to sanction for breach, in Templeton Insurance Ltd v Taylor (ORD 2019/0016) (11.09.19), Deemster Corlett confirmed (at § 40) that: “… the normal sanction for breach of disclosure orders or freezing orders will be an immediate and substantial period of custody” (in Templeton, the Court ordered 30 days’ custody, suspended for 12 months).

The “ordinary and proper course of business” exception

VTB & another v Mazurov (ORD 2019/0042) (25.08.21) (§ 18) clarified the “ordinary and proper course of business” exception (permitting a respondent to carry on business, whilst subject to the freezing injunction). Citing Floyd LJ in Koza Ltd and another v Akcil and others [2020] 1 All ER (Comm) 301 (at (§ 27), Deemster Corlett noted the following criteria:

“(i) The question of whether a transaction is in the ordinary and proper course of a company’s business is a mixed question of fact and law;

(ii) ‘Ordinary’ and ‘proper’ are separate, cumulative requirements;

(iii) The test is an objective one, making it necessary to consider the question against accepted commercial standards and practices for the running of a business;

(iv) The question is not whether the transaction is ordinary or proper, but whether it is carried out in the ordinary and proper course of the company’s business;

(v) The questions are to be answered in the specified factual context in which they arise.”

Applications to vary a freezing injunction

In Woman LLC v IOTA Violet LLC & others (2DS 2016/7) (19.08.16), the Appeal Division set out (at §§ 55-59) guidance on variation applications. It approved dicta of Christopher Clarke J (as he then was) in Compagnie Noga D’Importation et D’Exportation SA v Australian and New Zealand Banking Group and others [2006] EWHC 602 (Comm):

“(1) the essential test is whether it is in the interests of justice to make the variation sought;

(2) it is for the applicant to satisfy the court that it is appropriate make the variation sought and to adduce any evidence that is necessary to persuade the court that that is so;

(3) … the court is concerned to examine whether to do so would be consistent with the policy that… a defendant should be restrained from evading justice by disposing of assets otherwise than in the ordinary course of business with the result that any judgment goes unsatisfied;

(4) the correct test is to consider objectively the overall justice of allowing the payment to be made including the likely consequence of permitting it on the prospects of a future judgment being left unsatisfied, and bearing in mind that the assets belong to the defendant and that the injunction is not intended to provide the claimant with security for his claim or to create an untouchable pot which will be available to satisfy an eventual judgment… ;

(5) if the question is whether or not the [injunction] should be varied so as to allow frozen monies to be used to fund a defence it may be necessary to show that there are no other funds or sources of payment which should as a matter of objective fairness be used for that purpose…;

(6) … judges are entitled… to have a healthy scepticism about assertions made by the applicant particularly where the applicant, or those to whom his evidence or contentions relate, have been less than frank in dealing with the court or the claimant”.

Applications to discharge for material non-disclosure

In Illumination, Acting Deemster Gough summarised the duty of full and frank disclosure (see Bitel, above) (at § 18):

“The duty of an Applicant in a without notice application for an injunction is to make full and accurate disclosure of all material facts and draw the court’s attention to any significant factual, legal and procedural aspects of the case. It is a high duty. The application must be presented in a fair and even-handed way, and attention drawn to evidence and arguments the absent party might reasonably be anticipated to make. An Applicant must make proper enquiries, identify any likely defences and, of course, must not mislead the court. If it is found that there has been material non-disclosure the Claimant will be deprived of any advantage obtained thereby, often losing the injunction. Even so, the court has a discretion to continue the injunction but such discretion will be exercised sparingly”.

In AM Personnel Ltd v Salazar Consulting Ltd & others (CHP 2012/137) (12.11.12), Acting Deemster Gough clarified that:

“if the Claimant fails in any material way to make disclosure such as might impede the Court from applying its judicial mind to all of the facts and possible defences available to the Defendants, then the order will normally be discharged and it may be very difficult to obtain a further order. However, as always this must be viewed in the light of the circumstances and facts available to the party applying for the order…”.

And in Illumination, he also clarified (at § 68):

“If… allegations of deliberate misleading of the court are to be made there must be sound evidence that the conduct was deliberate; that is a conscious decision to give an untrue version of events to the court or deliberately to trick the court into believing a position that is false”.

An Isle of Man court can now also consider the English Court of Appeal’s recent review of full and frank disclosure in Astor Asset Management 3 Ltd & others v Pliego & another [2025] EWCA Civ 1060 (04.06.25) (at §§ 13-18, especially at § 13).

Asset disclosure orders

The discrete, but closely associated, jurisdiction to order an asset disclosure order, which generally accompanies a freezing injunction, is Rule 7.16(1)(g).

In VTB Bank (PJSC) v Campino Ltd & others (2DS 2020/16) (19.10.20), the Isle of Man Appeal Division (at § 28) applied the “just and convenient” test. In VTB Bank PJSC v Sabadash & others (CHP 2018/13) (01.03.18) (§§ 21-22), Deemster Doyle held:

“21. … there is a need to strike a balance between the prejudice to a defendant if he is required to disclose assets which it is later held he should not have been required to disclose, and the prejudice to the claimant if the defendant is not required to [disclose] assets which it is later held he should have been required to disclose.

22. … normally a stay of the disclosure obligations, ancillary to a freezing injunction until after it has been finally determined whether the freezing injunction should stand, is likely to be refused”.

Fortification of cross-undertaking in damages

Deemster Corlett set out applicable principles on fortification of the cross-undertaking in damages in Sochin v Baranov (CHP 2018/24) (28.03.18) (at §§ 12-23) (fortification of US $100,000 was ordered). Fortification was also considered in Illumination (at §§ 53-66) (fortification of £50,000 was ordered). At § 14 of Sochin, Deemster Corlett summarised thus:

“Whether fortification of a cross undertaking is appropriate and if so for how much is a matter of discretion for the court. … the enjoined party must show a good arguable case in support of his application for fortification and does not have to prove the need for fortification on the balance of probabilities. This involves taking into account firstly an intelligent estimate, being informed and realistic although not necessarily entirely scientific, of the likely amount of any loss which might be suffered by the applicant for fortification by reason of making the interim order. Secondly, that the applicant has shown a sufficient level of risk of loss to require fortification, which involves showing a good arguable case to that effect. Thirdly that the making of the interim order is or was a cause without which the relevant loss would not be or would not have been suffered”.

Costs

The English Court of Appeal’s decision in Isabel Dos Santos v Unitel S.A. [2024] EWCA Civ 1109 (30.09.24) (§§ 116-120), to the effect that there is no general rule that the costs of a freezing injunction application should be reserved, will also be relevant in an Isle of Man context.

Note for practitioners: Freezing injunctions and asset disclosure orders, and related issues, continue to be considered regularly by Isle of Man courts (which also require citation of the relevant Isle of Man authority: see Hillberry Trust Co. Ltd & another v Montpelier (Trust & Corporate) Services Ltd (in liquidation) (2DS 2023/21) (11.07.23) (§§ 16-17)).

Disclaimer: professional advice should be sought before applying any information in a given case.

For advice on Isle of Man civil procedure or enforcement, contact Coren Law.

See also Coren Law’s Isle of Man civil procedure portal: Click On | Coren Law.