New Delhi, Apr 1 (PTI) A UK court has refused to issue a worldwide freezing order against the parent company of Essar Steel Ltd and members of promoter family - Ravi and Prashant Ruia.
The order came as steelmaker ArcelorMittal looked to enforce a USD 1.5 billion arbitral award stemming from a soured supply agreement.
In an 81-page judgment, High Court Judge Andrew Henshaw on Monday found no merit in the case being brought by ArcelorMittal to enforce a worldwide freeze on Essar's assets to protect them from 'dissipation' while the former pursues parallel legal remedies.
Reached for comments, ArcelorMittal hinted it may appeal against the judgment while an Essar spokesperson welcomed the decision saying the firm has 'consistently argued that the underlying claims of wrongdoing – and therefore the applications for the freezing orders – were (and continue to be) ill-conceived and without any factual support.' 'We feel vindicated that the English Court has determined in this regard that ArcelorMittal USA LLC (AMUSA) has no good arguable case to bring before the Court. This Judgement has also vindicated Essar and its founders from any wrongdoing with regard to historic legitimate business transactions that AMUSA had previously sought to mischaracterize to its advantage in both the English and Cayman Courts,' the spokesperson said.
ArcelorMittal in a statement said: 'This is a complex dispute relating to alleged conspiracies to harm ArcelorMittal USA. The recent judgment is subject to appeal and is in any event ancillary to the main conspiracy claim against members of the Ruia family and Essar Group's parent company, amongst others.' 'That conspiracy claim is going to be pursued vigorously to final judgment against them. This action is connected to a USD 1.5 billion judgment, which remains unsatisfied, and World Wide Freezing Order granted by the Commercial Court in England against Essar Steel Limited. The World Wide Freezing Order and related search orders were upheld by the English Court of Appeal,' it said.
In the order, the London High Court said there was no grounds to order a global freeze on the Ruia and Essar assets because the petitioners (Arcelor Mittal USA) had failed to prove the Essar Group engaged in any transactions to defeat an earlier arbitration order.
Arcelor Mittal USA (AMUSA) had petitioned the court that the Essar Group which owed the former USD 1.5 billion in an earlier arbitration award had moved assets around in such a way as to take them out of the hands of the judgment creditors.
AMUSA's key argument that the Ruia family reclassified assets of Essar Steel in India so as to take them out of the balance sheet of the judgment debtor's books did not find favour with the court.
Justice Henshaw of the Royal Courts of Justice noted that the corporate arrangements at the 'Essar group involve a complex chain of companies and offshore trusts, with Ravi Ruia and Prashant Ruia holding their interests in Essar Global Fund (EGFL) through a series of offshore companies and trusts. That is not, however, an uncommon situation, and I do not consider the evidence suggests that the structure is likely to have been created to obscure the manner in which assets are held'.
Basis this finding, the judge ordered that 'I do not, however, consider the evidence before me indicates that the Essar group, and the individuals who control it, transfer assets and funds between group companies deliberately in order to evade the claims of certain creditors.' Essar Group’s defence was that legitimate business transactions in India and elsewhere were continuously being 'mischaracterised' by ArcelorMittal.
Over the last three years, ArcelorMittal has continuously pursued a failed legal strategy that involved treaty shopping to pursue a claim outside the jurisdiction of the company which owes the funds. ArcelorMittal has filed cases in London, Cayman and again now in London.
An Essar spokesperson said: 'Given the judgment, it is clear that AMUSA will need to reconsider carefully if it has any basis to continue its spurious claims in England. We intend to vigorously defend any pursuit of these claims by AMUSA, as well as to defeat claims and actions that AMUSA wrongly continues to pursue in other jurisdictions, based on similarly baseless accusations and inferences.' ESSAR spokesperson further said: 'Essar remains fully focused on our business strategy, that has seen Essar reduce its debt by USD 22 billion over recent years, the largest by any corporate to date, and Essar is now looking to reinvest in exciting business and ventures in India and elsewhere.' Judge Henshaw in judgment said: 'I have reached the conclusion that it would not be just and convenient to grant worldwide freezing order against any of the respondents. In summary, that is because in my judgment AMUSA has not shown a good arguable case on the merits of its substantive claim (and) AMUSA has, moreover, not shown a good arguable case that it has a claim in or approximating to the amount claimed, or any other specific amount.' PTI ABI ANZ MKJ