In another judgment in the long-running dispute in Renova Industries Limited v Emmerson International Corporation, the BVI Commercial Court discharged three ex parte freezing orders granted to Emmerson against Renova, Mr Vekselberg and two other Vekselberg parties in respect of assets valued over US$3 billion.

Justice Jack found there was no evidence of a real risk of dissipation of assets. Justice Jack clarified that while in most cases the sole issue on dissipation will be whether assets pass in the ordinary course of business, the strict test is whether the dissipation is unjustified. This was relevant here as while the transfers may not have been in the ordinary course of business, in light of new US sanctions at play they may have been justifiable.

His Lordship also noted that:

• Evidence depicting a general shadiness was not solid evidence of a real risk of dissipation.
• Even if the absence of documentation is highly suspicious, the underlying explanation might be reasonably convincing. Here, Renova and Mr Vekselberg established a legitimate reason for making one set of transfers.
• Emmerson’s allegations that transfers to Cypriot trusts were illegitimate were rejected because it produce no direct evidence that the trusts were a sham or a device for concealing Mr Vekselberg‘s ownership, including no evidence of dishonesty by the trustee.

Even if he was wrong about Emmerson establishing no risk of dissipation, Justice Jack held the six-month delay between Emmerson applying for the asset disclosure orders and the freezing orders would tip the balance against continuing them.

Justice Jack additionally found a number of non-disclosures by Emmerson at the ex parte hearing that were serious enough to warrant discharging the freezing orders in their own right. These included Emmerson’s failures to bring to the judge’s attention:

• The fact of Renova’s and Mr Vekselberg’s express previous submission that any application for a freezing injunction should be heard inter partes. It was no answer to say it was a matter for the judge whether to hear the application ex parte or not.
• Mr Vekselberg’s compliance with the asset disclosure order on the day of the ex parte hearing. There was no urgency in having the matter heard that day and Emmerson should have asked for an adjournment so that as part of its duty of fair disclosure it could tell the judge what Mr Vekselberg had disclosed.
• The substance of a key, lengthy affidavit filed in response to the asset disclosure orders on behalf of the Vekselberg parties. It was not reasonable to expect a judge to take on board all the material in such a document on an application listed as urgent without some assistance from the applicant.

As Justice Jack noted, ex parte applications are always an exception to the general rule and when making such an application practitioners should be scrupulous in ensuring they fully comply with their duty of fair disclosure.