The Court of Appeal in London has dismissed an application filed by ArcelorMittal seeking permission to appeal against the London High Court's judgment that refused a worldwide freezing order against the parent company of Essar Steel Ltd and members of promoter family.
"The Court of Appeal's decision given by Lord Justice Newey on April 21, 2020, concluded that Arcelor Mittal USA's (AMUSA) appeal had no real prospect of success and there was no other compelling reason for the Court of Appeal to hear it," Essar said in a statement.
The high court order of March 30 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 had 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.
"The (March 30) Judgment concluded that AMUSA had not even made out a good arguable case as regards its underlying claims. Further, the Judgment confirmed that there was no real risk of dissipation by Essar Global or the individuals of their assets and that Essar Global's prior dealings with regard to certain assets within the Essar portfolio had not been undertaken by it with the objective of defeating AMUSA's claim against other Essar entities," the statement said.
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.
"We have consistently maintained that the judicial proceedings and the underlying claims of wrongdoing brought by AMUSA were totally ill-conceived and lacking any basis in fact or reality. We are relieved that the threat of wide-ranging and ill-conceived injunctions has been finally removed by the Court and that the underlying claims by AMUSA have been found, at this early stage, to be less than arguable," said Essar spokesperson.
The origins of the present dispute arise from an arbitration award that AMUSA obtained against Essar Steel Ltd, a Mauritius company, and a subsidiary of Essar Global. Essar Steel went into insolvency in Mauritius in 2019.
"AMUSA has repeatedly sought to frustrate the Essar Steel insolvency process and has launched spurious proceedings against other Essar entities and individuals in various jurisdictions, which have been equally unsuccessful," the statement said. "AMUSA's latest proceedings in England, are its third failed attempt to use foreign courts to circumvent the insolvency process in Mauritius."
It remains to be seen if AMUSA continues to pursue the proceedings in England given the recent injunction ruling. It has indicated that it intends to amend its present claim and has been permitted a short period to do so by the Court.