News

July 26, 2019

ArcelorMittal Plea For Worldwide Freeze On Essar Steel Parent Company Rejected By Cayman Island Grand Court


[ By Bobby Anthony ]

ArcelorMittal

The Grand Court of Cayman Island has rejected ArcelorMittal SA’s plea for a Garnishee Order and a freezing injunction against Essar Global Fund Ltd, which is the parent firm of the Essar Group of companies, in order to recover a USD 1.5 billion arbitration award.

In a recent order, Justice Ian RC Kawaley rejected the Garnishee Summons and the modified freezing order with the liberty to apply.

A garnishee order is a common form of enforcing a judgment debt against a creditor to recover money. The court directs a third-party which owes money to the judgement debtor to instead pay the judgement creditor. The third-party is called a garnishee.

A Garnishee Order Absolute prevents the garnishee from making repayment of the debt owed to the judgement debtor.

Incidentally, ArcelorMittal is in the process of acquiring Essar Steel to enter India’s steel market but, in a recent development, the Supreme Court of India put the acquisition on hold.

It may be recalled that ArcelorMittal had mounted legal battles against the Ruia family which owns the Essar Group in multiple countries.

The legal battle was mounted in order to enforce a USD 1.5 billion US arbitration award it had won in December 2017 on an Essar Steel Minnesota’s terminated iron-ore pellets supply contract to ArcelorMittal USA LLC.

However, Essar Steel, which had assumed the liabilities of the US contract, had stated that it could not pay since it has less than USD 2.5 million in assets.

In order to seek enforcement of the USD 1.5 billion US arbitration award, ArcelorMittal had moved courts in Britain, Mauritius, and the Cayman Island seeking a 'Garnishee Order Absolute' and a 'Freezing Injunction and Asset Disclosure Award' against Essar Global Fund Ltd.

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