January 1, 2026

2023 judgment summaries for the Commercial Court

Commercial Court

2023

Anthony King & Ors v DWF LLP & Ors (Mr Justice Henshaw) 6 December 2023

Misrepresentation; professional negligence; conflict of interest; legal advice; discontinuance; indemnity costs; fiduciary duties; Commercial Court

The claimants, the King family, alleged that their former solicitors (DWF LLP) and barristers were in breach of duty during the conduct of litigation in 2017, particularly in advising discontinuance of a misrepresentation claim, to apologise in open court, and to pay indemnity costs, despite the claimants’ belief in the strength of their case. The Kings contended that the legal team concealed mistakes, acted under a conflict of interest, and gave negligent advice, including failing to explain the “B Share Mechanism” in a company sale transaction.

Mr Justice Henshaw dismissed all claims, finding them “entirely without foundation”. The judgment held that the legal team’s advice to discontinue was reasonable and professionally justified, given the collapse of the claimants’ case during trial, conflicting evidence from key witnesses, and adverse evidence from third parties (including GE Capital). The judge rejected allegations of conspiracy, dishonesty, or breach of fiduciary duty, concluding that the so-called “B Shares Mistake” was immaterial to the outcome and did not create a conflict of interest. The legal team’s conduct was found to be within the range of competent professional judgment, and the advice to apologise and pay indemnity costs was appropriate in the circumstances.

The full judgment [2023] EWHC 3132 (Comm) may be found at https://caselaw.nationalarchives.gov.uk/ewhc/comm/2023/3132

Ebury Partners Belgium NV/SA v Grossiste Francochine SARL (Jacobs J)

Anti-suit injunction – English law and jurisdiction contractual agreement – whether injunction should be granted in light of provisions of French law

The claimant applied for an anti-suit injunction to prevent the continuation of proceedings in France in circumstances where the parties’ contract contained English law and jurisdiction clauses. The contract concerned  the provision of financial services by a Belgian company to the defendant, whose business related to vaping products. The defendant contended that an anti-suit injunction would result in a material injustice to the defendant because, under French law, a number of relevant clauses, including in particular, the exclusive jurisdiction agreement, would be struck down.  The French Consumer Code extended protection in the present context to companies, such as the defendant, which were treated as quasi-consumers.

Held: The anti-suit injunction would be granted. There was a clear agreement for English jurisdiction. The basic approach under English law is that the existence of mandatory provisions of foreign law, applicable in the foreign court and which override the contractual choice of jurisdiction, is not a strong reason to refuse an anti-suit injunction: QBE Europe SA/NV v Generali Espana de Seguros Y Reaseguros [2022] EWHC 2062 (Comm)  (Foxton J) applied. It is difficult to find any cases in which the courts have treated the existence of a valid English jurisdiction clause or an arbitration clause as being subservient to the approach and law taken in the foreign country where the defendant wishes to litigate.  A foreign statute which seeks to impose domestic public policy choices on international commercial transactions, in defiance of the parties’ freely chosen choice of law, is unlikely to be given weight.

This conclusion is supported by Article 3.3. of the Rome I Convention. If the requirements of Article 3.3 are satisfied, then that does provide a potential route by which certain provisions of a foreign law, here French law, could be made applicable. However, the existence of that route is not a reason to refuse an anti-suit injunction: Ebury Partners Belgium SA/NV v Technical Touch [2022] EWHC 2927 (Jacobs J) applied.

Judgment handed down on 3 October 2023 can be found on the National Archives website.

Unitel v (1) UIH (2) Isabel dos Santos (Mr Justice Bright)

Freezing order – meaning of “good arguable case”

Unitel (an Angolan company) brought claims in debt against D1, UIH.  It then added as D2 Isabel Dos Santos, a former director/CEO of Unitel, alleging that she acted in breach of duties owed by her to Unitel under Angolan law. She resisted mainly on the basis of an alleged defence under Angolan law. Unitel contended it had at least a good arguable case on the point of Angolan law. Both sides relied on written evidence from experts in Angolan law.

The court considered the meaning of “good arguable case” in this context.

The full judgment [2023] EWHC 3231 (Comm) can be found on the National Archives website.

Williams v Federal Republic of Nigeria (Mr Justice Bright)

Default judgment against sovereign state – agreement for service of proceedings on High Commission in London – State Immunity Act 1978 ss. 3 & 12 – CPR 12.

W commenced proceedings in 2016, alleging he was the victim of a fraudulent breach of trust committed by FGN and claiming US$6.25 million.  He sent the claim form to the Nigerian High Commission in London.  He applied for and was granted default judgment in November 2018, saying the FGN Solicitor General had agreed in February 2016 that service could be effected by sending the claim form to the High Commission.  In September 2020, FGN issued an application notice for the default judgment to be set aside.  It took did not then seek a hearing date until September 2023.

The Court refused the application to set aside default judgment:

• FGN had not asserted a defence to the claim or challenged the essential factual allegations.
• W had provided evidence attesting to and confirming the Solicitor General’s agreement to service by sending the claim form to the High Commission.  FGN’s evidence in response provided no reason not to accept W’s evidence on this point.
• This was an agreement within State Immunity Act 1978 s. 12(6), such that W did not have to serve FGN by diplomatic channels under SIA s. 12(1).
• FGN was not entitled to state immunity in relation to the proceedings, the case being with State Immunity Act 1978 s. 3(1)(a) and/or (b).

The full judgment [2023] EWHC 3282 (Comm) may be found on the National Archives website.

Canon Medical Systems Ltd v The Imaging Centre Assets Ltd et al. (Andrew Baker J)

Newcastle Circuit Commercial Court trial – joint venture relating to transportable medical diagnostic scanning units (‘Units’) equipped with Canon equipment (principally MRI or CT scanners) – disputes as to the meaning and effect of the parties’ written contract, signed between the claimant (‘CMS’) and one of the defendants (‘Assets’), concerning inter alia (a) the status of TICM (one of Assets’ subsidiaries) under the contract, (b) CMS’s payment obligation, if any, relating to rental income earned by Units, (c) CMS’s payment obligation relating to unrented Units, (d) the amount to be paid to CMS for warranty/servicing of Units  – claims by Assets/TICM (‘TIC’) that CMS was in breach of contract by failing to sell more Units to TICM and/or by engaging in activity competitive with TICM’s fleet

Litigation arose out of a written contract (the ‘Master Agreement’) dated 17 March 2017 signed between CMS and Assets. The Master Agreement set out the terms for inter alia a joint venture business, through TICM (in which CMS was to have an 8% shareholding), in the field of transportable medical diagnostic scanning, for a period of ten years. CMS’s shareholding was to be relinquished for nil consideration in March 2027, unless either it was sold prior to that or the Master Agreement was renewed for a further period of at least ten years. TIC alleged that a further contract (a ‘Hire Agreement’) had been entered into following, and so as to supplement, the Master Agreement, but that claim was rejected on the facts.

In March 2021, CMS asserted that it was not obliged to account to TIC for rental income earned from Units covered by the Master Agreement (the ‘First Fleet’). By then, an associated company (‘Mobile’) also had a fleet of Units (the ‘Second Fleet’), under a written waiver from CMS such that CMS could not (and did not) complain that Mobile’s activity put TIC in breach of the exclusivity provisions of the Master Agreement. In response to CMS’s message in March 2021, TIC threatened to terminate the Master Agreement, and there was also a threat by Mobile to repossess Second Fleet Units rented to CMS. The proceedings were commenced by CMS in the face of those threats. A number of issues were resolved by the parties prior to trial, and the Master Agreement had not been terminated, but the parties remained in dispute over the matters referred to in (a) to (d), above. TIC also counterclaimed inter alia damages of c.£76.5 million, alleging that but for breaches of contract by CMS the First Fleet would have grown from 11 Units (as it was on 1 July 2020) to 151 Units by the end of the Master Agreement term, and for an injunction and/or damages, alleging that, in breach of contract, CMS has rented out Units other than First Fleet Units and/or facilitated its parent company to rent out Units in the UK and/or agreed with its parent company to develop a ‘Canon Medical fleet’ that would be competitive with the First Fleet, with a view to keeping Unit rental income in the Canon group.

Held:

1. On the proper construction of the Master Agreement:
   a. TICM is privy to the contract, entitled to sue and be sued upon it;
   b. CMS’s obligation in relation to rented First Fleet Units is to pay TICM the full amount of rental income earned, so that (i) CMS owes TICM £966,495.56 for the period to 31 July 2023 and (ii) the question arises whether at the date of the judgment, further sums are owed for August to October 2023;
   c. CMS is obliged, in addition, to pay TICM for unrented First Fleet Units at the monthly rate of £17,333 (MRI) or £14,083.50 (CT), up to a maximum of six unrented First Fleet Units at any one time, but the court would require further help from the parties to identify what, if any, sum it can find to be owed by CMS to TICM;
   d. TICM is obliged to pay for warranty/servicing of First Fleet Units, in each case from the third anniversary of first commissioning, at the rate of 6.5% per annum of a recommended selling price, for a sale by CMS of the Canon scanning equipment (only, i.e. not the price for the complete Unit), that can be derived from the Salesforce software used by the Canon group when quoting to supply. Although that is not the basis on which warranty/servicing charges have been invoiced and paid to date, on the evidence at trial and given the way in which the parties had pleaded their cases, CMS failed to establish that it has not been paid (at least) all that has fallen due to date, and TIC failed to establish that it has made any overpayment (once the judgment in its favour to be given pursuant to (i) above is taken into account).
2. CMS acted in breach of the Master Agreement by ignoring a proposal by TIC to revise a price list for First Fleet Unit rentals with effect from 1 March 2021, but that breach caused no loss.
3. CMS acted in breach of contract by failing to sell TICM two new CT Units to add to the First Fleet in response to a request for new Units in March 2020, but otherwise breach of contract in relation to growing the First Fleet was not established; and damages for the proved breach are nominal only. CMS’s obligation, putting it in breach (but only to the extent proved) is to sell Units to TICM in response to a reasonable request by TICM to buy Units pursuant to and on the terms of the Master Agreement. The major allegation of breach pursued at trial was that CMS should have sold 36 new Units over three years (July 2020 to June 2023), but instead offered only terms for such a bulk order that were very different from those of the Master Agreement. But the relevant request had been to offer terms for that number of Units to be supplied at a substantial discount below the Master Agreement price. It was not a request for supply on the terms of the Master Agreement, and CMS committed no breach by its proposal in response. Nor was TIC in fact interested or prepared to buy in bulk at the Master Agreement price.
4. CMS acted in breach of the Master Agreement by failing to use an available First Fleet MRI Unit for a rental contract that ran from June 2022 to January 2023 (inclusive), for which TICM was entitled to damages of £354,383.85 (the rental income that should have been earned for the First Fleet), less the amount treated by CMS as payable to TICM in respect of that Unit, as an unrented Unit, during that period, since that amount will have been paid at the time.
5. CMS has acted, and unless restrained is likely to continue to act, in breach of the Master Agreement, in facilitating rental in the UK of Units owned by its parent company, and in having agreed with the parent company to work with it, competitively with the First Fleet, in the business of renting Units in the UK, with a view to revenues being retained within the Canon group. Damages are nominal, but a final injunction should be granted to restrain CMS from so acting in breach.

A copy of the judgment [2023] EWHC 3007 (Comm) can be found on the National Archives website.

Gordiy v Dorofejeva and Target Global (Foxton J) 

Strike out – challenge to jurisdiction – claims inappropriately commenced in the Commercial Court – duty of all parties to raise issue promptly

C, a litigant in person, brought proceedings against D1 and D2 relating to the non-completion of an SPA for the sale of her company R to F (in which D1 and D2 were shareholders). The claim was worth between £650,000-900,000. D1 applied to strike out the claim as unarguable and D2 (a Cayman Islands company) sought a declaration that the court did not have jurisdiction and that it had not properly served. Each D listed its application for a separate  ½ day hearing in the Commercial Court, without raising the issue of whether it would be appropriate to continue the proceedings there. C’s alleged  that the Ds had made misleading statements to the FCA about the shareholders in F which had the result that a condition for completion of the sale of R to F (FCA approval) was not satisfied by the Longstop Date.

Held:

• It is as much the responsibility of defendants as of the claimant to ensure that the proceedings have been commenced in an appropriate court and, if not, to raise the issue of transfer with the court promptly. If this is not done, and instead hearings are listed in the Commercial Court in cases which should never have been commenced here, then in the future those cases will be transferred out, however close to the hearing the case might be, once the proceedings come to the attention of a judge.
• D1 was right to submit that C had not sufficiently pleaded a misrepresentation made to her, nor adequately pleaded her other claims. However, there is authority which suggests that the tort of causing loss by unlawful means may be committed if A dishonestly makes an untrue statement to B with the intention of causing loss to C, and loss is thereby caused to C, even if B suffers no loss (see Costa v Dissociadid Ltd [2022] EWHC 1934 (IPEC), [104]-[111] and Clerk & Lindsell on Torts (24^th), [23-81]). While C had not pleaded  a tort in these terms, she had pleaded (i) that D1 made fraudulent statements to the FCA; and (ii) that as a result, C had suffered loss. While C has not currently pleaded  that D1 acted with the intention of causing her loss, her skeleton argument makes a number of statements to that effect.
• C had asserted in other documents filed with the court that D1 made misleading statements to her, but these were not pleaded. The requirements for a proper pleading were explained.
• The pleadings against D1 in their current form would be struck out but C would be afforded an opportunity to apply to amend the Particulars of Claim.
• D2’s challenge that it had been served out of jurisdiction without permission when permission was required was upheld. C’s reliance on the jurisdiction clause in the F shareholder agreement was misplaced when C never became a shareholder in F, no Deed of Adherence was executed and her claims did not relate the shareholder agreement in any event.
• It would be open to C to seek to formulate amended claims against D2 and to seek permission to serve them out of the jurisdiction at the same time as any amendment application against D1.

The judgment ([2023] EWHC 3036 (Comm)) can be found on the National Archives website.

Lakatamia Shipping Company Limited v Tseng Yu Hsia and Chiharu Morimoto (Foxton J) 

Judgment on the merits – absent defendant – status of judgment in separate proceedings – entitlement to default judgment

In these proceedings, Lakatamia asserted claims for unlawful means conspiracy and the Marex tort against Ms Tseng and Ms Morimoto, in relation to the alleged concealment of assets of Mr Nobu Su, a substantial judgment debtor. Neither defendant engaged with the proceedings. Lakatamia applied for judgment on the merits against Ms Tseng and default judgment against Ms Morimoto. Lakatamia had obtained judgment on the same causes of action against Madam Su in Lakatamia Shipping Co Ltd v Su & Ors [2021] EWHC 1907 (Comm) (“the 2021 Judgment”).

Held: 

1. It was open to Lakatamia to seek judgment on the merits on the basis of documentary evidence and witness statements without calling the witnesses: In Lighting and Lamps UK Ltd v Clarke [2016] EWCA Civ 5, [41]-[42] applied.

• The findings of liability in the 2021 Judgment were not admissible in themselves, but the court was entitled to rely upon the substance of evidence given in that case for the purpose of reaching its own conclusions: in JSC BTA Bank v Ablyazov [2016] EWHC 3071 Comm), [24].

• It was far from obvious to that a claimant who, in the absence of the defendant, is required to do no more than prove its case by evidence untested by cross-examination should also benefit from an adverse inference from the non-participating defendant’s failure to provide disclosure or the failure of the non-participating defendant to give evidence and the court proceeded on the basis that no such inferences should be drawn.

• The court was persuaded on the evidence that the proceedings had been validly served on Ms Tseng and that the tort claims against Ms Tseng were established on the balance of probabilities.

• So far as the default judgment was concerned, the court was satisfied that Ms Morimoto had been validly served and that Lakatamia was entitled to default judgment in respect of the proceeds of a Tokyo property transferred to Ms Morimoto by Madam Su.

• Lakatamia’s other claim against Ms Morimoto was for conspiracy to injure Lakatamia by unlawful means “in connection with Madam Su’s defence” of the proceedings which led to the 2021 Judgment, the pleaded unlawful means comprise the production of forged documents which were deployed in the case (“the Litigation Conspiracy”).

• The court had “real doubts” as to whether English law recognises a tort of unlawful means conspiracy dishonestly to defend a claim through the production of forged documents in those proceedings. Under CPR 12.12(1), Lakatamia is entitled to “such judgment as the claimant is entitled to on the statement of case”. There are a number of first instance authorities which suggest that it is not part of the court’s function to consider the viability of the claim asserted as a matter of law: Football Dataco Ltd v Smoot Enterprises Ltd [2011] EWHC 973 (Ch), [16]-[19] and Otkritie International Investment Ltd v Jemal [2012] EWHC 3739 (Comm).

• However, the Particulars of Claim only sought damages for “additional legal costs” incurred by reason of the Litigation Conspiracy. No attempt has been made to quantify the additional costs or to break down the global costs of the litigation. Further, Lakatamia was asking the court to exercise its discretion to enter default judgment in a particular form which would make the judgment enforceable in Japan.  In the circumstances, the court was not willing to enter a default judgment in respect of the Litigation Conspiracy.

A copy of the judgment ([2023] EWHC 3023 (Comm)) can be found on the National Archives website

Infinity Treasures Pte Ltd v Global Currency Exchange Network Limited (Foxton J)

Stakeholder application – claims to funds in bank account – admissibility of claims – costs of the stakeholder applicant

These proceedings concerned competing claims to some $2.6m held in a bank account (“the Fund”), which was claimed by the Claimant, with the Defendant issuing a stakeholder application. The proceedings were commenced in 2015, and the stakeholder application commenced in February 2016. Numerous investors in financial products had filed claims to the Fund. The court determined the competing applications on paper.

Held:

1. Only litigants who had filed a signed witness statement with some form of statement of truth had sufficiently complied with the court’s orders to be recognised as potential claimants to the Fund.

• The evidential threshold for a claim to the Fund was only met by those who had provided some form of contemporaneous documentation confirming their investment.

• Having regard to the documents recording the manner in which invested funds were to be held, the Claimant had no right to the Fund, which represented funds originating with the investors which could only be used for limited purposes, which did not extend to paying commission or expenses to the Claimant.

• The Fund comprised payments made into the bank account between 13 September 2013 and 17 July 2014. It was more likely that the sums removed from the investor funds to the Account were removed from those funds prior to the point of transfer to the SPVs, rather than from the proceeds of sales.  As a result, any investor who made an investment during the period between 13 September 2013 and 17 July 2014 had an interest in the Fund by reference to the proportion of their investment.

• CPR 86.5 provides that the court may make such order for costs as it thinks just on a Stakeholder Application. Global Currency seeks an order for its costs. Applying Searle v Matthews (1887) 19 QBD 77n, Field and Elder Dempster Lines v Ishag (The Lycaon) [1983] 2 Lloyd’s Rep 548, 554, it appeared that the Stakeholder Applicant had applied investor funds by paying them into the bank account without a sufficient basis for doing so. The court’s provisional view was that it was not entitled to an order that its costs be paid from the Fund.

A copy of the judgment ([2023] EWHC 2945 (Comm)) can be found on the National Archives website.

Bailey Ahmad Holdings Ltd v Bells Holdings Ltd (Andrew Baker J)

Compulsory buy-out provisions in a Shareholders’ Agreement and Articles of Association in respect of a company – forced sale, if triggered, to be at fair value determined by independent expert valuation – whether triggered by honest but mistaken view of one shareholder that the other had committed (and failed to remedy) a serious breach of the Shareholders’ Agreement

The claimant and defendant owned a limited company carrying on an accountancy business. By a Part 8 Claim, the claimant sought a declaration that it was entitled to rely on the Defaulting Shareholder mechanism of the Shareholders’ Agreement and Articles of Association (and thus to invoke the expert valuation process for a compulsory purchase by it of the defendant’s shareholding), “based on [its] honest belief in a material breach by the defendant rather than requiring prior judicial determination of the presence or absence of material breach”. The defendant objected to the use of CPR Part 8, arguing that the claimant’s construction of the parties’ contract was not arguable. It said the real dispute in the case, which could not be avoided, was whether there had been any relevant breach of contract, a dispute for which the Part 8 procedure was not suited.

Held:

1. Although the case had been listed for case management, the objection to the claimant’s claim gave rise to the question whether it had any real prospect of success. Having allowed the claimant to provide additional submissions on that point in writing following the hearing, it was in principle fair to contemplate the possibility of a summary dismissal. Summarily disposing of claims or issues is within the court’s general case management powers.

• The claimant’s claim was not arguable. The contract said there was a Defaulting Shareholder if a Compulsory Transfer Event occurred; and (so far as material) such an Event occurred if a Shareholder “commits a material or persistent breach … and fails to remedy such breach (if capable of remedy) within 14 Business Days of being given notice … to do so”. The fact that the price for a compulsory transfer, if the contract called for one, was to be fixed by a valuation process, not through litigation, did not arguably mean that a mistaken belief that a relevant breach had occurred was sufficient to trigger a transfer. That was not arguably the correct interpretation of the contract; and nothing in Barclays Bank plc v Nylon Capital LLP [2011] EWCA Civ 826 or Aiteo Eastern E&P Company Ltd v Shell Western Supply and Trading Ltd [2022] EWHC 2912 (Comm), cited by the claimant, gave any support to its proposed construction. The defendant’s construction, which was correct, did not assert that a prior judicial determination of a dispute was required before there was a Compulsory Transfer Event, it asserted only that a relevant breach must in fact have occurred, a dispute as to which, if not resolved, would require litigation, which is different.

• Both parties’ expressed preference having been, for the short term, to mediate and not litigate, the right course was to dismiss the Part 8 Claim. An appropriate Part 7 Claim could be commenced subsequently if efforts to find an amicable resolution failed. If litigation did prove necessary, any such new Claim was suitable for and ought to be commenced in the County Court.

A copy of the judgment [2023] EWHC 2829 (Comm) can be found on the National Archives website.

RSM Production Corp v Gaz du Cameroun SA (Butcher J)

Anti Suit Injunction – Whether dispute governed by arbitration clause – Whether claim for permissible interim relief

The applicants applied to continue anti-suit relief restraining proceedings brought in the courts of Cameroon said to be in breach of an arbitration agreement in a settlement agreement previously entered into between the parties.

The respondent contended: that the arbitration agreement relied upon did not cover the claim it had made in Cameroon; that its claim in Cameroon was in support of an arbitration and thus had been permissible; that the English court had no jurisdiction over it; and that there had been a lack of full and frank disclosure when the injunction was sought ex parte.

The court rejected these arguments and continued the anti-suit injunction, subject to certain modifications, on a final basis.

The full judgment, [2023] EWHC 2820 (Comm), can be found on the National Archives website (external link).

Chocolate City Ltd v WEA International Inc (Foxton J)

Summary judgment – contractual interpretation – commercial purpose

Chocolate City applied for summary judgment in respect of its claim for breach of contract against WEA, seeking declarations that it was contractually entitled to exercise a purported express right to prepay a loan made to it by WEA. WEA sought summary judgment dismissing Chocolate City’s case:

Held:

1. The plain words of  clause 8.3(a) of the contract, providing for the content and timing of “any notice of cancellation or prepayment”, did not create an express right of prepayment, but sought to regulate such rights of cancellation and prepayment as were found elsewhere in the loan facility. The other terms of the loan facility created no such right.
2. This interpretation is supported by other contemporaneous and related agreements, which were more consistent with WEA having an unconditional right to convert debt into equity on the maturity date of the loan, which right would be defeated if Chocolate City had a unilateral right of prepayment..
3. The commercial purpose of the contract (a debt-equity conversion) weighed against any right to prepayment. The right of conversion was intended to give WEA to take an equity stake rather than repayment of the loan where this suited its economic interests. If Chocolate City’s construction was right, it could take that option away by prepaying the loan in those circumstances in which it would be in WEA’s interest to exercise it.

A copy of the judgment ([2023] EWHC2874 (Comm)) can be found on the National Archives website (external link).

Litasco SA v Der Mond Oil and Gas Africa SA (Foxton J)

Summary judgment – payment obligation for cargo of oil – alleged defences of force majeure, by reason of UK sanctions or frustration – observations on Russia (Sanctions) (EU Exit) (Amendment) Regulations 2019  and Mints v PJSC National Bank Trust & Anr [2023] EWCA Civ 1132

C applied for summary judgment for the outstanding part of the price payable for a cargo of West African crude oil delivered before the Russian invasion of Ukraine. D sought to resist summary judgment relying on alleged defences of (a) fraudulent misrepresentation which had induced D’s agreement to a variation in the payment schedule; (b) breach of a collateral warranty or implied term; (c) the force majeure clause because D could not with reasonable diligence make payment through international banking channels because of concerns over sanctions; (d) the application of a contractual sanctions clause and (e) because payment would or might be contrary to the Russia (Sanctions) (EU Exit) (Amendment) Regulations 2019 (“UK Sanctions Regulations”).

Held:

• The alleged misrepresentation case was hopeless on the facts, and in any event, would not improve D’s position because the debt would then be payable under the pre-variation timetable.

• The alleged implied term or collateral contract was hopeless as a matter of law, and D had not identified any loss said to have followed from any breach.

• If the contractual force majeure was applicable, and even allowing for the fact that it applied where performance was “hindered” as well as “prevented”, where force majeure was said to have hindered performance of an accrued payment obligation, it would take a very significant level of difficulty in paying, approaching albeit falling short of impossibility, before the force majeure clause would apply. Here it was clear to summary judgment standard that the failure to make payment was caused by D’s lack of foreign currency due to an adverse trading environment. This was not a force majeure event.

• As a matter of construction, the force majeure clause did not apply to performance of an accrued payment obligation in any event.

• As to the contractual sanctions clause:

• It did not apply to sanctions in force when the relevant contractual obligation was assumed. D had failed to point to any arguable change in the operation of the UK Sanctions Regulations since D had agreed to the revised payment schedule and promised that sanctions would not prevent it performing in accordance with that schedule.

• Nor did the UK Sanctions Regulations engage the contractual sanctions clause, because they did not apply to the contractual obligation in question.
• There was no sufficiently arguable basis in fact for the contention that C was controlled by Mr Alekperov for the purposes of the UK Sanctions Regulations.

• As to D’s case that C was arguably controlled by President Putin for the purposes of the UK Sanctions Regulations:

• Mints v PJSC National Bank Trust & Anr [2023] EWCA Civ 1132 concerned a claimant wholly owned by the Central Bank of Russia, whose directors or controllers were appointed on the recommendation or with the approval of President Putin, and which, on the appellants’ evidence (which the respondent had not challenged), was “an organ of the Russian state” and “serve[d] as an arm of the executive”.

(ii)     The statement in Mints that it “might well” the effect of the UK Sanctions Regulations that President Putin controlled every company in Russia was obiter, and had to be understood in the context of the particular factual position in that case.

(iii)    Litasco and its parents were private companies and there was no evidence arguably establishing that Litasco was presently under the de facto control of President Putin.

• As the issue of control arose  in the context of Regulation 12, the relevant “affair” for Regulation 7(4) purposes was the availability of funds, and the question was whether making funds available to Litasco amounts to “making funds indirectly available to” President Putin. There was no material which provided an arguable basis for contending that funds received by Litasco on payment of this debt would be used in accordance with President Putin’s wishes.

• Whilst it was strongly arguable that President Putin has the means of placing all of Litasco and/or its assets under his de facto control, that was true of many executive or legislative sovereign bodies in respect of companies in their jurisdiction. The better interpretation of Regulation 7(4) was that it is concerned with an existing influence of a designated person over a relevant affair of the company, not a state of affairs which a designated person has the power to bring about, where that power has not been exercised.

• The illegality defence was not arguable on the facts, and because it was clear from Mints v PJSC National Bank Trust & Anr [2023] EWCA Civ 1132 that the UK Sanctions Regulations did not prevent judgment being entered for a monetary amount.

The full judgment ([2023] EWHC 2866 (Comm) may be found on the National Archives website.

Magomedov and Others v TPG Group Holdings and Others (Butcher J)

Freezing and Notification Injunctions – Alleged conspiracy – Good Arguable Case – Risk of Dissipation

The applicants applied inter partes for freezing and notification injunctions against nine defendants.  The claim made in the proceedings is one alleging a conspiracy to deprive the claimants of their interest in a large Russian company in the transportation and logistics sector.

The court reviewed the guidance from authority as to the relevant tests.  It was concluded that in relation to three of the respondents no good arguable case on the merits had been demonstrated on this application; and that in relation to the other respondents there had not been shown, on solid evidence, to be a risk of unjustified dissipation of assets.

The full judgment, [2023] EWHC 2655 (Comm), can be found on the National Archives website.

LLC Eurochem v Societe Generale SA and Others (Butcher J)

Application for interim payment or payment into frozen account – sanctions – CPR r 25.1(1)

In the action, the claimants claimed under on demand bonds. The defendant banks declined to make payment on the basis that to make payment would breach international sanctions.  The claim is going to trial.  The claimants applied for an order that, in the interim, the sums claimed should be paid into court or into a frozen account.

It was held that the case was not one in which there could be an order for an interim payment under CPR r. 25.1(1)(k) because the court could not be satisfied on this application that the claimants would recover the sums in question. There had neither been an application for summary judgment or for a strike out, and the defendants’ defences were a matter for trial.  Nor could there be an order under CPR r. 25.1(1)(c) as the sums claimed were not ‘relevant property’ for the purposes of that rule; or under CPR r. 25.1(1)(l) because there was no specified fund.  No case had been made out for an interim injunction on American Cyanamid grounds. The applications were accordingly refused.

The full judgment, [2023] EWHC 2720 (Comm), can be found on the National Archives website (external link).

Star Axe I LLC v Royal and Sun Alliance Luxembourg SA and Others (Butcher J)

York-Antwerp Rules – Congenbill 1994 – Whether York Antwerp Rules 1994 or 2016 incorporated

The issue was whether the words in Congenbill 1994 which provided that general average is to be adjusted according to ‘York-Antwerp Rules, 1994, or any subsequent modification thereof’, meant that the York-Antwerp Rules 1994, or the York-Antwerp Rules 2016 were incorporated in to the relevant contracts of carriage.

It was held that the words, judged against the relevant background, meant that it was the York-Antwerp Rules 2016 which were incorporated.  They were a modification of the York-Antwerp Rules 1994.

The full judgment, [2023] EWHC 2784 (Comm), can be found on the National Archives website.

Chowgule & Company Private Ltd v Shirke and others (Dias J)

Freezing Injunction and associated relief – allegations of fraud – whether good arguable case

The backdrop to the dispute was an ongoing feud between two rival camps of the Chowgule family based in Goa.  Pursuant to a settlement agreement in 2021, the assets of the family were split between Group A and Group B.  C1 and its subsidiary, C2, were allocated to Group A.  D2, the former longtime Chairman and Managing Director of C1, was in Group B.  D3 (also a former director of C1) was a friend and advisor of D2.  D1 had long-standing connections to the Chowgule family and was married to one of D2’s sisters (also in Group B).   D2 and D3 were Indian citizens resident in Goa.  D1 was domiciled in the UK and D4 was a UK company under his control.

Following the transfer of Cs to Group A, they asserted that the four defendants had conspired to defraud them over a number of years of some US$128 million and dishonestly concealed their activities.  Proceedings asserting claims for breach of fiduciary duty, deceit and fraudulent conspiracy were commenced and served on D1 and D4 within the jurisdiction.  Permission was obtained to serve D2 and D3 in India as necessary and proper parties.  An application to set aside or stay the proceedings on grounds of forum non conveniens will be heard in December.

Meanwhile, Cs applied for a freezing order and ancillary disclosure orders against D1 and D4.  It was accepted that there was no direct evidence of fraud or improper dealings and that the case was based almost entirely on inference. D1 and D4 argued that there was no good arguable case on the evidence.

Held:

1. The test of good arguable case was the three-limbed test first articulated in Brownlie v Four Seasons. 

2. As explained by the Court of Appeal in Kaefer Aislamientos v AMS Drilling Mexico:

(i) A plausible evidential basis is required.  This is a relative test which requires the claimant to show that it has the better argument;

(ii) The court must try to reach a conclusion on any disputed issues of fact if it reliably can, applying judicial commonsense and pragmatism;

(iii) If it cannot decide which side has the better argument on the material available, the court can move away from a relative test and find a good arguable case provided there is sufficient plausibility of evidence to support it.

3.  Per curiam: although there is a distinction between jurisdictional challenges (where the question of jurisdiction will not be revisited after the interlocutory stage) and freezing orders, it is doubtful whether it would ever be right to grant a freezing order, particularly in a fraud case, unless the claimant had the better of the argument.

4.  The material before the court was admittedly incomplete.  While there were matters which required investigation, Cs had founded their case unequivocally on fraud and on the material available, they did not have the better of the argument.  The mere fact that the reason for a particular transaction is not immediately obvious without further investigation does not per se give rise to an inference that it must have been fraudulent.

5. The principles for assessing risk of dissipation were those summarised in Lakatamia v Su, [2019 EWCA Civ 2203. 

6. Cs’ case on dissipation depended almost entirely on inference from the alleged fraud.  Once the fraud case had been rejected, there was no evidence, let alone solid evidence, of any risk of unjustifiable dissipation.  To the contrary, the unchallenged evidence was the D1 was a man of good reputation and unimpeachable character.

The full judgment [2023] EWHC 2815 (Comm) may be found on the National Archives website.

EPISO 4 Pilgrim Holding SARL v Timothy Davies (Foxton J)

CPR 81 – false statement of truth – permission to pursue committal proceedings – whether in public interest

The Applicant applied under CPR 81 for permission to pursue committal proceedings against Mr Davies on the basis that he had made knowingly false statements as to his assets in two witness statements signed with statements of truth.

Permission would only be granted if the Applicants could show a strong prima facie case that Mr Davies made false statements knowing that they were untrue, and it is in the public interest for proceedings to be brought.

Held:

1. Mr Davies admitted to making some false statements, and there was a strong prima facie case that the other statements were untrue.
2. There was a strong prima facie case that Mr Davies made the statements knowing that they were untrue. The witness statements purported to and failed to address all of Mr Davies’ assets, corrections were made only after omissions were criticised by the Applicants, and the statements gave the false impression that Mr Davies’ assets were less than they were.
3. Notwithstanding that strong prima facie case, it was not in the public interest for proceedings to be brought. Most of the statements were corrected before the relevant court hearing, the remaining statements within a short period thereafter. At the hearing, the applicant had obtained all of the relief it was seeking and an order for indemnity costs. The judge had made public criticism of Mr Davies’ evidence. The proceedings for which the statements were made had been struck out and costs awarded to the Applicants, the Applicants had suffered little prejudice, and committal proceedings would consume excessive amounts of limited court resources.

The full judgment [2023] EWHC 2797 (Comm) may be found on the National Archives website.

Renaissance Securities (Cyprus) Ltd v ILLC Chlodwig Enterprises & Others (Dias J)

Anti-suit and anti-anti-suit injunction – hearing on urgent, private and without notice basis – permission to rely on expert evidence – service by alternative methods

C provided investment services to each of the six Ds pursuant to individual Investments Services Agreements (“ISA”) on materially identical terms.  The ISAs were each expressly governed by English law and contained an LCIA London arbitration clause.  Ds were all ultimately beneficially owned and controlled by G.  G and D1, D2, D3 and D6 were all either directly or indirectly sanctioned under US and/or UK and/or EU sanctions.  C reasonably considered that D4 and D5 were likewise indirectly sanctioned. 

Following the imposition of sanctions, D1 and D2 redomiciled to (eventually) Russia.  In apparently co-ordinated fashion, D3-D6 each requested transfer of their assets held by C to accounts of D1 or D2 in Russia.  C declined to comply so as not to breach sanctions.  In August, each D issued a letter before action referring to the relevant ISA and threatening proceedings before “the appropriate forum”.  On 13 October 2023, C discovered that each Defendant had brought a separate claim in the Russian courts effectively seeking damages in the amount of its blocked assets.  Preliminary hearings were scheduled to take place in two of the claims on 7 and 13 November 2023.  C had not been served with or notified of the proceedings.  C had some $206 million of its own assets in Russia which were blocked by the Russian authorities.

On C’s application for an ASI and AASI, held:

1.  Permission would be granted to rely on expert evidence as to Russian law on jurisdiction and procedure in the Russian proceedings; the availability of anti-suit relief in Russia and matters relating to service;

2. The expert’s evidence was that:

– the Russian proceedings were based on Article 248 of the Russian Commercial Procedure Code which had been introduced specifically to allow Russian parties to litigate in Russia, irrespective of any contractual arbitration or forum clause, where they were unable to arbitrate or litigate abroad due to “restrictive measures”;

– it would be possible for a court at a preliminary hearing to proceed to give judgment if the defendant did not appear or lodge submissions;

– Article 248 covered both sanctioned Russian entities and indirectly sanctioned non-Russian entities;

– Article 248 authorised the grant of anti-suit relief to restrain any foreign proceedings/arbitration relating to disputes within the scope of the article, including English anti-suit proceedings;

–  Such relief could be obtained within 5-15 days even in the absence of C.  The threshold for the grant of relief was low and the likelihood of its being granted was high;

–  Breach of a Russian ASI could result in C being ordered to pay the entire amount claimed in the Russian proceedings.

3. In the circumstances, Ds had actively taken steps to assert claims in Russia in flagrant breach of their contractual obligations and hearings in Russia were imminent which could potentially result in a judgment.  There was a real risk that Ds would apply for their own ASI or AASI if notified of the application, thereby defeating the purpose of the application.  Accordingly, it was appropriate to proceed without notice, in private and on an urgent basis.

4.  C had demonstrated to a high probability that the disputes between the parties were covered by the arbitration agreement;

5.  There was no good reason to refuse relief on the interim basis sought.  The Russian courts were unlikely to regard sanctions as a good defence to Ds’ claims.  Allowing the Russian proceedings to continue would potentially allow Ds to avoid sanctions altogether by obtaining judgment and enforcing it against C’s assets in Russia;

6. On the facts there was no undue delay in bringing the application.  C appreciated at an early stage that proceedings in Russia were possible, but Ds threat of proceedings was expressly referred to an “appropriate forum” and it was reasonable for Cs to wait and see whether Ds in fact abided by their contractual obligations;

7.  The probability of Ds seeking to obtain their own ASI was high and it was therefore just and convenient to grant an AASI as well;

8.  To avoid tipping-off, a non-disclosure provision was appropriate preventing disclosure of the proceedings until all Ds had been served;

9.  Permission was granted to serve by alternative means.  Russia was a signatory to the Hague Convention and had entered a reservation to Article 10.  The evidence was that service under the Convention could take up to 17 months.  Given the coercive nature of the order, backed by penal sanctions, it was important that the proceedings be brought to the attention of Ds and formally constituted as soon as possible.  The circumstances were therefore sufficiently exceptional to warrant service by alternative methods;

10.  Permission was granted to dispense with personal service of the order for the purposes of CPR Part 81.  There was evidence suggesting that G (who was named in the penal notice) might seek to evade service and might direct other named individuals to do so as well.  The court was satisfied that the order would in any event come to their attention;

11.  However, the court declined to dispense prospectively with personal service of any contempt application, regarding this as premature.

The full judgment [2023] EWHC (Comm) may be found on the National Archives website.

Deutsche Bank AG v Sebastian Holdings and Vik (Mr Justice Henshaw)

Suspended committal order; interpretation; ‘slip’ rule; variation; abuse of process; estoppel

A suspended committal order was made against Mr Vik, the Defendant company’s controller, following findings of contempt of court in connection with enforcement procedures.  The custodial sentence was suspended for a period of 6 months from an ascertainable date, on terms which included provision of specified documentation and attendance at a further hearing for oral examination of Mr Vik about the company’s assets.  The order provided that the sentence and warrant of committal would then fall away unless, prior to that date, the Claimant had applied to lift the suspension.  Some documentation was provided but no further oral examination hearing was listed (or sought to be listed) for hearing within the 6-month period.  The court held that, as a matter of construction of the order, the conclusion was unavoidable that the sentence had fallen away at the end of the 6-month period (the Claimant having made no prior application to lift the suspension).  Further, having regard to the nature of the order, it was not possible to arrive at any different conclusion by application of the slip rule or variation, or the principles of abuse of process or estoppel.

The full judgment [2023] EWHC 2563 (Comm) may be found on the National Archives website.

Clifford Chance LLP and Clifford Chance Europe LLP v Société Générale (Mr Justice Henshaw)

Jurisdiction challenge; framework agreement for conduct of legal work; parties to agreement; scope of exclusive jurisdiction clause; exceptional circumstances

C1 (an English LLP) and C2 (a French LLP) commenced proceedings in England seeking declarations that neither was liable in respect of threatened claims from D (a French-headquartered international bank) relating to the conduct of litigation in the English High Court on which D had retained C1.  D subsequently commenced proceedings in France and challenged the jurisdiction of the English court, relying on an exclusive jurisdiction clause in a framework agreement between C2 and D but purportedly made entered into by C2 on behalf of all Clifford Chance entities.  The court concluded that (a) D did not have the better of the argument that C2 was authorised to contract on C1’s behalf; (b) C1 never became a party to the framework agreement; (c) in any event, as a matter of construction, the exclusive jurisdiction clause was not intended to apply to individual retainers by D of Clifford Chance entities, regardless of the nature and location of the work done; and (d) no real claim had been put forward against C2 at all, C1 alone having been the entity retained to conduct the litigation in question: that fact, and the undesirability of C1 but not C2 being able to seek relief in England in relation to this matter, provided exceptional reasons to refuse a stay as against not only C1 but also C2.

The full judgment [2023] EWHC 2682 (Comm) may be found on the National Archives website.

Sheikh Mohamed bin Issa al Jaber v Sheikh Walid bin Ibrahim al Ibrahim and Sheikh Majid bin Ibrahim al Ibrahim (Mr Justice Henshaw)

Dispute over characterisation of US$30 million payment made in January 2002; loan agreement or advisory fee; applicable law; Saudi law on oral loan agreements

C paid US$30 million in January 2002 to an account held by a company, Durango, controlled by D2 and in which, on C’s case, D1 also had an interest.  C some years later alleged that the payment represented a loan to D1 and D2, which they had sought (at least ostensibly) in order to help them finance a new Arabic television channel, which in due course became the channel ‘Al Arabiya’.  D2 said the payment reflected an advisory fee paid for his assistance in facilitating the resolution of matters between C and a Saudi prince.  The resolution included, on D2’s case, facilitating the taking over by the Saudi government of leases of compounds operated by one of C’s companies, preparing the way for a major refinancing of the company in 2001, which in turn enabled C to repay the prince.  The court concluded that C’s case that the 2002 payment represented a loan was not supported by the evidence, and the payment was much more likely to have been a fee of the kind D2 maintained.  The claims therefore failed.  The court also found that, had an oral loan agreement been proven on the facts, it would have been valid under Saudi law, since the better view (based on the majority of scholarship and available court decisions) was that Verse 282 of the Qur’an did not making writing a mandatory requirement for a loan; and, further, the claim would not have been time barred under Saudi law.

The full judgment [2023] EWHC 2831 (Comm) may be found on the National Archives website.

Capita Business Services Limited v IBM United Kingdom (Foxton J)

Services contract – whether IBM obliged to continue to provide Relevant Service after 30 August 2023

In 2022, the parties entered into a 5-year contract for the provision of services. There was a dispute as to the effect of Condition 2 of that contract, and whether it obliged IBM to continue providing a particular service (“the Relevant Service”) after 30 August 2023. Upholding IBM’s case that it was no so obliged:

1. The terms of Condition 2 were more consistent with IBM’s construction. Both as a matter of language and because of certain commercial curiosities which would arise on Capita’s construction.
2. IBM’s construction was supported by Conditions 1 and 3, introduced into the contract at the same time as Condition 2 with a sjmilar subject, and which in time, place and origin were very close to the textual epicentre of this dispute.
3. Capita’s reliance on the general introductory terms of the agreement was misplaced, the generality of those terms having to yield to the specificity of Condition 2 in relation to the Relevant Services.
4. The parties’ respective arguments as to business common sense were of no or limited assistance (Arnold v Britton [2015] AC 1619, [19]-[20]).

The full judgment ([2023] EWHC 2623 (Comm) may be found on the National Archives website.

Kalo v Bankmed SAL (Foxton J)

Service out of the jurisdiction – consumer contract – ss.15C-E CJJA 1982

C had opened a bank account with a Lebanese bank, on terms which provided for Lebanese law and the exclusive jurisdiction of the Lebanese courts. C contended that the courts of England and Wales has jurisdiction because C was a consumer and the contract fell within the scope of commercial or professional activities which D had directed to England and Wales.

Held: on the material before the court C had shown a good arguable case that D had directed commercial or professional activities relating to retail banking to England and Wales. C had the better of the argument relating to the effect of C’s website and its international retail banking account. The court was not in a position to reach a reliable view of who had the better of the evidence on other issues which depended on the conflict of witness evidence, but C’s case on these issues had a plausible evidential basis.

The full judgment ([2023] EWHC 2606 (Comm)) may be found on the National Archives website.

JOL and JWL v JPM (Foxton J)

Arbitration Act 1996 – s.44 – application for final mandatory injunctive – whether case of sufficient urgency to require court to hear application to grant injunctive relief which would be final in its effect – whether s.38(4) of the Arbitration Act 1996 gave the arbitral tribunal power to grant interim injunctive relief – whether lack of such a power should preclude arbitral tribunal from forming and expressing  a view on the merits of the application when deciding whether to grant permission for a s.44 application

C applied for urgent injunctive relief under s.44(3) of the Arbitration Act 1886 requiring D to re-deliver (or procure the re-delivery) of vessels subject to bareboat charters on the basis that the charters had been brought to an end. The application was rejected:

• While it has been held that s.44(3) permits an urgent application to the court for injunctive relief for the purpose of preserving alleged contractual rights, the existence of which is in dispute in the arbitration (Cetelem SA v Roust Holdings Ltd [2005] 1 WLR 355), particular caution is required before granting relief of this kind, particularly where the effects of any court order is likely to be irreversible.
• The order sought in this case would be irreversible, and would involve the effectively final determination by the court of issues which the parties had agreed should be determined by the arbitral tribunal, and the applicant was unable to establish a sufficient degree of urgency to require the court to take the exceptional course of making such an order.
• Section 38(4) of the Arbitration Act 1996 did not give the LMAA arbitral tribunal to order interim injunctive relief by way of enforcement of disputed contractual obligations. However, the arbitral tribunal could reach a final determination of the application on an expedited timetable without undue prejudice to the applicant.
• If the arbitral tribunal determined, for whatever reason, that the application for final injunctive relief could not be determined for a prolonged period, it could give the applicant permission to apply to the court under s.44(5). While this would still involve the court being asked to reach an effectively final decision on matters which the parties have agreed to refer to arbitration, court intervention in the arbitral process which is sanctioned by the arbitral tribunal can more readily be reconciled with the policy in s.1 of the Arbitration Act 1996 than applications made without the arbitral tribunal’s consent.
• The fact that the LMAA tribunal does not itself have the power to grant interim injunctive relief as precluding it, to the extent it thought appropriate, from expressing its views on the merits of such an application when ruling on an application by one party for permission to apply to the court for s.44 relief.

The full judgment ([2023] EWHC 2486 (Comm) may be found on the National Archives website.

International Medical Supplies Ltd v Decker & Another (Dias J)

Judgment in default – Defendant contending that claim form had never come to his attention – whether judgment should be set aside – relief from sanctions

D1 negotiated a contract for the sale by D2 of medical supplies to C.  D2 defaulted and a settlement agreement was concluded between C, D2 and a Cypriot company, P, whereby D2 undertook to repay £10m. D2 failed to pay the settlement sum.

C commenced proceedings against D2 for the amount due under the settlement and against D1 for damages for breach of warranty of authority and fraudulent misrepresentation.  No acknowledgement of service was filed and C entered judgment in default against D1 on the breach of warranty claim only for the full amount of D2’s debt (£10m plus interest).  C also issued a statutory demand.

D1 argued that (1) he had never seen the claim form and only became aware of the proceedings on service of the judgment

D1 justified the delay in bringing the application on the grounds of impecuniosity, difficulties in raising funds and the need to prioritise the statutory demand.  He argued that the delay caused by the adjournment was consensual and should not count against him.

The court held that the application to set aside succeeded in part:

1. The court could not entirely exclude the possibility that D1 had not seen the claim form for some reason, in which case there was a good reason for not acknowledging service.
2. While borderline, the delay in bringing the application was not excessive.  D1 had not provided full evidence as to his assets, but the court accepted that he had needed to raise funds to defend the litigation and that this taken time.  He also needed time to obtain Cypriot law advice. 
3. D1 should therefore be permitted to defend the claim on quantum and causation but subject to conditions.

The full judgment ([2023] EWHC 2742 (Comm) may be found on the National Archives website.

Loreley Financing Jersey No 30 v Credit Suisse Securities (Europe) Limited and others (Cockerill J)

Fraudulent misrepresentation – Limitation – 2008 Financial crisis

The Claimant purchased US$100 million of CDO Notes in late 2007. It lost the full sum in the ensuing financial crisis. In 2018 it sued the Defendants saying that it had been induced to buy the notes by CDO representations (inter alia of honesty and as to its ability to assess the transaction) which were falsified by the risk that some of the underlying residential mortgage backed securities were afflicted by systemic misconduct and fraud in the securitisation and sale of those RMBS’s.

The court held that the claim was time barred because the Claimants had known enough to plead essentially the case now run well before 2012. Further: (i) the CDO representations were not made. (ii) If they were made they were not relied on by the Claimants because they were unaware of them (iii) Nor was there any falsity – the alleged RMBS misconduct was not made out. The other issues relied on (negligence, unlawful means conspiracy and Irish Law) also failed.

The full judgment [2023] EWHC 2759 (Comm) may be found on the National Archives website.

(1) Therium Litigation Funding A IC v Bugsby Property LLC (Jacobs J)

(2) Omni Bridgeway (Fund 5) Cayman Invt. Limited v Bugsby Property LLC (Jacobs J)

Litigation funding – impact of decision of Supreme Court in R (PACCAR) v Competition Appeal Tribunal [2023] UKSC 28 (“PACCAR”) – whether claim by litigation funders can survive the PACCAR decision – application for injunction to restrain disposal of proceeds of successful litigation funded by litigation funders – whether litigation funders should fortify their cross-undertaking in damages

Following the compromise of an appeal, litigation proceeds amounting to around £27 million was paid to the solicitors for the defendant (“Bugsby”). The litigation had been funded by the applicant (“Therium”) together with another funder (“Omni”). Therium sought an injunction, on a proprietary basis pursuant to the terms of the litigation funding agreement, to restrain Bugsby from dealing with the proceeds of successful litigation funded by Therium and Omni. Bugsby argued that an injunction should be refused, because the litigation funding agreement was unenforceable following the decision of the Supreme Court in PACCAR. Bugsby also contended that any injunction, if granted, should be limited to the amount of Therium’s claim, and should not extend to the entirety of the litigation proceeds.

The Court held:

• It was common ground that the decision in PACCAR rendered unenforceable Therium’s claim to a percentage share of Bugsby’s recoveries. However, there was a serious issue to be tried as to whether the entire agreement was unenforceable, and specifically whether Therium could recover other sums to which it was entitled under the litigation funding agreement: namely the costs which it had paid out and the agreed multiple of those costs.
• The issues as to enforceability, and the question of whether there could be severance, were to be determined by arbitrators in accordance with the arbitration agreement contained in the litigation funding agreement. The balance of convenience favoured granting Therium injunctive relief in order to preserve the litigation proceeds.
• The trust arrangements contained in the relevant agreements meant that it was appropriate to preserve the entirety of the proceeds, notwithstanding that the operation the “waterfall” provisions meant that parties other than Therium would be the beneficiaries of part of those proceeds.

The full judgment, [2023] EWHC 2627 (Comm) handed down on 20 October 2023, can be found on the National Archives website.

• The court subsequently determined that it was not appropriate to order Therium and Omni to be required to fortify their cross-undertakings in damages. The potential loss sought by Bugsby, relating to its desire to participate as a funder in the litigation funding market, was speculative.
• In any event, there was no good arguable case that there was a risk that the litigation funders would default on any liability under their cross-undertakings, in circumstances where a default would be a contempt of court and would have severe reputational and other consequences for the litigation funders.

The full judgment, on the fortification issue [2023] EWHC 2755 (Comm) handed down on 3 November 2023, can be found on the National Archives website.

Michalis S A Kallakis v Achilleas M Kallakis & Allied Irish Banks plc (Andrew Baker J) 

Commercial property portfolio built up by fraudulent means – claims against mortgagee bank in relation to its disposal of the portfolio when the fraud came to light – claims brought in the name of the son of the principal fraudster, joined as co-defendant supposedly on the basis of an allegation of negligence in the management of the portfolio

Achilleas Kallakis built up a substantial property portfolio by practising fraud upon Allied Irish Banks plc (‘AIB’), using forged documents as part of his fraudulent method. The properties were acquired by special purpose vehicles, in turn owned by holding companies the sole director and legal shareholder of which was Michael Becker, a Swiss lawyer. The main fabrication within the fraud was a false claim that subsidiaries of Sun Hung Kai Properties Ltd (‘SHKP’), with their obligations guaranteed by SHKP, were participating as head lessees from the SPV owning companies on very favourable terms such that AIB would value the properties, for the purpose of mortgage lending, well above their true market value. When the global financial crisis arrived with and following the collapse of Lehman Brothers in mid-September 2008, AIB’s total lending stood at c.£710 million. Achilleas Kallakis’ fraud came to light at that time, following which, ultimately, AIB sold all the mortgaged properties pursuant to its security rights, realising c.£650 million.

In 2013, at Southwark Crown Court, Achilleas Kallakis was convicted of conspiracy to defraud AIB. He served a substantial prison term. Almost immediately upon his release from prison on licence, these proceedings were issued in the name of his son, Michalis Kallakis, principally to allege that AIB sold the portfolio at an undervalue, but also making wide-ranging allegations against the bank, including allegations of fraud or dishonesty. Purportedly to justify the claims being brought in Michalis Kallakis’ name, it was alleged that he was and is a beneficiary of a family trust called the Hermitage Syndicated Trust (‘the HST’) and that Mr Becker, allegedly sole trustee of the HST, held his shares in the parent companies of the property-owning SPVs as trust property on the terms of the HST.

After a trial in June and July 2023, held that:

• none of the claims against AIB was well founded – the bank did not misrepresent its intentions as mortgagee following the discovery of the fraud, did not sell any of the properties without legal authority or cause, and did not undersell so as to obtain less than the best price reasonably obtainable for them;
• in any event, Michalis Kallakis had no title to sue – the property-owning SPVs were indirectly owned by Mr Becker as nominee for Achilleas Kallakis, not as trustee of the HST (which, if it existed at all, was and is a sham device for pretending that assets are not beneficially owned by Achilleas Kallakis), and contentions made at trial that AIB owed duties directly to Michalis Kallakis were neither pleaded nor arguable;
• in fact, the proceedings in Michalis Kallakis’ name were a dishonest contrivance, brought at the instance of, and to pursue the interests of his father, using him (the son) as nominee – the litigation was dishonest in conception, inception and prosecution.

All the claims pursued at trial were dismissed. The full judgment, [2023] EWHC 2148 (Comm), may be found on the National Archive website.

London Steam-ship Owners’ Mutual Insurance Association Limited v Kingdom of Spain (The ‘Prestige’) (Butcher J)

Appeal against order enforcing a foreign judgment – Irreconcilable with earlier English judgments and award – Effect of CJEU decision – Appeal against arbitrator’s conclusions – Equitable compensation – Injunctions against States

The Court had to determine (1) the outcome of the London Steam-ship Owners’ Mutual Insurance Association’s (‘the Club’s) appeal against an order enforcing a judgment of the Spanish courts in favour of the Kingdom of Spain (‘Spain’), and (2) the outcome of arbitration applications made in respect of awards of an arbitrator in favour of the Club against Spain.

The Court held:

1. That the Club’s appeal succeeded.  This was for two reasons.

2. First,  the Spanish judgment was irreconcilable with earlier judgments of the English courts, and that Article 34(3) of Regulation (EC) No. 44/2001 (‘the Regulation’) was applicable. The decision of the CJEU in Case C-700/20 The London Steam-Ship Owner’s Mutual Insurance Association did not dictate a different answer, because, in part, that decision dealt with matters already res judicata and went beyond the scope of the issues referred to the CJEU.

3.  Second, because the Spanish judgment was irreconcilable with an arbitral award between the parties, and it would be contrary to English public policy (and specifically the policy of and behind res judicata) for it to be enforced, and Article 34(1) of the Regulation was applicable.

4.  Spain’s arbitration applications failed in part, but, subject to one point on which a decision has been reserved, succeeded on one issue.

5.  Specifically, the arbitrator had found that Spain was liable for equitable compensation for its failure, in having maintained its action in the Spanish courts and in having sought to enforce the Spanish judgment, to comply with its obligation to arbitrate its claims in London arbitration.  Spain’s appeal against this finding under s. 69 Arbitration Act 1996 was dismissed.

6. Further, the arbitrator had found that he had jurisdiction to grant an injunction against Spain, but in the exercise of his discretion had not done so, but had decided that it was appropriate for there to be an award of damages in lieu.  The Court found, subject to the point raised in The Resolute, that the arbitrator had not had power to award an injunction against Spain, because the court could not have done so by reason of s. 13(2) State Immunity Act, and s. 48(5) Arbitration Act did not confer a wider power on the arbitrator; and that therefore damages could not be awarded in lieu. 

7. Insofar as Spain had sought to challenge the arbitrator’s conclusions by reference to the CJEU decision in Case C-700/20, those challenges were rejected.

The full judgment ([2023] EWHC 2473 (Comm)) may be found on the National Archives website.

The French State v London Steam-ship Owner’s Mutual Insurance Association Ltd (The Prestige) (Butcher J)

Challenges under Arbitration Act s. 69 – whether there was an award – should there be an extension of time – merits of appeals – equitable compensation – injunctions against States

The French State (‘France’) sought to challenge the conclusions of an arbitrator under s. 69, whereby she had held, in summary: (1) that France was liable for equitable compensation for breach of its obligations to pursue its claims only in London arbitration; and (2) that France should be enjoined from pursuing further or seeking to enforce a judgment in proceedings other than London arbitration.

The Court held:

1. That France needed an extension of time in which to bring its s. 69 application in respect of the arbitrator’s award. 

2. An extension of time would be granted for it to bring its s. 69 application on some but not other grounds.

3.  That in those respects in which an extension of time was allowed, permission to appeal would be granted.

4. That the appeal against the arbitrator’s finding that France was liable for equitable compensation was dismissed.

5. That subject to the Resolute point, on which a decision was deferred, the arbitrator had not had power to grant an injunction against France.

The full judgment ([2023] EWHC 2474 (Comm)) is to be found on the National Archives website.

Rolls-Royce Holdings plc v Goodrich Corporation (Foxton J)

Section 35A – whether contractual interest clause made order under s.35A inappropriate – effect of claimant not adducing or seeking to prove claim to interest at the contractual rate

The contract between R-R and GR provided for what was to happen Clause 44 provides “If R-R does not make payment in accordance with this Agreement.” It provided that GR would be entitled to recover a sum from R-R equal to the interest which it pays or loses as the case may be in consequence of such late payment upon provision of evidence of such payment/loss.. The clause (clause 44) provided “The Parties acknowledge and agree that such payments are sufficient to compensate GR for any such late payment”.

GR pleaded a claim to interest under s.35A but did not plead or seek to prove a right to clause 44 interest. It recovered in debt, with a  claim for damages for failure to pay the debt, or, had the court not rejected R-R’s argument that no debt had accrued, failure to accrue a debt. R-R argued that the court should not order pre-judgment interest under s.35A.

Held:

1. Clause 44 addressed the right to recover interest in the event sums were not paid by R-R in accordance with the contract.
2. The clause applies to all amounts which were not paid “in accordance” with the contract, however small. The parties must have intended that the process of quantifying GR’s  interest entitlement would be an essentially summary and straightforward one, effectively involving little more than proof of the interest rate it paid under any bank facility or interest it received on any bank deposit.
3. The recovery of either interest paid or interest foregone is conditional upon GR providing R-R with evidence of that loss,
4. The clause provides an agreed mechanism of redress for the consequences of late payment, hence the final sentence.
5. Applying Standard Chartered Bank v Ceylon Petroleum Corp [2011] EWHC 2094 (Comm), and Starbev GP Limited v Interbrew Central European Holdings BV [2014] EWHC 2863 (Comm), where the parties had by their contract whether, in what circumstances and at what rate interest would be payable on late payments, the court would not make an statutory interest inconsistent with that agreement.
6. It was not possible to circumvent this principle by claiming damages for non-payment of a debt. The court had not made any other damages award in GR’s favour, but even if damages for-R’s failure to take a step which would have allowed a debt to accrue had been awarded, the essence of that complaint – R-R’s failure to pay sums in accordance with the contract – would still have had the effect that interest should not be awarded under s.35A where the requirements for interest under clause 44 were not satisfied.
7. GR having failed to plead or adduce the evidence necessary to establish a right to interest under clause 44, no award of pre-judgment interest under statute would be

The full judgment Rolls-Royce Holdings plc v Goodrich Corporation may be found on the National Archives website.

SQD v QYP (Bright J)

Arbitration – Interim anti-suit injunction – English law agreement – arbitration with seat in Paris – court proceedings overseas

An agreement between SQD and QYP provided for English law to apply as the governing law of the agreement, and for disputes to be referred to arbitration in Paris.  QYP commenced proceedings overseas, in its own country.

SQD applied for an interim anti-suit injunction (“ASI”), relying on s. 44 Arbitration Act 1996 and s. 37(1) Senior Courts Act 1981.

There was evidence that an ASI would not be granted by the French court.

Held, refusing the application:

1. A claim for an ASI could not be brought under s. 44 Arbitration Act 1996.  It must be brought under s. 37(1) Senior Courts Act 1981: Ust-Kamenogorsk Hydropower Plant JSC v. AES Ust-Kamenogorsk Hydropower Plant LLP [2013] UKSC 35, per Lord Mance at [48]
2. In this case, permission to serve out could not be granted under CPR 62, because the seat was not within the jurisdiction. Jurisdiction must be founded under CPR 6.36, including the requirement that England and Wales is the proper forum.
3. In cases such as Aggeliki Charis Compania Maritima SA v Pagnan SpA (The Angelic Grace) [1995] 1 Lloyd’s Rep 87 (external link), the court did not have in mind the situation where the seat of the arbitration is outside the jurisdiction.
4. In such a case, the court should approach the matter with “the utmost caution”: Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334, per Lord Mustill at p. 367F, p. 368B-G.
5. The DAC reports suggest that, in such a case, it will not be appropriate to grant relief if to do so might give rise to a “conflict” or “clash”
6. The evidence on the approach to ASIs in France indicated that French law has a philosophical objection to ASIs and objects not only to the grant of ASIs by French judges, but also to ASIs granted by non-French judges, unless the non-French court has substantive jurisdiction and its procedural law applies, rather than French law.
7. The fact that the governing law of the agreement was English was not, by itself, sufficient to give the English court jurisdiction or to justify the grant of an ASI.
8. To grant an ASI would be inconsistent with the approach of the court of the seat.  The English court should have deference to the approach of French law.  To do otherwise would or at least might give rise to a conflict or clash.
9. The court should also have deference to the objective intention of the parties, who chose Paris as the seat knowing that the French courts will not grant ASIs.

 The full judgment [2023] EWHC 2145 (Comm) can be found on the National Archives website.

Viking Trading OU v Louis Dreyfus Suisse SA (Bright J)

Arbitration – application for s. 69 permission to appeal – respondent’s costs of opposing

Viking applied for permission to appeal an award under s. 69 Arbitration Act 1996.  LDC opposed the grant of permission, filing a respondent’s notice, witness statement and skeleton argument.  In none of these documents did LDC ask for its costs.

The court refused Viking’s application on documents.  The court’s order did not deal with costs.

LDC then applied for its costs.  The court awarded £20,000 subject to any application to vary by Viking.  Viking applied for a variation, contending (i) that the court did not have the power to grant costs after the event and (ii) that the quantum of LDC’s costs was excessive and should be reduced.

Further submissions followed.  Each party asked for the additional costs incurred subsequent to the order refusing s. 69 permission to appeal.

The court held that it had power to order costs after the event under CPR 44.10 as explained by Timokhina v Timokhin [2019] 1 WLR 5458, but varied its assessment of quantum to £15,250.  The sum awarded took account of the fact that none of the costs after the court’s original order would have been incurred if LDC had asked for costs in its respondent’s notice.

The court gave general guidance as to how a respondent should approach costs on an application for s. 69 permission:

1. Such a respondent should be conscious of the need to control the costs incurred.
2. If the respondent wants the court not only to dismiss the application but to award the respondent its costs, it should say so in the respondent’s notice.
3. In most cases, it ought to be possible to provide a statement of costs either with the respondent’s notice and skeleton or very shortly afterwards.  The level of detail provided should be proportionate to the amounts sought.
4. Otherwise, the respondent should say that the statement will be provided later, if required.  But the respondent should have in mind that, if the court takes the view that this has unnecessarily caused further costs to be incurred, this will be reflected in the court’s decision: as happened in this present case.

The full judgment [2023] EWHC 2160 (Comm) can be found on the National Archives website.

Deutsche Bank AG v Central Bank of Venezuela (Bright J)

Sovereign state contract subject to LCIA arbitration – State Immunity Act 1978 – waiver of immunity – effect of waiver on relief under s. 44 Arbitration Act 1996

CBV entered gold bullion swap transactions with DB.  Following the imposition of US sanctions on Venezuela, substantial sums were payable by DB to CBV but it was not clear how, where or to whom they should be paid.  Two rival parties claimed to be the true representative of CBV – “the Guaido board” and “the Maduro board”.

The transactions were subject to LCIA arbitration and contained an express waiver of immunity under the State Immunity Act 1978 in sub-para. 10(ii).  DB applied under s. 44(2)(e) Arbitration Act 1996 and receivers were appointed in May 2019.  The terms of the receivership order provided for the receivers’ costs to be paid by DB.

DB now applied for the court to order new terms such that, following payment of the receivers’ costs by DB and with the relevant sums having been scrutinised and approved/ challenged/ determined (as might be the case), the receivers would reimburse DB out of the receivership funds.  The Guaido board consented.  The Maduro board objected on the ground that an order that the receivership funds be used to pay DB would infringe Venezuela’s sovereign immunity, being a form of enforcement against the property of CBV.

The Court considered the relationship between the Arbitration Act 1996 and the various claims that might be brought in court in support of arbitration, and their relationship to the State Immunity Act 1978.

The Court held as a matter of construction that sub-para. 10(ii) waived immunity from enforcement against BCV’s property and allowed DB’s application.

The Court queried whether the receivership funds were, in fact, the property of BCV.

The full judgment [2023] EWHC 1942 (Comm) can be found on the National Archives website.

Eternity Sky Investment Ltd v Mrs Xiaomin Zhang (Bright J)

Enforcement of foreign arbitration award – public policy under Consumer Rights Act 2015, Financial Services and Markets Act 2000 – s. 103(3) Arbitration Act 1996

Chong Sing, a company based in Hong Kong, held a corporate bonds issue in Hong Kong in May 2016.  Chong Sing was managed and controlled by Mr Zhang.  Eternity Sky was a major subscriber to the bonds issue, under a Subscription Agreement with Chong Sing, in the sum of HK$500 million.  A condition precedent to its payment under the Subscription Agreement was that Mrs Zhang provided a Personal Guarantee.

Mrs Zhang was resident in London.  She was asked to sign the Personal Guarantee by Mr Zhang’s PA, who sent her only the signature page.  She signed it without asking for or reading any of the substantive provisions, including cl. 2 (the guarantee clause, which defined the subject-matter as Chong Sing’s obligations under the other transaction documents, which included the Subscription Agreement, but did not set them out) or cl. 17 (Hong Kong law and arbitration).

Chong Sing defaulted and Eternity Sky called on the Personal Guarantee.  Mrs Zhang commenced arbitration proceedings in Hong Kong, alleging that the Personal Guarantee was not valid and effective for (i) lack of agreement (ii) undue influence and (iii) unconscionability.  She expressly submitted to the jurisdiction of the arbitrator, including his jurisdiction to decide his jurisdiction. Eternity Sky brought a counterclaim for HK$500 million and interest.  The arbitrator dismissed Mrs Zhang’s case, finding that she had been negligent in not asking to see the terms of the Personal Guarantee, and upheld Eternity Sky’ counterclaim.

Eternity Sky obtained, without notice, an order for enforcement of the award under s. 101 Arbitration Act 1996.  Mrs Zhang applied for it to be set aside under s. 103(3), on the basis that to do so would be contrary to public policy because of her consumer rights under the Consumer Rights Act 2015.

The Court held:

• Mrs Zhang was a consumer.
• The Consumer Rights Act 2015 did not apply, because the Personal Guarantee did not have a close connection to the UK within s. 74(1), despite Mrs Zhang being resident in London.
• The “average consumer” under Consumer Rights Act 2015 is someone who might enter into a consumer contract of this particular type, bearing in mind its nature and context.  Here, that meant an average consumer a good understanding of what a personal guarantee is and of what a bonds issue is.
• Such average consumer must not be negligent.  Not obtaining or reading the terms might not be negligent in a typical consumer contract, but this was not a typical contract.  Mrs Zhang was negligent (as the arbitrator held) and so not “circumspect” within s. 64(5).
• Transparency and prominence had to be assessed on the basis the average consumer would have taken the trouble to read and obtain the contract terms.
• Cl. 2 was transparent and prominent.  This was so, despite the fact that the obligations being guaranteed were not set out or summarised.  Their essence would have been obvious to the relevant average consumer.
• Cl. 2 was neither surprising nor objectionable, as the operative clause of a guarantee.  It was not unfair under s. 62.
• Neither the choice of Hong Kong law nor the provision for Hong Kong arbitration were unfair.  The application of Hong Kong law to the substantive issues made no difference; the outcome of the issues referred to the arbitrator would have been the same under English law.  Hong Kong arbitration was not surprising or objectionable in all the circumstances.

The court dismissed the application.  The court also refused Mrs Zhang’s application to adjourn the determination of her application, on case management grounds.

The full judgment [2023] EWHC 1964 (Comm) can be found on the National Archives website.

World Challenge Expeditions Ltd v Zurich Insurance Company Ltd – Dias J

Personal Accident and Business Travel Policy covering travel company which provided challenging expeditions for students – Construction of policy – Whether insurance company estopped by prior course of dealing from denying coverage for refunds paid to students following cancellation of trips by reason of the pandemic – Aggregation

WCE provided adventurous expeditions for school children (“Challengers”).  Challengers would typically pay for the trip in instalments over a two year period leading up to departure, during which WCE would undertake significant preparatory work with them.  However, flights, accommodation and expeditions would not be booked or paid for by WCE until  1 or 2 months before departure.  From 2016 WCE was insured by Zurich against travel risks, including cancellation, under a personal accident and business travel policy which was renewed from year to year on substantially identical terms.  The Challengers themselves were also expressly designated as insured persons.  An aggregate annual deductible applied specifically to cancellation claims under the Policy. 

In 2020, the emergence of the Covid pandemic obliged WCE to cancel nearly all of its booked expeditions for the year thereby incurring statutory and contractual obligations to refund deposits and advance payments received from Challengers.

Throughout the life of the Policy, cancellation claims presented by WCE had invariably been for the amount of the deposit refunded to the Challenger and had been agreed and adjusted by Zurich in that amount and set against the deductible.  The deductible had never been exceeded.  Following the 2020 cancellations, WCE presented a claim on the same basis for a sum in excess of £10 million.  Zurich denied that the Policy covered the refunds paid to Challengers and asserted that it only indemnified WCE’s irrecoverable third party costs which it calculated to be less than £150,000.  WCE challenged this construction but in any event asserted that Zurich was estopped from denying that refunds were covered under the policy.  A point also arose on aggregation.

(1) Construction: the Policy indemnified WCE in the event of cancellation for a cause outside its control for “deposits, advance payments and other charges which have not been and will not be used but which become forfeit or payable under contract or cannot be recovered elsewhere”.  The court held that the Policy was in standard industry-wide wording and on its natural and ordinary meaning covered costs paid by the claimant to a third party which could not be recovered or which were forfeit.  In the context of a claim by WCE, deposits received from Challengers which had to be refunded may have been “forfeit” as between WCE and the Challenger, but were not irrecoverable third party costs within the meaning of the Policy.  Nor could a claim by the Challengers have succeeded since they received refunds and their costs were accordingly not irrecoverable.

None of the factual background relied upon by WCE affected this conclusion.  WCE relied heavily on the prior course of dealing between the parties relating to the adjustment of claims but this was not inconsistent objectively with the natural and ordinary meaning of the words used.

2)  However, Zurich was estopped by convention from denying that claims were payable in the amount of the refunds paid by WCE to Challengers. There was ample conduct crossing the line which demonstrated a shared mutual assumption that the amount of any refund was covered provided it was contractually due under WCE’s terms and conditions and there was a valid reason for the cancellation under the Policy.  The reason why Zurich’s claims handlers thought that refunds were covered under the Policy, or what they thought the refunds represented was irrelevant.  In fact they assumed (without enquiry and for no good reason) that the refunds represented irrecoverable third party costs to WCE.  There was nonetheless an assumption that the insurance indemnified the amount of the refunds and this was demonstrated every time that a claim was agreed and set by Zurich against the deductible – an act which had contractual consequences for both parties. 

While WCE could not establish reliance on the common assumption in relation to the cancellation of trips due to depart prior to 31 May 2020, the evidence showed that it delayed cancelling trips departing thereafter pending clarification by Zurich of certain matters and in reliance on the assumption that, subject to those clarifications, the amount of its refunds would be covered.  Otherwise it would have cancelled all remaining trips in mid-March 2020 at which time it still had the goodwill of its customers and would have had a greater chance of persuading them to accept deferrals or other solutions instead of a refund.  In the event, it took the final decision to cancel on 20 April 2020 by which time it had no other choice.  This was sufficient detriment to found an estoppel and it was not necessary for WCE to establish affirmatively that it would have been financially better off had it cancelled in March.  In circumstances where Zurich bore almost entire responsibility for the continuation of the incorrect assumption, it would be inequitable to permit it now to resile from the assumption save to the extent of requiring WCE to give credit for any third party recoveries.

(3) A policy limit applied to all claims “for loss and expense arising out of any one event.”  “Event” was defined as a “sudden, unforeseen and identifiable occurrence” with provision for separate occurrences to be treated as a single occurrence where they arose from or were attributable to one source or original cause and occurred within a 10 mile radius and 72 hours of that source/cause.  On the facts, the cancellation of trips departing after 31 May 2020 did not arise out of any sudden, unforeseen and identifiable occurrence.  While WCE’s decision on 20 April 2020 was capable in principle of being an occurrence for aggregation purposes, the possibility of manipulation by an astute assured meant that it cannot have been objectively intended by the parties that the assured’s own decisions could qualify as relevant occurrences.  The aggregation provision accordingly did not operate in this case.

The full judgment [2023] EWHC 1696 (Comm) may be found on the National Archives website.

Saudi Arabian Airlines Corporation v Sprite Aviation No 6 Designated Activity Company (Foxton J)

Aircraft lease – claim for rent and delivery payment – summary judgment – no “set-off”

Sprite counterclaimed to recover rent under an aircraft lease and an amount payable under a redelivery certificate in lieu of meeting the physical redelivery conditions. Saudi claimed it was entitled to set-off those amounts against its claim for a contribution to maintenance work from maintenance reserves.

Held:

1. Clause 5.12 of the Common Terms Agreement was a valid and effective no set-off clause which prevented Saudi from asserting a right of set-off in respect of the payments for rent.  Saudi’s argument that the clause only covered equitable and not legal set-off was without merit: In International Lease Finance v. Buzz Stansted Limited [2004] EWHC 292 (Comm) and FG Wilson (Engineering) Limited v. John Holt & Co (Liverpool) Limited  [2013] EWCA Civ. 1232 applied.
2. The no set-off clause did not apply to the payment made under the Redelivery Certificate. The redelivery certificate had expressly incorporated a number of terms from the Common Terms Agreement but clause 5.12 was not among them. It took clear words to exclude the right of set-off: Modern Engineering v. Gilbert Ash [1974] AC 689 applied.
3. Sprite’s claim under the redelivery certificate for payment in lieu of complying with the redelivery condition and Saudi’s claim for a contribution to work previously done on the aircraft were sufficiently closely connected to satisfy the test for an equitable set-off in Geldof Metaalconstructive NV v Simon Carves Ltd [2011] 1 Lloyd’s Reps 517.
4. Caution should be taken before extending the limited right of set-off against payments for hire under time charters established by The Nanfri [1978] 2 Lloyd’s Rep 132 outside of its maritime context.

The full judgment ([2023] EWHC 421 (Comm)) may be found on the National Archives website.

Delivery Hero SE v MastercardAsia/Pacific Pte Ltd (Foxton J)

Summary judgment – whether right to sign-on bonus accrued prior to termination – when valid payment request made – whether payment recoverable in unjust enrichment if paid – award of interest

Delivery Hero sought summary judgment of a Sign-On Bonus payable under a Client Business Agreement (CBA). It was common ground that the CBA had been terminated by the end of 2022 and the issue was whether Delivery Hero’s right to accrue the Sign-On Bonus had accrued prior to termination. This in turn depended on:

1. Whether Delivery Hero’s right to the Sign-On Bonus was conditional upon it not being in material breach of the CBA when a Payment Request for the Sign-On Bonus was made and/or was payable.
2. Whether the Sign-On Bonus would be recoverable, if paid, on the basis of a total failure of consideration.
3. Whether a clause providing for payment within 45 days of a valid Payment Request applied to the Sign-On Bonus, and, if so, whether the right to the Sign-On Bonus accrued on the Commencement Date, only when a valid Payment Request was submitted or only after the 45-day period had elapsed.
4. Whether the Payment Requests relied upon by Delivery Hero were valid.

There was also a dispute as to what interest rate should be award.

Held:

1. There was no provision in the CBA which made the right to the Sign-On Bonus conditional upon Delivery Hero not being in material breach of the CBA when the Payment Request was made and/or payable. The CBA had a carefully calibrated provision addressing the issue of when the Sign-On Bonus would be recoverable and the implicit condition contended for would cut across that scheme.
2. It was a defence to a claim for payment that the amount paid would immediately be recoverable on the basis that there had been a total failure of consideration – a defence of circuity of action: Fibrosa Spolka Akeyjna v Fairbairn Lawson Come Barbour Limited [1943] AC 32 applied. However, that defence was not available. The consideration for the Sign-On Bonus was the entry into the CBA (“signing on”), and the right to payment was not conditional on particular events or activity occurring post-completion. In any event, recognising a claim in unjust enrichment would cut across the carefully calibrated contractual right of recovery which did not give Mastercard a right of recovery in the prevailing circumstances: Pan Ocean shipping Co Ltd v Creditcorp Ltd [1994] 1 WLR 161, Dargamo Holdings Limited v Avonwick Holdings Ltd [2020] EWCA Civ 1149 and Barton v Morris [2023] UKSC 3 applied.
3. The CBA provided for the debt to accrue no later than the submission of a valid Payment Request, the 45-day period addressing only when the accrued debt became payable, rather than being  a condition of accrual: Boston Connecticut v European Grain and Shipping Ltd (the Dominique) [1989] AC 1056, Vagres Compania Maritima SA v Nissho-Iwai American Corporation (The Karin Vatis) [1988] 2 Lloyd’s Rep 580,  Alexander v Gardner (1835) 1 Bing N Cas 671 and Fragano v Long (1825) 4 B&C 219 applied.
4. The CBA did not permit Mastercard to impose additional requirements of a valid Payment Request, beyond those set out in the CBA, after the CBA was entered into. The various Payment Requests relied upon by Delivery Hero were valid.
5. Interest would be awarded at US Prime plus 1%: Lonestar Communications Corporation LL v Kaye and ors [2023] EWHC 732 (Comm) applied.

The full judgment Delivery Hero SE v MastercardAsia/Pacific Pte Ltd (Foxton J) may be found on the National Archives website.

LMH v EGK (Foxton J)

Arbitration award – section 68 Arbitration Act 1996 – whether serious irregularity in tribunal’s assessment of loss – effect of alleged error in tribunal’s damages assessment

LMH and EGK were parties to a Material Services Agreement, clause 3.1 of which obliged the parties to negotiate in good faith to extend the contract when its initial term expired. The tribunal found that LMH had breached that obligation and awarded EGK substantial damages.

LMH pursued five challenges under s.68 of the Arbitration Act 1996 to an ICC arbitration award in favour of EGK:

1. It alleged that the tribunal had failed to address the causation issue of whether, if LMH had negotiated in good faith, an extension would have been agreed, or had failed to give reasons for their decision (Grounds 1 and 2).
2. There was no evidence to support the tribunal’s finding that an extension would have been agreed if LMH had negotiated in good faith, and the arbitral process had been unfair because LMH’s witness’s evidence had not been challenged on the issue of whether LMH was willing to contract on particular terms (Ground 4.1).
3. The tribunal had failed to apply agreed evidence as to the appropriate measure of loss under the governing law (Ground 4.2).
4. The tribunal had acted unfairly in performing its own calculation of loss and/or had made a mathematical error in doing so (Ground 5).

Held:

1. Grounds 1 and 2 were rejected. If a tribunal has dealt with an issue in any way, that is sufficient for the purposes of s.68(d) of the 1996 Act, whether the tribunal has dealt with the issue well, badly or indifferently, nor does it matter that the tribunal might have expressed its conclusions at greater length  RAV Bahamas Ltd v Therapy Beach Club Inc [2021] UKPC 8, [43]. Here the tribunal had made a clear finding of causation. Further, it is not sufficient to establish that the award does not comply with s.68(2)(h), because it does not “contain the reasons for the award” as required by s.52(4), merely because the reasons are said to be inadequate: UMS Holding Limited v Great Station Properties SA [2017] EWHC 2398 (Comm), [134] and Islamic Republic of Pakistan v Broadsheet LLC [2019] Bus LR 2753, [22]-[23]. The award did give reasons for the tribunal’s conclusion (and, fairly read, sufficient reasons).
   1. As to Ground 4.1, a contention that the tribunal has ignored or failed to have regard to evidence relied upon by one of the parties cannot be the subject matter of an allegation of a serious irregularity within s 68(2)(a) or (d): UMS Holding Ltd v Great Station Properties SA [2017] EWHC 2398 (Comm), [28]. In any event the tribunal identified the evidence they had relied upon in reaching their conclusion. As to the second complaint, there is no absolute rule that party must challenge every part of a witness’s evidence in cross-examination if it is to invite a tribunal not to accept that evidence:  BPY v MXV [2023] EWHC 82 (Comm), [67]-[68].This is a fortiori the case when the issue does not relate to a matter of historical fact (what the witness saw, heard or understood at the relevant point), when a challenge will often carry an imputation on the witness’s honesty, but to what is essentially a matter of opinion – what would have happened in a counterfactual scenario had the parties conducted themselves differently: Rolls-Royce Holdings plc v Goodrich Corporation [2023] EWHC 1637 (Comm), [192]. The nature of EGK’s case, and its contention that if LMH had acted in good faith a deal would have been done, was clear from the filings which preceded the service of this statement, and the witness had ample opportunity to offer any observations on that case. In any event, the witness’s evidence was not directed to the particular terms of the extension which the tribunal found would have been entered into, and the tribunal had rejected the witness’s evidence that LMH had negotiated in good faith.
   1. As to Ground 4.2, there was no consensus between the foreign law experts to the effect contended for. The position for which LMH contended rested upon a particular (and somewhat unlikely) reading of an ambiguous passage in one expert’s report, and neither side had thereafter argued for a rule of law which limited the measure of recovery. At best for LMH, the tribunal had made an error in determining the content of the applicable law or misinterpreted one expert’s evidence. That did not give rise to s a..68 complaint: Secretary of State for the Home Department v Raytheon Systems Ltd [2014] EWHC 4375 (TCC),  [33(c)] and Sonatrach v Statoil Natural Gas [2014] 2 Lloyd’s Rep 252, [18] and [45]) applied.
   1. So far as Ground 5 is concerned, an arbitral tribunal will very often be faced with a complex calculation of the claimant’s case presented in its most optimistic form, and a response which either simply critiques that approach (as was the position here), or offers an assessment of loss from the polar perspective. In these circumstances, arbitral tribunals can and frequently do calculate their own measure of loss, lying somewhere between the extremes presented to them. Provided that the issues and material relied upon is “in play”, the tribunal is not required to offer the parties the opportunity to make submission on its proposed quantum calculation (Weldon Plant Ltd v The Commission for the New Towns [2001] 1 All ER (Comm) 264, [33],  Bulfracht (Cyprus) Ltd v Boneset Shipping Co (The Pamphilos) [2002] 2 Lloyd’s Rep 681, 687, Cameroon Airlines v Transnet Ltd [2004] EWHC 1829 (Comm), Republic of Kazakhstan v World Wide Minerals Ltd [2020] EWHC 3068 (Comm) and RAV Bahamas Ltd v Therapy Beach Club [2021] AC 907 considered). It must have been obvious to LMH, which had merely criticised EGK’s quantum calculation without offering its own or explaining the quantum implications of its criticisms, that if the case reached the question of damages, then unless the Tribunal either awarded the entire amount claimed or nothing (which no lawyer with experience of international arbitration would have regarded as a likely scenario), then the tribunal would have to make its own adjustments or allowances to reflect LMH’s attacks on EGK’s quantum case to the extent that they were regarded as having merit. That is what the tribunal did, using building blocks taken from the record in the case.
   1. On first analysis, there did appear to be an error in the manner in which the tribunal had adjusted EGK’s calculations to reflect on of its findings. If that error amounted to a “computational error” for the purpose of Article 36 of the ICC Rules and s.57 of the Arbitration Act 1996, then LMH’s failure to invoke Article 36 provided an absolute answer to its s.68 application: s.70(2)(b) of the 1996 Act and Torch Offshore LLC & anr v Cable Shipping Inc [2004] EWHC 787 (Com), [28]. If the complaint fell outside that Article 36/section 57, then it did not constitute a serious irregularity (Ducat Maritime Limited v Lavender Shipmanagement Incorporated [2022] EWHC 766 (Comm) considered).

The full judgment LMH v EGK (Foxton J) may be found on the National Archives website (external link).

SVF II Alpha GP (Cayman) Limited v Chimera Investment LLC – Dias J

Interim injunction – American Cyanamid

Chimera made a loan of $1 billion available to Alpha pursuant to a Loan Agreement concluded on 24 September 2021 and subsequently amended and restated on 24 December 2021.  A dispute arose between the parties as to whether Alpha was in breach of the agreement in having failed to execute a call option agreement.  The dispute turned on the construction of a particular provision of the Loan Agreement which was governed by English law and provided for the exclusive jurisdiction of the English courts.

Chimera served a purported notice of default pursuant to the Loan Agreement which, if valid,  allowed Alpha a 20 day “cure period”, failing which Chimera would become entitled to enforce its security which included taking control of Alpha and acquiring Alpha’s entire shareholding in a company called AutoStore currently worth some $2.73 billion. 

There was uncertainty as to when the notice of default was served and thus as to when the cure period expired.  If the notice was valid and the default was Despite requests in correspondence, Chimera refused to agree that it would refrain from exercising its purported rights until after the disputed question of construction had been resolved.  Alpha accordingly applied without notice for an urgent interim injunction restraining Chimera from acting on the notice of default.

The court held that there was a real possibility that the cure period would expire within days and that the urgency of the application was justified.  Applying American Cyanamid principles, the judge concluded that:

• There was a serious issue to be tried as to the construction of the contentious clause on which there were arguments to be made on both sides;
• There was a real risk of prejudice to Alpha if no injunction were granted and Chimera proceeded to act on the basis of the notice of default;
• This prejudice was not necessarily compensatable in damages;
• There was no obvious immediate prejudice to Chimera in being restrained from enforcing its security forthwith; the shares in AutoStore were already held safely in a custody account and were pledged to Chimera and Chimera had the benefit of an Equity Upside Agreement at least until March 2024.

The court accordingly granted an interim injunction for a limited period to preserve the status quo until such time as Chimera had the opportunity to appear before the court and make its case.

Siem v Windhorst – Dias J

WWFO

The Defendant was one of several defendants in three separate but overlapping claims.  The Claimants had obtained default judgments in the first two claims and the court was satisfied that they had a good arguable case in relation to the third.  The total amount owing in respect of all three claims (after allowed for any overlap) was around €143 million.

There was ample evidence that the Defendant had access to assets and lived a lavish personal lifestyle.  The evidence also demonstrated that he had a history of ignoring and disobeying court orders, including orders made in the context of a Part 71 application to examine him on his assets.  His modus operandi was to ignore any orders until it was impossible to do so any longer and then only to do the barest minimum to forestall any adverse consequences.  He had recently been found guilty of contempt in separate proceedings, following which he did attend a Part 71 hearing and disclose a limited number of documents, which were also disclosed to the Claimants in these proceedings, although the Claimant submitted that they were far from complete.

Whilst not evidence of dissipation in itself, the court accepted that the Defendant’s attitude to court orders and procedures heightened the risk of dissipation.  In addition, there was evidence that the Defendant’s activities had attracted the attention of the regulatory and prosecution authorities in other jurisdictions.  He had avoided prosecution for fraud and embezzlement by admitting a breach of trust for which he was given a one-year suspended sentence.  He had also admitted in the past to arranging his affairs so as to make himself as judgment-proof as possible.

In these circumstances, the court held that there was a real risk of dissipation and that there was insufficient material to demonstrate that the Defendant’s recent attendance at a Part 71 hearing evidenced a new compliant attitude on his part, rather than a further example of him doing the bare minimum to avoid further sanctions.

The Claimants accepted that there had been a period of delay before applying for a WWFO.  However, the time had been spent in attempting to enforce their existing judgments by conventional means, none of which had borne fruit, largely because the Defendant failed to comply fully with any compromise agreements that he had made.  The court accepted that this was not culpable delay and granted the injunction sought.

Steamship Mutual Underwriting Association Ltd v Shipowners Insurance and Guaranty Company Ltd – Dias J

Anti-suit injunction – whether third party bound by an arbitration clause in a contract between a P&I Club and its member

This was a without notice application for an interim anti-suit injunction to restrain third party proceedings brought by the Defendant (“SigCo”) against the claimant P&I Club (“the Club”) in the US Puerto Rico District Court.  The US proceedings arose out of the ground of the vessel “MARGARA” in 2006.  The vessel’s registered owner was a Cayman Islands company.  She was beneficially owned and operated by a German company, Ernst Jacob.  The owners and Ernst Jacob were jointly entered with the Club for P&I risks for the relevant policy year.  SigCo was the guarantor of the owners’ liabilities under the US Oil Pollution Act 1990, pursuant to which both owners and Ernst Jacob were potentially financially responsible for any clean-up operations or damage.

Although the grounding did not lead to any oil pollution, it caused damage to a coral reef and on 9 December 2021 the US authorities issued proceedings in the Puerto Rico court against SigCo and Ernst Jacob seeking to recover substantial sums already paid to restore the reef and declaratory relief as regards uncompensated damage.

In August 2022, both SigCo and Ernst Jacob issued separate Third Party Complaints against the Club.  SigCo’s Third Party Complaint was served on 4 November 2022.  On 25 November 2022, the Club filed an answer to the complaint and issued a motion to compel arbitration of SigCo’s claims on the basis of a compulsory dispute resolution provision in the Club’s Rules requiring any disputes to be mandatorily referred to adjudication by the Club’s directors followed, if necessary, by arbitration in London under the Arbitration Act 1996.

Three issues arose for the court’s consideration:

(1) Were the conditions for the grant of an ASI satisfied in principle?

(2) If so, was it appropriate to grant an injunction without notice?

(3) Whether an injunction should be refused on the grounds of delay since November 2022 in bringing the application.

As to (1), the court accepted that:

(a) an ASI would ordinarily be granted to restrain proceedings brought in breach of an arbitration clause unless the defendant showed strong reasons to refuse relief: see The Angelic Grace;

(b) the applicant must demonstrate to a high degree of probability that there is an arbitration clause which governs the dispute in question, whereupon the burden shifts to the defendant to show strong reasons for refusing an injunction;

(c) where no breach of contract was involved, an ASI would only be granted if the pursuit of the foreign proceedings was vexatious and oppressive.

In this case, the complication arose because SigCo itself was not party to any contract with the Club, whether under the Rules or otherwise.  The court recognised that the extent to which non-parties to a contract are bound by or entitled to rely on dispute resolution provisions in the contract is a fast-developing area of the law which has not yet been fully explored.  However, this was a relatively straightforward case since the claims asserted by SigCo were all ultimately derived from rights arising under the contract contained in the Club Rules, whether by subrogation or by assertion of rights under a direct action statute. One way or another SigCo was in substance asserting the contractual rights of the owners under the Rules.

There is ample authority that where a third party seeks to assert a right derived under or in respect of a contract, it cannot accept the benefit of those rights without also assuming the burden of abiding by any contractual dispute resolution mechanism: The Jay Bola, The Yusuf Cepnioglu; The Archangelos Gabriel; QBE v Generali. 

The arbitration clause in the Club Rules was sufficiently wide to cover the disputes raised by SigCo and on the evidence before the court, there was no strong reason to refuse an ASI.  The authorities above established that comity alone was not a sufficiently strong reason for refusing to give effect to the contractual forum clause.

As to (2), the court was satisfied that it was appropriate to proceed without notice since the Club had a legitimate concern that SigCo might be prompted to apply for its own anti-anti-suit injunction if notified of the application.

As to (3), the court was required to look at all the circumstances in deciding whether delay should defeat the application.  Mere absence of prejudice to the defendant did not automatically mean that the delay could be ignored.  In this case, however, very little had happened in the Puerto Rico proceedings since service of SigCo’s Third Party Complaint.  Moreover, it was reasonable for the Club to have sought expert advice on US law before launching the application and this took longer than had been anticipated.  Matters were further delayed because it had originally been intended to proceed against both SigCo and Ernst Jacob simultaneously.  However, discussions with the latter were expected to lead to a consensual stay and the Club was reluctant to proceed against SigCo alone in case it provoked Ernst Jacob to apply for its own anti-anti-suit injunction.  In all the circumstances, the Club could not be criticised for delaying the application until it was certain that it was necessary.

An anti-suit injunction was therefore granted on an interim basis.

HRH Princess Deema Bint Sultan Bin Abdulaziz Al Saud v Gibbs – Dias J

Application for unless order debarring defendant from defending proceedings failing compliance with orders for disclosure, service of witness statement and payment of outstanding costs orders

The Claimant’s claim concerns a sum of US$25 million which was given to the Defendant (a former partner of Linklaters) in 2011 to invest on her behalf.  She alleges that she requested its return in 2012 but received nothing.  In 2018 a settlement agreement was reached with the Defendant whereby he was to liquidate certain assets scheduled to the agreement and pay over the proceeds.  This has not been done.  Proceedings were issued on 8 January 2021 (at which time a WWFO was obtained against the Defendant) and in April 2022, the Claimant obtained summary judgement against the Defendant for breach of the settlement agreement.

The proceedings were thereafter amended to add certain misrepresentation claims in the light of further matters which had come to light.  The Defendant was given permission to serve an amended defence by July 2022 but failed to do so.

In November 2022, the CMC was held at which the Defendant represented himself.  The CMC Order contained detailed provisions as to disclosure which was to be given by 17 February 2023 (subsequently extended by consent to 21 February 2023).  If it was no possible for the Defendant to search any of the identified data sources, he was to serve a witness statement explaining the position.  The Order also contemplated the instruction of experts on valuation, investment returns and forensic accounting who would plainly require considerable disclosure in order to express any meaningful opinions on the matters required. 

No disclosure was given and no documents were actually provided pursuant to this Order save that on 3 July 2023 the Defendant provided a list of documents (mainly emails between the parties) which he said he proposed to disclose, indicating that he would provide copies when next in the UK.

At the hearing, which the Defendant attended in person, it transpired that he had in fact filed a “statement of facts” some two days previously.  In those circumstances, the Claimant did not pursue the application for a debarring order in relation to service of a witness statement.

As regards disclosure, the Defendant claimed to have already provided all the documents in his possession, custody and control and maintained that he had fully complied with an order made by Butcher J in relation to the WWFO proceedings.  The Claimant asserts to the contrary that there has been material non-disclosure in relation to his assets, both as regards value and ownership.

The court did not accept that the Defendant had provided all the documents which he was in a position to provide.  There was no attempt to list documents corresponding to many of the categories set out in the CMC Order and no witness statement explaining why (if it was the case) it was not possible to do so.  The Defendant relied on various difficulties which he said had hindered his compliance, including the fact that he has no offices or staff, has only limited IT facilities available to him, the lack of any express request for documents required by the experts, ill-health, and the alleged blocking of his Gmail account and bank accounts.

The court rejected all these excuses as either being spurious or inconsequential.  Any difficulties experienced in complying with the disclosure order should have been set out in a witness statement supported by evidence that they were really insuperable.  The lack of any express request for documents required by the experts did not justify wholesale non-compliance with the CMC Order.  No medical evidence had been adduced in support of the Defendant’s complaints of ill-health beyond a discharge certificate showing that he was admitted to hospital in the autumn of 2022 and discharged on the same day with symptoms of angina.  No evidence had been put forward to substantiate the claim that his Gmail account was blocked or to evidence any attempts to get it unblocked.  Nor was there any evidence that he was prevented from accessing banking facilities in circumstances where the WWFO permitted him to withdraw over £17,000 per week for living expenses.  In any event, substantially all of these supposed difficulties were advanced at the CMC and taken into account by Jacobs J when making the CMC Order.

It was now nearly 9 months since the CMC order and there was no indication that the Defendant was disposed to comply properly with its provisions.  This was unacceptable.  The failure to give disclosure or to explain properly why it could not be given, combined with the lack of any pleaded defence and the failure until very recently to serve any witness statement was very likely to cause significant disruption to preparations for trial (listed for January/February 2024).  The Defendant’s non-compliance with the CMC Order was serious and flagrant and in the circumstances, it was just and proportionate to make a debarring order failing compliance with the disclosure provisions of the CMC Order by 25 August 2023.

As regards non-payment of costs which had been ordered to be paid immediately, the Defendant claimed to be impecunious but there was no satisfactory evidence to substantiate this.  Moreover, the court was sceptical of this claim in circumstances where there was evidence suggesting the contrary.  On any view the Defendant had been less than transparent about his assets.  When the Claimant had attempted to enforce costs orders in her favour against assets supposedly legally and beneficially owned by the Defendant in the UK, he claimed that he had in fact put those assets in trust for his family many years ago.  He gave no explanation as to how (if that was true) they had been represented as being legally and beneficially owned by him.

The Defendant also relied on an entitlement to offset costs which would become due to him on assessment in the future following discontinuance of a claim originally brought in the proceedings by the Claimant’s brother.  However, any order in his favour would only be a fraction of what he had already been ordered to pay the Claimant under the existing costs orders and in any event there was no extant offset pending any actual order in his favour. 

The lack of transparency as to the Defendant’s assets combined with the plausible suggestion that he had materially misrepresented his asset position in the WWFO proceedings made it just and proportionate to make an unless order requiring payment likewise by 25 August 2023.

Nopporn Suppipat and others v Nop Narongdej and others – Calver J

Whether misrepresentations by various defendants which allegedly induced the Claimants to transfer shares in valuable Thai wind farm business to First Defendant’s companies under a Share Purchase Agreement actionable under Thai law – whether, as a matter of Thai law, defendants conspired to asset strip the First Defendant’s companies so as to disable them from meeting their payment obligations under the Share Purchase Agreement and whether that gives rise to a cause of action under Thai law – causation – damages – section 423 Insolvency Act 1986 – whether there existed a sufficient connection between the claim and this jurisdiction – issues of construction arising in respect of a claim  and counterclaim under an advisory services agreement; claims for breach of fiduciary duty and unlawful means conspiracy under English law.

FACTS:

The First Claimant (Mr Suppipat) is a successful Thai businessman who founded Renewable Energy Corporation Company Limited (REC) in 2006 and Wind Energy Holding Company Limited (WEH) in 2009.

On 1 December 2014, Mr Suppipat was charged with lèse-majesté (the offence of insulting the King, Queen and Heir to the Throne) under Article 112 of the Thai Criminal Code and other crimes. Mr Suppipat fled Thailand on 30 November 2014 after a tip-off in anticipation of the charges. On 15 December 2014, Mr Suppipat resigned his position as co-CEO and Director of WEH. From that point, Ms Collins (the second defendant) became sole CEO. Mr Suppipat’s involvement in REC was seen as “toxic”.  As such, with the assistance of the second, third and fourth defendants (“the WEH Managers”), Mr Suppipat began to look for an investor to buy his stake in REC. He trusted the WEH Managers to act in his best interests.

In March/April 2015, Mr Suppipat started to consider using a nominee structure whereby a third party would acquire his REC shares and work towards an IPO (Part A) with Mr Suppipat retaining the right to repurchase his REC shares at a later stage through the exercise of a call option agreement (COA) (Part B) (Part A and Part B being the Global Transaction). He identified Khun Nop, the first defendant, as a suitable nominee.

On 19 June 2015, Mr Suppipat authorised representatives of his Companies to enter into share purchase agreements for the sale of his REC shares between Symphony (his company) and Fullerton (Khun Nop’s company) (Fullerton SPA) and NGI/DLV (his company) and KPN EH (Khun Nop’s company) (KPN EH SPA) (together, the REC SPAs). The total purchase price was USD 700 million, being USD 357 million under the KPN EH SPA and USD 343 million under the Fullerton SPA. Mr. Suppipat alleged that he was induced into doing so by reason of three categories of misrepresentations: the Global Transaction representations and the Payment Representations by Khun Nop and Khun Nuttawut; and the Watabak Representations by Ms Collins.

No call option agreement was entered into, but Khun Nop and Khun Nuttawut continued to lead Mr. Suppipat to believe that they would enter into one in due course.

Also on 19 June 2015 Fullerton, KPN EH, Khun Nop, Ms Collins and Khun Thun entered into a Shareholders’ Agreement (KPN EH SHA) by which Ms Collins and Khun Thun were each to hold 20% of KPN EH. No consideration was provided for those shares. Ms Collins and Khun Thun held the KPN EH shares as nominees for Mr Suppipat pending his exercise of the call option, at which point it was understood that they would be transferred back to Mr Suppipat. The shares were allotted to them as part of the blocking mechanism under the KPN EH SHA to ensure that Mr Suppipat’s interests under the Global Transaction were protected by Ms Collins and Khun Thun.

An Advisory Services Agreement (ASA), dated 25 June 2015, but not executed until 3 August 2015, was entered into between NGI, Ms Collins, Khun Thun and Ms Siddique (Mr Lakhaney’s wife), whom Mr Lakhaney said was included for tax reasons. The ASA placed prospective obligations on the WEH Managers to protect Mr. Suppipat’s interests in the Global Transaction by (amongst other things)working to ensure that he received payment under the REC SPAs.

Fullerton failed to pay the First Instalments under the REC SPA by 26 November 2015. On 8 January 2016, Symphony issued a Notice of Rescission to Fullerton seeking recovery of the REC shares on the basis that Symphony had not received payment of the First Instalment of US$85,750,000 due by 23 October 2015, which constituted total non-performance of Fullerton’s obligations under the Fullerton SPA.

On 26 January 2016, Symphony filed a Request for Arbitration against Fullerton under the Fullerton SPA (the Symphony Arbitration). NGI/DLV filed their Request against KPN EH on 25 March 2016, with no payment having been made under that SPA.

On 17 February 2016, the Emergency Arbitrator granted Symphony’s application for emergency measures (the EA Order), ordering amongst other matters that:

“Fullerton Bay Investment Limited is prohibited from disposing of the shares, representing 49% of the share capital, it holds in Renewable Energy Corporation Co., Ltd. (now known as KPN Energy (Thailand) Co., Ltd.) (including through sale) and/or transferring such shares and/or creating any charge…and any other action having an economic effect similar to the disposal and/or transfer and/or encumbrance of the shares, pending the resolution of the present dispute between the Parties by way of the final award in the arbitration between the Parties” (emphasis added)

On 17 March 2016, being one month after the EA Order of 17 February 2016, a key meeting took place between Khun Nop, Khun Nuttawut, Khun Weerawong and the WEH Managers. It was at this meeting that the idea of a “ring-fencing strategy” was specifically proposed by Khun Weerawong. According to this, there would be a sale of the WEH shares to a connected third party in order to put the shares beyond the reach of Mr. Suppipat’s companies, the creditors under the REC SPAs.

On 18 March 2016 Mr. Lakhaney circulated to the WEH Managers and Khun Nop and Khun Nuttawut his “Project Houdini” presentation. When read alongside Mr. Lakhaney’s White Board Presentation of 7 April 2016, these documents contained each of the steps of the planned dishonest asset stripping scheme which these parties then subsequently implemented with the assistance of certain of the other defendants.

Accordingly, instead of acting in Mr. Suppipat’s best interests, the WEH managers chose, in exchange for a bribe from Khun Nop of a 1.25% shareholding in WEH each, to switch sides to assist Khun Nop. They removed Mr Suppipat’s blocking mechanisms by terminating the KPN EH SHA and the ASA for their own financial gain.

Under the share stripping scheme, the WEH shares were transferred to Dr Kasem (Khun Nop’s father) sometime in May 2016. Khun Nop, Khun Nuttawut, Khun Weerawong, Khun Thun, Mr Lakhaney and Ms Collins all knew that the shares had been so transferred and that this was designed to put them beyond the reach of Mr Suppipat’s creditor-companies. The WEH shares were sold merely for book value at THB 2.4 billion (c. USD 68 mill, THB c.37.08 per share), which was a very substantial under-value. They remained under Khun Nop’s control.

In accordance with the share stripping scheme, various false documents were created to give the impression that the sale to Dr Kasem was an arm’s length sale under a share purchase agreement approved by the Board of REC. A false agency agreement was created to give the impression that Dr Kasem had purchased the REC shares as Madam Boonyachinda’s agent, in order to prevent Dr Kasem co-operating with the court in Hong Kong which in May 2018 had issued an injunction preventing dealing in the WEH shares.

Further false documents were manufactured in October 2016, particularly by Mr. Lakhaney and Khun Thun, in the context of an abortive sale to Orix, in an attempt to give the impression to Orix that the “sale” to Dr Kasem was a genuine, arms length sale.

Pursuant to share purchase agreements dated 17 January 2017, the WEH Managers then set about transferring half of their 1.25% WEH shareholdings to each of their fellow managers’ companies, again to put the shares beyond the reach of Mr. Suppipat’s companies.

There were further transfers of tranches of shares away from Dr Kasem to recipients in different jurisdictions to ensure that Mr. Suppipat’s companies could not recover the sums owed under the REC SPAs.

HELD:

1. In a case such as this, where many of the defendants were dishonest in numerous respects, it is important to keep firmly in mind the approach of Leggatt J (as he then was) in Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm), which was approved by Lord Kerr (in a dissenting judgment) in R (on the application of Bancoult No 3) v Secretary of State for Foreign and Commonwealth Affairs [2018] UKSC 3 at [103], that the best indicator of where the truth lies is to be found in the contemporaneous documents, save that in this case it is obviously important to distinguish between genuine, contemporaneous documents and fictitious documents which have been falsely created after the event.
2. The court applied the approach to expert evidence of foreign law set out in Deutsche Bank AG London v Comune di Busto Arsizio [2021] EWHC 2706 (Comm) at [104]-[108] (Cockerill J) and Banca Intesa Sanpaolo SpA v Comune di Venezia [2022] EWHC 2586 (Comm) at [120]-[127] (Foxton J).
3. So far as the claims in misrepresentation under Thai law are concerned, the Court found as a fact that:
   a. The Global Transaction Representations were expressly made by Khun Nop and Khun Nuttawut on three occasions – the Skype Call on or around 17 May 2015, the First Paris Meeting on 29 June 2015 and the Bangkok Meeting on 16 July 2015 – and there was a dishonest failure to correct these representations subsequently;
   b. The Watabak Representations were not made by Ms Collins on the phone call with Mr Suppipat on 24 August 2015 (still less were they made on behalf of Khun Nop);
   c. The Payment Representations were not made at the Second Paris Meeting on 26 September 2015 or during the telephone call on 6 November 2015.

4. Thus the only claim that could have succeeded was the Global Transaction Misrepresentation claim but it is time barred as a matter of Thai law.
5. There is no abuse of process (or issue estoppel) in bringing the Misrepresentation Claims.
6. So far as the asset stripping claims are concerned, the Claimants rely on s. 420 and s. 432 of the Thai Civil and Commercial Code (TCCC) to bring claims concerning the dissipation of the Relevant WEH Shares following the REC SPAs.
7. s. 420 TCCC. Only the s. 420 TCCC claim based upon s. 350 Thai Penal Code (cheating against creditors) succeeds against Khun Nop, Khun Nuttawut, Khun Weerawong and the WEH Managers. The successful claim is, however, that of Symphony, NGI and DLV, not Mr Suppipat. This claim is not time-barred.
8. s. 432 TCCC. The following defendants are liable to the same claimants as joint wrongdoers/ assisters/ instigators under s. 432 TCCC: (1) Khun Nop, Khun Nuttawut, Khun Weerawong and the WEH Managers (who committed the s. 350 principal offence), (2) Madam Boonyachinda, (3) Golden Music and Cornwallis, (4) the WEH Managers’ Companies Colome, Keleston and ALKBS, (5) Dr Kasem and (6) Khun Pradej.
9. All of the asset-stripping claims fail against the following defendants: (1) Ms Siddique, (2) SCB and (3) Khun Arthid.
10. Damages for s. 420 TCCC (based on s. 350 TPC) and s. 432 TCCC.
    a. The relevant counterfactual is that but for the wrong committed under s. 420 TCCC/ s. 350 TPC, Fullerton and KPN EH would have had sufficient value in their REC shares to pay under any arbitral awards as at the dates on which they were made.
    b. In relation to the Fullerton First Instalment Award, Symphony is entitled to recover:
    i. First Instalment under Fullerton SPA = US$85.75m; plus
    ii. Interest on $85.75m calculated at the 15% simple interest rate from 23 October 2015 to 22 September 2017 = US$ 24,667,808;
    iii. Making a total of US$110,417,808m; plus
    iv. Interest on US$110,417,808m calculated at the US Prime Rate from 22 September 2017 to 12 June 2019 (parties to calculate)
    Less:
    v. Credit for sums paid on 12 June 2019 = US$85.75m;
    Leaving:
    vi. A sum on which interest is payable calculated at the US Prime Rate from 12 June 2019 to the date of this judgment (parties to calculate).
    c. In relation to the KPN EH First Instalment Award, NGI and DLV are entitled to recover:
    i. Interest on First Instalment under KPN EH SPA calculated at the 15% simple interest rate from 25 September 2015 to 22 September 2017 = $1,532,921; plus
    ii. Interest at the US Prime Rate on $1,532,921 from 22 September 2017 to the date of this judgment (parties to calculate).
    d. In relation to the Remaining Amount Awards, Symphony, NGI and DLV are entitled to recover:
    i. Remaining Amounts under the REC SPAs = US$525m; plus
    ii. Interest on $525m calculated at the 15% simple interest rate from the relevant milestone dates to 17 March 2023 = US$279,030,649;
    plus
    iii. Interest on the relevant sum calculated at the US Prime Rate from 17 March 2023 to the date of this judgment (parties to calculate).
11. Since the damages award effectively assumes that the First Partial Awards and the Remaining Amount Awards were paid at the date they were handed down, the claimants must not be allowed to then separately claim these sums under the BVI Enforcement Judgment and any subsequent proceedings to enforce the Remaining Amount Awards. They have to give credit for the sums received under this judgment.
12. s. 423 Insolvency Act:
    a. There is an insufficient connection between the claim and this jurisdiction. The Court would have declined to exercise the discretion to apply s. 423 in any event.
    b. The argument that it would be impossible for the Claimants to get a fair trial in Thailand is unsustainable.
13. The ASA-related claims: The ASA and non-contractual obligations “arising out of or in connection with it” are governed by English law. The Court holds that:
    a. NGI’s claim against Ms Collins, Khun Thun and Ms Siddique for breach of the ASA succeeds;
    b. The counterclaim of Ms Collins, Khun Thun and Ms Siddique for non-payment of the $10m fee under the ASA fails;
    c. The loss suffered by NGI for breach of the ASA is the same as the loss claimed in the main asset stripping claim;
    d. Ms Collins, Khun Thun and Mr Lakhaney are in breach of the fiduciary duties which they owed to Mr Suppipat and NGI by assisting in the asset stripping scheme and for accepting the 1.25% bribe from Khun Nop. As a result, each of them held their 1.25% stake in WEH on trust for Mr Suppipat and NGI and continue so to hold it (or any part thereof) in so far as they have not divested themselves of it (or any part thereof). Mr Suppipat and NGI are also entitled to trace their beneficial interest in the 1.25% stake from the WEH Managers into Colome, Keleston and ALKBS (in so far as it has been so transferred) and claim a proprietary remedy over it: applying FHR European Ventures LLP Cedar Capital Partners LLC [2014] UKSC 45; Foskett v McKeown [2002] UKHL 29.
14. Ms Collins and Khun Thun committed the tort of unlawful means conspiracy in respect of the asset stripping scheme and (once again) are liable to Symphony, NGI and DLV for the sums under the relevant arbitral awards against Khun Nop’s companies which remain outstanding: applying ED&F Man Capital Markets v Come Harvest [2022] EWHC 229 at [465]-[467].

The full judgment [2023] EWHC 1696 (Comm) may be found on the National Archives website (external link).

Technip Saudi Arabia Limited v Mediterranean & Gulf Cooperative Insurance & Reinsurance Co (Jacobs J)

WELCAR 2001 Offshore Construction Project Policy – damage to offshore oil production platform caused by the negligence of owners of vessel chartered by one of the insureds – claim under Section II of the WELCAR policy in respect of liabilities of one insured to another – effect of the “Existing Property Endorsement” commonly incorporated in a WELCAR policy.

The Claimant, Technip, had chartered an anchor-handling vessel to perform certain work as part of a project to improve certain production assets in an offshore field in Saudi Arabia. Technip was engaged as the “Contractor” by the operators of the field, a joint venture known as KJO. An offshore platform, owned by KJO, was damaged by the vessel when it was returning to anchorage at the end of a working day. Technip and KJO were both insured under a WELCAR 2001 policy which Technip had obtained. The policy contained a standard form “Existing Property Endorsement”, widely used with such policies. The insurers advanced various arguments as to why Technip did not have cover under the policy in respect of any liability to KJO for the damage.

The court held that the insurers were correct in their argument based upon an exclusion in the “Existing Property Endorsement”. The damaged platform was owned by KJO, and there was an exclusion for damage to property which “the Principal Assured” owns. KJO came within the expression “the Principal Assured”, and therefore the exclusion was applicable notwithstanding that this was a “composite” policy providing cover separately to each insured. If damage to KJO’s property was to be covered, then the property needed to be included in the schedule to the endorsement which set out property subject to a “Buy-Back”. Here, some property of KJO had been included, but not the damaged platform.

Other arguments advanced by the insurers on liability issues were rejected. The court held that Technip did have a liability to KJO for the damage caused by the vessel. This liability did not arise from a “hold harmless” or similar provision, and therefore a further exclusion in the “Existing Property Endorsement” was inapplicable. A “Watercraft” exclusion, relied upon the insurers, was also inapplicable. The absence of insurers’ consent to Technip’s settlement did not preclude a claim under the policy on its true construction. The court would also have been strongly inclined to accept Technip’s argument that the insurers’ lack of consent could not be relied upon in circumstances where the insurers had denied liability and told Technip to act as a prudent uninsured.

The full Judgment [2023] EWHC 1859 (Comm) can be found on the National Archives website (external link).

Czech Republic v Diag Human SE, Josef Stava (Bright J)

Arbitration claim – security, arbitration Act 1996 s. 70(6), (7)

Diag Human SE and its principal, Mr Josef Stava, were awarded a substantial sum against the Czech Republic, by an arbitration seated in London.  The CR applied to challenge the award on the basis of lack of jurisdiction and serious irregularity.  DH and JS applied (a) for security for costs, under s. 70(6), and (b) for security for the award, under s. 70(7).

(a): Security for costs, s. 70(6)

DH and JS said that CR’s past conduct in relation to an adverse costs order in Luxembourg suggested that CR could not be trusted to pay any order for costs and might actively remove assets.  They also relied on other wrongdoing, found by the arbitrators in the award.

The court held that DH and JS had not shown that CR’s conduct in relation to the costs order in Luxembourg demonstrated untrustworthiness in relation to adverse costs orders.  DH and JS could not rely on the award to establish wrongdoing by CR, because the award is subject to the s. 67 and s. 68 challenges.  In any event, wrongdoing that is not related to the payment of costs orders is not sufficient under s. 70(6).

The court would nevertheless have granted security in circumstances where, prior to the hearing, CR had not said it would comply with any adverse costs order and had not identified any assets that would be readily available.  However, CR provided an undertaking to honour any adverse costs order, through its solicitors, very shortly after the close of submissions.  The court accepted this undertaking, with the result that the application for security for costs was dismissed.

(b) Security for the award, s. 70(7)

The Court held that security for the award will generally be granted only if the applicant shows that (i) that the challenge is flimsy and (ii) that the challenge prejudices his ability to enforce the award (usually by demonstrating a risk that the challenger will dissipate his assets pending determination of the challenge).  In the context of s. 68 challenges, only limb (ii) arises).

DH and JS argued that the conduct set out in the award was so egregious that neither limb should be applied.

The Court held that s. 70(7) is related to prejudice that may arise from the s. 67 or s. 68 or s. 69 challenge; specifically, the risk the award may become more difficult to enforce during the period while the challenge is pending.  This calls for a comparison between the enforceability of the award before the challenge was issued, and the enforceability by the end of the challenge proceedings.

In any event, on the limited materials shown to the court it was not possible to accept, even provisionally, the allegations made by DH and JS as to CR’s misconduct.

The full judgment [2023] EWHC 1691 (Comm) can be found on the National Archives website (external link).

Payward Inc. v Maxim Chechetkin (Bright J)

Enforcement of foreign arbitration award – public policy under Consumer Rights Act 2015, Financial Services and Markets Act 2000 – s. 103(3) Arbitration Act 1996

The Payward group operates the ‘Kraken’ global digital online cryptoasset exchange.  Mr Chechetkin is a British citizen resident in England.  In 2017 he opened a Kraken account, by contracting with Payward Ltd (incorporated in England).  The contract terms provided at cl. 23 for California law and arbitration in San Francisco.

Mr Chechetkin used the account heavily in March-May 2020, ultimately losing about £613,000.  His lawyers wrote to Payward Ltd asserting that its activities were “regulated activities” under Financial Services and Markets Act 2000 (“FSMA”), conducted without authorisation and in breach of the general prohibition in s. 19 FSMA, so the contract was unenforceable under s. 26 and he was entitled to recover his money.  He also referred to the Consumer Rights Act 2015 (“CRA”), contending that cl. 23 was inconsistent with s. 74 and that the contract was unfair.

Payward commenced arbitration in San Francisco, seeking an order enjoining Mr Chechetkin from suing in England.  Mr Chechetkin then commenced proceedings in England, bringing a claim under FSMA.

In the arbitration proceedings, the arbitrator held that cl. 23 bound the parties and California law applied, found in Payward’s favour and made the order it sought.  Payward then applied for the award to be enforced in England under s. 101 Arbitration Act 1996.  Mr Chechetkin resisted enforcement, primarily on the basis it would be contrary to public policy under s. 103(3).

The Court found that Mr Chechetkin had contracted as a consumer under the CRA, and that he could not have brought his FSMA claim in the arbitration.

The Court held:
(1) It was not bound by the arbitrator’s decision as to the effect of cl. 23 but had to form its own view of the award’s consistency with English public policy.
(2) CRA s. 71(3) and s. 74 represent UK public policy. So does FSMA.
(3) Mr Chechetkin’s contract with Payward Ltd had a close connection with England. The choice of California law in cl. 23 was inconsistent with s. 74 CRA.
(4) Cl. 23 was unfair under s. 62 CRA in that it required arbitration in San Francisco.
(5) Cl. 23 was also unfair, and contrary to UK public policy in FSMA, in that it made it impossible for him to bring his claim under FSMA.

Enforcement would be contrary to UK public policy and therefore was refused.

The full judgment [2023] EWHC 1780 (Comm) can be found on the National Archives website (external link).

Commercial Bank of Dubai PSC v Abdalla Juma Majid Al Sari (Bright J)

The First Claimant (CBD) obtained judgment in Sharjah against members of the Al Sari family and companies associated with them in Sharjah.  It and various BVI companies commenced proceedings in England (a) for enforcement of the Sharjah judgment debt and (b) bringing tortious claims against the same defendants and three additional companies (“the Globe Defendants), alleging they had acted fraudulently so as to prevent the Claimants from enforcing CBD’s Sharjah Judgment; in particular, to prevent the Claimants from obtaining possession of real property in London (“the Bridge Properties”).  The primary tortious claim was in unlawful means conspiracy.

The defendants challenged English jurisdiction. The Globe Defendants argued (i) that the applicable law of the tortious claims under the Rome II Regulation was not English law, because the original direct damage occurred in the UAE or in the BVI, and (ii) that because the claimants had not pleaded a case as to the content of the relevant foreign law(s), there was no serious issue to be tried.  They relied on Brownlie v FS Cairo (Nile Plaza) LLC [2021] UKSC 45.

The Court held:

(1) Identifying the country where the original direct damage occurred required the court to look closely at the pleaded case as to (a) the events that gave rise to the damage, (b) the damage that was caused and (c) the causative connection between them.

(2) The original direct damage alleged in relation to the claim for unlawful means conspiracy related to the Bridge Properties, in England. The unlawful means allegedly used in the conspiracy occurred in a number of different countries, but these were the events alleged to give rise to the damage alleged in relation to this claim; they were not the damage itself. English law was applicable to this claim.

(3) The other claims were subject to the law of the UAE or the BVI. However, the claimants were not obliged to plead a case as to content of foreign law in the Particulars of Claim. They were entitled to rely on the presumption that foreign law is the same was English law, wait to see if this was challenged by the defendants, then plead as to the content of foreign law in their Reply.

The full judgment [2023] EWHC 1797 (Comm) can be found on the National Archives website (external link).

Horn and others v Knott and others (SKAT litigation) – Foxton J

Joint and several costs order – claim for contribution – correct legal basis – appropriate percentages

The Court of Appeal had made joint and several costs orders and orders for interim payments on account of costs against various defendants in the SKAT litigation after rejecting their challenge that SKAT’s claims infringed the so-called Revenue Rule. SKAT recovered the payment on accounts in full from the applicants (the DWF Defendants). The DWF Defendants reached an agreement for a contribution from one group of defendants (the Sanjay Shah Defendants), and pursued a claim for contribution from other defendants who had participated in the Revenue Rule trial before Mr Justice Andrew Baker and the Court of Appeal.

There was a dispute between the parties as to (i) whether a claim for contribution between parties to a joint and several costs order was a claim for relief under the court’s costs jurisdiction, or a claim for contribution between co-obligors to be resolved on equitable principles; and (ii) in the light of that characterisation, whether it was permissible to apportion costs on any basis other than numerically by reference to the number of defendants (regardless of their legal representation or beneficial ownership) and/or by reference to factors relating to their participation in the litigation.

The court held that an application for contribution between parties to a joint and several costs order involved the exercise of the court’s costs jurisdiction, to which the factors identified in CPR 44.2 or otherwise relevant to the exercise of the court’s costs jurisdiction were potentially relevant. On that basis, the court determined levels of contribution which reflected (a) the fact that particular litigants had instructed a common legal team and (b) their roles in the litigation more generally.

The full judgment [2023] EWHC 1351 (Comm) can be found on the National Archives website (external link).

Radisson Hotels APS Danmark v Hayat Otel Işletmeciliği Turizm Yatırım Ve Ticaret Anonim Şirketi (Dame Clare Moulder DBE)

Section 73 of Arbitration Act-waiver of right to challenge under section 68; redaction of judgments

Radisson Hotels APS Danmark (Radisson) had raised a challenge against a London-seated ICC arbitration award connected with one of its hotels in Turkey managed by a Turkish Hayat entity. Radisson claimed serious irregularity on the grounds of arbitrator bias and non-disclosure of communications between a tribunal member appointed by Hayat and an individual acting on behalf of Hayat.

Hayat began the underlying arbitration proceedings against Radisson for breaches of a hotel management agreement in 2018. In March 2021, the tribunal issued a partial award on liability, finding Radisson in breach. Hayat’s former in-house counsel Dr Durman – who had previously acted in the arbitration for Hayat – offered to assist Radisson in the arbitration. Dr Durman alleged to Radisson that Hayat’s appointed arbitrator, Ms Timer, corresponded with representatives of Hayat on an ‘ex parte’ basis.

Dr Durman put Radisson in contact with Hayat’s former quantum expert, a Mr. Önkal, who was subsequently retained by Raddison to assist in the quantum phase of the arbitration. In January 2022, Mr Önkal provided Radisson with a USB stick. The device contained a Word document setting out email exchanges between members of the tribunal. Radisson continued to participate in the arbitration after discovering the emails, submitting its rejoinder on quantum the following day. It did not challenge the partial award until two weeks later, after receiving ‘native’ copies of the emails.

In its challenge, Radisson alleged that Ms Timer had engaged in serious misconduct by forwarding internal tribunal emails to Mr Önkal in March 2019. Ms Timer was then copied in on an email from Mr Önkal in April 2019 to a board member of Hayat’s holding company. Finally, in May 2019, Ms Timer sent Mr Önkal an email to Hayat’s expert attaching correspondence between Radisson and the tribunal. The April and May emails were discovered after issue of the application to challenge the award.

The Court, dismissing Radisson’s challenge, found that, as a result of its delay, Radisson had waived its right to challenge the partial award under section 73 of the 1996 Arbitration Act. This provides that, where the claimant to a s.68 challenge continued to take part in arbitral proceedings after its grounds of objection had arisen, it is for them to prove that they did not know, and could not with reasonable diligence have discovered, those grounds at the relevant time.

The Court held that section 73 applied notwithstanding the issue of the Partial Award on liability and causation.

The Court rejected Radisson’s assertion that it only acquired the requisite knowledge of the grounds on 25 January 2022. On the evidence, the Court found that by 13 January 2022 Radisson knew there were grounds for objection and the evidence dispelled any notion that Radisson needed time before it could raise the objection. It could have sent a letter to the tribunal/ ICC Secretariat raising the objection immediately following its discovery of the Word Document but for strategic reasons it chose not to do so. As the contemporaneous evidence showed, Radisson and Quinn Emanuel did not want to raise the issue immediately as that would involve revealing their hand and they were of the view that they needed to deploy it strategically.

Accordingly, Radisson had failed to discharge its burden of demonstrating that it had not had the requisite knowledge to issue the s.68 challenge while it continued to participate in the Arbitration. It was therefore precluded from objecting to the Partial Award.

Radisson also failed to show that it had used reasonable diligence to discover the grounds of objection. It had been told in September 2021 by Dr Durman that there had been contact between CD and Hayat’s representatives. Radisson regarded Dr Durman as a credible source albeit one that needed to be viewed with caution hence it contemplated instructing investigators. However Radisson took a positive decision not to pursue this as it was of the view that it would not lead anywhere without being able to discredit the chair of the tribunal. Radisson had the alternative of getting more information and/or evidence from Dr Durman and Mr Önkal. Both of them were content to be retained by Radisson and were so engaged.

As a consequence, it was also precluded from objecting to the Partial Award on this basis.

Radisson also opposed the publication of the judgment in unredacted form. This was rejected by the Court. The proposed anonymisation of the parties and the witnesses made the judgment difficult for a reader to follow. It is in the public interest that judgment should be accessible and readily understood. There is a public interest in understanding how the courts apply the law to maintain fairness in the conduct of arbitrations. That public interest exists whether or not the judgment can be said to raise matters of general importance or novelty.

The full judgment on the substantive challenge can be found on the National Archives website (external link).

The judgment concerning redaction can be found on the National Archives website (external link).

Public Institution for Social Security v Al Wazzan (Mr Justice Henshaw)

Disclosure – documents in Switzerland – Swiss Criminal Code and Criminal Procedure Code – risk of prosecution – relevance of pending criminal letter of request – interaction with Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters

The Claimant, PIFSS, is a Kuwaiti public body operating a State social security and pension scheme.  It sues a range of defendants in relation to schemes pursuant to which corrupt payments were allegedly made by financial institutions and others to its former director general, the late Mr Fahad Al Rajaan.  Ms Al Wazzan, Mr Al Rajaan’s widow, represents his estate (‘D1’) and is sued in her own right (‘D2’).  D1 and D2 applied to resist disclosure of documents to which they have access or control, being a file of documents held by the Swiss Federal Prosecutor’s Office (SFPO) arising from investigations of Mr Al Rajaan and Ms Al Wazzan, and other documents held in Switzerland. 

D1 and D2 resisted disclosure and inspection on the basis that: (i) it would expose them and their legal representatives to a real risk of prosecution and sanction under Swiss law; (ii) the Swiss courts had repeatedly refused to remove certain restrictions which apply to PIFSS’s access to the SFPO file, and (as a matter of comity) the English courts should not undermine the Swiss courts or a pending criminal mutual legal assistance (“MLA”) process arising from requests made by the State of Kuwait for the purpose of its own criminal proceedings against the applicants in Kuwait; (iii) PIFSS will in any event be entitled to obtain copies of documents from the SFPO file if and when documents are remitted by Switzerland to Kuwait pursuant to that MLA process; and (iv) PIFSS could lawfully obtain documents through letters of request pursuant to the Hague Convention.

The court concluded, in brief outline, that the evidence did not establish that the disclosure would involve any breach of Swiss law, nor in any event any real risk of prosecution or other relevant prejudice; that the documents were essential for the proper conduct of the present case; that the Hague Convention route would be a slow and unsatisfactory alternative to disclosure; and that, overall, the balance came down firmly in favour of disclosure. The court would, though, in the interests of comity be willing to put in place measures, subject to later review , to avoid any risk of the documents in question being transmitted onward to the State of Kuwait (given concerns expressed by the Swiss courts that such transmission might circumvent the pending criminal MLA process).

The full judgment [2023] EWHC 1065 (Comm) can be found on the National Archives website (external link).

Port de Djibouti v DP World Djibouti (Mr Justice Henshaw)

Arbitration – jurisdiction challenge – whether claimant ceased to be a “Shareholder” for purposes of joint venture agreement and company Articles by reason of Presidential Ordnance compulsorily transferring shareholding – arbitrator’s jurisdiction to determine that issue and related issues

The Claimant (‘PDSA’) challenged under section 67 of the Arbitration Act 1996 determinations in a final partial award of 7 July 2021 in the context of an arbitration seated in London and conducted under the 2014 LCIA Rules.

PDSA and the Defendant (‘DP World’) were shareholders in a joint venture company (‘DCT’) which constructed and owned a container port.   By a Presidential Ordinance of 9 September 2018, the Republic of Djibouti took ownership of PDSA’s shares in DCT.   The joint venture agreement, and DCT’s Articles of Association, made provision for the directors not to register any share transfer unless and until the transferee signed a deed of adherence to them.  No such deed was signed.  PDSA contended, however, that under the contracts an entity could not remain a Shareholder unless it owned equity in DCT, which had ceased to be the position upon the issue of the Ordinance.  As a result, PDSA submitted, it ceased to be bound by the joint venture agreement; and the arbitration agreements in the joint venture agreement and the Articles, which applied only to disputes “between the Shareholders”,  had no application to post-Ordinance breaches.  That in turn also meant that the arbitrator had no jurisdiction to decide whether PDSA remained a shareholder in DCT following the Ordinance.

The court rejected the challenge, holding that:

(1) whether or not it was also a jurisdictional issue, the question of whether PDSA remained a Shareholder was a substantive issue between the parties, and had been one ever since the Presidential Ordinance was issued;

(2) it was common ground that the arbitration agreements continued to apply to alleged breaches occurring before PDSA ceased to be a Shareholder; the question as to precisely which categories of matters the arbitration agreements continue to apply to had to be found in the parties’ agreements;

(3) on the correct construction of the arbitration agreements and related provisions, the arbitrator’s jurisdiction to decide whether PDSA ceased to be a Shareholder was not contingent on the answer to that question: the arbitrator had jurisdiction to decide that issue whether or not PDSA in fact (as ultimately found by the court) ceased to be a Shareholder upon issue of the Presidential Ordinance;

(4) even if PDSA did cease to be a Shareholder upon issue of the Presidential Ordinance, the arbitrator had jurisdiction to find a breach (arising from PDSA’s failure to procure execution of a deed of adherence) that began on or before the date of the Ordinance and continued thereafter; and

(5) in any event, addressing the issue for itself, the court found that PDSA did in fact remain a Shareholder following the Ordinance, for the purposes of the joint venture agreement and the Articles, with the result that the arbitrator on any view had jurisdiction to make the findings she did.

The full judgment [2023] EWHC 1189 (Comm) can be found on the National Archives website (external link).

Deutsche Bank AG v Sebastian Holdings Inc and Vik – Dias J

Limitation Act 1980 section 24(2) – recovery of arrears of interest on an order for costs to be assessed – assessment was not completed more than six years after the date of the order – whether recovery of interest limited to the six years prior to final assessment

An order for costs to be assessed was made in the Claimant’s favour on 8 November 2013 with an interim payment to be made within 14 days. The Defendant failed to pay and on 2 July 2014 a non-party costs order was made against V who was ordered to pay the amount of the interim payment together with accrued interest at the Judgments Act rate.

On 10 October 2016, V was ordered to pay the balance of the costs awarded to the Claimant by the 8 November 2013 order together with interest accrued thereon.

Detailed assessment was not completed until 11 May 2023, V having made various payments pursuant to interim costs certificates meanwhile.

Section 24(2) provides that “no arrears of interest in respect of any judgment debt shall be recovered after the expiration of six years from the date on which the interest became due.”

The Claimant argued that interest did not become “due” for this purpose until it became due for payment after quantification and that it could therefore recover interest on the costs in full from 8 November 2013. V argued that interest on costs became due when the order was made and accrued from day to day thereafter, even if it did not fall to be paid until after assessment.

The court concluded that V’s submissions were to be preferred. The intention of Parliament as collected from the plain and ordinary meaning of the words used, and supported by the legislative history of the provision, authority and policy considerations, was that interest on an order for costs to be assessed becomes due at the date of the order and accrues from day to day thereafter, even if it does not become payable until after quantification.

The full judgment [2023] EWHC 1527 (Comm) can be found on the National Archives website (external link).

Gagliardi v Evolution Capital Management LLC (Foxton J)

Section 15C CJJA 1982 – whether claim by employee – whether court had jurisdiction over claim – whether claimant entitled to anti-suit injunction

G provided services to ECML, but his retainer was terminated by notice. G brought proceedings against ECML in the courts of England and Wales to recover an outstanding bonus and ECML brought proceedings against G in New York, seeking a declaration that it was obliged to pay the bonus, and seeking to recover amounts previously paid. ECML argued that no anti-suit injunction was required given the undertakings it had offered, and further denied that (i) the court had jurisdiction over G’s claim; (ii) G had shown a sufficiently arguable case that he was domiciled in England and Wales; (iii) that G had shown a sufficiently arguable case that he was an employee for the purposes of s.15C and (iv) whether it was appropriate to grant anti-suit injunctive relief.

Held:

1. ECML had breached the undertaking given to the court in refusing to make a joint application to move the deadline for G to file his Answer in New York. In those circumstances, it was appropriate to consider whether an anti-suit injunction was appropriate.
2. The evidence established a case to the requisite standard that the court had jurisdiction over G’s claim by virtue of s.15C(2) CJJA 1982 (Kaefer Aislamientos SA de CV v AMS Drilling Mexico SA de CV [2019] EWCA Civ 10, [70]-[80] and Nogueira v Crewlink Ireland Ltd [2018] ICR 344, [63] applied).
3. The request for anti-suit relief in support of G’s asserted right only to be sued in the place of his domicile under s.15C(3) had to be assessed by reference to the same standard as applications for contractual and quasi-contractual anti-suit injunctions (AIG Europe SA v John Wood Group Plc and ors [2021] EWHC 2567 (Comm), [58], and [2022] EWCA Civ 781, [10] and QBE Europe SA/NV v Generali Espana de Seguros y Reaseguros [2022] EWHC 2062 (Comm), [10]-11] applied).
4. The decisions of the Court of Appeal in Samengo-Turner v J&H Marsh & McLennan (Services) [2008] ICR 18 and Petter v EMC Europe Ltd [2015] CP Rep47 in relation to the grant of anti-suit relief in support of the employee’s right under the Lugano Convention and Brussels Regulation only to be sued by their employer in the courts of their domicile applied to s.15C of the CJJA 1982, which had preserved that regime in UK law.
5. While those decisions had their detractors and defenders, they binding on the court and could not be distinguished.
6. On the evidence, G had established to a high degree of probability that he was domiciled in England and Wales when the New York proceedings were commenced. He had also shown to a high degree of probability that he was an employee for the purposes of s.15C (Arcadia Petroleum Ltd v Bosworth [2020] ICR 349 and Alta Trading UK Ltd v Bosworth [2021] ICR 1358 applied).
7. ECML had not made out any good reason for not granting a prohibitory anti-suit injunction and ECML would also be ordered to make a joint approach to the New York court to seek to extend the deadline for G to file his Answer. However, it was not appropriate to grant a mandatory injunction requiring ECML to withdraw the New York proceedings.

The full judgment [2023] EWHC 1608 can be found on the National Archives website (external link).

Rolls-Royce Holdings Plc v Goodrich Corporation (Foxton J)

Implied Novation – Call Option – Whether debt claim due and payable – damages counterfactual

RR alleged that it had validly exercised a call option originally granted to another RR company, arguing that there had been an implied novation of the option, alternatively there was a contractual estoppel which precluded G from arguing the contrary. G denied RR was entitled to exercise the call option, and put forward various reasons why the option was said to have lapsed.

G argued that RR had breached the contract between them by organising a parts availability service for aircraft engines, and/or raised issued as to the terms and amounts of the invoices. RR denied that the launch of the service involved any breach of contract. In relation to the amounts payable, RR contended that if G was correct in its contention as the applicable price per unit, RR would not have gone ahead and damages should be assessed on that basis. It also said that it had a defence to any debt claim because G had not issued invoices in the correct amount.

Held:

1. RR had validly exercised the Call Option. There had been an implied novation (Musst Holdings Limited v Astra Asset Management UK Limited [2023] EWCA Civ 128 applied), or G was precluded from arguing otherwise, and G’s construction arguments were without merit. Various complications in applying contractual estoppel clauses in three-party novation scenarios considered.
2. The parts availability service did not breach any contractual obligation owed to G.
3. In any event G had calculated its damages on the wrong basis (by reference to the position if G and RR had agreed to vary the contract to allow the service): British Gas Trading Limited v Shell UK Limited [2020] EWCA Civ 2349 and Unicredit Bank AG v Euronav AV (The Sienna) [2023] EWCA Civ 471 considered.
4. RR was obliged to pay for parts which were not acquired for a particular aircraft operator at a higher price, and was in breach of contract in including the lower price in its order.
5. G had a debt claim for the correct price. The fact that, in reliance on RR’s orders, G had included the wrong price in its invoices did not provide RR with a defence. Coburn v Colledge [1897] 1 QB 702,  Consulting Concepts International Inc v Consumer Protection Association [2022] EWCA Civ 1699 and Verizon UK Limited v Swiftnet Limited [2008] EWHC 551 (Comm) considered..
6. Approached as a damages claim, G was entitled to sue for damages for each order which had included the wrong figure. Damages were not to be assessed on the basis that, if RR had realised the correct price for the parts, it would not have ordered them. Medsted Associates Ltd v Canccord Genuity Wealth (International) Ltd [2020] EWHC 2952 (Comm) considered.

The full judgment can be found on the National Archives website (external link).

London International Exhibition Centre PLC v Royal & Sun Alliance Insurance PLC and others (and other parties) (Jacobs J)

Covid-19 business interruption insurance claims – determination of preliminary issues of policy construction in test cases – coverage for occurrences and other events “at the premises” – coverage for disease prior to Covid-19 being designated a “notifiable” disease – scope of coverage concerning “Medical Officer for Health of the Public Authority”

The court determined issues of policy construction for Covid-19 business interruption insurance losses in claims brought by various policyholders including the London International Exhibition Centre (known as the Excel Centre), the Pizza Express restaurant chain, and a number of small businesses comprising a hairdresser, gyms, restaurants and nightclubs.

The court held:

1. The test for causation applied by the Supreme Court in Financial Conduct Authority v Arch Insurance (UK) Ltd [2021] UKSC 1 was applicable to policies which provided coverage for occurrences or other events “at the premises”. The Supreme Court’s causation test was therefore not confined to policies which provided coverage for occurrences or other events within a radius of the premises. Accordingly, in order to show that loss resulting from interruption of or interference with a claimant’s business was proximately caused by closure of the premises on the order or advice of any local or governmental authority as a result of an occurrence of Covid-19 “at the premises”, it is sufficient to prove that the order or advice was made or continued in response to cases of Covid-19 which included at least one case of Covid-19 at the premises which had occurred by the date of the order or advice.
2. Where coverage was in respect of notifiable diseases “at the premises”, only occurrences of Covid-19 after it became a notifiable disease (in England, at 6.15 pm on 5 March 2020) are relevant for the purposes of coverage, notwithstanding that the closure of the premises occurred subsequently.
3. Where there was coverage for the closure of or restrictions on a business “on the advice or with the approval of the Medical Officer of Health for the Public Authority”, the “Medical Officer of Health” wording was satisfied by the restrictions imposed by the government  taken on the advice or with the approval of the Chief and/or Deputy Chief Medical Officer.  This wording was not confined to advice or approval given by officers of local authorities.
4. Where a policy provides coverage in respect of disease “suffered by any visitor or employee…at the Premises”, there was coverage if a visitor or employee was at the premises at a time when he or she had contracted Covid-19.

The full judgment [2023] EWHC 1481 (Comm) can be found on the National Archives website (external link).

Pizza Express Group Limited and others v Liberty Mutual Insurance Europe SE and another (Jacobs J)

Covid-19 business interruption insurance claims – determination of preliminary issue concerning policy limits

The Pizza Express restaurant chain claimed for business interruption losses consequent upon the closure of restaurants in March 2020 as a result of the Covid-19 pandemic. The policy, which was on the Aon Trio wording, provided that “all Limits of Liability apply any one Occurrence”. The court accepted the insurers’ argument that these words were applicable to the “sub-limits” in the policy, as well as to the main limits of liability.

The full Judgment [2023] EWHC 1269 (Comm) can be found on the National Archives website (external link).

GASL Ireland Leasing A-1 Limited v SpiceJet Limited (Foxton J)

Aircraft lease – Adjournment Application –Failure to Redeliver Aircraft in Compliance with Delivery Conditions – Scope of Conclusive Evidence Clause

G sought damages for breach of the obligation under an aircraft lease to redeliver the Aircraft in compliance with the delivery conditions. S sought to adjourn the trial, contending that it needed time to seek replacement legal representatives. G relied upon the conclusive evidence clause in the lease in relation to the quantum of its claim,

Held:

1. Dismissing the application for an adjournment, there had been repeated and unjustified delay by S, and the evidence suggested that this was the latest attempt to postpone the trial.
2. G had made out its case on the basis of the factual and expert evidence before the court as to the defects in the condition of the Aircraft on redelivery and the cost of rectifying the defects.
3. Where the expert had offered a range of figures, G had relied upon the conclusive evidence clause and certified the higher figure. In circumstances in which S had agreed to indemnify G against the costs of remedying any defects in the delivery condition, the conclusive evidence clause referring to “any amount payable under this Agreement” was engaged. It could not be said that in certifying the amount payable at the upper end of the expert’s range, there had been a manifest error.

The full judgment [2023] EWHC 1107 (Comm)] can be found on the National Archives website (external link).

Emirates Shipping Line DMCEST v Gold Star Line Ltd (Dias J)

Arbitration Act s. 67 – application to set aside Tribunal’s award that it had no jurisdiction – express/implied agreement to arbitrate – estoppel

In late 2019 Emirates was negotiating to join the shipping line consortium of which Gold Star was a member.  In December, Emirates purchased space on one of the line’s vessels and shipped cargo in respect of which it issued its own bill of lading.  Having incurred liability to cargo receivers in respect of cargo damage, Emirates commenced arbitration proceedings against Gold Star seeking an indemnity.  The question of jurisdiction turned on whether there was a binding arbitration agreement between the parties and this in turn depended on whether, when it shipped the cargo, Emirates had already become a party to the consortium MOU (which contained an arbitration clause) or whether the slot space had been purchased pursuant to a separate contract pending Emirates’ admission to the consortium.  Emirates argued that the slot purchase was expressly or impliedly concluded on the terms of the MOU.  Alternatively, it submitted that Gold Star was estopped by representation and/or convention and/or silence from denying that it was, having in 2020 itself asserted that the MOU applied to the parties’ relationship and failed to object to Emirates’ similar assertions.  The court found that there was no express agreement that the terms of the MOU should apply to the slot purchase and no conduct from which such agreement could be implied.  As regards estoppel, the court rejected Gold Star’s argument that Emirates was seeking to rely on estoppel to create a cause of action but held that (i) promissory estoppel failed because Gold Star’s own mistaken assertion that the MOU applied did not amount to a representation that it would not rely on its contractual rights; (ii) Emirates’ view as to the applicability of the MOU had been formed independently of anything said or done by Gold Star who could not therefore be said to have assumed responsibility for any common (mistaken) assumption; (iii) no duty to speak arose in circumstances where both parties were mistaken as to the applicability of the MOU; (iv) Emirates had failed to establish reliance; (v) in any event, it would not be unconscionable to permit Gold Star to resile from any representation or assumption.

The full judgment ([2023] EWHC 880 (Comm)) can be found on the National Archives website (external link).

Fibula Air Travel Srl v Just-Us Air Srl (Dias J)

Application to amend – issue estoppel – Henderson v Henderson abuse

The Claimant was a Romanian company which sold package holidays to various destinations.  In December 2019, it agreed to wet lease an aircraft from the Defendant for 6 months from 1 April-31 October 2020.  A security deposit was payable on signature of the lease followed by stage payments up to a stipulated minimum sum.  The obligation to make stage payments arose following successful completion of an audit (the “Audit Condition”).  The lease agreement further provided that it would only come into force when certain Turkish and Romanian CAA approvals had been obtained (the “Approvals Condition”). 

The security deposit was duly paid but following the outbreak of the Covid pandemic, various restrictions were imposed by the Eygptian, Turkish and Romanian authorities between 16 March and 4 April 2020 suspending or prohibiting flights between Romania and Turkey/Egypt and generally interfering with air travel.  On 17 March 2020, before the aircraft had been delivered, the Claimant purported to terminate the lease on the grounds that (i) the Defendant had ceased to have the necessary authorisations to perform flights under the lease being unable to fly lawfully between Romania and Egypt after 16 March 2020; (ii) the Claimant was entitled to terminate the lease on grounds of force majeure; alternatively, the lease had been frustrated by virtue of the various restrictions.

The Claimant sued to recover its deposit.  The Defendant denied that the lease had been validly terminated and counterclaimed for the balance of the minimum sum due.  In due course the Defendant applied for reverse summary judgment dismissing the claim.  The counterclaim was not part of the summary judgment application.  The application was heard by HHJ Pelling who held that the claim had no realistic prospect of success on the grounds that: (1) the obligation to obtain authorisations and clearances was that of the Claimant and the Defendant was not in repudiatory breach on 17 March 2020 since it was under no obligation to do anything until the Claimant had made the first of the stage payments (due on 18 March); (2) there was no contractual restriction or common assumption which limited the countries to which the aircraft could fly and the governmental restrictions accordingly did not constitute force majeure; (3) for similar reasons, the restrictions did not amount to frustrating events and performance of the lease did not become illegal.

The Claimant applied to the Court of Appeal for permission to appeal and to adduce new evidence.  Both applications were refused on the basis that the appeal would have no realistic prospect of success and that the evidence in question could have been obtained for the hearing below.

The Claimant now applied for permission to amend its defence to the counterclaim to rely on the new evidence for which the CA had refused permission and to argue that the Audit and Approvals Conditions had not been fulfilled such that the lease never came into effect, alternatively that the obligation to make stage payments never arose; alternatively that the lease had been frustrated on or about 27 March 2020.

The Defendant did not challenge the substance or authenticity of the new evidence but argued that the Claimant was precluded from raising these defences on grounds of issue estoppel and/or Henderson abuse.  It was common ground that neither defence had been pleaded or argued before HHJ Pelling.  Non-fulfilment of the Audit Condition had been tentatively floated in argument but the judge held that the point was not open to the Claimant as it had not been pleaded or foreshadowed in evidence.  He therefore accepted on the “material available” that the audit had been passed successfully.

The Court held that in these circumstances there was no issue estoppel in relation to either the Audit Condition or the Approvals Condition.  It was not necessary for the Claimant to prove satisfaction of either condition in order to succeed on its claim, and resolution of the points was accordingly not fundamental to the judge’s decision.  Read in context, the judge’s acceptance that the audit had been successfully passed was no more than an assumption as to a background fact for the purposes of considering the pleaded case.  As such it was not an “issue” for the purposes of issue estoppel.  The Approvals Condition was not mentioned or discussed in the judgment and in so far as the judgment implicitly assumed that the lease had come into effect, this again was not fundamental to the ultimate decision.

It would not be abusive to permit the Claimant to rely on the Audit Condition and the Approvals Condition as defences to the counterclaim.  The Defendant had chosen not to include the counterclaim in the summary judgment application and had to accept that there could not be finality until it had been resolved.  This was not a case of the Claimant harassing or vexing the Defendant with multiple proceedings; the counterclaim was brought by the Defendant and the Claimant was entitled to defend itself as best it could.  Even though the new evidence could have been obtained earlier by the exercise of reasonable diligence, the Claimant had paid the penalty for its delay by losing irrevocably its right to reclaim the deposit.  The balance of prejudice was clearly in favour of allowing these defences to proceed.

By contrast, an issue estoppel arose in relation to the frustration defence and the availability of new evidence which could with reasonable diligence have been obtained for the summary judgment application did not justify an exception to its operation.

The full judgment ([2023] EWHC 1049 (Comm)) can be found on the National Archives website (external link).

GOYAL v BGF INVESTMENT MANAGEMENT AND OTHERS (Butcher J)

Deceit – Misrepresentation Act 1967 – Unlawful means conspiracy

The Claimants claimed against the Defendants damages in deceit, damages pursuant to s.2(1) Misrepresentation Act 1967 and damages for unlawful means conspiracy. 

The First Claimant was one of the co-founders of a business, IBSL.  The Second Claimant is his wife.  In late 2018 / early 2019 a divestment transaction was entered into under which the shares in IBSL were sold to a new company, IBSHL, and shares in IBSHL were apportioned among many of the previous shareholders of IBSL, including the Claimants, as well as to a new investor, which was a company in the group of the First to Fourth Defendants.

The Claimants’ case was that, during the course of negotiations for this transaction the First to Fourth Defendants, as well as the Fifth Defendant who was the CEO of IBSL, made a number of misrepresentations to them which had induced them to enter into the transaction. The representations were said to relate to the First Claimant’s continued role as CFO, his suitability for it, and the representators’ intentions in these respects.

The Claimants pleaded that there were 8 occasions in which things were said or done which gave rise to implied misrepresentations.

None of the misrepresentations was found to have been made.  Both claims in deceit and under s2(1) Misrepresentation Act 1967 thus failed.  The case of dishonesty had not been made out. The claim for unlawful means conspiracy failed given that it was founded on the allegations of deceit, given the lack of evidence put before the court, and given that it had not been shown that the Defendants had an intention to injure the Claimants. In any event it was not established that the Claimants had suffered any loss by reason of entering into the transaction. 

The full judgment ([2023] EWHC 1180 (Comm)) can be found on the National Archives website (external link).

INFRASTRUCTURE SERVICES LUXEMBOURG SARL and another v KINGDOM OF SPAIN (Fraser J) 

Arbitration – ICSID Convention award – Arbitration (International Investment Disputes) Act 1966 – Order made ex parte for recognition – application to set aside – jurisdiction – non-disclosure – procedure   

The claimants were investors and claimed certain sums from the Kingdom of Spain (“Spain”) in respect of changes to tariffs for renewable energy investments made in that country.  The claims arose under the Energy Charter Treaty (“ECT”) of which Spain is a signatory, which incorporates arbitration under the ICSID Convention as its dispute resolution mechanism. The claimants commenced arbitration under these provisions and Spain challenged the jurisdiction of the tribunal. This challenge failed and the claimants obtained an award in their favour and Spain again challenged jurisdiction, this time before the ICSID ad hoc Committee. This application also failed and the Committee affirmed the award. The claimants then sought to have recognised in England and Wales under the Arbitration (International Investment Disputes) Act 1966 (“the Act”) and CPR Part 62.21 and Part 74. Cockerill J made an order on an ex parte basis recognising the award. Spain applied to have it set aside on two grounds. Firstly, Spain argued that there was no jurisdiction on the part of the court to make such an order binding a sovereign state. This was said to be because there was no binding arbitration agreement for the purposes of the State Immunity Act 1978, and also because the Court of Justice of the European Union had decided that arbitration provisions that included Member States of the EU were void and of no effect because they conflicted with the EU Treaties. It was argued that such arbitration provisions as were in the ECT were contrary to EU law and also therefore international law. The second ground was one of alleged non-disclosure on the part of the claimants in obtaining the order from Cockerill J, in particular a failure to draw the relevant EU jurisprudence to the attention of the judge who made the order, both before and after the order was made. It was also argued that the order should not have been made without an inter partes hearing.

Spain’s arguments on jurisdiction failed. The Act had been enacted specifically to comply with the obligations of the UK under the ICSID Convention. As such, there could be no valid objection in the High Court by Spain to the jurisdiction of the arbitral tribunal, which under the Convention was a matter reserved to the tribunal and the ad hoc Committee, both of which had considered the matter and ruled in the claimants’ favour. None of Spain’s arguments on EU law and its alleged primacy were valid ones, as this point had already been decided by the Supreme Court in Micula & Ors v Romania (European Commission intervening) [2020] UKSC 5.

The arguments on non-disclosure also failed. Whilst full disclosure was required on any ex parte application to the Court, including under the Act, in this case there had been no non-disclosure and the claimants had fully identified Spain’s likely arguments on jurisdiction. The correct method of making such an application for recognition was ex parte as had been done in this case, as this was the procedure specified in the Civil Procedure Rules. It was also in accordance with the overriding objective, given states would not necessarily challenge jurisdiction in the way adopted in this case.

In future cases, if jurisdiction had been considered and dismissed under the Convention procedure and the award were a valid and authentic one, there would be no grounds for repetition or rehearing of those objections in the Commercial Court, as this would frustrate and undermine the purposes of the ICSID Convention, international arbitration and the Act.

The full judgment ([2023] EWHC 1226 (Comm)) can be found on the National Archives website (external link).

Watchstone Group PLC v PricewaterhouseCoopers LLP v Slater & Gordon (UK) 1 Limited (Jacobs J)

Misuse of confidential information – whether confidential was passed to bidder by seller’s accountants – whether purchase paid by bidder was influenced by the confidential information

This claim arose from a substantial corporate M&A  transaction involving the sale of the legal services arm of Quindell (now Watchstone Group PLC) to Slater & Gordon (UK). PricewaterhouseCoopers LLP (PwC) had been engaged by Quindell to perform services which included financial analysis of their accounting practices and cash-flow position. Watchstone alleged there was a misuse of confidential information by PwC, by virtue of which information confidential to Quindell became known to Slater & Gordon at and following a meeting in January 2015. The key issues surrounded whether confidential information was in fact passed on to Slater & Gordon at that meeting, and if so  whether the information made a difference to the price Slater & Gordon paid for the legal services arm of Quindell.

Held: claim dismissed. On the evidence, Watchstone had failed to establish that confidential information was wrongly passed on at the meeting, and also failed to prove that the information was recognised as important, relied upon as giving a negotiating advantage and that it had any material effect on the sale.

The full judgment can be found on the National Archives website (external link).

Palladian Partners LP & Ors v The Republic Of Argentina & Anor [2023] EWHC 711 (Comm)

Construction of GDP-linked Securities – Sovereign debt restructuring – GDP rebasing

The Claimants were a group of investors who held Euro-denominated Securities issued by the Defendant, the Republic of Argentina, in 2005 and 2010. The Securities were a novel form of bond, referred to as ‘GDP-linked Securities’, under which obligations to make repayment only arose where the Republic’s GDP met agreed benchmarks for level and growth within a given year.

For the purposes of the Securities GDP was measured according to a ‘Base Year’, which was 1993 at the time of issue. In 2014, the Republic rebased its measurement of GDP, changing the Year of Base Prices to 2004. Following that rebasing, the Republic concluded that the Payment Conditions had not been met for Reference Year 2013 and that no payment was due. The Claimants, conversely, argued that an obligation to make payment arose notwithstanding the rebasing, for 2013 and every year thereafter. The Claimants sought a declaration as to the proper construction of the Securities, payment of the sums due, and an order for specific performance requiring the Republic to apply the correct construction for the remainder of the Securities. The Claimants also brought an alternative case that the Republic had acted in bad faith in producing certain GDP data in March 2014.

The matter turned on the proper construction of a single provision within the Securities, the ‘Adjustment Provision’. Relying on settled principles of construction, each side proposed alternative constructions. The Claimants advanced a construction which required an annual adjustment to Base Case GDP based on the ratio between Real GDP in the old and new Years of Base Prices. The Defendants proposed two alternate constructions: one entailing a one-off adjustment to the levels of Base Case GDP, rescaling the entire series into the new year of base prices, and a second whereby the figure published yearly in the New Year of Base Prices was adjusted for inflation only.

The Court held that the Claimants’ construction was to be preferred, given that accorded with the plain meaning of the Securities. It granted the declarations sought and awarded monetary judgment of EUR 1.330 billion. Having found for Claimants on the construction point, it was unnecessary and undesirable to address the Claimants’ alternative case.

The Trustee appeared on behalf of the Securities-holders to ensure that the entire class would benefit from any judgment. It argued that difficulties with the clearing systems made payments to individual holders practically impossible. The Court dismissed this argument, holding that any of the Claimants were entitled to bring a claim for their own beneficial interest, in addition to judgment for the Trustee.

The full judgment can be found on the BAILII website (external link).

SKATTEFORVALTNINGEN v SOLO CAPITAL PARTNERS LLP and others (Andrew Baker J)

Claims of dishonest schemes to extract tax refund payments from the Claimant tax authority to which applicants were not entitled – preliminary issues of Danish tax law – judgment determining the requirements of a valid tax refund claim for the purpose of the main trial

The Claimant (‘SKAT’) is the Danish Customs and Tax Authority.  It claims that it was induced to pay, between August 2012 and July 2015, c.DKK 12.5 billion (c.£1.5 billion) as refunds of Danish dividend tax it had no liability to pay.  SKAT asserts various causes of action against many Defendants, some but not all of whom are alleged to have acted dishonestly.  The main trial of SKAT’s claims is listed for 24 weeks commencing in April 2024.  For the purpose of that trial, the Court has determined issues arising between the parties over what was required, under Danish tax law, for SKAT to be liable to pay the dividend tax refund claims presented to it that underlie the causes of action it now asserts in these proceedings.  A principal conclusion, endorsing SKAT’s position on this point, was that the existence of a contract for the sale of shares in a Danish company did not, without more, mean that the buyer was treated for the purpose of Danish tax law as a shareholder in the company who might therefore incur Danish dividend tax liability.

The full judgment can be found on the National Archives website (external link).

LONESTAR COMMUNICATIONS CORPORATION LLC v ORANGE LIBERIA INC (Foxton J)

Approach to determining interest rate on USD; whether starting point in absence of evidence should be US Prime or USD Libor; Calderbank offer; relevance of reduction in costs recovery at trial

The Claimant obtained a USD damages award. A dispute arose as to whether interest should be calculated by reference to US Prime or USD Libor, and what uplift over that rate was appropriate. The court reviewed the authorities in the Commercial Court which had awarded one or other rate. It determined that the court should have a clear default rate, which would apply in the absence of evidence to the contrary, and that the rate should be US Prime. So far as any uplift is concerned, a court might be willing to provide for an uplift of 1-2% over US Prime by reference to the general characteristics of the borrower, without the need for evidence. Any request for a higher uplift was likely to need some supporting evidence. In this case, there was nothing which suggested that any uplift over US Prime was justified.

The effect of the award of US Prime rather than six-month USD LIBOR was that, in principal and interest terms, the Claimant had (just) beaten a Calderbank offer. However, the Calderbank letter had included an offer to pay all of the Claimants’ costs to the date of acceptance. The Court had awarded the Claimant only 40% of its costs, to reflect the fact that it had only recovered 10% of the amount claimed, and the greater part of the costs of the trial had been incurred on the unsuccessful aspects of its quantum. There was a dispute as to whether the court’s costs order was relevant to the issue of whether the Claimant had “beaten” the Calderbank. The Court held that it was appropriate to consider the issue of costs when considering whether the Claimant had obtained a more favourable result by refusing the Calderbank offer and proceeding to trial. In the circumstances, the Claimant had not obtained a more favourable outcome.

The full judgment [2023] EWHC 732 (Comm) can be found on the National Archives website (external link).

TERRE NEUVE SARL v YEWDALE AND OTHERS (Foxton J)

Application for order requiring the Defendants to hand over documents, electronic devices and access to email accounts to an independent Electronic Disclosure Provider to be subject to search terms and to review by an independent counsel

The Claimants alleged that there had been a wholesale failure by the Defendants to conduct disclosure properly. Relying on decisions such as The Nolan Family Partnership v Walsh [2011] EWHC 535 (Comm) and JD Classics Limited v Hood [2021] EWHC 3193 (Comm) , they sought an order requiring the Defendants to have over archives of hard copy documents, all of their electronic devices and to give access to their email accounts to  an independent e-disclosure provider who would run search terms on the material, with documents responding to those searches being submitted to an independent counsel for review.

The Court reviewed the cases in which orders had been made taking the disclosure exercise out of a party’s hands and handing it over to persons appointed by the court. It noted the obtrusive nature of such orders, particularly those which required the respondents to hand over their personal electronic devices for third party review. The court identified various factors which were likely to be relevant in determining whether or not to make an order of that kind, and the scope of such an order. It observed that orders of this kind should not be seen as simply another tool in the box of a litigant with legitimate complaints about the other party’s disclosure.

The full judgment [2023] EWHC 677 (Comm) can be found on the National Archives website (external link).

CRF I Limited v Banco v Banco Nacional de Cuba and Republic of Cuba (Cockerill J)

Jurisdiction – Assignment – Cuban Law – Reasonable withholding of consent – State Immunity

The defendants (debtor and guarantor respectively under/in respect of certain loan agreements) disputed the jurisdiction of the English Court when claims were brought by an assignee of the loans/guarantee. The agreements all permitted assignment with prior consent (such consent not to be unreasonably withheld). The defendants contended that they lacked capacity; or the persons purporting to act of them lacked authority under Cuban law; or that they were entitled to withhold consent on the grounds (inter alia) that CRF was a “vulture fund”. It was held that the first Defendant had capacity to consent for itself, but not for the Republic of Cuba, that there was prior consent which consent was properly authorised; and that the assignments of the loan agreements (but not the guarantee) were valid. Accordingly the First Defendant’s plea of state immunity failed and the court had jurisdiction to hear the claim against the First Defendant. Had withholding of consent arisen, the nature of CRF’s business would not have entitled the defendants to withhold consent.

The full judgment, [2023] EWHC 774 (Comm), can be found on the National Archives website (external link).

Cantor Fitzgerald & Co. v YES Bank Ltd (Bright J)

Construction of contract

YB engaged CF as financial advisor, placement agent and arranger in relation to a proposed financing.  Cantor claimed to be entitled to a fee under the Engagement Letter.

The court concluded that, properly construed, the Engagement Letter provided for CF to be paid only in the event of a specified contingency which did not occur.

The full judgment [2023] EWHC 745 (Comm) can be found on the National Archives website (external link).

The Public Institution for Social Security v Ruimy and another (Jacobs J)

The claimant, a Kuwaiti public institution responsible for Kuwait’s social security system, brought proceedings against its former director and a large number of other parties. The trial is to be heard in March 2025, estimated to last 25-30 weeks. The claim alleges that bribes were paid by various defendants to the former director on a number of different “schemes”. Two defendants (Mr Ruimy and Aerium Finance Ltd), who were alleged to be party to one of the schemes, applied for a stay of the claim against them on the ground of forum non conveniens and Article 34 of Brussels Recast.

The court rejected the argument that Switzerland was clearly a more appropriate forum for the trial of the proceedings against those defendants. The proposed stay would give rise to a significant risk of inconsistent judgments, and the parties had substantial connections to England.

Article 34 of Brussels Recast was inapplicable. Article 34 is only capable of applying to proceedings in the court of a third State (here Switzerland) which were already in existence at the time when the court in the Member State (here England) became seised of the relevant proceedings. Municipio de Mariana and others v BHP Group (UK) Ltd [2022] EWCA Civ 951 applied. Here, there were no such proceedings. The Swiss “commandements de payer” procedure did not give rise to proceedings pending in a court. Even if Article 34 had been applicable, the court would exercise its discretion so as to decline to stay the proceedings.

The full Judgment [2023] EWHC 177 (Comm) can be found on the National Archives website (external link).

King and others v Stiefel and others (Jacobs J)

Wasted costs

Following a successful strike-out application before Cockerill J (see [2021] EWHC 1045 (Comm)), the successful defendants applied for wasted costs orders against the barrister and solicitors who had advised in connection with the claim. The wasted costs applications were dismissed at the “Stage 1” stage.

There was long-standing authority that a wasted costs applications should not be allowed to go forward, if it cannot properly be dealt with by means of a simple and summary procedure and at a cost which is proportionate to the sum claimed. Cases in the Commercial Court are no exception to this principle, even though the costs incurred may be very high. The applications in the present case were inappropriate for that procedure.

Where a strike-out had succeeded on the basis of an argument that the proceedings were an abuse of process, this did not lead to the conclusion that a wasted costs application was appropriate. Counsel and solicitors can properly act for clients in cases where abuse of process arguments are raised.

In defending an application for wasted costs, counsel and solicitors are entitled to question aspects of the judgment which was adverse to their clients: to do so is not a collateral attack on the judgment so as to be an abuse of process (R (on the application of B) v X Crown Court [2009] EWHC 1149 (Admin) followed).

The full judgment [2023] EWHC 453 (Comm) can be found on the National Archives website (external link).

Aercap Ireland Limited v AIQ Europe S.A. And Others (Butcher J)

Civil Procedure – Addition of Parties – Insurance

The Claimant had issued proceedings claiming under an aircraft hull spares and equipment policy in respect of aircraft and aircraft parts which had been leased to Russian airlines and not returned following the Russian invasion of Ukraine and the imposition of EU and UK sanctions. The claim form named two insurers as representative defendants: one (the first defendant) as representative of all insurers subscribing Section One (‘All Risks’) of the Policy, and another (the second defendant) as representative of all insurers subscribing Section Three (‘War Risks’). Another insurer (Fidelis Insurance Ireland DAC), which had subscribed to both sections, sought to be joined as a further defendant. This was resisted by the first defendant and not consented to by the claimant. The court considered CPR rules 19.2 and 19.6 and the decision in PNPF Trust Co v Taylor [2009] EWHC 1693 (Ch). It was held that where a party had a significant financial interest in the litigation such as Fidelis’s here, and accepted that a judgment against it could be enforced without the leave of the court and that it would be liable for its own costs, then, exceptional circumstances apart, that party should be allowed to be joined to the proceedings as a defendant. There were no such exceptional circumstances here, and accordingly Fidelis’s application for joinder was granted.

The full judgment ([2023] EWHC 96 (Comm)) can be found on the National Archives website (external link).  

National Iranian Oil Company v Crescent Petroleum Company And Another (Butcher J)

Permission to Appeal – Conditions on Permission – Finality

After receiving both written and oral submissions on the issue, the Court had given a ruling in writing granting the claimant (NIOC) permission to appeal against the court’s grant of summary judgment in favour of the defendant (Crescent) in relation to a challenge by NIOC under s. 67 Arbitration Act. After the ruling had been given but before the order was sealed, Crescent had raised for the first time, and applied to the court for an order, that permission to appeal should be made conditional upon NIOC paying into court all or part of the amount of the award which NIOC’s s. 67 application sought to challenge. The court considered CPR rules 52.6 and 52.18, and the decision in AIC Limited v Federal Airports Authority of Nigeria [2022] 1 WLR 3223. It also made reference to recent restatements by Commercial Court judges of the need for arguments as to consequential matters to be kept within proper bounds. The Court considered that the finality principle was not outweighed by other factors and refused Crescent’s application to add conditions to the grant of permission.

The full judgment ([2023] EWHC 300 (Comm)) can be found on the National Archives website (external link).

CRO v REC and RUI (Foxton J)

Civil Procedure – Freezing Order – Legal Expenses Exception

The Claimant obtained a worldwide freezing order against the defendant on the standard Commercial Court form which provided that the Defendant could spent a reasonable amount on legal expenses “but before spending any money the Respondent must tell the Applicant’s legal representatives where the money is to come from”. The Claimant argued that the effect of the proviso was that the Defendant was also obliged to inform the Claimant of the amount it was spending on legal expenses, pointing to the decision to that effect of Neuberger J in on Cantor Index Ltd v Lister [2002] CP Rep25. Held: the Court declined to follow Cantor, on the basis that the decision was wrong (i) in concluding that the standard wording for the legal expenses exception applied to legal expenses of any kind, rather than legal expenses relating to the subject-matter of the litigation; and (ii) on the basis of the conclusion, wrongly determined that it was implicit in the standard wording that the Defendant was obliged to inform the Claimant of the amount of legal expenses it was incurring from time-to-time. The standard wording imposed no such obligation.

The full judgment ([2023] EWHC189 (Comm)) can be found on the National Archives website (external link).

Milson and Standish v Gerald Martin Smith and the Estate of Phyllis Smith (Foxton J)

Equitable Proprietary Interest – Burden of Proof – Rochefoucauld v Boustead

The Defendants argued that the estate was the beneficial owner of real property, legal title in which was vested in Dr Smith, or alternatively that Dr Smith could deny the existence of such a beneficial interest under the principle in Rochefoucauld v Boustead. Held: the holder of the legal estate was presumed to be also the sole beneficial owner, with the burden on those contending otherwise to establish that position: Stack v Dowden [2007] 2 AC 432. The principle in Rochefoucauld v Boustead [1897] 1 Ch 196 relied upon by the Defendants had no application, because this was not a case in which the putative beneficiary had transferred the legal title to the putative trustee on the basis of an oral agreement that the property will be held on trust when received: see Archibald & Archibald v Alexander[2020] EWHC 2161 (Ch), [32]. Reviewing the evidence, the Judge held that there was no evidence of any agreement, arrangement or understanding that the estate would have a beneficial interest in the property, and no evidence that the estate had acted to its detriment on any such agreement, arrangement or understanding.

The full judgment ([2023] EWHC 189 (Comm)) can be found on the National Archives website (external link).

Olympic Council of Asia v Novans Jets Ltd (Foxton J)

Committal for Contempt of Court; Body Corporates; Limited Liability Partnerships; Aiding and Abetting Breach of the Order

The Claimants applied to commit Mr Gringuz for contempt of court as the de facto director of a Limited Liability Partnership which had not complied with the disclosure obligations imposed by (a) an order for directions and (b) two worldwide freezing orders. Mr Gringuz contended that (i) the effect of the October 2020 amendments to CPR 81 was that it was no longer possible to commit the director of a body corporate for the corporation’s breach of a court order; (ii) that jurisdiction did not apply to a limited liability partnership in any event; (iii) the lack of the penal notice on the directions order and the terms of the penal notice on the freezing order precluded the committal application against Mr Gringuz. Held: (i) the jurisdiction to commit directors for breaches of court orders of companies had not been removed by the October 2020 amendments to the CPR ; (ii) that jurisdiction applied to LLPs in respect of persons who performed the same function for the LLP as a director or officer did for a company; (iii) the directions order was not a coercive order and could not be enforced by committal; (iv) the terms of the penal notices on the two injunctions were inconsistent with committal of Mr Gringuz for the LLP’s breach and (v) Mr Gringuz could not be liable for aiding and abetting the LLP’s breach merely by reason of his failure, without any positive to act, to procure the LLP’s compliance.

The full judgment ([2023] EWHC 276 (Comm)) can be found on the National Archives website (external link).

Lonestar Communications Corporation LLC v Orange Liberia Inc (Foxton J)

Dedicated Denial of Service Attacks – Claim for Damages under Liberian Tort Law – Compensatory and Exemplary Damages

The Claimant contended that certain individuals (the Individual Defendants) had organised Dedicated Denial of Service (DDOS) Attacks on its mobile data network in Liberia and that the Fifth Defendant (Orange Liberia) was vicarious liable for those attacks. It brought tort claims under Liberian law on various grounds. Orange Liberia denied that the Claimant had pleaded a cause of action known to Liberian law against the Individual Defendants and also that there could be vicarious liability for intentional wrongdoing under Liberian law or that any of the Individual Defendants were its employees for the purpose of the doctrine of vicarious liability. It also challenged the Claimant’s claim to compensatory and exemplary damages.

Held: Liberian law did not recognise the torts of lawful and unlawful means conspiracy or unlawful interference which the Claimant had pleaded, but the Claimant’s claim of action of damages for wrong was known to Liberian law and was made out. There was vicarious liability for intentional wrongful conduct under Liberian law and Orange Liberia was vicariously liable for the wrongful acts of two of the Individual Defendants. However, the Claimant’s claim for compensatory damages was seriously overstated, and exemplary damages were only appropriate against one of the Individual Defendants.

The full judgment ([2023] EWHC 421 (Comm)) can be found on the National Archives website (external link).

Re Gerald Martin Smith (Foxton J)

Adjournment Application; Applications for Transfer of Assets and to Set Aside Service; Summary Judgment

The Harcus Parker Parties applied for an order requiring SMA to transfer the legal estate in shares to new trustees, to give effect to prior orders of the Court. Minardi sought to intervene in and adjourn the application, contending that it had claims against SMA which it should be able to enforce against the shares, and seeking an adjournment to allow its new legal team to prepare to argue its case. BKV alleged that it was authorised to represent SMA, and it had challenged the jurisdiction of the court to hear the application for a transfer order. It sought to adjourn the hearing of its jurisdiction challenge. The Harcus Parker Parties sought summary judgment of the transfer order application.

Held: (1) Minardi had had more than sufficient time to prepare for the hearing, and the adjournment application was refused. (2) The claims which Minardi sought to advance were an abuse of process, being a collateral attack on the court’s prior findings, and issues which should have been raised by Minardi at an earlier trial. (3) BKV had had sufficient time to prepare for the jurisdiction application and its application on SMA’s behalf for an adjournment was refused. (4) The jurisdiction challenge brought by BKV in SMA’s name was without merit and was dismissed. (5) The Harcus Parker Parties were entitled to summary judgment on the transfer orders.

The full judgment ([2023] EWHC 428 (Comm)) can be found on the National Archives website (external link).

Sui Northern Gas Pipelines Ltd v National Power Parks Management Co (Pte) Ltd (Mr Justice Bright)

Arbitration s 68 challenge – gas supply contract – complaint Tribunal decided issue not before it – true effect of Award

SNGPL provides gas to NPPMCL, a power-supplier in Pakistan.  Disputes under the supply contract were referred to arbitration.  The Tribunal’s award was in favour of NPPMCL.  SNGPL challenged the Award on the basis that it decided that SNGPL’s monthly invoices each had to be issued before the end of the relevant month, which (a) had not been argued and (b) was unworkable.

The court concluded that the true effect of the Tribunal’s award is not that each invoice must be issued before the end of the relevant month.  SNGPL’s challenge therefore failed.

The full judgment [2023] EWHC 316 (Comm) can be found on the National Archives website (external link).

Millbrook Healthcare Bidco Ltd v Paul Croll & ors (Mr Justice Bright)

Purchase of business – breach of warranty claims – incorrect entries in financial information – quantum – sellers’ counterclaim for failure to give notice of TP claims

C purchased a healthcare equipment business from Ds, who gave standard warranties as to the accuracy of accounting information.  C claimed that a contract with important NHS group customers had been varied, and that the debt owed by another NHS group had been waived, rendering the accounts materially inaccurate.

The court upheld both complaints, finding that there was a material effect on maintainable EBITDA and on the sums given in the accounts for debtors.  Quantum fell to be assessed on the warranty true/warranty false basis: Ageas (UK) v Kwik-Fit (GB) [2014] Bus LR 1228.  The difference in maintainable EBITDA would have reduced the purchase price, on the warranty false scenario, but a reduction in the historic debts would not.  The claim succeeded, the counterclaim failed.

The full judgment [2023] EWHC 290 (Comm) can be found on the National Archives website (external link).

Evrythng Ltd v Gilbert-Rolfe (Henshaw J)

Non-competition covenant – interaction between two sets of covenants – enforceability – interim relief

The Claimant applied for interim injunctive relief requiring the Defendant to comply with a non-competition covenant in his contract of employment, due to last until 13 June 2023, pending a speedy trial. The Claimant had discovered that the Defendant was working for a competitor, in alleged breach of the covenant. The court declined to grant injunctive relief, having regard to (a) a significant doubt whether the covenant had been superseded by other covenants (in a tripartite agreement between the parties and the Claimant’s new owner) on which the Claimant did not attempt to rely, (b) the fact that pending a speedy trial the risks to the Claimant could be mitigated by undertakings the Claimant had already given and was willing to reinforce and (c) the significant risk that injunctive relief would leave the Defendant, whose financial position appeared precarious, with no employment and limited prospect of employment. The court transferred the case to the general King’s Bench Division list and gave directions for a speedy trial.

The full judgment [2023] EWHC 7 (Comm) can be found on the National Archives website (external link).

Peregrine Aviation Bravo Ltd and others v Laudamotion GmbH and Ryanair Holdings PLC (Henshaw J)

Aircraft leasing – right to terminate in event of threat to suspend payment of debts – right to claim damages based on ground not relied on when purporting to terminate – obligation to take delivery of aircraft – mitigation of damages

During the early stages of the Covid pandemic in spring 2020, the First Defendant airline and its parent company (Ryanair) sent communications to the claimant leasing companies stating that they would not be able to accept delivery of four aircraft pursuant to their respective lease agreements. The claimants purported on 1 May 2020 to tender the first aircraft for delivery on 7 May 2020, which Laudamotion declined to accept on various grounds, then purported to exercise contractual termination rights in all four leases (relying on cross-default provisions in the other three leases) and to claim the net present value of the rentals due under them. 

The court held the tender of the first aircraft to be invalid because (a) the relevant claimant did not comply with the provisions for consultation and giving of reasonable notice of delivery dates, and (b) (as Laudamotion sufficiently pointed out on the date of tender) the aircraft was not in deliverable condition since it lacked an Export Certificate of Airworthiness and other prescribed documents. The court also rejected the Claimants’ alternative claim, arising from the preceding correspondence, based on a contractual right to terminate if Laudamotion threatened to suspend payment of its debts, on the grounds that (a) the relevant provision, which formed part of a clause concerning insolvency-like events, required a clear and unequivocal threat to suspend payments of the lessee’s debts in general (or at least a category of them), indicative of financial difficulties carrying a risk of insolvency or other curtailment of creditors’ rights, and where the debts are existing (not merely contingent); and (b) not having relied on this ground when purporting to terminate, the claimants could not found a monetary claim on it (following, in this regard, the approach of Andrew Baker J in Phones 4U Ltd (in Administration) v EE Ltd [2018] EWHC 49 (Comm) and distinguishing Boston Deep Sea Fishing v Ansell (1888) 39 Ch D 352). 

The full judgment [2023] EWHC 48 (Comm) can be found on the National Archives website (external link).

Fastfreight Pte Ltd v Bulk Trident Shipping Ltd (Henshaw J)

Arbitration Act s.69 – appeal on point of law – charterparty – offhire provision – clause precluding deduction from hire without shipowners’ consent

The vessel “Anna Dorothea” was trip time chartered for a voyage from India to China under amended New York Produce Exchange terms. After three crew members had positive lateral flow Covid tests on 1 May 2021, the charterers contended that the vessel was off hire from 4 May 2021 to 28 August 2021 and made no hire payments during that period. The charterparty contained a standard provision for the vessel to be off hire in the event of loss of time from deficiency and/or default of officers or crew or by any other similar cause preventing the full working of the vessel; and a clause providing for it to be off hire if any crew member had a highly infectious or contagious disease and the vessel had to deviate, was quarantined or was barred from entering any port. 

However, the payment clause included an amendment stating that, notwithstanding the terms and provisions of the charterparty, no deductions from hire could be made for any reason under the off hire provision or otherwise (whether for alleged off-hire underperformance, overconsumption or any other cause whatsoever) without the express written agreement of Owners.

Two LMAA arbitrators held that the amendment operated as a ‘pay now, argue later’ clause, requiring the charterers to pay hire in full notwithstanding an alleged off hire event, subject to their right to establish a right to recover it subsequent (if necessary by arbitration). They distinguished the decision in Tradax Export v Dorada Compania Naviera (The “Lutetian”) [1982] 2 Lloyd’s Rep. 140 on the basis that the charterparty there had no equivalent to the amended wording in the present case. 

The court held that the arbitrators were correct. The amendment was evidently intended to act as a qualification to the off hire provisions as a whole, requiring full payment of hire (in order to protect the owners’ cash flow), absent owners’ agreement (which could be withheld only in the event of a genuine dispute), without prejudice to the ultimate outcome of any arbitration.

The full judgment [2023] EWHC 105 (Comm) can be found on the National Archives website (external link).

ADM v Grain House and others (Cockerill J)

Contempt-  Committal – Sentencing

The Claimants who had obtained an arbitration award in their favour sought to commit the First Defendant and the Second and Third Defendants (directors of the First Defendant) for contempt of court in relation to alleged breaches of a post award disclosure order and WFO. The Court found the contempts established to the criminal standard, albeit that some were minor and either purged or technical. Having allowed the Defendants a week to prepare submissions on mitigation it refused a late application to adjourn the sentencing hearing and sentenced the Second Defendant to 12 months imprisonment, with an indication that purging of the contempts would enable the sentence to be reduced and suspended.  

The full judgment [2023] EWHC 135 (Comm) can be found on the National Archives website (external link).

PJSC v Mints and others (Cockerill J)

Sanctions – civil procedure – stay of proceedings

The Defendants sought to stay proceedings on the basis that any or all of the entry of any judgment, the paying of favourable or adverse costs orders, the satisfaction of an order for security for costs or the payment of damages under a cross undertaking in damages would be unlawful under Sanctions and Money Act 2018 and Russia (Sanctions) (EU Exit) Regulations 2019. Further it was contended that the Second Claimant was subject to the sanctions regime because it was “owned or controlled” by President Putin or the governor of the Central Bank of Russia (both of whom are sanctioned). The Court concluded that on the true construction of the Act and Regulations or by reason of the presumption of legality, judgment can lawfully be entered and is not licensable, while the remainder of the acts were licensable. Further it concluded that Article 7(4) of the Regulations did not extent to control by virtue of political office (or employment).

The full judgment [2023] EWHC 118 (Comm) can be found on the National Archives website (external link).

Verlox International Ltd v Antoshin (Foxton J)

Application by Cs for permission to bring committal application against three Respondents pursuant to CPR 81.3(5)(b) and by Respondents to strike out committal application against a fourth Respondent; whether merits and public interests tests for permission satisfied; approach to be taken to committal application concerning the deployment of a forged document when this did not fall within CPR 81.3(5)(b)

The applicants sought permission to issue committal applications against three Respondents and were pursuing a further committal application (“the Fourth Application”) in relation to an allegedly forged document against a fourth respondent (“R4”) which it was said did not fall within CPR 81.3(5)(b). The committal applications related to evidence deployed for the Defendants’ challenge to the Court’s jurisdiction and for security for the costs of that application. However, the court had set aside the order for service out without either application being heard and without the evidence which was the subject of the committal applications being considered. The court held:

1. C1 (a company) could not be represented other than by a solicitor, having regard to the complex and serious nature of the allegations made, and the prior ruling in the case refusing its director, C2, permission to appear on its behalf.
2. C2 had no sufficient interest to be an appropriate person to pursue the committal applications and had shown himself to be an unsuitable guardian of the public interest which was at stake in the committal applications.
3. Permission under CPR 81.3(5)(b) would be refused for the first three applications. The committal applications were wholly without merit and there was no public interest which justified allowing the committal applications to proceed.
4. The Fourth Application fell within the spirit of CPR 81.3(5)(b). If R4 had exhibited a forged document to his own witness statement, and verified it by a statement of truth, permission would have been needed to bring a committal application. Where, as here, R4 was alleged to have permitted his solicitor to serve a witness statement confirming the authenticity of the document to the best of R4’s belief, it would not be appropriate to permit the committal application to proceed if permission would have been refused under CPR 81.3(5)(b) had R4 himself been the deponent who exhibited the document
5. It could not be said at this early stage that the allegations of forgery in the Fourth Application were without merit. However, resolving the Fourth Application would essentially involve trying the substantive dispute which the court had held should never have been brought in this jurisdiction. Given that factor, and the fact that the document in issue had never been deployed at a hearing, it was not in the public interest to permit the application to be pursued. Accordingly, the Fourth Application was stayed.

The full judgment [2023] EWHC 86 (Comm) can be found on the National Archives website (external link).

Gravelor Shipping Ltd v GTKL Asia M5 Limited (Foxton J)

Application for summary judgment for specific performance in respect of obligation to sell vessels under two bareboat charterparties; whether right to purchase had arisen; whether Cs could seek specific performance on basis most favourable to Ds while reserving right to contend more favourable contractual regime applied; whether clause of charterparties obliged Ds to nominate account for payment to which EU sanctions regime would apply and payment in Euros rather than USD; whether order for specific performance justified

C was party to two bareboat charterparties with Ds which gave two rights of purchase, one where the charterparties were terminated for C’s breach (“the Breach Basis”) and another, on more favourable terms, where there was no breach (“the Non-Breach Basis”). Ds became subject to US and EU sanctions after the Russian invasion of Ukraine leading C to stop paying hire under the charterparties. Ds terminated the charterparties for breach. C argued that it was entitled to an order for specific performance on terms which assumed in Ds’ favour that the Breach Basis applied. Held:

1. With one exception, Ds’ arguments that the conditions for C’s right to purchase on the Breach or Non-Breach Basis had yet to arise were rejected. In particular Ds’ argument that they could terminate the Charterparties and then wait to decide whether to demand payment of the amounts due in respect of any transfer was wrong – the Charterparties were drafted on the basis that Ds were obliged to make such a demand, and in any event, Ds had done so. However, C was obliged to provide a qualifying bankruptcy opinion before any obligation to transfer the Vessels arose.
2. The issue of whether C could obtain summary judgment on the Breach Basis, paying the amounts due, while at the same time reserving the right to contend that it was entitled to transfer on the Non-Breach Basis, at a lower cost, raised potentially complex issued which were not the subject of argument. However, it was appropriate for the court to make final declarations as to the conclusions it had been able to reach to a summary judgment standard. If the effect of those findings was that C was entitled to delivery of the Vessels on either the Breach Basis or the Non-Breach Basis, the court would order an interim mandatory injunction requiring delivery of the Vessels on payment of the Breach Basis amount, while reserving C’s entitlement to challenge whether that amount, or some lesser amount, is due.
3. Having regard to the language, purpose and context of clause 8.10 of the Charterparties, Ds were obliged to nominate a bank account into which C’s banks could lawfully make a payment under the EU sanctions. That was the case even if, as Ds’ contended, they were no longer subject to sanctions as a matter of law due to a (disputed) change of beneficial ownership, because the uncertainty surrounding the bona fides of the purported change had the practical effect of preventing any paying bank from paying into account which would not be subject to the EU sanctions regime.
4. The court was satisfied to the relevant standard that an order for specific performance was appropriate. The issue for the court was whether, at the time specific performance was sought, damages were an adequate remedy. That test was satisfied when there was very serious doubt as to Ds’ ability to pay any damages, and C’s ability to enforce any award of damages given the effect of damages. It was not appropriate to refuse specific performance at the summary judgment stage simply to allow for the possibility that matters might change by the time of the final hearing.

The full judgment [2023] EWHC 131 (Comm) can be found on the National Archives website (external link).

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