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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Integral Petroleum SA v Petrogat FZE & Anor [2018] EWHC 2686 (Comm) (17 October 2018) URL: https://www.bailii.org/ew/cases/EWHC/Comm/2018/2686.html Cite as: [2019] 1 WLR 574, [2018] WLR(D) 650, [2018] EWHC 2686 (Comm) |
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BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Rolls Building London, EC4A 1NL |
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B e f o r e :
____________________
INTEGRAL PETROLEUM S.A |
Claimant |
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- and - |
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(1) ![]() ![]() (2) SAN TRADE GMBH |
Defendants |
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-and- |
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(1) MR KLAUS SONNENBERG (2) MS MAHDIEH SANCHOULI (3) MR HOSSEINALI SANCHOULI (4) MR KANYBEK BEISENOV (5) MS NADIA LOBIS |
Third Parties |
____________________
Stephen Cogley QC and Edward Ho (instructed by Stephenson Harwood LLP) for the Defendants and Third Parties
Hearing dates: 18 and 19 September 2018
____________________
Crown Copyright ©
Mrs Justice Moulder :
i) to set aside service of the Committal Application;
ii) to set aside the order of 1 May 2018 granting permission to serve the Committal Application by email; and
iii) a declaration that the English court has no jurisdiction to try the Committal Application.
Background
Evidence
Issues
i) Does Article 24(5) of Recast Brussels I Regulation no. 1215/2012 ("Brussels 1 Recast") have the effect that the claimant did not require permission to serve the Committal Application out of the jurisdiction?
ii) If Article 24(5) does not apply, is it open to the court to grant permission for service out of the jurisdiction under CPR PD6B 3.1 (3) or (10)?
Does Article 24(5) of Brussels I Recast have the effect that the claimant did not require permission to serve the Committal Application out of the jurisdiction?
"The following courts of a Member State shall have exclusive jurisdiction, regardless of the domicile of the parties:
…
(5) in proceedings concerned with the enforcement of judgments, the courts of the Member State in which the judgment has been or is to be enforced"
i) Article 24 (5) does not apply to committal proceedings as they are not "proceedings concerned with the enforcement of judgments";
ii) Article 24(5) only applies where the defendant is domiciled in a Member State and apart from Mr Sonnenberg, the Third Parties are not domiciled in a Member State.
iii) Article 24(5) only applies to civil and not criminal contempt proceedings and since the second, third and fifth Third Parties are not directors of the defendants, such proceedings against those Third Parties cannot be civil contempt proceedings.
I. Does Article 24 (5) apply to committal proceedings?
"any judgment given by a court or tribunal of a Member State, whatever the judgment may be called, including a decree, order, decision or writ of execution, as well as a decision on the determination of costs or expenses by an officer of the court". [Emphasis added]
"… given the width of the wording of Article 2(a), I would have struggled to see why the CPR 71 order was not a "judgment" falling within the meaning of that wording and would have been minded to agree with Teare J's reasoning, at [23] – [24]."
"aim to settle a dispute relating to the "use of force or constraint, or the dispossession of movables and immovables in order to obtain the physical implementation of judgments and measures."
Accordingly the European Court held that the action paulienne did not fall within the scope of Article 16(5) (the equivalent provision in the 1968 Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters of Article 24).
"should not be interpreted in a sense wider than required by its objective because it has the effect of preventing the parties from choosing the forum which they could otherwise do and, in certain cases, of bringing them before a court which is not the court of the domicile of either of them."
"the main reason for the exclusive jurisdiction of the courts of the place in which the judgment is to be enforced is that it is for the courts of the Contracting State in which enforcement is sought alone to apply the rules relating to the actions in that state of the authorities responsible for enforcement."
"disputes which may be caused by the use of force or constraint or the dispossession of movables and immovables in order to obtain the physical implementation of judgments and measures."
"it seems to me clear from the Reichert case that Article 22(5) is concerned with actual enforcement and not with steps which may lead to enforcement."
"As to whether Article 22(5) applies to committal proceedings, Mr Bear's submissions were powerful, but it was stated in Reichner v Dresdner Bank AG… that "the essential purpose of the exclusive jurisdiction of the courts of the place in which the judgment has been or is to be enforced is that it is only for the courts of the Member State in whose territory enforcement is sought to apply the rules concerning the action on that territory of the authorities responsible for enforcement."
"the point that committal proceedings are not concerned with the "enforcement" of judgments was not raised before Teare J. My immediate reaction is that this submission appears improbable, sitting uneasily with the nature and wording of CPR 81.4 as well as the observations in Dar"
II. Does Article 24(5) only apply where the defendant is domiciled in a Member State?
"in the absence of authority which compels a different conclusion, I would hold that it is unnecessary-and wrong-to construe the words "regardless of domicile" in Article 22 as having any application to a case where the person to be sued is not domiciled in a Member State."
"The following courts shall have exclusive jurisdiction [regardless of domicile]
"… 5 in proceedings concerned with the enforcement of judgments, the courts of the Member State in which the judgment has been or is to be enforced"
The words in square brackets "regardless of domicile" were proposed to be deleted.
"The following courts of a Member State shall have exclusive jurisdiction, regardless of the domicile of the parties".
Discussion
"although the Czech Republic was not party to the Brussels Convention at the date on which the [proceedings were brought] and the defendant in the main proceedings was not therefore domiciled in a Contracting State at that date, such a circumstance does not prevent application of Article 16 of the Brussels Convention, as expressly stated in the first subparagraph of Article 4."
"my instinct would have been that Art. 24(5) means what it says and applied regardless of Mr Vik's domicile. I would also be much influenced by the consideration that this Court in Dar, at [59] - [64], albeit obiter, concluded that the Choudhary decision was per incuriam. In all those circumstances, my inclination would have been to follow the views expressed in Dar and to give effect to the wording of the current Art. 24 (5)."
These remarks were obiter but were expressed having had "full arguments advanced" ([73] of the judgment). I do not therefore accept that his views can be dismissed as merely following the reasoning in Dar Al Arkan.
"in my judgment the amended wording of Article 24(5) together with the reasoning of Andrew Smith J… and the approval of that reasoning by the Court of Appeal in the Dar Al Arkan case… makes it clear that the exclusive jurisdiction provisions in the Article apply "regardless of the domicile of the parties." Thus the fact that Mr Vik is not domiciled in a Member State is an irrelevant consideration."
III Are the second third and fifth Third Parties to be regarded as directors of the defendants under CPR 81.4?
(a) required by a judgment or order to do an act does not do it within the time fixed by the judgment or order; or(b) disobeys a judgment or order not to do an act,
then, subject to the Debtors Acts 1869 and 1878 and to the provisions of these Rules, the judgment or order may be enforced by an order for committal.
…
(3) If the person referred to in paragraph (1) is a company or other corporation, the committal order may be made against any director or other officer of that company or corporation." [Emphasis added]
i) "Director" in CPR 81 means de jure not de facto;
ii) If the term extends to de facto or shadow directors, the Third Parties (other than Mr Sonnenberg and Mr Beisenov who were de jure directors) were not de facto or shadow directors and were not officers of the company.
"the company's primary rules of attribution together with the general principles of agency, vicarious liability….are usually sufficient to enable one to determine its rights and obligations. In exceptional cases however, they will not provide an answer.…
"… There will be many cases in which neither of these solutions is satisfactory; in which the court considers that the law was intended to apply to companies and that, although it excludes ordinary vicarious liability, insistence on the primary rules of attribution would in practice defeat that intention. In such a case, the court must fashion a special rule of attribution for the particular substantive rule. This is always a matter of interpretation; given that it was intended to apply to a company, how is it intended to apply? Whose act (or knowledge, or state of mind) was for this purpose intended to count as the act etc. of the company? One finds the answer to this question by applying the usual canons of interpretation, taking into account the language of the rule (if it is a statute) and its content and policy." [Emphasis added]
"In relation to each of the individual defendants, in order to establish a contempt of court the claimant needs to prove, first, a breach of the court's order; second, that at the time of the relevant breach the defendant was aware of the court's order; and third, that the defendant is responsible for the breach - which is established by showing that the defendant was at the relevant time either a director as a matter of law or a de facto director of the company which was the subject of the order. Fourth, it is necessary to show that the committal proceedings have been served on the relevant defendant so that it has had due notice of this application and has had the opportunity to appear or to be represented before the court today…" [Emphasis added]
"[6] I start with the second defendant, Mr Prem Garg. There is ample evidence to show that he is, if not the controlling mind, then the person with primary control over the first defendant company. He was formerly a director of the company. He resigned from that office on 11 May 2015, but there is clear evidence to show that he still acts de facto, not only as a director, but as the managing director of the company. In particular, he is held out on the company's own website as the owner of the Shri Lal Mahal Group and as its managing director. He has also been referred to as such in various reports in Indian newspapers which I have been shown, and he continued to be shown as a director notwithstanding his purported resignation in a report obtained in July of last year based on corporate documents which were available on the official website of the Ministry of Corporate Affairs in India.
[7] In addition, there is evidence given by Mr Espir, who is charged with responsibility for seeking to recover the monies owing to the claimant, of a conversation with Mr Prem Garg which took place on 10 March 2016… It was clear from the tenor of the conversation that Mr Prem Garg was the person chiefly responsible for the affairs of the first defendant." [Emphasis added]
"…The overriding objective is to enable the court to deal with cases justly. It includes enforcing compliance with rules, practice directions and orders (CPR 1.1(1) and (2)(f) ). I consider that the combination of that part of the objective, the need to ensure that the courts have the ability to control proceedings which are properly brought in this jurisdiction, and the anomalies that would result if the provision designed to provide such control for a corporation in contempt does not apply to foreign directors of that company which are responsible for its contempt, provide the underlying reason of principle for reading CPR 81.4(3) as including foreign directors out of the jurisdiction. [Emphasis added]
"In my judgment, the nature of committal proceedings is very different from the nature of the power of the court under Part 71 to obtain information from judgment debtors. The rationales for the two procedures are also very different. Mr Béar's submissions underplay the public interest element underlying the modern law of civil contempt. The twofold character of civil contempt in modern law is well-established. As well as the authorities relied on by the judge (see [15(ii)] above), in Jennison v Baker [1972] 2 QB 52 at 61 and 64, Salmon LJ stated that "the public at large no less than the individual litigant have an interest and a very real interest in justice being effectively administered". He also said, of the purpose of enforcing an injunction, that it is to vindicate "(a) the rights of plaintiffs (especially the plaintiff in the action) and (b) the authority of the court. The two objects are in my view inextricably intermixed." Similarly, in JSC BTA Bank v Solodchenko (No. 2) [2011] EWCA Civ 1241, reported at [2012] 1 WLR 350, which concerned non-compliance with a court order, Jackson LJ stated (at [45]) that punishment for non-compliance with a court order "upholds the authority of the court" and has "everything to do with the public interest that court orders should be obeyed". It is thus clear that it is for the public good that the order of the court should not be disregarded." [Emphasis added]
"the principle of Rule 175 (2) has been increasingly accepted by the authorities. The cases at least establish that the law of the place of incorporation determines the composition and powers of the various organs of the constitution, whether directors have been validly appointed, the nature and extent of the duties owed by the directors to the corporation, who are the corporation's officials authorised to act on its behalf, the extent of an individual members liability for the debts or engagement of the corporation…"
"a de facto director for this purpose means someone who has assumed the status and function of the director so as to make himself responsible as if he were one."
It is not a question to be determined by the laws of Germany or the UAE and as the matter is in any event not determinative, I do not propose to consider the alternative position if I were wrong on that and in particular the expert evidence as to the position under those laws.
Is it open to the court to grant permission under PD6B 3.1 (3) or (10)?
"3.1 The claimant may serve a claim form out of the jurisdiction with the permission of the court under rule 6.36 where –
…
(3) A claim is made against a person ('the defendant') on whom the claim form has been or will be served (otherwise than in reliance on this paragraph) and –
(a) there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and(b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim.
…
(10) A claim is made to enforce any judgment or arbitral award."
Gateway (10)
Gateway (3)
"there is clearly a real issue between the second defendant and the claimant companies as to whether the companies fall within the scope of CPR 81.4 (1). Under the rule of attribution in CPR 81.4 (3) there is clearly a real issue as to whether the jurisdiction to seek an order for the committal of the director exist. The cause of action against the director asserts a factual situation, that is the claimant companies contumacious breaches of the preservation, undertaking and delivery order and the director's responsibility for the same."