Motorola Credit Corporation v Uzan & Ors

Under Civil Jurisdiction and Judgments Act 1982, section 25, an English court considering interim relief in support of foreign proceedings must first ask whether the relief would be available in domestic substantive proceedings. It must then decide whether granting it would be inexpedient.

Expediency requires close regard to comity, conflict with foreign courts, the defendant’s individual connection with England, and whether an order against a resisting foreign defendant can be enforced. A co-defendant’s English residence or assets do not supply the required connection. Orders remain binding until set aside, even if an appellate court later holds that interim relief should not have been granted.

Motorola alleged in New York proceedings that members of the Uzan family had fraudulently procured major financing for a Turkish telecommunications company and had diminished Motorola’s security. In England, orders were made under section 25 of the Civil Jurisdiction and Judgments Act 1982 freezing the defendants’ worldwide assets and requiring disclosure and cross-examination.

Steel J refused applications to discharge the worldwide orders. He treated the defendants collectively when assessing their English connection. He also made cross-examination orders, and later committal orders followed deliberate non-compliance.

The Court of Appeal considered whether the contemnors should be heard, whether worldwide relief was inexpedient for defendants without a meaningful English connection, and the consequences for cross-examination and contempt orders.

1. The appeals were allowed in part. The worldwide freezing and cross-examination orders against D2 and D3 were discharged. The corresponding orders against D1 and D4 were upheld. The findings of contempt against D2 and D3 remained valid, but their prison sentences were set aside pending further submissions as to penalty.

2. The court would hear the defendants despite their contempt. Refusing a contemnor access to the court is exceptional. It was especially inappropriate to prevent appeals directed to the validity and propriety of the freezing orders which had generated the alleged contempts. The discretionary approach in X Ltd v Morgan Grampian [1991] AC 1 supported that conclusion.

3. Section 25 required a two-stage inquiry. The court first asks whether the relief would have been justified had the substantive proceedings been brought in England. It then asks whether the absence of ordinary jurisdiction makes the relief inexpedient. A foreign court’s inability to grant worldwide relief does not itself make English relief inexpedient, provided that the English order properly supports, rather than displaces, the foreign proceedings.

4. In deciding expediency, the court must consider possible interference with the primary court, the policy of the primary jurisdiction, risks of conflicting or overlapping foreign orders, potential jurisdictional conflict, and enforceability. Each defendant’s position must be assessed separately. D2 and D3 were Turkish residents with no assets or meaningful connection in England. They had indicated that they would not obey English orders, and no effective sanction was available. The Turkish anti-suit orders also demonstrated the real risk of conflict and disharmony. It was therefore inexpedient to continue worldwide relief against them.

5. D1’s substantial English assets gave the court effective means of enforcement. D4 was resident in England and had substantial English assets. The court therefore declined to interfere with the discretionary decision to retain worldwide relief against them. As to D4, the English court had to make its own assessment of a good arguable case. A reasoned foreign interlocutory decision was an important starting point, but did not prevent that independent exercise. The evidence supported the judge’s conclusion.

6. Cross-examination about assets is governed by whether it is just and convenient. Disclosure of assets exceeding the monetary limit of a freezing order does not preclude cross-examination where the disclosed assets are inaccessible and fuller disclosure may make the order effective.

7. The court had jurisdiction under section 25 and the service rules even though relief against D2 and D3 was later held inexpedient. Those orders therefore had to be obeyed until set aside. Their contempt findings stood. The court rejected the contention that an order later found erroneous was thereby made without jurisdiction for Convention-rights purposes.

• Court of Appeal (Civil Division) [2003] EWCA Civ 752: allowed D2 and D3’s appeals against the worldwide freezing and cross-examination orders; maintained their contempt findings but set aside their imprisonment orders. Dismissed D1 and D4’s substantive appeals.

• High Court, Queen’s Bench Division (Steel J): on 22 July 2002, refused to discharge domestic and worldwide freezing orders. On 18 October 2002, ordered D2 and D3 to attend for cross-examination.

• High Court: Gross J committed D1 and D4 for contempt on 20 December 2002, and D2 and D3 on 31 January 2003, following failures to attend cross-examination.