Dadourian Group Int Inc v Simms & Ors

Permission to enforce a worldwide freezing order abroad is a flexible discretionary remedy. It should be granted where this is just and convenient to make the order effective, without oppressing the defendant or affected third parties.

The court must consider all relevant circumstances, balance competing interests and assess proportionality. There must be a real prospect that relevant assets exist in the foreign jurisdiction and evidence of a risk of dissipation. Permission should not normally enable the applicant to obtain relief superior to the English order. The application ordinarily requires notice, adequate evidence of foreign law and practice, and precise limits on the proposed foreign proceedings.

The respondents pursued claims for fraudulent misrepresentation and conspiracy following an unpaid arbitral award. They obtained worldwide freezing orders against Mr Simms and Mr and Mrs Dadourian, followed by a without-notice order permitting enforcement in Switzerland.

Laddie J refused the appellants’ applications to discharge that permission. He held that it was sufficient to show a real prospect that assets subject to the freezing order existed in Switzerland.

The appellants challenged that decision, principally contending that foreign enforcement should not be permitted where an alleged asset-holder could be brought before the English court. The appeals required the Court of Appeal to determine how the discretion to permit foreign enforcement of a worldwide freezing order should be exercised.

Appeals dismissed; permission to appeal against the costs order refused.

1. Permission to enforce a worldwide freezing order abroad is discretionary. It should be granted where this is just and convenient to make the order effective and is not oppressive to the parties or affected third parties. There is no rigid preference for resolving disputes about ownership through joinder and litigation in England.

2. The court stated eight Dadourian guidelines. It must consider all relevant circumstances and feasible options, including conditions limiting the type and number of foreign proceedings, extensions of costs undertakings, reporting obligations and liberty to apply. It must balance the applicant’s interest in effective protection against the cost, inconvenience and oppression imposed upon defendants and third parties.

3. Permission should not normally authorise relief superior to the English freezing order. A worldwide freezing order operates in personam and creates no proprietary or security interest. Accordingly, authority to obtain a foreign charge or priority requires good reason and evidence about the remedies available under foreign law.

4. The applicant’s evidence should identify, so far as reasonably possible, the proposed proceedings, parties and assets. It should explain the relevant foreign law and practice, available safeguards, likely duration and costs, and any risk of inconsistent judgments. The applicant must show a real prospect, rather than a likelihood or strong case, that assets within the order exist in the foreign jurisdiction. There must also be evidence of a risk of dissipation.

5. An application should normally be made on notice. Urgency and a real risk that assets will be removed may justify a without-notice order, but the respondent must receive the earliest practicable opportunity for reconsideration. Such an order must ordinarily be served immediately under rule 23.9 of the Civil Procedure Rules, unless service is lawfully deferred.

6. Laddie J had omitted relevant matters, including possible oppression of third parties, Swiss law and practice, and appropriate conditions. His exercise of discretion was therefore set aside. On re-exercising the discretion, however, the court found a real prospect that each appellant had assets in Switzerland and that enforcement was reasonable and proportionate. Although permission to obtain a foreign charge lacked evidential justification, no variation was necessary because the respondents no longer sought Swiss relief.

1. Court of Appeal (Civil Division): In [2006] EWCA Civ 399, set aside Laddie J’s exercise of discretion, re-exercised that discretion, upheld the permission to enforce the worldwide freezing order in Switzerland and dismissed the appeals. Permission to appeal against the costs order was refused.
2. High Court, Chancery Division (Laddie J): Refused to discharge Lewison J’s order permitting enforcement in Switzerland and ordered the appellants jointly and severally to pay the respondents’ costs.
3. High Court, Chancery Division (Lewison J): Without notice, permitted the respondents to enforce the worldwide freezing order in Switzerland and to seek similar or security-conferring relief there.
4. High Court, Chancery Division (Lindsay J and Lewison J): Granted and renewed worldwide freezing orders against the appellants.