Masri v Consolidated Contractors International Company SAL & Anor

A court with substantive jurisdiction over a defendant may grant interim protective relief, including a worldwide freezing order or receivership, even where the relevant assets or receivables are abroad. Such relief is ordinarily in personam, rather than enforcement against the assets themselves, and does not fall within the exclusive jurisdiction applicable to execution proceedings merely because it follows judgment.

A post-judgment freezing order may be granted where there is a real risk of dissipation. A receiver may be appointed over future debts or receivables where it is just and convenient, and contractual restrictions on assignment do not necessarily prevent that appointment. Ancillary orders requiring the judgment debtor to provide information and co-operate with the receiver may also be made.

The claimant had obtained liability and quantum judgments against the defendants concerning his contractual entitlement to a share of oil-concession revenues. The defendants had failed to pay sums ordered by the court and had commenced proceedings in Yemen, Lebanon and Greece which sought to obstruct or limit enforcement of the English judgments.

The claimant applied for a limited freezing order over the defendants’ interest in the concession, the appointment of a receiver over oil-sale receivables, an affidavit of means, accounts and disclosure, and an interim payment. The principal issues were whether the court had jurisdiction to grant relief concerning foreign assets and receivables, whether the relief would interfere with foreign enforcement jurisdiction, whether there was a sufficient risk of dissipation, and whether contractual restrictions on assignment prevented receivership.

1. Freezing order. The court had jurisdiction under section 37(1) of the Supreme Court Act 1981 and CPR Part 25.1 to grant a worldwide freezing order in support of substantive proceedings over which it had jurisdiction. Under Van Uden Maritime BV v Deco-Line [1998] ECR I-7091 and Mietz v Intership Yachting Sneek BV [1999] ECR I-2277, a court with substantive jurisdiction could order provisional or protective measures without the additional connecting-link requirement applicable where jurisdiction depended solely on Article 31.

2. The fact that the order was sought after judgment did not alter the analysis. A freezing order bound the defendant personally and did not attach, charge or otherwise operate directly against foreign assets. It was therefore an interim protective measure, not a measure of execution within Article 22(5) of the Regulation. The reasoning in Babanaft International Co SA v Bassatne [1990] Ch 13, endorsed in Derby & Co Ltd v Weldon (Nos 3 and 4) [1990] 1 Ch 65, remained applicable.

3. The court distinguished a freezing order from a third-party debt order. The latter operated in rem against the debt and could expose a foreign third party to double jeopardy. The former restrained the judgment debtor and did not interfere with the foreign court’s control over enforcement. Société Eram Shipping Co Ltd v Cie Internationale de Navigation [2004] 1 AC 260, Kuwait Oil Tanker Co SAK v Qabazard [2004] 1 AC 300 and Turner v Grovit [2004] ECR I-1935 did not require a different result.

4. A fresh jurisdictional inquiry was unnecessary. An application for a freezing injunction was ancillary interim relief in existing substantive proceedings, not a new cause of action. The defendants had submitted to the court’s jurisdiction and had participated fully in the proceedings.

5. There was a real and substantial risk of dissipation. The defendants’ deliberate non-payment, attempts to resist enforcement and transfer of the account receiving oil revenues justified relief. Post-judgment circumstances could make the court more ready to grant a freezing order than it would have been before judgment.

6. Receivership. The court had jurisdiction under section 37(1) of the Supreme Court Act 1981 and CPR Part 69 to appoint a receiver over oil-sale receivables situated abroad. The appointment was substantially in personam and, on the proposed terms, did not itself create an equitable charge or attach the debts. It did not infringe Article 22(5), provided appropriate safeguards protected foreign third parties.

7. A receiver could be appointed over future debts or receivables where it was just and convenient. The court had regard to the amount claimed, the likely recovery and the costs of appointment under CPR Part 69 Practice Direction 5. The contractual restrictions on assignment in the concession agreements did not apply to the defendants’ rights to receive payment for oil already sold. In any event, a contractual restriction on assignment did not prevent an in-personam receivership order over the proceeds.

8. The court could require the defendants and their officers, in their capacities as company officers, to provide information and co-operate with the receiver. Such orders were ancillary to substantive proceedings and did not constitute the taking of evidence in another Member State under the Evidence Regulation. An order requiring confirmation of the receiver’s authority was not an order to pay the judgment debt and did not contravene section 11 of the Administration of Justice Act 1970.

9. The freezing order, receivership order, affidavit of means, accounts and disclosure orders, and interim payment of US$2,612,715.79 were granted. The claimant was not required to give a cross-undertaking in damages for the freezing order, but was required to give one for the receivership relief.

The judgment records earlier liability and quantum judgments in the same litigation, including [2006] EWHC 1931 (Comm) and [2007] EWHC 468 (Comm). It also records appellate orders concerning jurisdiction, payment conditions and the anti-suit injunction. Those decisions formed part of the procedural background to the present applications.