Masri v Consolidated Contractors International Company SAL & Anor (includes Addendum)

An English court with personal jurisdiction over a judgment debtor may appoint a receiver by way of equitable execution over foreign property and future receipts from a defined asset. The order acts in personam; it neither transfers title nor creates a proprietary charge. International comity is preserved where foreign third parties are protected and the receiver may sue abroad only if his title is recognised.

Ancillary receivership, freezing and asset-disclosure orders do not constitute actual enforcement for the purposes of Article 22(5) of the Brussels I Regulation. A court seised of the merits may grant protective ancillary relief. A post-judgment freezing order may be granted where there is a real risk that the judgment will remain unsatisfied.

Munib Masri obtained Commercial Court judgments against the Lebanese companies CCIC and CCOG for breach of an agreement concerning a 10% interest in revenues from a Yemeni oil concession. Liability was determined in his favour in [2006] EWHC 1931 (Comm), and quantum was determined in [2007] EWHC 468 (Comm).

The judgment debtors did not pay. Gloster J consequently appointed a receiver to receive CCOG's oil-sale revenues, granted a freezing order over its concession interest and related oil sales, and ordered CCIC and CCOG to disclose assets. CCOG appealed the receivership order and, with CCIC, challenged the related orders.

The central questions were whether the orders impermissibly concerned foreign assets, whether the Brussels I Regulation deprived the English court of jurisdiction, and whether equitable execution could extend to future debts.

1. Appeal dismissed unanimously. Lawrence Collins LJ, with whom Lord Neuberger and Ward LJJ agreed, held that the receivership, freezing and asset-disclosure orders were valid and discretionary relief had properly been granted.

2. A receiver by way of equitable execution acts in personam against the judgment debtor. The appointment does not vest property in the receiver, create an equitable charge, or itself compel a foreign third-party debtor to pay. It could therefore extend to CCOG's foreign oil revenues without conflicting with the international-comity principles in Société Eram Shipping Co Ltd v Cie Internationale de Navigation [2004] 1 AC 260. The debtor had submitted to the English jurisdiction and was ordered to comply with an English judgment. The modified Babanaft provisos protected foreign third parties and local law, while the receiver could sue abroad only where his title was accepted or recognised.

3. The court rejected the jurisdictional challenges under the Brussels I Regulation. CCOG had not established a Greek domicile. In any event, a court having jurisdiction over the merits may grant ancillary provisional or protective measures. Article 22(5) concerns actual execution by force, constraint or distraint in the state of enforcement. These orders might assist future enforcement but were not themselves enforcement proceedings.

4. Gloster J had made no error of principle in exercising her discretion. Post-judgment freezing relief is available where there is a real risk that the judgment will remain unsatisfied. The carefully limited orders legitimately assisted recovery from debtors who had resisted payment and enforcement.

5. Under section 37(1) of the Supreme Court Act 1981, a receiver by way of equitable execution may be appointed over future receipts from a defined asset. The jurisdiction is not confined to property presently reachable by legal execution, nor frozen by pre-1873 practice. The special rule against attaching a person's future earnings did not prevent relief over future commercial debts.

• Court of Appeal (Civil Division): Dismissed CCOG's appeal against the receivership order and dismissed the challenges to the freezing and asset-disclosure orders. Permission to appeal was granted for the latter two orders.
• High Court, Commercial Court (Gloster J): On 20 December 2007, appointed a receiver over CCOG's oil revenues, granted a freezing order, and required CCIC and CCOG to provide affidavits of assets.
• High Court, Commercial Court: Found CCIC and CCOG liable to Mr Masri for breach of contract: [2006] EWHC 1931 (Comm) . It subsequently determined quantum: [2007] EWHC 468 (Comm) .