Masri v Consolidated Contractors International Company Sal & Anor

The jurisdiction to appoint a receiver by way of equitable execution under Supreme Court Act 1981, section 37(1), is governed by justice and convenience and is not confined by rigid requirements that ordinary execution be impossible. Practical difficulty in enforcing an English judgment against overseas assets may justify relief. The court must consider comity, international obligations, contractual rights and third-party interests, but should not be deterred where the judgment debtor can prevent the anticipated interference. Receivership may extend to future receivables and may involve limited monitoring of business operations. Post-judgment freezing relief is available where there is a real risk that the judgment will remain unsatisfied, provided it serves the legitimate purpose of assisting enforcement.

The claimant was a judgment creditor owed more than US$63 million by two companies in the Consolidated Contractors Company group. Earlier judgments had established liability and quantum, and a receiver had been appointed over revenues from the Masila oil concession. The Court of Appeal upheld that order in [2008] EWCA Civ 303, but the defendants’ conduct had made the receivership ineffective.

The claimant sought a further receiver over receivables arising from 38 international construction projects, together with continuation of freezing orders over bank accounts and shares. The defendants relied on the alleged difficulty of enforcement abroad, contractual and third-party interests, Lebanese law and an order of the Lebanese court. The principal issues were whether the court had jurisdiction to grant the receivership, whether its terms were permissible, and whether the freezing orders should continue or be set aside.

The applications were substantially granted. The court ordered the appointment of a receiver over the receivables from the 25 construction projects on which CCIC was the sole contractor. The Qatar Shell project was excluded because it was already subject to an interim receivership order in Bermuda. The freezing orders were continued, subject to specified amendments.

1. Receivership jurisdiction. Section 37(1) gives the court power to appoint a receiver wherever it is just and convenient. The authorities did not impose a rigid requirement that ordinary execution be impossible. Enforcement of an English judgment overseas, particularly outside the European Community, was practically difficult in this case and justified equitable execution.
2. Scope and safeguards. The court had to respect international obligations and avoid unwarranted interference with third-party rights. Those considerations did not prevent relief where the defendants could avoid the anticipated inconvenience by co-operating. The order was confined initially to the more straightforward sole-contractor projects and could be extended in the light of experience. It preserved presently existing contractual obligations and allowed applications for directions.
3. Business operations. A receiver’s role was essentially to collect receivables, with monitoring of the use of funds where necessary. In modern conditions, the fact that the function might in some respects resemble management was not an impediment. The receiver was expected to ensure that the projects continued without interruption.
4. Foreign law and comity. The alleged risks under Article 579 of the Lebanese Criminal Code and Article 197 of the Lebanese Code of Commerce were insufficiently established. The court adopted a flexible approach to alleged foreign-law incrimination and was not satisfied that the Lebanese judgment prevented compliance with the proposed order. A saving clause protected assets located outside England and Wales from conflict with orders of the competent local court.
5. Freezing orders. After judgment, relief was more readily available where there was a real risk that the judgment would remain unsatisfied. The orders served the legitimate purpose of assisting enforcement and were not oppressive merely because they encouraged payment. They could be discharged later if maintained for an illegitimate purpose. The ordinary-course-of-business exception was appropriate for receivables but not for bank-account balances in the post-judgment context.
6. The challenge to the manner in which the bank-account and share freezing orders had been obtained failed. The ex parte material did not compromise the inter partes hearing, and no special costs order was justified.

The judgment describes earlier proceedings in the same litigation, including liability and quantum judgments by Gloster J, and an earlier receivership order upheld by the Court of Appeal in [2008] EWCA Civ 303. Those decisions formed the background to the present first-instance applications.