Masri v Consolidated Contractors (Oil and Gas) Company Sal

A court order carrying penal consequences must speak for itself. It is construed according to the ordinary and natural meaning of its words, read in the context of the order as a whole. Earlier drafts and other extrinsic material are inadmissible as aids to construction.

Any ambiguity must be resolved in favour of a person exposed to imprisonment for disobedience. An express exception should not be narrowed by implication where that would enlarge potential liability. If the natural meaning produces unintended consequences, the remedy is an application to vary the order, rather than a strained construction.

A receiver was appointed over oil revenues payable to the appellant’s judgment debtor. Paragraph 7 of the receivership order required the debtor to provide information about the revenues and written confirmation of the receiver’s rights. Paragraph 15 provided that, in respect of assets outside England and Wales, the debtor and its directors were not required to disobey an order of a court of competent jurisdiction relating to those assets.

A Lebanese court prohibited the debtor from supplying information in execution of the English orders. David Steel J declared that paragraph 15 excused compliance with the relevant information and confirmation requirements while the Lebanese order remained effective. The judgment creditor appealed. The debtor sought permission to cross-appeal against a further declaration that the receiver’s proposed confirmation letter was reasonable.

The central issue was whether paragraph 15 applied only to an order made by a court in the jurisdiction where the assets were situated.

1. Appeal dismissed. The receivership order was an order of the court, not a commercial agreement. Because it carried a penal notice, it had to speak for itself and make clear to affected persons what conduct could expose them to contempt. Earlier drafts and material describing the parties’ thinking were inadmissible as aids to construction.

2. The words of paragraph 15 had to receive their ordinary and natural meaning in the context of the order as a whole. Any ambiguity had to be resolved in favour of persons liable to imprisonment for disobedience. It was therefore inappropriate to imply a limitation under which paragraph 15 applied only to an order made by a foreign court in the jurisdiction where the relevant assets were situated. Paragraph 14 contained an express territorial limitation of that kind, while paragraph 15 did not.

3. The receiver was appointed to receive oil revenues situated outside England and Wales. The debtor’s positive obligations in relation to those assets included providing information about them and confirming the receiver’s entitlement to receive them. The phrase “in relation to such assets” was broad enough to encompass the Lebanese order prohibiting disclosure of information about the oil revenues. Paragraph 15 therefore qualified the debtor’s obligations under paragraph 7(a).

4. The position under paragraph 7(b) was less clear because copies of confirmations sent to purchasers might themselves disclose information about the revenues. There was no expert evidence establishing the meaning and effect of the Lebanese order. Its scope was for the Lebanese court, which was shortly to consider related applications. The English court should not attempt to anticipate that determination.

5. If the natural meaning of a receivership order creates unintended consequences, the proper course is to seek a variation. A receiver may apply for an order tailored to overcome an unforeseen obstacle; the court should not adopt a strained construction of the existing order.

6. Permission to cross-appeal against the declaration concerning the receiver’s proposed letter was granted conditionally. The outstanding judgment sum of US$63,365,957.40 had to be paid into court within 28 days of the Court of Appeal’s order. Rimer and Mummery LJJ agreed with Sullivan LJ.

1. Court of Appeal (Civil Division): By [2009] EWCA Civ 36, dismissed the judgment creditor’s appeal from David Steel J’s construction of paragraph 15. It granted the judgment debtor conditional permission to cross-appeal.
2. High Court, Queen’s Bench Division: David Steel J, by an order dated 12 June 2008, declared that paragraph 15 excused the debtor from complying with specified information and confirmation requirements while the Lebanese court’s prohibition remained effective. He also declared that, subject to that prohibition, the receiver’s proposed confirmation letter was reasonable.
3. Earlier enforcement proceedings: Gloster J made the receivership order on 20 December 2007 in [2007] EWHC 3010 (Comm). An appeal against her post-judgment orders was dismissed in [2008] EWCA Civ 303.