Belletti & Ors v Morici & Ors

The Chabra jurisdiction is substantive in character and can be exercised only after the court has established territorial jurisdiction over the third party. Where the substantive proceedings are abroad, the relevant basis for serving a foreign third party is section 25 of the Civil Jurisdiction and Judgments Act 1982 and the applicable Civil Procedure Rules provision. The court must be satisfied both that granting relief is expedient and that there is a real connecting link between the subject matter of the measures and England. The connection of the principal defendant with England does not automatically establish a connection with an accessory third party. A foreign defendant’s lack of connection with England, combined with the absence of any practical means of enforcing the order, will ordinarily make relief inexpedient. Inadvertent material non-disclosure does not automatically require discharge; the court retains a discretion governed by the interests of justice.

The claimants had obtained a worldwide freezing order in England against the first defendant in support of civil proceedings pursued within criminal proceedings in Italy. Documents obtained in Monaco suggested that the fifth and sixth defendants, the first defendant’s parents, had assisted in transferring or dissipating assets subject to that order.

Andrew Smith J granted ancillary freezing, disclosure and delivery-up relief against the parents and permitted service of the amended claim form out of the jurisdiction. The parents, resident in Italy and having no apparent connection with England, applied to set aside those orders on the grounds of lack of territorial jurisdiction and material non-disclosure. The central issue was whether an English court could invoke its Chabra jurisdiction against foreign third parties in support of foreign substantive proceedings.

1. The application was allowed. The orders of Andrew Smith J dated 8 May 2009, including permission to serve the amended claim form out of the jurisdiction, were set aside in their entirety.
2. The court distinguished between substantive jurisdiction and territorial jurisdiction. Section 37 of the Supreme Court Act 1981 could support a Chabra order against a third party only after territorial jurisdiction over that third party had been established. It did not itself authorise service out of the jurisdiction.
3. Because the substantive dispute was to be determined in Italy, paragraph 3.1(3) of Practice Direction B to CPR Part 6 could not be used. There was no substantive claim in England against the first defendant and no real issue between the claimants and that defendant for this court to try. Article 6 of the Judgments Regulation and paragraph 3.1(10) were likewise unavailable.
4. The only possible basis for extra-territorial jurisdiction was section 25 of the Civil Jurisdiction and Judgments Act 1982. Section 25(2) required consideration of expediency, and the European jurisprudence also required a real connecting link between the measures sought and England. Those requirements applied separately to the parents, notwithstanding the earlier relief against the first defendant.
5. Applying the factors identified in Motorola Credit Corporation v Uzan (No 2) [2004] 1 WLR 113, the complete absence of any connection between the parents and England, the location of the assets in Monaco, and the parents’ stated intention not to comply with the order made relief inexpedient. The English court had no practical sanction by which the order could be enforced against them.
6. The alleged non-disclosure was inadvertent. Although relevant authorities and the Italian criminal proceedings should have been disclosed, it would not have been in the interests of justice to discharge the orders on that ground alone. The court would have made the same orders had the matters been disclosed. The jurisdictional conclusion nevertheless required the orders to be set aside.

Not stated in the judgment.