Continental Transfert Technique Ltd v Government of Nigeria & Ors

A third party debt order under CPR Part 72 may only attach a debt actually owed to the judgment debtor. It cannot be used to freeze a separate corporation’s bank accounts merely because the judgment creditor alleges that the corporation is an organ of the judgment debtor state or that the state has a beneficial interest in the funds.

The court followed AIG Capital Partners Inc v Kazakhstan and applied the same reasoning to ordinary business accounts held in the corporation’s name. The separate legal personality of a state corporation raises a distinct issue for charging orders. That issue may require fuller evidence and should not ordinarily be finally determined on an interlocutory application where there is no immediate prejudice.

The claimant obtained permission to enforce a substantial arbitral award and judgment against the first four defendants, connected with the Federal Government of Nigeria. It later obtained, without notice to the fifth defendant, interim charging orders over property and shares held by the Nigerian National Petroleum Corporation and an interim third party debt order freezing NNPC’s London bank accounts.

NNPC was not a party to the arbitration or the judgment. It applied to discharge the orders, arguing that its separate corporate personality meant that its bank debts were not debts owed to the judgment debtors and that its assets could not be used to satisfy their judgment debt. The claimant argued that NNPC was an organ of the Nigerian state. The central issues were whether CPR Part 72 permitted the third party debt order and whether the charging-order issue should be determined summarily.

1. Third party debt order discharged. CPR r. 72.2 permits a final third party debt order only for a debt due or accruing due from the third party to the judgment debtor. The bank accounts were held in NNPC’s name, and the contractual debtor-creditor relationship was between the banks and NNPC.
2. The fact that the claimant alleged that the Nigerian state had a beneficial interest in the funds, or that NNPC was an organ of the state, did not create a debt owed by the banks to the judgment debtors. The reasoning in AIG Capital Partners Inc v Kazakhstan was indistinguishable and was followed. The court also relied on Hirschorn v Evans, which confirmed that a garnishee order could not be used to attach an account in another person’s name merely because the judgment debtor might have an interest in it.
3. The apparently inconsistent result in Kensington International Ltd v Republic of Congo did not justify a different conclusion. The relevant point under CPR r. 72.2 had not been argued in that case, whereas the wording of the rule was plain and the procedure was mechanistic.
4. Charging orders not discharged at this stage. Section 101 of the Arbitration Act 1996 was not a bar to enforcement against assets which the claimant could establish were assets of the state. Norsk Hydro v State Property Fund of the Ukraine concerned permission to enforce an award, not the later enforcement of an existing judgment.
5. The court was sceptical of the proposition that English law permits the separate personality of a foreign corporation to be ignored merely because it is an organ of a state, absent sham or fraud. Authorities concerning the Congo supported the claimant’s position, while J.H. Rayner (Mincing Lane) Ltd v DTI, Salomon v A. Salomon and Co. Ltd and Kazakhstan v Istil supported respecting separate corporate personality. The issue was of general importance and had not been fully argued.
6. The applications to make the interim charging orders final were therefore to continue in the usual way. The court left open whether a cross-undertaking in damages should be required and whether the status of NNPC should be determined as a preliminary legal issue or after fuller disclosure and evidence.