CMA- CGM Marseille v Petro Broker International

Money paid into court as the price of an injunction should not automatically be returned when the injunction is discharged. The court must consider whether the money remains security for sums payable in the proceedings, including an enforceable judgment debt. CPR 3.1(6A) provides the starting point: the court should generally retain the fund so that the successful party can enforce against it. The court must also distinguish between security for an unresolved claim and payment of an existing, enforceable judgment. Where arbitral awards have become enforceable as judgments, and no competing creditor interests arise, the fund may properly be paid to the judgment creditor in satisfaction of the judgment.

Petro Broker International obtained two London arbitration awards against CMA-CGM Marseille concerning bunker supplies and contractual interest. CMA obtained a without-notice freezing injunction preventing enforcement against guarantees securing the awards, on condition that approximately US$4.5 million was paid into court.

After the injunction was discharged because the risk of dissipation was no longer pursued, Hamblen J ordered the money returned to CMA. Petroval appealed. By then, leave had been given under s.66(1) of the Arbitration Act 1996, judgment had been entered in terms of the awards under s.66(2), and CMA’s challenges under ss.68 and 69 had failed. The central issue was whether discharge of the injunction required repayment of the fund, or whether it could be retained and used to enforce Petroval’s judgments.

1. Appeal allowed. The order requiring repayment of the US$4.5 million paid into court was set aside. The court invited written submissions on the substituted order and indicated that the fund should be paid to Petroval, with accrued interest, in partial satisfaction of its enforceable judgments.
2. The court had jurisdiction to grant the freezing injunction. The arbitrators could decline to make an interim award, but they had no power to impose a freezing order on the fruits of enforcement. Accordingly, the court’s jurisdiction arose under s.44(5) of the Arbitration Act 1996.
3. The court’s view that the injunction should arguably not have been granted was irrelevant to the repayment discretion. The appropriate remedy for an injunction which ought not to have been granted was the undertaking in damages. The court also found no improper conduct by CMA in obtaining the order.
4. The payment into court was the quid pro quo for preventing Petroval from drawing down guarantees which had been provided as immediately available security for the awards. Although that rationale ceased to apply once the guarantees were available again, it did not follow that the money had to be returned automatically.
5. CPR 3.1(6A) supplied the starting point. Read with the court’s power to impose, vary or revoke conditions under CPR 3.1(3)(a) and CPR 3.1(7), it indicated a predisposition to keep money paid into court available as a secured fund for sums payable by one party to another in connection with the litigation.
6. Petroval was not seeking additional security for unresolved claims. Its awards had become enforceable judgments, subject only to the short period for an application to set aside the order granting leave. CMA had no remaining identified basis for resisting enforcement, and no competing creditor interests required consideration. Petroval could therefore enforce against the fund without being required to pursue further proceedings in the Netherlands.

• Court of Appeal (Civil Division): [2011] EWCA Civ 461. Appeal allowed and the order for repayment of the money paid into court was set aside.
• Queen’s Bench Division, Commercial Court: Hamblen J ordered that the US$4.5 million paid into court be returned to CMA after the freezing injunction was no longer pursued.
• Arbitration proceedings: Two awards dated 28 January 2010 and 18 August 2010 were made in Petroval’s favour. Leave to challenge under s.69 of the Arbitration Act 1996 was refused, the s.68 application was dismissed, and leave was later granted under s.66(1) to enforce the awards as judgments.