Societe Generale S.A v Saad Trading, Contracting and Financial Services Company & Anor

An appeal court may impose payment or security conditions only where there is a compelling reason, while retaining discretion over the form and amount of the order. Relevant factors include enforcement difficulty, available resources, financial disclosure, third-party funding, whether the order would stifle a meritorious appeal, and continued disobedience of unpaid orders. A judgment-debt condition should generally respect separate legal personality and should not indirectly require an owner or third party to fund enforcement. Exceptional circumstances may justify considering that relationship. Non-EU residence must not itself be discriminatory, although enforcement difficulty may be a legitimate factor. Non-compliance ordinarily results in a stay, not automatic dismissal.

The respondent sought orders against the appellants in a pending appeal from an order of Teare J in the Commercial Court. The underlying judgment required payment of approximately US$49 million plus interest and costs under a facility letter and guarantee. The respondent applied for conditions requiring payment, security for costs, and directions enabling the appeal court to determine alternative restitution claims raised by respondent’s notice.

The central issues were whether there were compelling reasons for conditions, whether security would be just and would stifle the appeals, how the appellants’ assets and third-party funding should be assessed, and whether the restitution issues should be determined before or after the substantive appeals.

1. Conditions on appeal. Lord Justice Aikens, with Lord Justice Rimer agreeing, held that rule 52.9 of the Civil Procedure Rules 1998 required a compelling reason before conditions could be imposed, but left the court with a discretion whether to impose a condition and what form it should take. The factors identified in Hammond Suddards, solicitors v Agrichem International Holdings Limited [2001] EWCA Civ 2065 were relevant.
2. The court considered enforcement difficulty, the appellants’ resources and access to resources, the absence of convincing evidence that they could not pay, inadequate disclosure, the position of owners and backers, the risk of stifling a meritorious appeal, and continued disobedience of existing orders. An appellant asserting stifling had to provide full and frank evidence of its means. Neither appellant had done so.
3. Difficulty enforcing an English judgment in Saudi Arabia was a legitimate factor, but the court could not discriminate solely because an appellant was resident outside the European Union. The factor had to be assessed with all the circumstances. The evidence showed that the Saudi Royal Order froze assets in Saudi Arabia, but did not affect assets elsewhere. The appellants’ evidence concerning their overseas assets was unsatisfactory.
4. A judgment-debt condition should generally not be used to require an owner, director or other third party to fund payment by a separate corporate or partnership appellant. That could short-circuit enforcement and disregard separate legal personality. There was no absolute bar, however. The present case was exceptional because Mr Al-Sanea was Saad’s general partner, owned 90 per cent of its share capital, had given a personal guarantee, and his appeal was substantially dependent on Saad’s case.
5. The appellants were therefore ordered jointly and severally to pay US$5 million into court within 42 days. The whole judgment debt and costs were not required. Failure to comply would result in a stay, not automatic dismissal, although the respondent could later apply to dismiss the appeals. Security for costs was also ordered jointly and severally in the sum of £90,000 within 42 days, with non-compliance likewise resulting in a stay.
6. The court declined to determine the restitution issue immediately. The substantive appeals should first be decided. If they were dismissed, the restitution issue would not arise; if they were allowed, the respondent could seek a further decision on whether the respondent’s notice should be heard.

• Court of Appeal (Civil Division) — determined applications for conditions on the pending appeals, security for costs, and directions concerning the respondent’s restitution claims.
• Queen’s Bench Division, Commercial Court — Teare J entered judgment against the appellants on the facility letter and guarantee and made an order for payment and interim costs. The citation of that decision was not stated in the judgment.