The Royal Bank of Scotland Plc v FAL Oil Company Ltd& Ors

Under section 25 of the Civil Jurisdiction and Judgments Act 1982, the court may grant worldwide freezing and disclosure orders in support of substantive proceedings abroad. The court must first ask whether the evidence would justify equivalent relief if the substantive proceedings were in England. It must then decide whether the foreign nature of the proceedings makes relief inexpedient.

That second inquiry requires careful attention to comity, overlap with the primary court, conflicting orders, the territorial location of assets and the practical enforceability of the order. Relief may remain expedient despite the absence of assets in England where contractual obligations, English governing law, jurisdiction clauses, English accounts and commercial operations establish a real connection with England.

The Bank financed vessels owned by two defendant companies and obtained guarantees from two related companies. The loan and guarantee documents were governed by English law, contained English jurisdiction provisions and required payments through London bank accounts.

After defaults, the Bank commenced substantive proceedings and obtained interim attachment orders in Sharjah. Those orders had not located the vessels or assets and UAE law did not provide equivalent worldwide freezing or disclosure relief. The Bank therefore sought continuation of English worldwide freezing orders and worldwide asset-disclosure orders under section 25 of the Civil Jurisdiction and Judgments Act 1982. The defendants sought discharge and strike-out. The central issue was whether granting the English relief was inexpedient because the substantive proceedings and most known assets were abroad.

1. Relief justified on the merits. The Bank had a good arguable case against all four defendants. The evidence established a real risk of dissipation, including apparent asset transfers, concealment of vessel locations and refusal to provide meaningful financial information. The facts would therefore have justified worldwide freezing and disclosure orders had the substantive proceedings been brought in England.
2. Section 25 approach. The court adopted the two-stage approach in Refco Inc v Eastern Trading Co [1999] 1 Lloyd’s Rep 159: first, determine whether the facts warrant the relief; secondly, consider whether the absence of jurisdiction apart from section 25 makes relief inexpedient.
3. Expediency and connecting links. The court applied the guidance in Crédit Suisse Fides Trust SA v Cuoghi [1998] QB 818, Motorola Credit Corporation v Uzan (No 2) [2004] 1 WLR 113 and Mobil Cerro Negro Ltd v Petroleos de Venezuela SA [2008] 1 Lloyd’s Rep 684. The court had to consider interference with the primary proceedings, the policy and powers of the foreign court, the risk of conflicting orders, jurisdictional conflict and enforceability.
4. None of those considerations made relief inexpedient. The English orders would assist, rather than interfere with, the Sharjah proceedings. UAE law provided no equivalent worldwide relief, and subsequent attachment in the jurisdictions where assets were found would assist enforcement of any Sharjah judgment.
5. The defendants had substantial connections with England. The facilities were provided by a London-based bank, executed in London, governed by English law and supported by English jurisdiction and service provisions. The defendants operated accounts in England and had held themselves out as having an English operational presence. Those connections remained relevant even though the accounts were presently overdrawn and the English subsidiaries’ assets could not be treated as the defendants’ assets.
6. The court rejected the contention that the orders would be futile because the defendants’ directors might stop visiting England. It was entitled to expect compliance, particularly given the defendants’ continuing commercial dealings and access to London capital markets. The freezing and disclosure orders were continued; precise wording was left for further argument.