Dar Al Arkan Real Estate Development Co & Anor v Refai & Ors

CPR 81.4(3) applies to a foreign director or officer outside the jurisdiction where the company is properly subject to the English court’s jurisdiction and is alleged to have disobeyed its order or undertaking. The presumption against extra-territoriality is displaced by the court’s disciplinary interest in enforcing its orders, the public interest in their observance, and the need to hold to account those through whom a company acts.

A committal application against a non-party director commences proceedings. Its application notice is therefore a claim form for CPR Part 6. A real issue may arise between the applicant, the company and the director for the necessary-or-proper-party gateway.

Dar Al Arkan Real Estate Development Co and Bank Alkhair BSC, foreign companies, brought English proceedings and obtained without-notice injunctive relief. The High Court later discharged that relief after finding breaches of a preservation undertaking and an order concerning hard drives.

Kroll Associates UK Ltd then sought committal orders against the companies and imprisonment of their Saudi-resident director, Sheikh Abdullatif Al Shalash, under CPR 81.4(3). Andrew Smith J held that the provision could reach him and authorised service out under CPR 6.36 and Practice Direction 6B, paragraph 3.1(3): [2013] EWHC 4112 (QB).

The director appealed. Kroll cross-appealed on Article 22(5) of the Brussels I Regulation. The central questions were the extra-territorial scope of CPR 81.4(3) and whether the committal application satisfied the service-out gateway.

1. Appeal dismissed. CPR 81.4(3) could apply to a foreign director outside the jurisdiction. It supplies a means by which the court may exercise disciplinary powers over a corporate contemnor already subject to the court’s jurisdiction. A company acts through its officers, and the rule prevents an officer responsible for its non-compliance from avoiding the provision merely by remaining abroad.

2. The presumption against extra-territoriality applied in principle but was displaced on the proper construction of CPR Part 81. Civil contempt serves both private rights and the public interest in maintaining the authority of court orders. The court distinguished Masri v Consolidated Contractors International (UK) Ltd and others (No. 4), [2009] UKHL 43, because CPR Part 71 concerned obtaining information for private enforcement, whereas committal for a company’s breach of an order directly concerned the court’s disciplinary authority.

3. The potential difficulty of enforcing an order while the director remained abroad did not prevent that construction. The relevant companies had invoked the English court’s jurisdiction and wished to continue litigating here. The court also rejected the submission that a private litigant’s interest in the committal application deprived the proceedings of their public character. A case-specific misuse of the process might affect discretion, but did not negate the rule’s extra-territorial reach.

4. For a director to be liable under CPR 81.4(3), it must be shown that the director knew of and was responsible for the company’s breach. The appeal did not determine whether that threshold would ultimately be met.

5. The committal application against a non-party was an application to commence proceedings. Its application notice was therefore a claim form within CPR 6.2(c). There was a real issue concerning the companies’ alleged contempt and the director’s responsibility for it, so the relevant conditions of CPR 6.36 and Practice Direction 6B, paragraph 3.1(3), were met.

6. The cross-appeal concerning Article 22(5) of the Brussels I Regulation was not decided, because the appeal failed on the CPR grounds. Beatson LJ stated, expressly obiter, that the first-instance analysis treating Choudhary v Bhatter, [2009] EWCA Civ 1176, as per incuriam European authority appeared compelling.

• Court of Appeal (Civil Division): The director’s appeal was dismissed. The cross-appeal concerning Article 22(5) of the Brussels I Regulation was not determined.
• High Court of Justice, Queen’s Bench Division: Andrew Smith J held that CPR 81.4(3) covered the foreign director and that service out was authorised under CPR 6.36 and Practice Direction 6B, paragraph 3.1(3): [2013] EWHC 4112 (QB).