Cruz City 1 Mauritius Holdings v Unitech Ltd & Ors

The court may appoint receivers by way of equitable execution over foreign assets where it has personal jurisdiction over the judgment debtor and there is a real prospect that the appointment will assist enforcement. The remedy is discretionary. The central consideration is whether it is just and convenient, assessed in the contemporary context. Normal execution need not be impossible, but there must be some practical or legal hindrance. The court need not determine hypothetical questions of foreign law. It may make ancillary orders against the judgment debtor to render the receivership effective, subject to safeguards where compliance may create a real risk of foreign criminal liability. The remedy is not fruitless merely because the foreign court may not recognise the English order.

Cruz City sought receivers by way of equitable execution over shareholdings held by Unitech and Burley. The application arose from London arbitration awards for almost US$300 million, which the defendants had not paid. Enforcement proceedings had been commenced in India, Cyprus and the Isle of Man, but the defendants resisted enforcement and had failed to comply promptly with English disclosure and freezing orders.

The proposed receivership concerned shareholdings in four companies in India, Cyprus and the Isle of Man. The issues were whether the English court had jurisdiction to appoint receivers over those foreign assets, whether ordinary enforcement abroad was sufficiently difficult, whether the order would be fruitless or disproportionate, and whether ancillary orders could properly be made.

1. Receivership order made. It was just and convenient to appoint receivers over Unitech’s shareholdings in URRL, UOL, Nuwell and Technosolid, with ancillary orders necessary to make the appointment effective.
2. The power under Senior Courts Act 1981, section 37, operates in personam. It may therefore extend to foreign assets where the court has personal jurisdiction over the defendant. Non-recognition by the foreign court is not a bar, since contempt proceedings in England remain available.
3. The jurisdiction requires some hindrance or difficulty in using ordinary execution, but there are no rigid requirements as to its nature. Here, the opaque chains of ownership, lack of information, likely procedural delays, and determined resistance to enforcement created substantial practical difficulty. There was a real prospect that receivers would assist recovery, so the remedy would not be fruitless.
4. Receivers may exercise the judgment debtor’s rights as shareholder, including selling shares, exercising voting powers, appointing directors, or seeking a winding-up and distribution. They cannot take assets belonging to subsidiaries merely because the debtor owns their shares.
5. Ancillary orders requiring the defendants not to impede the receivers and, where appropriate, to appoint them as agents were permissible. If a concrete step might expose the defendants to foreign criminal or regulatory liability, the receivers should obtain advice and the parties may apply for directions. A general blanket proviso was unnecessary.
6. The alleged need for Reserve Bank permission to pay the award did not prevent the receivership. It was unproved and, in any event, the order over the shares did not itself require an infringement of Indian law. The expense of the remedy was proportionate to the debt and the defendants’ obstructive conduct.