Adm Rice Inc. v Corporacion Comercializadora De Granos Basicos SA

Committal for contempt requires proof beyond reasonable doubt that a court order was properly served, contained an effective penal notice, and was disobeyed. A director or officer may be committed where he or she had the ability to take reasonable steps to secure the company’s compliance and wilfully failed to do so. A blanket and contumacious refusal to comply with disclosure and asset-information orders may justify an immediate custodial sentence.

The claimant obtained six GAFTA arbitration awards against the first respondent, a Nicaraguan company. The court subsequently made freezing and information orders requiring the company to disclose worldwide assets and provide confirmations by affidavit. The orders were served electronically on the company and personally on the second and third respondents, who were alleged to be directors or officers.

The respondents failed to comply and did not attend or participate in the committal application. The issues were whether the orders had been properly served, whether the breaches were proved to the criminal standard, whether the individual respondents were responsible for the company’s non-compliance, and what sentence was appropriate.

1. Contempt established. The court found beyond reasonable doubt that the freezing and information orders had been served, that they contained penal notices, and that CORCOSA had not complied with them in any respect.
2. Responsibility of officers. The second respondent was the company’s executive president and a registered director. The third respondent, although no longer shown on the register, described herself as an executive director and authorised manager and had previously held a power of attorney. Each was an officer capable of taking reasonable steps to procure compliance.
3. The failure by the individual respondents to procure compliance was wilful and contumacious. The court was also satisfied beyond reasonable doubt that service of the committal proceedings out of the jurisdiction had been properly effected, the method having been retrospectively validated.
4. All respondents were therefore in contempt and liable to committal. The second and third respondents were each committed to prison for 18 months. No writ of sequestration was issued, although the claimant was given liberty to apply for one later. The respondents were ordered to pay the claimant’s costs on the indemnity basis, summarily assessed.