Asia Islamic Trade Finance Fund Ltd v Drum Risk Management Ltd & Ors

A contempt penalty punishes defiance of the court’s order and may coerce future compliance. The court must consider whether imprisonment is necessary, the shortest appropriate term and whether suspension is suitable, subject to the two-year maximum for a single occasion.

Deliberate and continuing non-compliance with disclosure obligations in a freezing order is an attack on the administration of justice. It will usually justify immediate and substantial imprisonment. A lengthy sentence may encourage compliance, but must retain a proper punitive and deterrent element for past defiance.

The claimant had obtained a freezing order requiring disclosure of assets. On 4 December 2015, Popplewell J found the second, third and fourth defendants in contempt for non-compliance with those disclosure obligations and adjourned sentence.

At the sentencing hearing, Mr Doğan did not attend, arrange representation or make submissions. Documents lodged late by his Turkish lawyers had not been served on the claimant and did not provide the required affidavit or a full account of the relevant assets. The issue was the appropriate sentence for deliberate and continuing contempt of the freezing order.

1. Sentence imposed. The court imposed 18 months’ imprisonment on Mr Doğan for the contempts found proved on 4 December 2015.

2. A penalty for contempt punishes defiance of the court’s order and can also coerce future compliance. The court must consider whether imprisonment is necessary, its shortest necessary duration and whether it can be suspended. Breach of a freezing order’s disclosure provisions ordinarily warrants immediate imprisonment of a substantial term because it attacks the administration of justice.

3. For a continuing breach, a long sentence, potentially up to the two-year maximum, may encourage cooperation. The court may indicate the part that might be remitted after prompt and full compliance, but any indication is not binding on a future court. The exercise must balance an incentive to comply against the public interest in punishment and deterrence.

4. The contempts were deliberate, serious and continuing. Mr Doğan understood the disclosure requirements, had legal advice, acted neither under pressure nor because of others, gave no proper compliance, and caused prejudice by enabling the defendants to conceal and move assets.

5. The sentence was imposed without regard to the late-filed material. Mr Doğan could apply under the Civil Procedure Rules to vary or remit it on properly served evidence of full or partial compliance. If he complied fully and promptly, the court expected that a significant proportion, perhaps a majority, of the sentence would be remitted.

This was a first-instance sentencing judgment. It followed the court’s finding on 4 December 2015 that the second, third and fourth defendants were in contempt of the disclosure provisions of the freezing order.