Eastern European Engineering Ltd v Vijay Construction (Proprietary) Ltd

When enforcing a foreign arbitration award, the English court may grant ancillary freezing relief even if the relief was not included in the arbitration claim form. The court nevertheless retains a discretion over the territorial scope of the order.

As a general guideline, an enforcement court should confine freezing relief to its own territory. A worldwide order requires exceptional circumstances, including a sufficiently strong connection with England or another compelling factor. The court must consider comity, the role of the primary court, and the risk of inconsistent orders. A domestic order requires solid evidence of a real risk that the judgment will go unsatisfied.

Eastern European Engineering Ltd sought a worldwide freezing order against Vijay Construction (Proprietary) Ltd in support of an unpaid ICC arbitration award seated in Paris. The award arose from construction contracts governed by Seychelles law and had been entered as an English judgment under section 101 of the Arbitration Act 1996.

The parties were Seychelles companies, and related enforcement, recognition and protective-relief proceedings had occurred in France, Seychelles and England. The central issues were whether the court had jurisdiction to grant ancillary worldwide relief and, if so, whether the discretion should be exercised in that way. Vijay accepted that domestic relief could be granted.

1. Jurisdiction. The court had jurisdiction under section 37 of the Senior Courts Act 1981 to grant ancillary freezing relief. Such relief did not need to be included in an arbitration claim form seeking recognition and enforcement under section 101 of the Arbitration Act 1996. The distinction between domestic and worldwide relief could not be justified by the form of the claim or the service-out provisions.
2. Worldwide relief. The discretion had to be exercised in light of the court’s limited role as an enforcement court. Following Rosseel N.V. v Oriental Shipping Ltd [1990] 1 WLR 1387 and S&T Bautrading v Bertil Nordling [1998] I.L.Pr. 151, the court should ordinarily stop short of orders extending beyond its territory unless the case was exceptional or special. The principles applicable under section 44 of the Arbitration Act 1996 and section 25 of the Civil Jurisdiction and Judgments Act 1982 were relevant by analogy.
3. The present case was not exceptional. The parties, contracts, arbitration and principal assets were connected with Seychelles. The Seychelles Court of Appeal had discharged earlier protective measures, and the Seychelles courts remained able to grant relief over Seychelles assets. A worldwide order risked conflicting orders, including in relation to an outstanding contempt application. The case did not involve international fraud. The worldwide application was therefore refused.
4. Domestic relief. A domestic freezing order required solid evidence of a real risk that the judgment would go unsatisfied. That requirement was met by statements indicating an intention not to pay, the transfer of shares in Q Glazing Ltd after evidence of ownership had been served, and the movable nature of the defendant’s assets. A domestic order was accordingly granted, with ordinary-business and legal-expenses exceptions and limited asset-information requirements.

This was a first-instance application. The judgment records earlier arbitration, French, Seychelles and English enforcement proceedings, including an English order entering judgment in the terms of the award. No appeal from the present decision is stated.