Dell Emerging Markets (EMEA) Ltd & Ors v Systems Equipment Telecommunications Services S.A.L

Contempt for breach of an English injunction requires proof, to the criminal standard, that the respondent knew the order, deliberately acted or failed to act in breach, and knew the facts constituting the breach. A foreign-law obligation or possible foreign-law liability does not excuse disobedience to an English order. A company director is not automatically liable for the company’s contempt. Liability requires culpable conduct, including a wilful failure to take reasonable steps to secure compliance, assessed on the facts as a whole. Formal service may be dispensed with where the respondent knew the order’s terms and effect and the absence of formal service caused no prejudice or injustice.

The claimants sought findings that SETS and its four directors were guilty of contempt for breaching interim and final anti-suit injunctions restraining Lebanese proceedings concerning a distribution agreement. The injunctions required SETS to stop pursuing the Lebanese proceedings and to withdraw them. SETS continued to take procedural steps and did not withdraw the proceedings. The directors contended, among other matters, that Lebanese law required or exposed them to liability if the proceedings were discontinued, and that formal service requirements had not been met.

The respondents did not attend the hearing. The court therefore determined whether the alleged contempts had occurred, postponing questions of sentence or sanction. It also considered whether formal service could be dispensed with or treated as valid by alternative means.

1. Contempt established. The court found SETS guilty in seven respects, and found each director guilty in the respects specified in the judgment. Sentence and sanction were adjourned.
2. The applicable test required proof that the respondent knew the order’s terms, breached it by act or omission, and knew the facts making the conduct a breach. The acts or omissions had to be deliberate, but the claimant did not need to prove knowledge, belief or intention that the conduct would constitute a breach. Dell had to satisfy the criminal standard: Masri v Consolidated Contractors [2011] EWHC 1024 (Comm); Devere v Hither Green Developments [2015] EWCA Civ 1365; Khawaja v Popat [2016] EWCA Civ 362.
3. There was no reasonable-excuse defence based on foreign law. Any conflict with foreign law should be raised when the English order is sought or by applying to vary or set it aside. The alleged Lebanese-law liability was not established and, in any event, was not the reason for the breaches.
4. Under CPR 81.4(3), a director’s liability required culpable conduct. A director had to take reasonable steps to ensure compliance, but mere inactivity or a presumption that every director acted wilfully was insufficient. Wilfulness had to be assessed on the whole facts, including whether the director caused, permitted or failed to prevent the breaches.
5. The court was satisfied that Maher Chahlawi and Marwan Junior Chahlawi managed SETS and wilfully caused, permitted and failed to prevent its breaches. Sarah Bibi knowingly authorised and encouraged the defiance and had powers she could have used to seek compliance. Pierre Chalhoub knew of the final injunction and wilfully failed to take reasonable steps after becoming a director.
6. The respondents knew the injunctions and their effect before the relevant breaches. Applying CPR 81.8 and 81.24, the court dispensed with formal service, or treated specified alternative notifications as good service, because the respondents had actual knowledge and suffered no prejudice or injustice. The court followed the approach in Bell v Tuohy [2002] EWCA Civ 423, [2002] 1 WLR 2703, and Khawaja v Popat [2016] EWCA Civ 362.
7. Details of the conclusions were directed to be provided to the national media and the Judicial Office under the relevant Practice Direction.