Petrosaudi Oil Services (Venezeula) Ltd v Clyde & Co LLP

The court may exercise its discretion under Civil Procedure Rules 1998, Part 64, and its supervisory jurisdiction over trustees to order trust money into court and bring the relevant trust arrangements to an end. A material change in circumstances may justify reconsideration of an earlier refusal. A foreign court order which has not been domesticated in England and Wales has no effect in this jurisdiction and does not, without more, prevent payment into court or periodic payments out of court.

The claimant sought orders concerning US$325 million held by the defendant law firm as escrow agent and trustee. In earlier proceedings, the court had refused to order payment into court because a United States arrest warrant created a real risk of prosecution or proceedings against the defendant.

The warrant was subsequently recalled, and the defendant adopted a neutral position while relying on rights of indemnity and retention. The claimant sought conversion of the funds into sterling, payment into court, and monthly payments out. The issue was whether the changed circumstances and a Malaysian court order prevented the proposed relief.

1. Relief concerning trust funds. The court had jurisdiction under Part 64 of the Civil Procedure Rules 1998 and under its supervisory jurisdiction over trustees to order payment of the trust funds into court and bring the trust arrangements to an end.
2. Material change of circumstances. The earlier refusal had rested on the real risk created by the United States arrest warrant. That warrant had been recalled and the associated protective-order application dismissed. The crucial change in the factual landscape justified making the proposed order.
3. Malaysian order. The Malaysian court’s order had not been domesticated in this jurisdiction, and no application concerning it had been made by the NCA. It therefore had no effect in this jurisdiction and did not prevent payment of the monies into the English court or periodic payments out of court. The claimant’s decision to respect the order voluntarily did not amount to acceptance that it was applicable or enforceable.
4. Order. The court approved the draft order, subject to minor amendments. The monies were to be converted into sterling and paid into court, with monthly payments out of court until further order, while the defendant’s rights of indemnity and retention were preserved.

First-instance application. The judgment refers to earlier proceedings concerning the same funds, in which payment into court had been refused: [2021] EWHC 444 (Ch).