Sahara Energy Resource Limited v Rahamaniyya Oil & Gas Limited & Ors.

The court has a complete discretion when deciding whether to permit a contemnor to purge contempt and discharge coercive or punitive orders under Civil Procedure Rules 1998, rule 81.10(3). The punitive and coercive elements of a contempt sanction are not rigid or self-contained. Subsequent compliance may mitigate both. In civil litigation, the victim’s position and any settlement making the victim whole are important factors, although the court retains an independent interest in enforcing its orders. The public interest in securing compliance may be balanced against the public interest in encouraging parties to remedy breaches. Where the circumstances justify forgiveness, the court may discharge the relevant orders subject to an appropriate condition, including a payment to charity.

The first, third and fourth defendants applied to discharge injunctions requiring delivery up of oil and granting anti-suit relief, together with contempt sanctions imposed for non-compliance. The sanctions included a £500,000 fine against the first defendant, a ten-month prison sentence against the third defendant and a £10,000 fine against the fourth defendant.

After the sanctions were imposed, arbitration proceedings resulted in a substantial award. The first defendant paid the award and the claimant’s costs, thereby being made whole. The claimant supported the application. The central issue was whether the court should exercise its discretion to discharge the injunctions and contempt orders in those circumstances.

1. Application granted conditionally. The injunctions and contempt orders were discharged, subject to Mr Bashir undertaking to pay £75,000 to the Access to Justice Foundation.
2. Under Civil Procedure Rules 1998, rule 81.10(3), the court has a complete discretion on an application to purge contempt and reverse orders previously made. The judge was not bound by the earlier judge’s non-binding indications of the punitive and coercive elements of the sanctions.
3. The distinction between punitive and coercive elements is not rigid. Effective compliance with the underlying order may significantly mitigate both elements, including where a prison sentence has been imposed. The court was therefore required to consider the matter afresh.
4. The fact that the proceedings were civil litigation, and that the claimant no longer sought enforcement, was relevant but not decisive. The court retains an interest in ensuring that its orders are obeyed, particularly after a sanction has already been imposed.
5. The claimant’s support, the settlement, full payment of the arbitral award and costs, genuine apologies, and the fact that the injunctions no longer served a useful purpose were powerful considerations in favour of discharge. The applicants’ original conduct remained seriously criticisable, but their subsequent conduct went beyond merely rectifying the breaches.
6. The public interest in enforcing court orders had to be balanced against the countervailing public interest in encouraging companies and individuals to put matters right. In the unusual circumstances, the latter consideration justified a forgiving approach, subject to the charitable payment.