Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden NV v Societe Bengaz SA & Anor

Summary judgment is appropriate where the claimant establishes a claim and the defendant has no realistic prospect of success, provided there is no compelling reason for trial. The court may decide a short point of law or construction summarily where it has the evidence and the parties have had a fair opportunity to address it.

Contractual security arrangements may entitle a secured creditor to exercise receiver and attorney powers directly, enforce payment directions against a third party, and claim proprietary relief over segregated proceeds. Specific performance or an injunction is appropriate where damages would leave the secured creditor unsecured or otherwise provide an inadequate remedy. A third party already subject to contractual payment obligations is not ordinarily entitled to an indemnity merely because it complies with those obligations under a final order.

FMO lent money to Bengaz to finance its investment in WAGPCO. Bengaz granted security over its rights under shareholder and escrow arrangements and agreed that income from WAGPCO would be paid into a secured proceeds account.

Bengaz defaulted, failed to repay Facility A, and did not file an acknowledgement of service or defence. FMO sought permission to apply for summary judgment, judgment for the debt, declarations concerning segregated and diverted payments, specific performance, injunctions against Bengaz and WAGPCO, and disclosure. WAGPCO adopted a neutral position but sought an indemnity against claims and costs arising from compliance with the proposed orders.

The central issues were whether FMO had established its debt and proprietary and contractual rights summarily, whether mandatory relief was appropriate, and whether WAGPCO should receive an indemnity.

1. Permission and summary judgment. Permission was granted under CPR 24.4 because service and jurisdiction were established, the application involved declaratory and injunctive relief, and a reasoned judgment might be more readily enforceable overseas. Under CPR 24.3, Bengaz had no realistic prospect of defending the debt claim and there was no compelling reason for a trial. Summary judgment was entered for US$55,960,802.58, with additional enforcement costs subject to assessment.
2. Declarations and proprietary rights. The Segregated Funds were held by WAGPCO on a primary trust for Bengaz because they were segregated, identified as being held for Bengaz, and treated as belonging to it. Bengaz’s beneficial interest was held on trust for FMO under clause 5.5(a) of the Security Agreements. The security had become enforceable following Events of Default, including non-payment. FMO could therefore exercise the powers of a receiver directly under clause 9.5 and act as Bengaz’s attorney under clause 15. Future Shareholder Payments and the Segregated Funds were required to be paid into the Proceeds Account.
3. Mandatory relief. Specific performance against Bengaz was appropriate because Shareholder Payments represented its principal revenue stream and the means of repaying the secured debt. Damages would deprive FMO of the agreed security and were inadequate. Injunctions against WAGPCO were also justified by the risk of further diversion, the Missing Payments, unresolved control disputes, non-disclosure, and WAGPCO’s notice of FMO’s rights.
4. Indemnity. WAGPCO was not an innocent third party. It had pre-existing contractual duties to pay Bengaz and was subject to FMO’s contractual receiver and attorney rights. The authorities concerning indemnities for innocent third parties complying with interlocutory orders were distinguishable. WAGPCO was not entitled to an indemnity for potential consequences or legal costs.
5. Orders were made for disclosure concerning the Missing Payments, continuation of the worldwide freezing order, the parties’ costs, and ancillary service arrangements.