Soprim Construction SARL v The Republic of Djibouti & Ors

A charging order over a debtor’s beneficial interest under a trust requires an English-law trust, with the technical characteristics of a trust and an intention to create a private-law obligation. Trust intention may be inferred from conduct and the surrounding evidence. Where the only trust assets are in one jurisdiction, their situs may carry particular weight in identifying the law with which the trust is most closely connected. A foreign office-holder’s authority depends on whether the judgment appointing them is recognisable under English conflicts rules. In deciding whether to make a charging order final, the court considers all the circumstances, including undue prejudice to other creditors; the first creditor to take enforcement steps will ordinarily have priority where no exceptional circumstances justify a different result. A third-party debt order requires a debt owed to the judgment debtor in its own name.

Soprim sought to enforce unpaid arbitral awards against the Republic of Djibouti by obtaining a final charging order over funds held in London bank accounts in DCT’s name. Soprim alleged that DCT had agreed to hold the funds on trust for the Republic. DPW and DCT disputed that case and applied to set aside the interim charging order, relying on the authority of DCT’s Djiboutian office-holders, foreign-judgment recognition rules, competing enforcement principles, alleged non-disclosure and late service of the enforcement claim form. The court also considered Soprim’s alternative applications for a third-party debt order and receivership.

1. Charging order granted. The court found, on the balance of probabilities, that DCT’s administrator had agreed to hold the London account funds for the Republic. The inference followed from the Republic’s control, the administrator’s conduct and the absence of evidence from those able to address the alleged agreement. The court also found the intention to create a trust and its external manifestation sufficiently established.
2. Applicable law and trust. Under Article 7 of the Hague Convention, the situs of the assets was especially significant because the accounts were the only assets and were all in England. The alleged arrangement was therefore governed by English law. Section 2(1)(a)(ii) of the Charging Orders Act 1979 requires a trust in the technical English-law sense. The court held that the agreement created a bare trust satisfying that requirement. It did not decide whether a foreign trust over assets outside the jurisdiction could be charged. The French/Djiboutian concept of prête-nom was closer to sham than trust and, in any event, did not meet the statutory requirement.
3. Recognition objections rejected. Under Koza Ltd v Koza Altin Isletmeleri AS [2022] EWCA Civ 1284, authority derived from a foreign judgment depends on recognition under English conflicts rules. The appointment order was not procured in breach of the English injunctions: those orders restrained PDSA, and the Republic’s status as its affiliate did not itself make the Republic a party or make PDSA responsible for acts done independently by the Republic. The court also found the Djiboutian order adequately reasoned. General evidence about judicial independence did not displace it without cogent evidence impinging on that particular decision.
4. Other enforcement routes and discretion. The first-past-the-post approach applied. Soprim alone had sought a charging order, and there were no competing charging-order applicants whose priorities had to be balanced. A third-party debt order was unavailable because SCB owed the account debt to DCT, not the Republic. A receiver also could not be appointed on the proposed basis: de facto control alone did not establish an enforceable right to call for transfer of the asset.
5. Applications to set aside dismissed. The alleged failures of full and frank disclosure did not make the without-notice application unfair. The one-month service limit in Part 62 Section I did not apply to an enforcement application under Section III; the claim form was served within the applicable period. The final charging order covered all funds in the SCB Accounts. The alternative third-party debt and receivership applications were rejected.

This was a first-instance decision on enforcement and setting-aside applications. Teare J had granted Soprim permission to enforce the arbitral awards, and Dias J later made an interim charging order. A Deputy Master refused DPW’s application to strike out the interim order. This judgment made the charging order final and dismissed the Objecting Parties’ setting-aside application.