Masri v Consolidated Contractors International Company SAL & Anor (includes Addendum) [2008] EWCA Civ 303

[2008] EWCA Civ 303Case No A3/2008/0082
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION (COMMERCIAL COURT)
MRS JUSTICE GLOSTER DBE
CLAIM NO 2004 FOLIO 124 & CLAIM NO 2004 831
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 04/04/2008
Before
LORD JUSTICE WARDLORD NEUBERGER OF ABBOTSBURYLORD JUSTICE LAWRENCE COLLINS
Between
MUNIB MASRIRespondent(1) CONSOLIDATED CONTRACTORS INTERNATIONAL COMPANY SALAppellants(2) CONSOLIDATED CONTRACTORS (OIL & GAS) SALAppellant
Mr Alexander Layton QC, Mr Thomas Raphael and Mr Ben Olbourne (instructed by Olswang) for Appellant sMr Simon Salzedo and Mr Colin West (instructed by Simmons & Simmons) for RespondentHearing Hearing dates : February 5 and 6, 2008
Judgment

I Introduction

[1]In this case the judgment creditor (the respondent to this appeal) succeeded in an action in the Commercial Court in London in proving that he had a 10% interest in the judgment debtors’ own 10% interest in an oil concession for the exploitation of an oil field in the Yemen. After initially objecting to the jurisdiction, the judgment debtors fully participated in the proceedings and the judgment debt presently stands (including interest) at about US$55 million. The judgment debtors, who are part of a substantial group based in the Lebanon, have not paid the judgment debt, have made it clear that they will resist payment, and commenced proceedings in the Yemen for a declaration that they are not liable to the judgment creditor, and in Lebanon and Greece for declarations that the judgment is not enforceable.[2]In June 2003 the House of Lords decided that the English court did not have power to make a third party debt order (what used to be called a garnishee order) in respect of debts situate abroad: Société Eram Shipping Co Ltd v Cie Internationale de Navigation [2004] 1 AC 260. This appeal is primarily concerned with the question whether the Commercial Court had international jurisdiction to make an order for the appointment of a receiver by way of equitable execution, and a freezing order, in relation to the judgment debtors’ interest in the concession and the revenues which they may earn from it. It also involves the purely English law question whether a receivership order can be made by way of equitable execution in relation to future debts.[3]The background to this appeal is that the respondent, Mr Masri, brought two actions in England against members of the Consolidated Contractors Company (“CCC”) group of companies, which is a substantial group mainly involved in construction work in the Middle East. The group was founded, with others, by Mr Said Khoury. Consolidated Contractors Group SAL (Holding Company) (“CC Holding”), which is incorporated in Lebanon, is the holding company for the group. Consolidated Contractors International (UK) Limited (“CCUK”), an English company, provides services such as office space and staff to certain companies in the CCC group. Consolidated Contractors International Company SAL (“CCIC”) is incorporated in Lebanon, and is one of the main operating companies in the CCC group. Consolidated Contractors (Oil & Gas) Company SAL (“CCOG”), also incorporated in Lebanon, operates certain oil and gas interests of the CCC group.[4]The procedural history is complex and is set out in detail in Gloster J’s judgment, but for present purposes it is sufficient to say that ultimately the defendants were(1) CCUK; (2) Mr Khoury; (3) CC Holding; (4) CCIC; and (5) CCOG.[5]Mr Masri’s claim was that Mr Khoury and/or the CCC group members (or some of them)were in breach of a written agreement entered into in 1992 in having failed to pay Mr Masri 10% of CCC’s 10% share of the revenues of the Masila Oil Concession in the Yemen. The CCC Group’s position was that the agreement had been terminated in about May 1993, in response to Mr Masri’s failure to meet his obligations to make payments due from him.[6]After jurisdictional challenges, CCOG and CCIC submitted to the jurisdiction of the English court by appearing and defending the case on the merits. In their appeal to the House of Lords from the decision of the Court of Appeal in October 2005 ([2005] EWCA Civ 1436, [2006] 1 WLR 830) they acknowledged that the English court had jurisdiction over them in relation to Mr Masri’s claims.[7]In July 2006 Gloster J held that CCIC and CCOG were liable to Mr Masri for breach of contract: [2006] EWHC 1931 (Comm). The judge dismissed Mr Masri’s claims against Mr Khoury personally and against CCUK and CC Holding.[8]In March 2007 Gloster J gave judgment on quantum: [2007] EWHC 468 (Comm). She ordered, inter alia, that CCIC and CCOG were to make an interim payment to Mr Masri in the sum of US$30 million, in respect of the amount owing to Mr Masri up until December 31, 2006, and a payment on account of costs to Mr Masri in the sum of about £720,000. In June 2007 Gloster J made a final order for payment of the amount due to December 31, 2006, including interest, of some US$38.6 million (subsequently increased to US$52 million following an appeal by Mr Masri on an aspect of quantum). She also (then and later) made further orders in relation to sums due for subsequent periods.[9]CCOG and CCIC, as I have said, have brought actions in the Yemen for a declaration that they are not liable to Mr Masri, and in Lebanon and Greece for declarations that the judgment is not enforceable. The Yemen proceedings were discontinued following the grant of an anti-suit injunction by the Commercial Court in May 2007.[10]Affidavits have been filed by CCIC and CCOG suggesting that the net assets of CCIC are some US$420 million, and those of CCOG some US$130 million, but except where they have decided that it was in their interests to comply with costs orders as a condition of being allowed to appeal against interlocutory orders, CCOG and CCIC have not paid any of the substantial interim and final sums awarded against them. The defendants’ appeal on liability was struck out when they failed to comply with the condition that they made the interim order payment of US$30 million and the costs payment of about £720,000. So also their appeal from an order by Gloster J for specific performance of the payment for the first quarter of 2007 was struck out when they failed to comply with the condition that they paid all sums which the judge and the Court of Appeal had ordered them to pay.[11]But they decided it was in their interests to pay the costs of a successful application by Mr Masri for an anti-suit injunction restraining the proceedings in Yemen and elsewhere outside the EU so that they could prosecute an appeal from that decision, permission to appeal having been given by Sir Henry Brooke on condition that they pay £108,500 costs. So also they have complied with an order for security for costs in relation to the present appeal, and with a condition that they pay outstanding costs in the main action.[12]On December 20, 2007 Gloster J appointed a receiver in relation to CCOG’s interest in revenues from the Concession, and made a freezing order restraining CCOG from disposing of its interest in the Concession and from selling oil from the Concession area otherwise than in the ordinary course of business. She also made an order for CCOG and CCIC to make an affidavit of assets. The judge refused permission to appeal.[13]CCOG appeals against the receivership order, pursuant to permission granted by the Court of Appeal (Rix and Jacob LJJ) on January 15, 2008. The application by CCOG in relation to the freezing order and by CCOG and CCIC in relation to the affidavit of assets order was adjourned to be heard with the appeal against the receivership order. Mr Masri does not object to permission being given in relation to those orders, except insofar as the appeal relates to the judge’s exercise of discretion.

II CCOG’s interest in the Concession: the commercial situation

[14]CCOG has a 10% interest in the Concession pursuant to i) The Agreement for Petroleum Exploration and Production between the Yemeni Minister of Energy and Materials and Canadian OXY Offshore International Ltd (a Bermuda company) and CCIC dated 15 September 1986 (the “PSA”); this contains an arbitration clause providing for either an ICC arbitration in Paris or an ICSID arbitration in London (depending on Canadian ratification of the ICSID Convention): the tribunal is to apply principles of law common to the Yemen, Canada and Lebanon and, in the absence of such common principles, the principles of law normally recognised by nations in general, including the relevant rules of customary international law. ii) The Masila Joint Operating Agreement between Canadian OXY Offshore International Ltd and CCIC dated 27 April 1987, as amended (“the JOA”). This contains provision for English law and London arbitration. iii) An assignment from CCIC to CCOG dated 25 October 1992.[15]Both the PSA and the JOA contain provisions against assignment without consent.[16]The partners in the Concession become the owner of their shares in the oil when it is lifted in Yemen. The parties are entitled physically to take the oil which is produced, but there is no agreement between the parties for selling of the oil or the split of oil revenues or entitlement to the oil revenues. That is a matter for the respective individual parties themselves.[17]Canadian Nexen Petroleum Yemen operated the field and produced the oil on behalf of the partners. Until the end of 2006 Nexen Marketing Singapore Ltd (“Nexen Marketing”) was engaged by CCOG as the broker for the sale of the oil to which CCOG was entitled, but in August 2006 CCOG gave notice terminating Nexen Marketing’s services as at December 31, 2006. CCOG’s evidence was that the decision to terminate was a commercial decision, and that in view of commercial relationships with other oil companies in respect of other oil concessions in Yemen, CCOG decided that it would be more commercially expedient for itself to arrange for the marketing and sale of its oil. The judge noted that no details were given of these marketing and sales arrangements, or as to whether CCOG itself arranged for sales of oil, or retained brokers to do so on its behalf. Nor had any details been given as to which account, or in which country, the proceeds of any sales of oil by CCOG to third parties were credited. The inference the judge drew was that CCOG wished to ensure that the least information possible was made available to Mr. Masri in relation to his 10% entitlement to CCOG’s interest in the Concession, and, in particular, as to how the oil was marketed and sold, and the country to which the proceeds of any such sales were remitted.[18]For the purposes of this judgment it is relevant to note that the consequences of the contractual arrangements are as follows:(a) the oil is produced in and shipped from Yemen;(b) sales of the oil could be made by CCOG, or agents acting on its behalf, pursuant to contracts concluded in any country anywhere in the world;(c) receipts from CCOG’s sales of oil from the Concession could be paid into any bank account anywhere in the world, depending on the contractual arrangements with CCOG’s third party purchasers or any agents that CCOG had retained to sell the oil;(d) an assignment of CCOG’s interest in the Concession could take place in, or subject to the laws of, any country, subject to consent (if the assignment was not to an affiliate) from the Oil Ministry in Yemen and Canadian OXY in Bermuda (and from any other parties now party to the JOA and/or PSA).

III The orders

[19]The relevant parts of the orders are reproduced in an appendix below.

Receivership Order

[20]The judge made an order appointing Mr. Lee Manning, an insolvency practitioner, as receiver to receive “… all amounts due to [CCOG] from Nexen Marketing Singapore PTE Ltd (‘Nexen Singapore’) or any other entity to the extent that they relate to proceeds of sale of the oil from [the Concession] … to which [CCOG] is entitled pursuant to [the PSA, the JOA and the Assignment]… and any other broking, sales or other agreements to which [CCOG] is party regarding the sale of such oil (such amounts to be referred to as ‘Oil Revenues’).”[21]The Oil Revenues are defined in the order as meaning all amounts due to CCOG that relate to the proceeds of the sale of oil to which CCOG is entitled under the various relevant concession agreements (the PSA, the JOA and the assignment from CCIC to CCOG) or under any broking sales or other agreements to which CCOG is party regarding the sale of such oil.[22]The order provides (at paragraph 3(b)) that the receiver may bring actions in CCOG’s name, or his own name, to collect the Oil Revenues. In the case of foreign proceedings, that power is subject to the defendant in those proceedings accepting his title to sue or his title to sue being recognised by the foreign court.[23]The order requires (para 7) CCOG and its officers to co-operate with the receiver by:(a) providing information about the Oil Revenues (including, in particular, the contractual arrangements for the sales of oil from time to time); and(b) giving written confirmation to third party debtors anywhere in the world that the receiver is authorised to act on behalf of CCOG and to receive the Oil Revenues.[24]The order contains in paragraphs 12 to 15 modified Babanaft provisos, the broad effect of which is that wholly foreign customers of CCOG are not affected by the order except to the extent that the order is declared enforceable by or is enforced by a court in the country or state of the customer. Nor will any customer (foreign or not) be prevented by the order from complying(a) with what it reasonably believes to be its obligations, contractual or otherwise, under the laws and obligations of the country or state in which the debts due to CCOG are situate or under the proper law of any contract between the customer and CCOG; or(b) with any orders of the courts of that country or state. The order also provides (paragraph 15) that nothing in the order is to require, in respect of assets located outside England, CCOG or its directors to disobey the order of any court of competent jurisdiction in relation to such assets.

Freezing order

[25]The freezing order restrains CCOG from assigning or otherwise disposing of its rights in the Concession, and from selling oil and also imposes restrictions on the sale from the Concession otherwise than in the ordinary course of business and subject to conditions.[26]The order contains modified Babanaft provisos in the same form as the receivership order.

Affidavit of assets order

[27]The affidavit of assets order requires CCOG and CCIC to serve, by a succession of dates in January and February 2008, affidavits identifying their assets.

Overall effect

[28]The broad effect of the receivership order and the freezing order is that if CCOG complies with them (and the court will not assume otherwise) CCOG will retain its interest in the oil concession, and sell only to bona fide customers. It will notify the receiver of sales of oil by it, and give information about the customers and the accounts to which the proceeds are to be remitted, and (if requested by the receiver) notify customers of the receiver’s rights. But the receiver will have no power to commence proceedings abroad unless his title to do so under any relevant foreign law is first established.

IV Receivership order and subject matter jurisdiction

[29]This part of the appeal concerns the question whether, even if the court has in personam jurisdiction over the defendant, it is appropriate for the English court to make an order for the appointment of a receiver in relation to foreign assets.

Subject matter jurisdiction

[30]Subject matter jurisdiction is concerned, inter alia, with the extent to which the law or the court’s orders applies extra-territorially. The expression “subject matter jurisdiction” was imported into English law from United States law by Hoffmann J in his important decision in Mackinnon v Donaldson, Lufkin & Jenrette [1986] Ch 482. Typically in the United States the question of subject matter jurisdiction arises when the court is asked to consider whether legislation applies to conduct abroad, for example whether the Securities Exchange Act applies to fraudulent misrepresentation in England (as in Leasco Data Processing Equipment Corp v Maxwell, 468 F 2d 1326 (2d Cir 1972), at 1329) or whether the Sherman Act applies to allegedly anti-competitive agreements concluded in the London insurance market (Hartford Fire Insurance Co v California, 509 US 764 (1993), at 796, 798) and to the manipulation of the copper market on the London Metal Exchange (Metallgesellschaft AG v Sumitomo Corp of America, 325 F 3d 836 (7th Cir 2003), at 838).[31]The same point has long been recognised in England, where it used to be said that there was a presumption that Parliament did not design its statutes to operate beyond the territorial limits of the United Kingdom. But nowadays the presumption has little force and it is simply a matter of construction: for a recent example see Office of Fair Trading v Lloyds TSB Bank plc [2007] UKHL 48, [2007] 3 WLR 733. But even where legislation is construed to apply without territorial limitation, the question whether the matter has a sufficient connection with England may be a highly material factor in the exercise of the court’s powers, as for example under the Insolvency Act 1986, sections 238 and 239 (transactions at undervalue and preferences) in Re Paramount Airways Ltd [1993] Ch 223, which Hoffmann J characterised as subject matter jurisdiction: Barclays Bank pc v Homan [1993] BCLC 680 (Hoffmann J and CA) at 689.[32]In Mackinnon v Donaldson, Lufkin & Jenrette [1986] Ch 482 the plaintiff in proceedings which were pending in London served an order under the Bankers’ Books Evidence Act 1879 on the London branch of Citibank NA, a New York bank, and a subpoena addressed to one of its officers to produce documents. The New York bank was subject to the in personam jurisdiction of the English court because it had a branch in London. The order and the subpoena were set aside because they were an exorbitant exercise of jurisdiction.[33]Responding to the argument that the New York bank was subject to the personal jurisdiction of the English courts because it had a branch in England irrespective of the nature of the subpoena, Hoffmann J said (at 493):
“I think this argument confuses personal jurisdiction, i.e. who can be bought before the court, with subject matter jurisdiction, i.e. to what extent the court can claim to regulate the conduct of those persons. It does not follow from the fact that a person is within the jurisdiction and liable to be served that there is no territorial limit to the matters which a court may properly apply its own rules or the things which it can order such a person to do. … The content of the subpoena and order is to require the production by a non-party of documents outside the jurisdiction concerning business which it has transacted outside the jurisdiction. In principle and on authority it seems to me that the court should not impose such a requirement upon a foreigner, and, in particular, on a foreign bank. The principle is that a state should refrain from demanding obedience to its sovereign authority by foreigners in respect of their conduct out of the jurisdiction.”
[34]This case, like Re Paramount Airways Ltd [1993] Ch 223, shows that what may be a sufficient connection with England to justify an order will vary with the circumstances. It does not decide that the court will never have jurisdiction to make orders under the Bankers’ Books Evidence Act 1879 against the London branch of a foreign bank in relation to papers held by head office, nor that it will never be possible to issue a witness summons against the bank’s London branch officer in respect of head office transactions. The result might have been different if head office held papers relating to London transactions. What it says is that any power or discretion must be exercised in accordance with internationally recognised principles on the limits of the exercise of jurisdiction.[35]Consequently the mere fact that an order is in personam and is directed towards someone who is subject to the personal jurisdiction of the English court does not exclude the possibility that the making of the order would be contrary to international law or comity, and outside the subject matter jurisdiction of the English court.[36]That was why Lord Donaldson MR confirmed that the Mareva injunction should not conflict with “the ordinary principles of international law” and that “considerations of comity require the courts of this country to refrain from making orders which infringe the exclusive jurisdiction of the courts of other countries”: Derby & Co Limited v Weldon (Nos. 3 & 4) [1990] Ch 65, 82. It was for this reason also that it has been suggested that the extension of the Mareva jurisdiction to assets abroad was justifiable in terms of international law and comity provided that the case had some appropriate connection with England, that the court did not purport to affect title to property abroad, and that the court did not seek to control the activities abroad of foreigners who were not subject to the personal jurisdiction of the English court: Collins (1989) 105 LQR 262, 299.[37]In Babanaft International Co SA v Bassatne [1990] Ch 13, at 46, Nicholls LJ emphasised, in relation to the post-judgment worldwide Mareva injunction granted in that case “The enforcement of the judgment in other countries, by attachment or like process, in respect of assets which are situated there is not affected by the order … the English court is not attempting in any way to interfere with or control the enforcement process in respect of those assets.”[38]It was concerns of international comity which led the Court of Appeal in Babanaft International Co SA v Bassatne to limit the effect of the Mareva injunction on third parties abroad who may have notice of the injunction, by what became known as the Babanaft proviso, which Kerr LJ described (at 37) as “the internationally appropriate course” and which Lord Donaldson MR indicated was designed to avoid “an excess of jurisdiction”: Derby & Co Limited v Weldon (Nos. 3 & 4) [1990] Ch at 82-83. The reason, as Nicholls LJ said in Babanaft International Co SA v Bassatne, at 44, was:
“It would be wrong for an English court, by making an order in respect of overseas assets against a defendant amenable to its jurisdiction, to impose or attempt to impose obligations on persons not before the court in respect of acts to be done by them abroad regarding property outside the jurisdiction. That, self-evidently, would be for the English court to claim an altogether exorbitant, extra-territorial jurisdiction.”
[39]Even if the third party with notice of the order is subject to the in personam jurisdiction of the English court, there may still be concerns relating to international comity, for example where the defendant has an account abroad at a foreign branch of an English bank, or an account at the head office or foreign branch of a foreign bank with a branch in England: Baltic Shipping Co v Translink Shipping Ltd [1995] 1 Lloyd’s Rep 673.

Société Eram Shipping Co Ltd v Cie Internationale de Navigation [2004] 1 AC 260

[40]In Société Eram Shipping Co Ltd v Cie Internationale de Navigation [2004] 1 AC 260 (“Société Eram”) the House of Lordsapplied the principle in Mackinnon v Donaldson, Lufkin & Jenrette (Lord Bingham at [22]; Lord Hoffmann at [67]) in holding that a third party debt order (what used to be called a garnishee order) would not be made against a Hong Kong bank with a branch in London in respect of an account held in Hong Kong.[41]The application of this decision is an essential part of CCOG’s argument on this appeal. CCOG invites this court to find that Société Eram has two ratios. Mr Layton QC, for CCOG, says that the first ratio was the broader ratio that there is no subject matter jurisdiction over foreign debts: Lord Hoffmann (with whom Lords Nicholls and Hobhouse agreed) at [54], [62], [67]; Lord Millett, at [98]; and cf Lord Bingham at [22]-[23]. The second was the narrower ratio that it is not open to the court to make a third party debt order where the making of the order will not discharge the debt of the third party or garnishee to the judgment debtor according to the law which governs the debt: Lord Bingham, at [24], [26]. Mr Salzedo for Mr Masri says that there is only one ratio, the narrower one.[42]It seems to me that deciding whether there is one ratio or two is a sterile and unnecessary exercise. Four members of the House gave long and considered opinions, and those of Lord Bingham and Lord Hoffmann each had the express assent of a majority. I can discern no conflict between them, or with any authority which binds this court, and I propose to treat the statements of view in that decision (whether strictly ratio or not) as being authoritative.[43]Lord Bingham (with whom Lords Nicholls, Hobhouse and Millett expressly agreed), after referring (at paras [22]-[23]) under the heading “Extraterritorial jurisdiction” to R v Grossman (1981) 73 Cr App R 302, Mackinnon v Donaldson, Lufkin and Jenrette Securities Corporation [1986] Ch 482, and Babanaft International Co SA v Bassatne [1990] Ch 13, then went on to emphasise (at [24]):(a) a garnishee or third party debt order was a proprietary remedy which operated by way of attachment against the property of the judgment debtor;(b) on the making of the interim or nisi order that chose in action was bound, frozen, attached or charged in the hands of the third party or garnishee, who was not entitled to deal with that chose in action by making payment to the judgment debtor or any other party at his request;(c) when a final or absolute order was made the third party or garnishee was obliged to make payment to the judgment creditor and not to the judgment debtor, but the debt of the third party to the judgment debtor is discharged pro tanto.[44]His conclusion (at [26]) was that it was not open to the court to make an order in a case “where it is clear or appears that the making of the order will not discharge the debt of the third party or garnishee to the judgment debtor according to the law which governs that debt. In practical terms it does not matter very much whether the House rules that the court has no jurisdiction to make an order in such a case or that the court has a discretion which should always be exercised against the making of an order in such a case. But the former seems to me the preferable analysis, since I would not accept that the court has power to make an order which, if made, would lack what has been legislatively stipulated to be a necessary consequence of such an order. I find myself in close agreement with the opinion of Hill J in Richardson v Richardson [1927] P 228, subject only to the qualification (of little or no practical importance) that an order may be made relating to a chose in action sited abroad if it appears that by the law applicable in that situs the English order would be recognised as discharging pro tanto the liability of the third party to the judgment debtor. If (contrary to my opinion) the English court had jurisdiction to make an order in a case such as the present, the objections to its exercising a discretion to do so would be very strong on grounds of principle, comity and convenience: it is contrary in principle to compel a bank to pay out money owed by a customer if its liability to its customer is not reduced to the same extent; it is inconsistent with the comity owed to the Hong Kong court to purport to interfere with assets subject to its local jurisdiction; and the judgment creditor has a straightforward and readily available means of enforcing its judgment against the assets of the judgment debtors in Hong Kong.”[45]Lord Hoffmann (with whom Lords Nicholls, Hobhouse and Millett agreed) said:
“[54]…The execution of a judgment is an exercise of sovereign authority. It is a seizure by the state of an asset of the judgment debtor to satisfy the creditor's claim. And it is a general principle of international law that one sovereign state should not trespass upon the authority of another, by attempting to seize assets situated within the jurisdiction of the foreign state or compelling its citizens to do acts within its boundaries. … [59] … [T] here are strong reasons of principle for not making a third party debt order in respect of a foreign debt. ... … [62] … The essence of such an order is that it is execution in rem against the property of the judgment debtor, against a res or chose in action which belongs to him and which is within the jurisdiction of the court making the order. … It is not a personal claim against the third party. The third party pays with his own money only in the same sense as a bank upon which a cheque has been drawn by a customer in credit pays with its own money. But the substance of the matter is that the judgment creditor is paid with the debtor's money, as the drawee of the cheque is paid with the customer's money. [63] The discharge of the third party's indebtedness effected by rule 72.9(2) (formerly RSC Ord 49, r 8) is therefore an essential part of the execution. As Lord Blackburn said in London Corporation v London Joint Stock Bank (1881) 6 App Cas 393, 415, the garnishee, ‘if he is to be obliged to pay the money, must be discharged from paying it to his creditor’. It is this which ensures that the creditor is paid with the debtor's money and not the third party’s. … [67] The Court of Appeal rejected the suggestion that it was infringing the sovereignty of Hong Kong by saying that it was not ordering the bank to do anything in Hong Kong. All it had to do was to pay money in London. On this ground it distinguished cases like R v Grossman (1981) 73 Cr App R 302 and Mackinnon v Donaldson, Lufkin and Jenrette Securities Corpn [1986] 1 Ch 482 in which courts had refused to order banks to produce information about accounts held in foreign jurisdictions. But this distinction depends upon treating the third party debt order simply as an order against the bank instead of what it really is, namely, a process of execution by the attachment of property of the judgment debtor. Once the true nature of the order is understood, it becomes plain that an order in respect of a foreign debt is an attempt to levy execution on an asset in the foreign jurisdiction, which infringes the principle of international law applied in the Grossman and Mackinnon cases.”
[46]The speeches of Lord Hoffman, Lord Hobhouse and Lord Millett contain additional valuable material, but I will not increase the length of an already long judgment by further quotation. It is sufficient to make these points. Lord Hobhouse emphasised the difference between personal jurisdiction and subject matter jurisdiction (at [74]-[75]). Lord Millett referred to the near universal rule of international law that sovereignty, both legislative and adjudicative, was territorial, that is to say it may be exercised only in relation to persons and things within the territory of the state concerned or in respect of its own nationals. He said that a third party debt order was not an in personam order against the third party; it had proprietary consequences and took effect as an order in rem against the debt owed by the third party to the judgment debtor. The discharge of the debt was an integral part of the scheme of the order, which first created and then realised a proprietary interest in the debt and made the proceeds available to the judgment creditor. If the debt were situate and payable overseas, it was beyond the territorial reach of the English court: Ellis v M’Henry (1871) LR 6 CP 228, 234.[47]The following propositions can be derived from this important decision. First, it is not permissible as a matter of international law for one State to trespass upon the authority of another, by attempting to seize assets situated within the jurisdiction of the foreign state or compelling its citizens to do acts within the foreign State’s boundaries. Second, it would be an exorbitant exercise of jurisdiction to put a third party abroad in the position of having to choose between being in contempt of an English court and having to dishonour its obligations under a law which does not regard the English order as a valid excuse. Third, an in personam order against a person subject to the English jurisdiction may be contrary to international comity. Fourth, a garnishee or third party debt order is a proprietary remedy which operates by way of attachment against the property of the judgment debtor, and creates a proprietary interest by way of security in the debt or fund and gives priority to the claim of the judgment creditor to have his debt paid out of the fund before all other claims against it including that of the judgment debtor himself (Lord Bingham at [24]), or has proprietary consequences and takes effect as an order in remagainst the debt owed by the third party to the judgment debtor (Lord Millett at [87]-[88]), or is in essence execution in rem against the property of the judgment debtor, because the discharge of the third party's indebtedness is an essential part of the execution. Fifth, a third party debt order cannot be made where it will not discharge the debt of the third party or garnishee to the judgment debtor according to the law which governs that debt, even if the order is directed in personam to a bank with a branch in London, because the order in respect of a foreign debt was an attempt to levy execution on an asset in the foreign jurisdiction.

Gloster J’s judgment and CCOG’s argument

[48]Gloster J decided that the receivership order was not objectionable. It was an in personam remedy. It was only when the English court ordered the monies to be paid out to the judgment creditor (by which time the monies were necessarily in and subject to the jurisdiction of the English court), that any in rem effect took place. The third party debtor was not bound, and was protected by the Babanaft provisos in the order. Consequently there was no conflict with the principle in Société Eram.[49]On this aspect of the appeal, CCOG’s lengthy argument may be summarised as follows: i) The appointment of a receiver was by way of equitable execution, and was a form of enforcement against foreign assets (namely debts payable abroad to a payee abroad (CCOG)). ii) The receivership order amounts, in effect, to a seizure by a state of an asset of the judgment debtor because the judgment debtor is required on pain of contempt to transfer the asset to the receiver and through the receiver to the court, which will then inevitably pass it on to the judgment creditor. On receipt by the judgment creditor, at the latest, the judgment debtor’s title will be transferred to the judgment creditor. iii) If a receivership were granted in respect of the foreign assets of a foreign company, the English court would trespass on the authority of a foreign court by (in effect) attempting to seize (by the threat of contempt) assets within the jurisdiction of the foreign state, and by compelling its citizens to do acts within its boundaries. iv) The fact that the order does not have a proprietary effect does not prevent the court lacking subject matter jurisdiction. In any event, to the extent that it is relevant, a receivership order does have a proprietary or quasi-proprietary effect. The judgment debtor, if he obeys, has to hand over his property; or to direct his debtors to hand over his property, to the receiver; and it will then find its way to the judgment creditor, via the receiver or the court, at which point the judgment debtor’s title will (at the latest) be extinguished. v) A receivership order interferes with the rights inter se between a third party debtor of the judgment debtor and the judgment debtor and prevents the third party debtor obtaining a good discharge from the judgment debtor. The third party will be put in a quandary: he cannot pay his creditor, who is refusing to accept payment. This in itself amounts to an interference with his rights and obligations as against his creditor. Under the terms of this order, the judgment debtor is then required to provide “written confirmation” “of the receiver’s rights under this order” to third parties “anywhere in the world”. The third party may well then receive a letter from the judgment debtor saying “A receiver has been appointed by the English court to receive my assets”. However, that letter will have been given under compulsion; and the judgment debtor is under no obligation to confirm anything more than what English law states – he is not required to confirm the position under any other law. In the circumstances, there is no guarantee whatsoever that under any appropriate local law, and in particular under the law where the debt is situated, in a jurisdiction where the receivership order has not yet (and may never be) recognized, that if the third party makes payment to the receiver, the applicable law will treat him as having received a good discharge from the judgment debtor.

Conclusion

[50]In my judgment, there is no rule that the court cannot ever make a receivership order by way of equitable execution in relation to foreign debts and that the judge did not exceed the permissible limits of international jurisdiction in making such an order in the circumstances of this case.[51]In summary my reasons are that(a) the order has no proprietary effect and acts in personam against the judgment debtor;(b) any adverse effects which the order might have on foreign parties with knowledge of the order are removed by the Babanaft provisos;(c) since the nineteenth century the English courts have recognised the legitimacy of the appointment by the court of receivers in relation to foreign property;(d) the fact that those appointments in the reported cases have been receivers appointed by the court on the application of debenture holders, or receivers appointed prior to judgment, does not affect that conclusion in relation to receivers appointed by way of equitable execution;(e) nothing in Société Eram affects the conclusion.[52]The starting point is the effect of the receivership order. Receivership by way of equitable execution is summarised in Snell, Equity, 31st ed. McGhee, para 17-25 as follows:
“A judgment creditor normally obtains satisfaction of his judgment by execution at common law, using the writ of fieri facias, attachment of debts and, formerly, in the case of land, the writ of elegit. There were cases, however, where the creditor could not levy execution at law owing to the nature of the property, the principal case being where the property was merely equitable, such as an interest under a trust or an equity of redemption. Another example was a covenant of indemnity or other chose in action of which the debtor has the benefit, but which could not be reached by attachment. In order to meet this difficulty, the Court of Chancery evolved a process of execution by way of appointing a receiver of the equitable interest, and if necessary supplemented this by an injunction restraining the judgment debtor from disposing of his interest in the property. This process was not ‘execution’ in the ordinary sense of the word, but a form of equitable relief for cases where execution was not possible. The effect of such an appointment ‘is that it does not create a charge on the property, but that it operates as an injunction against the judgment debtor receiving the income’ or dealing with the property to the prejudice of the judgment creditor.”
[53]The authorities bear out the proposition, important in this case, that the appointment does not have a proprietary effect. It has effect as an injunction restraining the judgment debtor from receiving any part of the property which it covers, if that property is not already in his possession, but it does not vest the property in the receiver. As Cotton LJ said in Re Sartoris [1891] 1 Ch 11, 22 (CA):
“It operates as an injunction restraining the defendant from getting in money which the receiver is appointed to receive.”
See also Stevens v Hutchinson [1953] 1 Ch 299, 305. The judgment creditor receives no interest in the received property until it is transferred to him in satisfaction of the judgment debt: Re Potts [1893] 1 QB 648, 661.[54]The receivership order does not create an equitable charge (at least when the property is not in the hands of the receiver): Re Potts [1893] 1 QB 648, 661; Stevens v Hutchinson [1953] 1 Ch 299, 305; In re Whiteheart (1971) 116 SJ 75; Clayhope Properties v Evans [1986] 1 WLR 1223, 1229.[55]Payment of an English debt to the receiver is, under English law, a good discharge of a third party debtor’s obligations to the judgment debtor, as the receiver can give a good receipt: Kerr and Hunter, Receivers and Administrators, 18th ed Hunter, 2005, para 6-12. Whether payment to the receiver of a foreign debt discharges the debt depends on the applicable law of the contract: cf Ellis v M‘Henry (1871) LR 6 CP 228, 234.[56]The phrase “by way of equitable execution” attached to receiverships ordered following judgment is, it has been said, capable of giving rise to confusion. As Cotton LJ said in Re Shephard (1889) 43 Ch D 131 at 135:
“Confusion of ideas has arisen from the use of the term ‘equitable execution’. The expression tends to error. It has often been used by judges, and occurs in some orders, as a short expression indicating that the person who obtains the order gets the same benefit as he would have got from legal execution. But what he gets by the appointment of a receiver is not execution, but equitable relief, which is granted on the ground that there is no remedy by execution at law; it is a taking out of the way a hindrance which prevents execution at common law.”
[57]So also Bowen LJ said (at 137):
“Equitable execution is not like legal execution; it is equitable relief, which the Court gives because execution at law cannot be had. It is not execution, but a substitute for execution.”
Fry LJ said (at 138):
“… the appointment of a receiver was not execution, but was equitable relief granted under circumstances which made it right that legal difficulties should be removed out of the creditor’s way.”
[58]These authorities show clearly that the order has no proprietary effect and acts in personam. I deal below with CCOG’s argument that the court does not have in personam jurisdiction over CCOG, but this part of the argument proceeds on the basis that the court has in personam jurisdiction over CCOG.[59]As I have said, the fact that it acts in personam against someone who is subject to the jurisdiction of the court is not determinative. In deciding whether an order exceeds the permissible territorial limits it is important to consider(a) the connection of the person who is the subject of the order with the English jurisdiction;(b) whether what they are ordered to do is exorbitant in terms of jurisdiction; and(c) whether the order has impermissible effects on foreign parties.[60]CCOG’s connection with the English jurisdiction is that it submitted to the jurisdiction of the English court, defended the case on the merits, and has a substantial English judgment outstanding against it. I do not consider that the court exceeded the bounds of international jurisdiction by ordering CCOG not to receive the proceeds of oil, or in ordering it to co-operate with the receiver and to give notice of his appointment to its customers. CCOG will have to inform customers of the position and they will have to take advice. I suggested in the course of argument that the reality of the matter is that CCOG will be concerned that customers may think that a receiver has been appointed because it is bankrupt. CCOG has only itself to blame for that, and if it wishes to avoid that impression it has only to pay the judgment debt, which the group can well afford to do.[61]Nor do I consider that the effects on third parties show that the exercise of jurisdiction is exorbitant. CCOG accepts that the third party is protected by the Babanaft provisos from being found in contempt by interfering with the order. I do not consider that there is anything in the point that the effect of the order may be that, because the judgment debtor (if he complies with the order) has to decline to receive payment, the third party will be put in a quandary in that he cannot pay his creditor, who is refusing payment. Oil contracts are high value, and it will not take many customers or many shipments to clear the judgment debt. The number of potential purchasers is limited and they will be well able to take advice.[62]The next point is that at least since 1900 English courts have appointed receivers in respect of foreign property.[63]Re Maudslay, Sons & Field [1900] 1 Ch 602 was a case of receivers appointed by the court under a floating charge debenture granted by an English company. Cozens-Hardy J said, referring to several earlier cases from 1834 onwards (at 611):
“It is well settled that the Court can appoint receivers over property out of the jurisdiction. This power, I apprehend, is based upon the doctrine that the Court acts in personam. The Court does not, and cannot attempt by its order to put its own officer in possession of foreign property, but it treats as guilty of contempt any party to the action in which the order is made who prevents the necessary steps being taken to enable its officer to take possession according to the laws of the foreign country.”
[64]Cozens-Hardy J went on to say:
“... the receiver is not put in possession of foreign property by the mere order of the Court. Something else has to be done, and until that has been done in accordance with the foreign law, any person, not a party to the suit, who takes proceedings in the foreign country is not guilty of a contempt either on the ground of interfering with the receiver’s possession or otherwise.”
[65]He was not saying that someone who interfered with his function would never be guilty of contempt. The real issue in that case was whether the debenture holders could obtain an injunction in England to restrain unsecured creditors from attaching a debt due to the English company from a French debtor. It was held that no injunction would be granted because French law did not recognise the assignment of the debt to the debenture holder which took place (as a matter of English law) on crystallisation of the floating charge.[66]CCOG says that (even apart from what it says is the change or clarification of the law in Société Eram)this case is of no assistance because it concerned a receiver appointed under a debenture. In my judgment, this is an important and relevant decision. It shows that more than 100 years ago it was recognised not only that the order is in personam but also that it has no actual effect on the property abroad. It shows not only that the English court may appoint a receiver over foreign property, but it also illustrates why the mere appointment is not a breach of international comity. The fact that the receiver in that case was appointed by the court under a debenture is a distinguishing factor, but not one which meets the fundamental point that the English court may appoint a receiver over foreign property, because the order operates in personam only.[67]90 years later the Court of Appeal appointed a receiver in relation to foreign assets and approved Re Maudslay, Sons & Field in litigation in which a receiver was appointed by the court (pre-judgment) in a case involving an alleged fraud in the cocoa market on various members of the Phillip Brothers group. The receiver was appointed over the assets of one of the defendants, a Luxembourg company: Derby & Co Limited v Weldon (Nos 3&4) [1990] Ch 65. Lord Donaldson MR said (at 86):
“… I do not understand why the order that the assets vest in the receiver should only take effect if and when the order was recognised by the Luxembourg courts. True it is that C.M.I. is a Luxembourg company, but it is a party to the action and can properly be ordered to deal with its assets in accordance with the orders of this court, regardless of whether the order is recognized and enforced in Luxembourg. The only effect of non-recognition would be to remove one of the potential sanctions for disobedience.”
[68]In a later judgment in the same litigation (Derby & Co Limited v Weldon (No 6) [1990] 1 WLR 1139) Dillon LJ said (at 1150):
“To regard the grant of a Mareva injunction not as a matter of territorial jurisdiction to be exercised court by court throughout the various countries of the world where it may be appropriate but as a matter of unlimited jurisdiction in personam of the English court over persons who have properly been made parties, under English procedure, to proceedings pending before the English court is consistent with the approach of the English court to the appointment of receivers of the British and foreign assets of English companies. The court has always been ready to appoint a receiver over the foreign as well as British assets of an English company, even though it has recognized that in relation to foreign assets the appointment may not prove effective without assistance from a foreign court: In re Maudslay, Sons & Field… Moreover where a foreign court of the country where the assets are situate refuses to recognise the receiver appointed by the English court, the English court will, in an appropriate case, do what it can to render the appointment effective by orders in personam against persons who are subject to the jurisdiction of the English court …”
[69]There is no reason to suppose that the position of receivers by way of equitable execution is any different. The authorities make it clear that, although there may be special conditions for the appointment of such a receiver, the receiver does not differ in kind from other court-appointed receivers. The expression “by way of equitable execution” refers to the purpose of the appointment, but does not turn it into a process of execution. I accept the submission for Mr Masri that the appointment of a receiver in aid of enforcement is an interim order, and is inherently temporary, pending payment of the judgment. As soon as the judgment has been paid, the receivership will be discharged, whether or not the receivership plays any eventual role in the recovery of payment.[70]Does the receivership order infringe any of the principles in Société Eram? In my judgment it does not.[71]First, it is not a proprietary remedy. It does not change the title to the debts, nor impose any charge. Second, the third party is not required by the order to pay the receiver, and there is no question of any discharge of the debts being effected by the order. Third, the consequence is that the third party debtor is not in danger of being compelled to pay twice. Fourth, the only person who is directly subject to the order is CCOG, which is subject to the jurisdiction of the court, and is being ordered to perform certain acts which have a genuine connection with England, namely compliance with an English judgment against it. Fifth, the third party debtors are protected from being put in the position of having to choose between being in contempt and having to dishonour their obligations under the applicable law by the Babanaft provisos in the order. Sixth, the right of the receiver to sue for the debts in a foreign country is limited to cases where his title to sue will be recognised by the foreign court.[72]The essence of the decision in Société Eram so far as it concerns international jurisdiction is that it is wrong for one legal system to reach out and affect title to property in another country (the judgment creditor’s interest in a foreign debt), and, as in the case of attachment of debts, place the citizens of that other country in a position where they may have to pay twice. To do so is an impermissible exercise of extraterritorial jurisdiction. This is not such a case.

V Personal jurisdiction to grant the orders and the exercise of discretion

[73]This part of the appeal proceeds on the basis that there is subject matter jurisdiction, i.e. that there is no reason in international law why the orders should not be made, and deals with the submission of CCOG (and CCIC in relation to the affidavit of assets order) that the English court has no personal jurisdiction.[74]This, they say, is for two separate reasons. First, CCOG is domiciled in a State to which Council Regulation 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (“the Brussels I Regulation”) applies, namely Greece. Consequently there must be a basis for jurisdiction in the Regulation. The fact that the English court had jurisdiction over the merits does not give jurisdiction to deal with enforcement matters, and the jurisdiction in Article 31 to order provisional and protective measures does not apply because the measures lack a territorial link with England. Second, and in any event, and regardless of domicile, the orders are incompatible with the provision in Article 22(5) of the Brussels I Regulation that exclusive jurisdiction is vested, in proceedings concerned with the enforcement of judgments, in the courts of the Member State in which the judgment has been or is to be enforced. For reasons on which I shall elaborate it is said that this applies whether or not enforcement is to be within or outside the States to which the Regulation applies. A Gloster J’s judgment and CCOG’s argument Gloster J’s judgment

A Gloster J’s judgment and CCOG’s argument

[75]Gloster J did not rule on CCOG’s domicile because counsel then instructed for CCOG had submitted that the actual domicile of CCOG did not matter because the operation of Article 22(5) precluded jurisdiction irrespective of CCOG’s domicile. Counsel on both sides accepted that there was no need for her to decide the domicile of CCOG for the purposes of the applications before her.[76]Gloster J decided that neither the receivership order nor the freezing order were in conflict with Article 22(5) of the Brussels I Regulation. Even if the receiver’s appointment was to be characterised as an aid to enforcement, as opposed to a protective measure, the making of the order did not purport to confer jurisdiction in relation to enforcement proceedings in any other country in which the assets might be situate. In any event there was no evidence that the oil receivables were or would be situate in any other Regulation State.[77]The freezing order was not, she held, in “proceedings concerned with the enforcement of judgments” for the purposes of Article 22(5). The court had jurisdiction, ancillary to its jurisdiction to determine the merits of the case, to make the freezing order and an order requiring a defendant to provide information about the whereabouts of relevant property, as a protective measure in support of substantive English proceedings. The basis of the jurisdiction to make the affidavit of assets order was no different from the jurisdiction to make a freezing order.

CCOG’s arguments

[78]CCOG argues that the court had no personal jurisdiction over CCOG to make the receivership order and the freezing order (nor over CCOG and CCIC to make the affidavit of assets order). The arguments in relation to these orders overlap but are not identical. I will indicate the differences at the appropriate points.[79]The first point, common to both, is that because CCOG is domiciled in Greece, jurisdiction must be established under the Brussels I Regulation.[80]Second, it is not sufficient for that purpose for the English court to have been seised of the underlying dispute, or that CCOG submitted to the English jurisdiction by defending the case on the merits. That is because adjudicatory jurisdiction does not comport what Mr Layton QC calls “executory jurisdiction” but which I consider is better called “enforcement jurisdiction”. A court which has had jurisdiction over the substance, but which will not have jurisdiction over enforcement, will have jurisdiction (which he describes as parasitic jurisdiction) only to grant provisional or protective measures in support of its adjudication on the substance: Case C-391/95 Van Uden Maritime BVv Firma Deco-Line 1998] ECR I-7091. For this point he relies on the distinction in the Brussels I Regulation between jurisdiction over the merits in Chapter II and enforcement in Chapter III, and on Babanaft International Co SA v Bassatne [1990] Ch 13, at 34. Neither the receivership order nor the freezing order were made in support of the adjudication on the substance.[81]Third, in any event, the receivership order by way of equitable execution is not a provisional or protective measure and therefore does not fall within the scope of what Mr Layton QC calls “parasitic” jurisdiction. The order is in reality a final measure, which aims to secure final enforcement by payment to the judgment creditor through the receiver. It does not preserve the status quo, but transforms it by achieving equitable execution.[82]Fourth, the only basis for jurisdiction under the Brussels I Regulation would be Article 31, but that would not apply, because(1) it applies only to “provisional including protective” measures, and the three orders were not such measures;(2) there was no “real connecting link” between the measure and the territorial jurisdiction of the court granting the orders (Van Uden, at [40]; Banco Nacional de Comercio Exterior SNC v Empresa de Telecommunicaciones de Cuba SA [2007] EWCA Civ 662, [2007] 2 Lloyd’s Rep 484, at [20]-[28]) because the subject matter of the receivership order is the Concession in Yemen and the oil revenues earned from it abroad; the freezing order primarily freezes property situate abroad, namely CCOG’s rights under the Concession and the Concession Agreements; and the affidavit of assets order required evidence about the assets of companies incorporated in Lebanon and domiciled in Greece which had no assets in England.[83]Fifth, in any event the three orders were “proceedings relating to enforcement” within Article 22(5), irrespective of whether enforcement was to take place within a Regulation State.

B Domicile

[84]Article 60 of the Brussels I Regulation provides:
“For the purposes of this Regulation, a company or other legal person or association of natural or legal persons is domiciled at the place where it has its: (a) statutory seat, or (b) central administration, or (c) principal place of business.”
[85]As I have said, it was accepted before the judge that there was no need for her to decide the domicile of CCOG for the purposes of the applications.[86]CCOG now wishes to argue that it has a domicile in Greece for the purposes of personal jurisdiction. It accepts (as it must) that it is domiciled in the Lebanon, because its “statutory seat” is located there. But it says that it is also domiciled in Greece because that is where its central place of business is located. It says that jurisdiction is a matter for the court to take of its own motion in the context of the application before it.[87]I am satisfied that(a) it would be quite wrong for the point to be taken now; but(b) in any event there is nothing in the point.[88]When a jurisdictional issue of domicile is raised, it is to be determined on the basis of a “good arguable case” test: Canada Trust Co v Stolzenberg (No 2) [1998] 1 WLR 547, at 558, per Waller LJ, approved [2002] 1 AC 1 at [13], and in Bols Distilleries BV v Superior Yacht Services Ltd [2006] UKPC 45, [2007] 1 WLR 12, at [28]. See also Kolden Holdings Ltd v Rodette Commerce Ltd [2008] EWCA Civ 10, at [49]-[52].The burden of proof, as distinct from the standard of proof, is not likely to be decisive. If the argument on one side is clearly better than the argument on the other, that will normally be sufficient to resolve the issue.[89]If the point had been taken properly before Gloster J there would have been full witness statements on both sides dealing with the matter, and she would have been able to take a view on the material before her. What was before her to support CCOG’s case was some material in witness statements to the effect that CCOG was principally operated from Athens, and that correspondence was directed to it in Athens from the group’s London office.[90]It would be wholly unfair to Mr Masri for this court to be asked to determine for the first time CCOG’s domicile on the basis of the limited evidence before the judge. But in any event (and irrespective of the burden of proof) it goes nowhere near showing that CCOG is domiciled in Greece. All the available material points in the direction of it not being domiciled in Greece.[91]First, CCOG challenged the exercise of jurisdiction by the English court on forum conveniens grounds on the basis that it had no domicile in a Brussels I Regulation State: Consolidated Contractors International v Masri [2006] 1 WLR 830, at [9]-[10], where it was recorded that CCOG was not domiciled in a state to which the Regulation applied. Second, the agreed statement of facts in the appeal to the House of Lords recorded that CCOG was domiciled in Lebanon. Third, CCOG and CCIC have brought proceedings in Lebanon and in Greece, which seek negative declaratory relief in the form of declarations that the liability judgment of the English court is not enforceable in Lebanon or Greece respectively. In the Lebanese proceedings it is said that CCIC and CCOG “are Lebanese and their head offices are in Beirut” and that CCOG “does not have any branch in any country of the European Union.” In the Greek proceedings it is said that CCIC has an office in Greece and assets there, but “its seat and the center of its decision making and of its operations are in Beirut (Lebanon).” As regards CCOG, the Greek pleading says that it “may acquire financial assets in Greece (without having a permanent establishment in Greece), ” but “its real seat and the center of its decision making and of its operations are also in Beirut (Lebanon).”

C Jurisdiction to make post-judgment ancillary orders

[92]It follows therefore, that, subject to the Article 22(5) points, the jurisdiction of the English court to make the orders depends on the ordinary principles of English law: Brussels I Regulation, Article 4(1). There could on that basis, therefore, be no doubt that the English court had in personam jurisdiction to make the ancillary orders by virtue (inter alia) of the submission by CCOG and CCIC to the jurisdiction in defending the case on the merits.[93]I will indicate what my conclusions would have been on the points taken by CCOG on this aspect of the Brussels I Regulation had they been relevant.[94]Essentially they would have turned on the power of the court which has been seised with the substance of the matter to order protective or provisional measures after judgment in the light of the rulings of the European Court in Case C-391/95 Van Uden Maritime BVv Firma Deco-Line 1998] ECR I-7091 and in Case C-99/96 Mietz v Intership Yachting Sneek BV [1999] ECR I-2277.[95]In Van Uden arbitral proceedings had been commenced in the Netherlands by a Dutch company against a German company. But for the arbitration agreement the Dutch courts would have had jurisdiction under Article 5(1) of the Brussels Convention in an action against the German company, as the Netherlands was the place of performance of the relevant obligation. The Dutch company sought an order from the Dutch court for a provisional part payment of the disputed debt in interim proceedings (kort geding). The Dutch Supreme Court referred to the European Court the questions (inter alia): whether it was relevant that the dispute in question was subject to arbitration; whether the jurisdiction of the court hearing the application for interim relief was subject to the condition that the measure sought must take effect or be capable of taking effect in the State of that court, in particular that it must be enforceable there, and whether it is necessary that such a condition should be met at the time when the application is made; and whether it was relevant that the case related to a claim for interim payment of a contractual consideration.[96]The European Court distinguished between cases in which the court which made the order had jurisdiction over the substance of the case under the Brussels Convention, and those in which it did not. Where the national court had jurisdiction over the substance of the case, the European Court held (paras 19, 21 and 22) that that court also had jurisdiction to order provisional or protective measures, without that jurisdiction being subject to any further conditions, such as that the order must be capable of enforcement in the State where the order is made. The same point is made in Mietz at paras [40]-[41][97]It follows that even if CCOG were domiciled in Greece, the English court as the court having jurisdiction to hear the substance of the case would have power to order provisional or protective measures. The effect of these decisions is that the court with jurisdiction over the substance of the case has jurisdiction to grant any ancillary order. There is no reason to doubt that that includes orders both pre-judgment and post-judgment, and would include a receivership order.[98]The only decision which throws doubt on this analysis is Babanaft International Co SA v Bassatne [1990] Ch 13, the first case deciding that the English court had jurisdiction to impose a worldwide Mareva injunction. It was a case of a post-judgment injunction.[99]For present purposes it is relevant because Kerr and Nicholls LJJ considered the application of Articles 16(5) and 24 of the Brussels Convention (now Articles 22(5) and 31 of the Brussels I Regulation) to post-judgment Mareva injunctions. Article 31 provides (as did Article 24):
“Application may be made to the courts of a Member State for such provisional, including protective, measures as may be available under the law of that State, even if, under this Regulation, the courts of another Member State have jurisdiction as to the substance of the matter.”
[100]The reason why Kerr and Nicholls LJJ considered the point was that the judgment debtors were resisting the injunction on the ground that Article 16(5) of the Brussels Convention precluded the grant of the injunction and that the appropriate remedy for the judgment creditors was to obtain an order in the court in the State where the assets were, pursuant to Article 24: [1990] Ch at 16. Mr Anthony Clarke QC (as he then was) argued successfully that Article 16(5) was not engaged because the injunction was not a proceeding concerned with the enforcement of judgments.[101]The defendants/judgment debtors were not domiciled in a Brussels Convention State. Both were Lebanese nationals, and Kerr LJ said (at 22) that it was not clear whether they were still domiciled in the Lebanon: one was resident mainly in Switzerland (the decision was prior to the Lugano Convention) and the other in Greece (to which the Brussels Convention did not then apply).[102]Kerr LJ considered (at 35) that a post-judgment provisional protective order fell within the scope of Article 24 (now Article 31): after judgment “the substance of the matter” referred to in Article 24 consisted of the “proceedings concerned with the enforcement of judgments” referred to in Article 16(5) (now Article 22(5)), which were within the exclusive jurisdiction of the state where the assets are. Article 24 would be available in the interim, pending enforcement of the judgment there, to entitle the English court to grant a Mareva injunction over the foreign assets pending execution abroad. Nicholls LJ shared this view: at 46.[103]I will revert to what Kerr and Nicholls LJJ said about Article 16(5), but I do not consider that what they said about Article 24 binds this court to hold that, where a defendant/judgment debtor is domiciled in a Brussels I Regulation State, post-judgment orders which are designed to assist, or preserve the position until, execution can only be made in circumstances permitted by Article 31 of the Brussels I Regulation. There are two reasons for this. First, it is clear that neither of the defendants was domiciled in a Brussels Convention country. Consequently the expression of opinion is plainly obiter. Secondly, this was a judgment given only a year or so after the United Kingdom’s accession to the Brussels Convention came into force, and more importantly, 10 years before the ruling in Van Uden that where the court which grants the measures had jurisdiction as to the substance of the case the Brussels Convention did not limit the court’s powers to order interim measures.[104]Consequently even if one of the defendants in Babanaft had been domiciled in a Brussels Convention country, the court’s jurisdiction would not have derived from Article 24 of the Brussels Convention but from its jurisdiction to hear the substance of the dispute against the judgment debtors which had led to the judgment debt.[105]It is therefore unnecessary to elaborate on the second aspect of the ruling in Van Uden, which was that where the national court did not have jurisdiction to determine the merits, then it could exercise jurisdiction to order provisional or protective measures under what is now Article 31, subject to these conditions:(a) the expression “provisional, including protective, measures” meant measures which, in matters within the scope of the Convention, were intended to preserve a factual or legal situation so as to safeguard rights the recognition of which is otherwise sought from the court having jurisdiction as to the substance of the case;(b) the grant of provisional or protective measures was conditional on, inter alia, the existence of a real connecting link between the subject-matter of the measures sought and the territorial jurisdiction of the Contracting State of the court before which those measures were sought;(c) the court must take into consideration the need to impose conditions or stipulations such as to guarantee their provisional or protective character: paras 37, 40-41.[106]This part of the ruling does not apply because, as I have endeavoured to show, CCOG is not domiciled in a Regulation State, and consequently it is not necessary to find a positive basis for jurisdiction under the Brussels I Regulation; but if it were domiciled in a Regulation State, jurisdiction to make the orders would have derived from the jurisdiction over the merits. If, however, Article 31 had applied, then in my judgment:(a) the relief sought and obtained in this jurisdiction were measures intended to safeguard the rights of Mr Masri which had been vindicated by the judgments on the merits; and(b) there was a sufficient connecting link between the subject matter of the measures and the territorial jurisdiction of the United Kingdom because of the in personam nature of the relief and the court’s personal jurisdiction over CCOG. The orders were consistent with the approach of the English courts to worldwide freezing orders: Republic of Haiti v Duvalier [1990] 1 QB 202; Credit Suisse Fides Trust SA v Cuoghi [1998] QB 818. Those cases were decided before Van Uden, but in my judgment there is nothing in Van Uden which casts any doubt on them.[107]Nor is there anything in Banco Nacional de Comercio Exterior SNC v Empresa de Telecommunicaciones de Cuba SA [2007] EWCA Civ 662, [2007] 2 Lloyd’s Rep 484 which would have stood in the way. In that case a Mexican bank had registered in England an Italian judgment enforcing an arbitral award in its favour. It sought a worldwide freezing order under Article 47(1) of the Brussels I Regulation (which provides that the enforcing court may grant provisional and protective measures in support of enforcement). The Court of Appeal held that Article 47(1) is subject to the Article 31 conditions imposed by the ruling in Van Uden. The order was refused because there was no connecting link between the subject matter of the measure sought and the territorial jurisdiction of the English court conditions. That was a case involving only the enforcement of a foreign judgment, and there were no other connections with England. D Article 22(5) CCOG’s argument

D Article 22(5)

[108]CCOG’s argument is:(1) the receivership order is “proceedings relating to enforcement” within Article 22(5) because it is enforcement, and is concerned with the “dispossession” of the judgment debtor and, with the threat of contempt, the “recourse to force ... in order to ensure the effective implementation of judgments” (C-261/90 Reichert v Dresdner BankAG [1992] ECR I-2149 at [27], adopting the Jenard Report);(2) the freezing order falls within “proceedings concerned with enforcement” within Article 22(5), and amounts to a “recourse to force … on movable property in order to ensure the effective implementation of judgments”: Reichert at [27]);(3) the affidavit of assets is also a measure “concerned with enforcement” for the purposes of Article 22(5).

The scope of Article 22(5)

[109]The starting point is that, even if CCOG is not domiciled in a Brussels I Regulation State, Article 22(5) will apply to proceedings within its scope.[110]Article 22(5) provides: The following courts shall have exclusive jurisdiction, regardless of domicile: … in proceedings concerned with the enforcement of judgments, the courts of the Member State in which the judgment has been or is to be enforced[111]The Jenard Report on the Brussels Convention (which remains authoritative in relation to the Brussels I Regulation) said of this provision:
“Article 16(5) provides that the courts of the State in which a judgment has been or is to be enforced have exclusive jurisdiction in proceedings concerned with the enforcement of that judgment. What meaning is to be given to the expression “proceedings concerned with the enforcement of judgments”? It means those proceedings which can arise from ‘recourse to force, constraint or distraint on movable property in order to ensure the effective implementation of judgments and authentic instruments [citing Braas, Précis de procedure civile, Vol 1, para 808].Problems arising out of such proceedings come within the excusive jurisdiction of the courts for the place of enforcement.”
[112]The original French of the penultimate sentence was:
“Il faut entendre par ‘contestations relatives a l’exécution des jugements’ les contestations auxquelles peut donner lien le ‘recours à la force, à la contrainte ou à la dépossession de biens meubles ou immeubles en vue d’assurer la mise en oeuvre materielles des decisions, des actes.”
For CCOG, Mr Layton QC says that this shows that there is an important weakness in the English translation, because “dépossession” should be translated by “dispossession” and that the Jenard Report therefore had in mind that “proceedings concerned with the enforcement of judgments” would include all proceedings concerned with the dispossession of assets. If M Jenard had meant “distraint” the original French would have been “saisie-execution”.

Reichert v Dresdner Bank AG

[113]The Jenard Report was adopted on this point in Case C-261/90 Reichert v Dresdner BankAG [1992] ECR I-2149.[114]Mr Reichert and his wife, who were German nationals and residents, owned property in Antibes, which they decided to give to their son. Dresdner Bank, a creditor of Mr and Mrs Reichert, challenged the gift before the French court by the action paulienne, which is a procedure under French law whereby a creditor can have a transaction set aside if a debtor has alienated property in derogation of the creditor’s rights.[115]At first the bank relied on Article 16(1) of the Brussels Convention (exclusive jurisdiction of the place of immovable property) as ground of French jurisdiction. In Case C-115/88 Reichert v Dresdner Bank [1990] ECR I-27 the European Court ruled that the action paulienne did not come within Article 16(1). The bank then relied on further grounds of jurisdiction, including Articles 16(5) and 24 of the Brussels Convention (Articles 22(5) and 31 of the Brussels I Regulation). The French court then asked for a ruling whether the case came within Article 5(3), Article 24 or Article 16(5): Case C-261/90 Reichert v Dresdner BankAG [1992] ECR I-2149.[116]It is important to note (as Lord Neuberger pointed out in argument) that there was in fact no judgment in favour of the bank. What the bank was arguing was (as some German writers had suggested) that Article 16(5) applied when enforcement was “indirectly” at issue, and consequently the bank claimed that the French court had jurisdiction under Article 16(5) because the purpose of the action to set aside the transaction was to prepare for enforcement of the bank’s claim to the property.[117]The European Court rejected that argument and ruled (paras [26]-[28]):(1) Article 16 (now Article 22) must not be given a wider interpretation than is required by its objective, since it results in depriving the parties of the choice of forum which would otherwise be theirs; and(2) the action paulienne preserved the interests of the creditor with a view in particular to a subsequent enforcement of the obligation, but it was not intended to obtain a decision in proceedings relating to “recourse to force, constraint or distraint on movable or immovable property in order to ensure the effective implementation of judgments and authentic instruments” (adopting the Jenard Report), and did not therefore come within the scope of Article 16(5).[118]The Court also stressed (at [26]) that the essential purpose of the exclusive jurisdiction of the courts of the place in which the judgment has been or is to be enforced is that it is only for the courts of the Member State on whose territory enforcement is sought to apply the rules concerning the action on that territory of the authorities responsible for enforcement. This emphasises the importance of the participation of the State in many types of enforcement action. This is what Gaudemet-Tallon, Compétence et exécution des jugements en Europe, 3rd ed, para 120, p 86, refers to as “l’exécution proprement dite.” She says:
“Les articles 16-5° [Brussels Convention] et 22-5° [Brussels I Regulation] reprennent un règle très généralement admise selon laquelle seuls les tribunaux de l’État du lieu d’exécution sont compétents pour des mesures d’exécution devant prendre place sur leur territoire. Cette compétence exclusive ne concerne que le contentieux de la réalisation de la mesure d’exécution, l’exécution proprement dite. En revanche, les art. 16-5° .. et 22-5° … ne s’appliquent pas pour déterminer la compétence d’une jurisdiction qui se contente d’autoriser ou d’ordonner une mesure d’exécution: une jurisdiction d’un État contractant peut autoriser une saise conservatoire de biens situés sur la territoire d’un autre État contractant.”

English authorities

[119]Babanaft International Co SA v Bassatne [1990] Ch 13 was decided before Reichert,but what Kerr and Nicholls LJJ said about the non-application of Article 16(5) of the Brussels Convention to a worldwide Mareva injunction is consistent with Reichert. Kerr LJ said (at 35) that a “holding order” in the form of a post-judgment Mareva injunction, covering assets of a defendant in the territory of a Brussels Convention state pending proceedings for the enforcement of the judgment in accordance with the applicable provisions of the Brussels Convention and the national law of that state, would not constitute any infringement of Article 16(5). So also Nicholls LJ said (at 46) that Article 16(5) did not apply because the injunction was not an order made in proceedings in which the judgment was sought to be enforced; the enforcement of the judgment in other countries, by attachment or like process, in respect of assets which were situated there was not affected by the order; and the order did not attach those assets; and the English court was not attempting in any way to interfere with or control the enforcement process in respect of those assets.[120]Article 22(5) was applied by the House of Lords in Kuwait Oil Tanker Co v Qabazard [2003] UKHL 31, [2004] 1 AC 300. Mr Qabazard had conspired with others to defraud the Kuwait Oil Tanker Company SAK and Sitka Shipping Inc of large sums of money. Moore-Bick J gave judgment against him for over US$130 million. He had an account with UBS AG in Switzerland. UBS AG had a branch in London. The question was whether an English court should make a garnishee order against UBS in respect of money held by the judgment debtor in an account in Switzerland. The Court of Appeal held that the place where the garnishee order was being enforced was England. It was there that UBS was being required to pay. Consequently Article 16(5) of the Lugano Convention did not deprive the English court of jurisdiction. The House of Lords reversed this decision.[121]Lord Bingham said (at [5]) that it followed from Société Eram that Switzerland was the state in which enforcement would take place because it was there that the debt is situated upon which it was sought to execute. English authority pointed towards that conclusion (Babanaft International Co SA v Bassatne), as did the Jenard Report and Reichert v Dresdner Bank AG. Consequently, very much the same considerations of principle, comity and convenience as underlay the English law were reflected in the jurisprudence on the Brussels and Lugano Conventions also.[122]Lord Hoffmann said (at [16-17]):
“[16] It is not correct to characterise the garnishee or third party debt order as a claim in personam made against the third party in England. It is enforcement of the judgment in rem against the debt, which in this case is situated in Switzerland. Article 16(5) therefore confers exclusive jurisdiction on Switzerland and it is understandable that UBS’s Swiss law expert should have said that a Swiss court would regard the order as an infringement of its sovereignty. Indeed, the judgment of the Court of Appeal produces the extraordinary result that the courts of any member state in which UBS maintains a branch have exclusive jurisdiction under article 16(5) to make a garnishee or similar order in respect of a debt in Switzerland - a strange form of exclusivity.”

Conclusions

[123]I am satisfied that neither the receivership order nor the freezing order is within Article 22(5). First, it seems to me clear from Reichert that Article 22(5) is concerned with actual enforcement, and not with steps which may lead to enforcement. I do not accept that the receivership order dispossesses the judgment debtor, nor does it amount to a recourse to force. It is plain from the context of the Jenard Report and the decision in Reichert that what is contemplated is actual execution. The Jenard Report, Reichert, Babanaft and Kuwait Oil Tanker speak with one voice.[124]Second, there is no suggestion here that execution might take place in a State to which the Brussels I Regulation or the Lugano Convention applies. The very fact that it is not possible to identify a State where there might be actual execution underlines the inapplicability of Article 22(5). The orders may pave the way for execution, but they are not proceedings concerned with enforcement of judgments.

Reflexive effect

[125]Consequently the question whether Article 22(5) has “reflexive” effect does not arise. The problem has long been recognised: see Dicey, paras 12-021-12-022; 23-026-027. The way in which it arises can be illustrated by two examples. First, Article 22(1) of the Brussels I Regulation gives exclusive jurisdiction, in the case of proceedings which have as their objects rights in rem in immovable property, to the courts of Regulation State where the property is situate. What if the defendant is domiciled in England and is sued in England, and the land is in a non-Regulation State, such as Canada? Second, Article 23 provides that if the parties, one or more of whom are domiciled in a Regulation State have agreed that the courts of a Regulation State are to have jurisdiction to settle any disputes which may arise between them. What if they have designated the courts of a State which is not a Regulation State, such as the courts of New York and an action is brought in England in breach of the jurisdiction agreement? In such cases it would be odd if the Brussels I Regulation did not permit the English court to stay its proceedings.[126]It is not necessary to refer to the considerable material on this controversial and difficult question. Some of it was surveyed by Colman J in Konkola Copper Mines plc v Coromin [2005] EWHC 898 (Comm), [2005] 2 Lloyd’s Rep 555 (affirmed without reference to this point: [2006] EWCA Civ 5, [2006] 1 Lloyd’s Rep 410), in which it was held that the English court had the power to stay an English action against English domiciled reinsurers who had agreed to the exclusive jurisdiction of the Zambian courts.[127]If the point had arisen for decision in this case it seems to me that the rule embodied in Article 22(5), and the decisions in Société Eram and Kuwait Oil Tankers Co v Qabazard, reflect the principle of international law that one State should not take enforcement measures in the territory of another State. Consequently there would be every reason why the court of a Regulation State should not purport to exercise enforcement jurisdiction in relation to assets in a non-Regulation State. Consequently it would not matter whether the judgment debtor was domiciled in England or not. The English court would not have subject matter jurisdiction for the reasons given in section IVof this judgment. E Discretion Gloster J’s exercise of discretion

E Discretion

[128]In summary, Gloster J decided that it was just and convenient to make an order for the appointment of a receiver. Unless such an order were made, it would be extremely difficult for Mr Masri to locate the oil revenues and take effective steps in relevant jurisdictions to enforce his judgment against them. It was right to make the freezing order. There was a sufficient connection with England. There was a real and substantial risk of dissipation. Since the date of the judgment on liability, the actions of the defendants had demonstrated that they proposed to take advantage of any opportunity open to them to resist enforcement of the judgments of the English courts, to evade their responsibility to pay Mr. Masri what is due to him and to put every obstacle in his way to prevent him from enforcing judgment against them. If injunctive relief was refused, there was a real risk that the judgment would go unsatisfied. The refusal of the defendants to honour the existing judgments and their efforts to resist enforcement in other jurisdictions justified the order for provision of information through the affidavit of assets order.

CCOG’s arguments

[129]The main points made by CCOG on the exercise of discretion are these. The courts should only grant extraterritorial freezing injunctions over the foreign assets of a foreign company in exceptional cases (which this was not): Derby v Weldon (Nos 3 & 4) [1990] 1 Ch 65, 79; Babanaft International Co SA v Bassatne [1990] Ch at 37; Republic of Haiti v Duvalier [1990] 1 QB 202, 215. In general it will be more appropriate for the claimant to seek relief in the state of the defendant’s domicile or the state where the assets are located: Credit Suisse Fides Trust SA v Cuoghi [1998] QB 818, 824.[130]The evidence of dissipation relied on by the judge was thin. CCIC is a large international construction company, with assets around the world on working projects. There is no reason why CCOG would dissipate its assets if CCIC would not. Since the judgment, CCOG (and CCIC) have served the first tranche of their affidavit of assets, which record a wide range of valuable assets, which in CCOG’s case are US$130 million. With one exception (the Concession) none of them was covered by any injunction and thus CCOG was at liberty to dissipate them if it so chose. But none of those assets has been dissipated.[131]The judge relied on the fact that the judgment debt had not been paid. But it is a necessary condition of a post-judgment freezing order being sought that the judgment will not have been paid. It does not follow from non-payment that a defendant intends to dissipate its assets. CCOG’s intends to resist enforcement abroad by any methods legitimate and appropriate under local law. The judge relied on a concern that CCOG is able to assign the Concession to another party. But the PSA contains restrictions on assignment, and there was no evidence of any intention so to assign. Third, the judge relied on the fact that proceedings to resist enforcement have been commenced abroad. But that merely shows that CCOG intends to resist enforcement, and does not show any intention to dissipate. Fourth, she relied on the fact that CCOG changed the location of one bank account from Switzerland to Lebanon. The judge had little basis for expressing some suspicion of CCOG’s explanation that it had purely commercial motivations.[132]If there is no intention or ability to enforce against a particular asset, then it is not legitimate to grant a post-judgment freezing order over it. It is not legitimate to use a freezing injunction merely as a collateral means of putting pressure on a judgment debtor to pay a judgment debt: Camdex International Ltd v Bank of Zambia (No 2) [1997] 1 WLR 632, 640. If an asset which is the subject of the injunction is unavailable for execution, then a post-judgment freezing order cannot be granted in respect of it: Hitachi Leasing (Singapore) Pty v Vincent Ambrose [2001] 2 SLR 525. Consequently if the judgment creditor has no intention of using legitimate measures of enforcement against an asset, he is not entitled to a freezing order over it. In the present case, Mr Masri has no intention of commencing enforcement proceedings over the assets governed by the freezing order. The assets covered by the freezing order are the rights in the Concession (which are situate either in Yemen or Bermuda) and the oil lifted in Yemen to which CCOG is entitled or which it owns. Mr Masri has never commenced enforcement proceedings in the Yemen or Bermuda against those assets. The primary purpose of the freezing order is to constrain CCOG’s freedom so that CCOG cannot escape earning income for the receiver to receive. If the receivership order is set aside, the freezing injunction has no purpose.

Conclusions

[133]The main attack by CCOG in relation to the exercise of discretion is on the freezing order. No doubt that is because once CCOG has disposed of its interest in the Concession, or can sell the oil to associates, the receivership order will have little effect.[134]I am satisfied that there is no error of principle in Gloster J’s exercise of discretion in relation to the three orders. In particular, a freezing order will be granted more readily after judgment than before: Babanaft International Co SA v Bassatne [1990] Ch 13 at 37; Republic of Hait v Duvalier [1990] 1 QB 202, at 214; Dicey, para 8-014. It is sufficient for the grant of relief that there is a real risk that the judgment will remain unsatisfied if injunctive relief is refused: Ketchum International plc v Group Public Relations Holdings Ltd [1997] 1 WLR 4 (CA).[135]The receivership and freezing orders were granted for a legitimate purpose, namely to assist in the ultimate collection of the debt. Whether they will have that effect remains to be seen. But if the matter is looked at in the round, in the light of the careful and proportionate limitations on the scope of the receivership order and the freezing order, then it seems to me plain that the discretion was properly exercised in the unusual and perhaps unique circumstances of the present case. No separate issue arises in relation to the affidavit of assets order.

VI Can a receiver be appointed by way of equitable execution over future debts?

[136]This was not an issue before Gloster J. She merely noted that the appointment of a receiver by way of equitable execution may be made wherever it is just and convenient so to do, over any assets of a company including future debts. In so doing she applied the decision in Soinco v Novokuznetsk Aluminium [1998] QB 406, in which Colman J held that although the Court of Chancery before 1873 would not have appointed a receiver over future debts the court now had the power to do so.

CCOG’s argument

[137]On this appeal CCOG takes a point not raised before the judge. CCOG says that the judge had no power to make a receivership order in respect of future debts. Mr Masri seeks to uphold the judge’s decision, on the basis that Soinco v Novokuznetsk Aluminium was right to hold that there is present-day impediment to the appointment of a receiver over future assets but wrong to hold (obiter) that there was no power to do so before 1873.[138]CCOG’s argument is as follows. The purpose of the appointment of a receiver by way of equitable execution is not to reach types of property that common law execution cannot in principle attach, but merely to give equitable relief where legal execution is in principle available but there are difficulties with its accomplishment. Before and after the Judicature Act 1873 the traditional common law execution methods could not attach future commercial debts: a third party debt order can only cover existing debts (including those that have accrued now but are payable in the future); writs of fieri facias can only apply to physical goods; and charging orders do not cover contractual debts: Charging Orders Act 1979, section 2. Section 25(8) of the Judicature Act 1873(and so also section 37(1) of the Supreme Court Act 1981) did not enlarge the power of the court to make orders for the appointment of receivers by way of equitable execution. The post-Judicature Act authorities are binding authority for the proposition that, as a result, a receiver by way of equitable execution cannot be appointed over future debts: Holmes v Millage [1893] 1 QB 551, 555 (CA). As a matter of policy, an order appointing a receiver over future debts to be earned from a given asset (which is not, itself, to be received) would be unattractive in principle, because it would amount to an injunction, without limit of time, preventing the judgment creditor from dealing with his assets in the ordinary course of business.[139]The authorities (Bourne v Colodense [1985] ICR 291; Maclaine Watsonv International Tin Council [1988] Ch 1) which suggest that a receiver may be appointed in respect of a right of indemnity do not bear on the question of future debts. The only authorities to the effect that a receiver may be appointed in respect of future debts are obiter and distinguishable (Webb v Stenton (1883) 11 QBD 518) or are wrong (Soinco vNovokuznetsk Aluminium [1998] QB 406) and inconsistent with Court of Appeal authority.[140]This aspect of the present appeal involves these questions. First, to what extent are the present powers of the court constrained by pre-1873 practice? Second, was there a rule, established before or after 1873, that a receiver could not be appointed over future debts? Third, if there was such a rule, is this court now bound to apply it?

Section 37(1) and the pre-1873 practice: the early authorities

[141]It may seem curious that, in deciding in 2008 whether the court may exercise a power under section 37(1) of the Supreme Court Act 1981, it is necessary to consider whether the exercise of the power is justified by pre-1873 practice.[142]By section 25(8) of the Judicature Act 1873 a receiver could be “appointed by an interlocutory order of the Court in all cases in which it shall appear just or convenient that such order should be made.” A similar power was embodied in section 45(1) of the Supreme Court of Judicature (Consolidation) Act 1925, and section 37(1) of the Supreme Court Act 1981 now provides that the court “may by order (interlocutory or otherwise) grant an injunction or appoint a receiver in all cases in which it appears to the court just and convenient to do so.”[143]The starting point is the well-known and influential decision in North London Railway Co v Great Northern Railway Co (1883) 11 QBD 30. That was a case involving the power to grant injunctions. It was held that section 25(8) of the 1873 Act had not given to the court any jurisdiction to grant an injunction in a case where prior to the 1873 Act there was no legal right or liability. The words “just or convenient” did not increase the power of any part of the court to the extent of altering the rights of parties so as to give to either a right which did not exist in law or equity before the 1873 Act: at 36, 38 (per Brett LJ), 39 (per Cotton LJ). That is the ratio of the decision, which is aptly expressed in Cotton LJ’s statement that “…the sole intention of the section is this: that where there is a legal right which was, independently of the Act, capable of being enforced either at law or in equity, then, whatever may have been the previous practice, the High Court may interfere by injunction in protection of that right.”[144]Both Brett LJ and Cotton LJ, however, expressed views (but different ones) on the extent to which the court would be bound by pre-1873 practice. Brett LJ said (at 36) that it was not necessary to decide whether section 25(8) had given power to issue an injunction in cases where no court could have issued an injunction before the 1873 Act, as it was only necessary to decide whether section 25(8) gave power to the court to issue an injunction in a case where no court before the 1873 Act could have given any remedy whatever. But his inclination would have been to hold that if no court had the power of issuing an injunction before the 1873 Act, no part of the High Court had power to issue it after the 1873 Act. But Cotton LJ said (at 39) that the effect of section 25(8) was to give the court “power, if it should think it just or convenient, to superadd to what would have been previously the remedy, a remedy by way of injunction, altering therefore not in any way the rights of parties so as to give a right to those who had no legal right before, but enabling the Court to modify the principle on which it had previously proceeded in granting injunctions, so that where there is a legal right the Court may, without being hampered by its old rules, grant an injunction where it is just or convenient to do so for the purpose of protecting or asserting the legal rights of the parties. That, in my opinion, is the real meaning of this section. In my opinion, all that was done by this section was to give to the High Court power to give a remedy which formerly would not have been given in that particular case, but still only a remedy in defence of or to enforce rights which according to law were previously existing and capable of being enforced …”[145]That is why Cotton LJ formulated the general principle in this way: “…the sole intention of the section is this: that where there is a legal right which was, independently of the Act, capable of being enforced either at law or in equity, then, whatever may have been the previous practice, the High Court may interfere by injunction in protection of that right.” (at 40: emphasis added)[146]The first case to deal with the effect of section 25(8) on the power to appoint a receiver by way of equitable execution was Manchester and Liverpool District Banking Co., Ltd v Parkinson (1888) 22 QBD 173 (CA). The court consisted of Lord Esher MR (as Brett LJ had become) and Fry and Lopes LJJ. Without citation of North London Railway Co v Great Northern Railway Co all three members of the court seem to have accepted, obiter, that section 25(8) gave the court powers which did not exist prior to 1873, at any rate where special circumstances existed: see at 175 (Lord Esher MR), 177 (Fry LJ) and 178 (Lopes LJ).[147]But later cases held that what they meant was special circumstances which would have enabled the court to appoint a receiver prior to 1873: Harris vBeauchamp Bros [1894] 1 QB 801, 809-810 (CA); Morgan v Hart [1914] 2 KB 183, 189 (CA). In those decisions (and in Holmes v Millage [1893] 1 QB 551, 557 (CA) and Edwards & Co v Picard [1909] 2 KB 903, 905 (CA)) it was held that the Judicature Acts did not enlarge the powers of the court to appoint a receiver. In Holmes v Millage (at 557, per Lindley LJ) and Morgan v Hart (at 191, per Buckley LJ) it was said that North London Railway Co v Great Northern Railway Co was authority for the proposition that section 25(8) gave no power to the court to grant an injunction in a case where no court could have granted one before the 1873 Act. This seems to have been based on a misunderstanding. In fact, as I have said (paragraphs 144-145, above), Brett LJ left the question open (but expressing a view that the court would not have the power) whereas, by contrast, Cotton LJ accepted that section 25(8) expanded the scope of the remedies which might be available.[148]In the same period there is another decision of this court on the appointment of receivers by way of equitable execution which echoes the approach of Cotton LJ. In Cummins v Perkins [1899] 1 Ch 16 (CA), a decision which was not cited on this appeal, it was held that a receiver could be appointed even when the judgment debt, for costs, had not been quantified. Lindley MR said (at 19-20):
“…the introduction of [section 25(8) of the Judicature Act 1873] does not curtail the power of the Court to grant injunctions or to appoint receivers: it enlarges it. It has not revolutionised the law, but it has enabled the Court to grant injunctions and receivers in cases in which it used not to do so previously. I will not say where it had no jurisdiction to do so, that would be going too far…”
This decision was applied in Faith Panton Property v Hodgetts [1981] 2 All ER 877, at 881 (CA).

Receivership and future debts

[149]This court has been referred to several authorities which are said bear on whether a receiver may be appointed by way of equitable execution in relation to future debts.[150]They fall into two groups. The first is a series of authorities from 1883 to 1914, most of which, says CCOG, support the proposition that a receiver may not be appointed over future debts. The second group consists of a decision of this court and a decision at first instance which decide that a receiver may be appointed in respect of a liability which could not be the subject of a garnishee order.

The older authorities

[151]In Webb v Stenton (1883) 11 QBD 518 the Court of Appeal held that future income from a trust (in which the judgment debtor had a life interest) could not be the subject of a garnishee order against the trustees because a garnishee order could only be made when the third party was actually indebted to the judgment debtor. But, significantly for present purposes, both Cave J in the Divisional Court (at 519) and Fry and Lindley LJJ in the Court of Appeal (at 530-531) considered that in these circumstances any injustice to the judgment creditor could be avoided by an application for the appointment of a receiver, which would give the judgment creditor “all that he seeks to obtain by the present order” (at 519) and would be “adequate to meet all that may be required” (at 531). The then current edition of Kerr on Receivers said: “The appointment of a receiver is not limited to such property as may be taken in execution at law, but extends to whatever is considered in equity as assets”: 2nd ed. 1882, p. 88.[152]Holmes v Millage [1893] 1 QB 551 is the cornerstone of CCOG’s argument that there is authority binding on this court for the proposition that a receiver by way of equitable execution cannot be appointed over future debts. In Holmes v Millage the plaintiff obtained judgment against the defendant, who was the Paris correspondent of a London newspaper, the Daily Chronicle, and was paid 8 guineas per week payable through a bank in Paris. The plaintiff sought the appointment of a receiver of the defendant’s salary by way of equitable execution. The Court of Appeal held that the plaintiff was not entitled to the order. The decision was that a receiver could not be appointed over future earnings because(a) courts of equity gave relief where a legal right existed but there were legal difficulties which prevented enforcement of that right in law;(b) the existence of a legal right was essential to the jurisdiction to appoint a receiver;(c) the judgment creditor did not have a legal right to be paid his debt out of the future earnings of the defendant;(d) the Court of Chancery had no jurisdiction to prevent a man from earning his living or receiving his earnings, nor did it reach by its process a kind of property which was not liable to execution;(e) a writ of sequestration was never issued to attach a man’s personal earnings;(f) the Judicature Acts did not enlarge the powers of the court to appoint a receiver.[153]The major thrust of the decision is that a receiver should not be appointed over future earnings. The passages showing most clearly that the decision was concerned with earnings are these passages from the judgment of Lindley LJ (at 554-557) “The common law writs of execution did not extend to future income. The garnishee process did not reach it; nor was the statutory process of charging orders applicable to wages or other remuneration for personal services. … The judgment creditor here has a legal right to be paid his debt, but not out of the future earnings of his debtor; and the Court of Chancery had no jurisdiction to prevent him from earning his living or from receiving his earnings, unless he had himself assigned or charged them. … If the earnings could have been reached under a writ of sequestration, a receiver might have been appointed …but a writ of sequestration was never issued before the Judicature Acts in order to attach a man’s personal earnings. … In [Manchester and Liverpool District Banking Co (1888) 22 QBD 173] an order for a receiver was discharged, because there was no difficulty in enforcing payment of a judgment by the ordinary legal methods. In this case there is such a difficulty; but it does not arise from any impediment which the old Court of Chancery had jurisdiction to remove. The difficulty arises from the fact that future earnings are not by law attachable by any process of execution direct or indirect.”[154]But Lindley LJ also said (at 555):
“We have simply to deal with a case in which an ordinary judgment creditor sought the aid of a Court of Equity to enforce his judgment against property not capable of being reached by any common law process. The only cases of this kind in which Courts of Equity have interfered were cases in which the judgment debtor had an equitable interest in property which could be reached at law, if he had had the legal interest in it, instead of an equitable interest only.”
[155]This passage was referred to with approval in Cadogan v Lyric Theatre Ltd [1894] 3 Ch 338, at 342, and in Morgan v Hart [1914] 2 KB 183 at 189.[156]Cadogan v Lyric Theatre Ltd [1894] 3 Ch 338 is another decision which is of no direct assistance. The judgment debtor was the lessee of a theatre, from which it carried on business. The judgment creditor sought the appointment of a receiver by way of equitable execution over the rents due or becoming due and the profits earned by the judgment debtor. Kekewich J, surprisingly, held that the money paid at the entrance of a theatre for a licence to enter the theatre and to remain there for a time to witness the performances was in the nature of rent of the theatre: at 338. Equally unsurprisingly, the Court of Appeal held that the money paid for tickets was not properly described as rent or profits, but held that the judgment creditor was entitled to the appointment of a receiver of the rents and profits of the debtor’s land. Davey LJ added (at 344):
“I do not think that a receiver appointed at the instance of a judgment creditor is entitled to carry on the business of the debtor, or to take the profits derived from it, though he may be entitled to prevent the debtor or any one else from carrying on business on the debtor’s premises.”
[157]Lord Herschell LC repeated (at 341-342) the point that receivership was used to reach property the legal title of which for some reason could not be reached, citing Holmes v Millage.[158]In Edwards & Co v Picard [1909] 2 KB 903 (CA) the judgment creditors sought the appointment of a receiver of all rents, profits and moneys receivable in respect of the judgment debtor’s interest in three patents. It was not shown that the judgment debtor was actually in receipt of any profits or royalties from the patents. It was held by a majority (Vaughan Williams and Buckley LJJ) that a receiver could not be appointed because (it seems) a patent was simply a right to exclusive manufacture and there was therefore no property for the receiver to receive.[159]Obiter, Buckley LJ added (at 910):
“If the patentee should in the future think proper to employ his patent, which he is not bound to do, the proceeds will be future earnings of which the judgment creditors cannot have a receiver.”
[160]Fletcher Moulton LJ, dissenting, thought that the court could appoint a receiver over future income:
“If there may be such moneys at any time, it is clear that the Court is not obliged to wait till they are actually being paid before appointing a receiver, if it has power to appoint one. It is true that in general it would not appoint a receiver without a probability that the appointment would be effectual and useful. But in the present case it is clearly desirable that the receiver should be appointed as soon as possible in order that nothing may escape him; and, as I have said, the justice of the case is so strongly on the side of helping the judgment creditors that we ought not to allow such a matter of discretion to interfere with our giving them all the assistance we can.”
[161]In Morgan v Hart [1914] 2 KB 183 judgment debtors were granted an order appointing a receiver to “receive the rents, profits and moneys receivable in respect of the defendant’s interest in…furniture and effects” stored in a furniture repository at Southend. There were in fact no rents or receivables, and it was held that the order was wrongly made because it had no effect except that which was equivalent to an injunction restraining the debtor from dealing with his furniture (at 186), and because it was irregular because it was made not for the purposes of execution, but in order to keep the property where it was until the plaintiff could get discovery: at 190. This also is of no direct assistance.[162]The position, then, was, first, that there was consistent Court of Appeal authority (based on what I have suggested was a misunderstanding of the decision in North London Railway Co v Great Northern Railway Co) that the power to appoint a receiver by way of equitable execution was limited to the pre-1873 practice. Second, in Webb v Stenton (1883) 11 QBD 518 two members of this court had expressed a view, obiter, which is only consistent with a view that the court had power to appoint a receiver over future trust income. Third, in Holmes v Millage [1893] 1 QB 551 it had been held that a receiver could not be appointed by way of equitable execution over a man’s future earnings. Fourth, there was no decision among the older authorities that the court had no power to appoint a receiver by way of equitable execution over debts which had not accrued, but which would accrue in the future.

Receivership and rights of indemnity

[163]Consequently, until recently there was no authority directly bearing on the question whether there was a power to appoint a receiver by way of equitable execution over future debts, but the question arose whether there was such a power in relation to a right of indemnity. That is relevant because the same objection could be made to such an order as to an order in relation to future debts, namely that a right of indemnity is not subject to a process of execution at law.[164]Bourne v Colodense [1985] ICR 291 concerned the appointment of a receiver by way of equitable execution over the right of the plaintiff to bring proceedings against his union for an indemnity in respect of an undertaking by the union to pay his costs, so as to enable the plaintiff (who had no other relevant assets of his own) to satisfy an order for costs made against him. Dillon LJ said (at 302):
“The appointment of a receiver by way, as it is traditionally called, of equitable execution is a form of equitable relief to enforce payment of a judgment debt which the court may grant in the special circumstances of a particular case if, as in the present case, the recovery of the judgment debt by the more usual processes of execution or attachment of debts is not practicable. The remedy is, however, discretionary and it is plain that the court would not appoint a receiver if the court were satisfied that the appointment would be fruitless because there was nothing for the receiver to get in.”
[165]The debtor’s asset was a legal chose in action, but execution at law was not available because a claim to be indemnified was not an attachable debt and could not be made the subject of a garnishee[166]Millett J held, applying Bourne v Colodense, that the court had jurisdiction to appoint a receiver by way of equitable execution in respect of a claim by the judgment debtor to be indemnified by a third party even though the claim to be indemnified was not susceptible to any process of legal execution. But the application failed because the applicants had failed to show that they had a good arguable case that the judgment debtor had any justiciable cause of action against the Member States.[167]The reasoning of Millett J was as follows. First, the court has no jurisdiction to appoint a receiver by way of equitable execution merely because in all the circumstances it would be a more convenient mode of obtaining satisfaction of a judgment than the usual modes of execution: Re Shephard (1889) 43 Ch D 131 and Harris v Beauchamp Brothers [1894] 1 QB 801. Second, the special circumstances which would justify the making of an order must be such circumstances as would have enabled the Court of Chancery before the Judicature Acts to have intervened by way of injunction or the appointment of a receiver at the suit of the judgment creditor: Holmes v Millage; Harris vBeauchamp Brothers; Edwards and Co v Picard; and Morgan v Hart. Third, those authorities showed that what was required was that there should be some hindrance arising from the nature of the property which prevented the judgment creditor from obtaining execution at law, but which the appointment of a receiver could overcome. Fourth, Holmes v Millage was not authority for the proposition that a receiver by way of equitable execution could not be obtained over property in which the judgment debtor had a legal, and not a merely an equitable, interest. Fifth, Bourne v Colodense Ltd was authority for saying that the appointment of a receiver by way of equitable execution could overcome the impediments that the ITC had not made and did not intend to make any formal demand on its members, and that a claim to be indemnified by a third party was not amenable to a garnishee order.[168]In the Court of Appeal Ralph Gibson LJ recorded that the ITC had not challenged that part of Millett J’s judgment, but expressed his agreement with it: [1989] Ch at 271. The judgment of the court (Kerr, Nourse and Ralph Gibson LJJ) in Maclaine Watson & Co Ltd v International TinCouncil (No 2) [1989] Ch 286 records that the ITC “rightly did not challenge” that part of Millett J’s judgment, and that these matters were “rightly” not raised again before Millett J: at 302.

Soinco v Novokuznetsk Aluminium

[169]In Soinco v Novokuznetsk Aluminium [1998] QB 406 the application was for the appointment of a receiver by way of equitable execution to receive payments due and which might in the future become due from the fifth defendants to the judgment debtor under a supply contract. It was held by Colman J that a receiver by way of equitable execution could be appointed, notwithstanding that the order would relate, at least in part, to future debts. Colman J did not agree that Holmes v Millage could be explained by the fact that the judgment debtor’s interest was in future wages as distinct from future debts unrelated to a contract of employment. He concluded on the authorities that had the application been before the court in the period between Morgan v Hart and the coming into force of the Supreme Court of Judicature (Consolidation) Act 1925 the court would have been bound to refuse to appoint a receiver by way of equitable execution in respect of any payments which would after the date of the order become due or accruing due. The reason was:
“Such future debts would not, when the order was made, be amenable to execution by garnishee proceedings since such proceedings are inapplicable to future debts because the Court of Chancery would not before 1873 give equitable relief to assist execution in a case where there was no property of a kind which could at the time be made subject to execution by legal process.”
[170]But he concluded that the jurisdiction could be extended to future debts since Bourne v Colodense was binding authority for the proposition that it was not a pre-condition to the exercise of the jurisdiction that there should be debts due or accruing due at the date of the order, and there was no reason why “124 years after the Judicature Acts, the court should deny to itself a jurisdiction which is self-evidently likely to be extremely useful as an ancillary form of execution” (at 422).[171]This decision was applied by the Irish High Court (Peart J) in O’Connell v An Bord Pleanala [2007] IEHC 79 to hold that a receiver by way of equitable execution could be appointed over a claim for damages which had yet to be determined.

Conclusions

[172]Consequently, in my judgment the position on the older authorities is, as I have suggested, that in none of them is the ratio that a receiver cannot be appointed in respect of future debts or future income. There are strong statements in Webb v Stenton (1883) 11 QBD 518 that future income from a trust could be the subject of an order. I accept that the remarks are obiter, but it would be surprising if these judges could express themselves so clearly in this sense in 1883 if there had been an established practice in Chancery prior to 1873 that a receiver by way of equitable execution could not be appointed in respect of future income. If there had been such a rule Holmes v Millage could have been decided very simply on that ground. There would have been no need for the extensive reasoning devoted to the special position of a man’s salary. Lindley LJ identified the question of general importance as being whether a judgment creditor was entitled to a receiver of future earnings. He said that the common law writs of execution did not extend to future income; that charging orders did not apply to wages or other remuneration for personal services; the Court of Chancery did not have the power to restrain a man from earning his living or receiving his earnings. Apart from the passage in Lindley LJ’s judgment referred to above (para 154)there is nothing to support such a rule. I agree with Millett J’s conclusion in Maclaine Watson & Co Ltd v International TinCouncil (No 1) [1988] Ch 1, at 19, that the ratio of Holmes v Millage was that a man’s salary was not attachable at law or in equity, and that the passage from Lindley LJ’s judgment was not part of the ratio.[173]To the extent that these cases support a principle that equitable execution is only available in relation to assets which are liable to legal execution, they are undermined by the second group of authorities, including Bourne v Colodense, which is binding on this court, and which establish that a receiver may be appointed in respect of a claim to an indemnity and that consequently the jurisdiction is not limited to choses in action which are available for legal execution.[174]In my judgment, therefore, there is no authority binding this court to hold that the jurisdiction is not available in relation to future income from a defined asset. In any event, even if the jurisdiction had not been exercised before 1873, I do not think that this court is bound by pre-1873 practice to abstain from incremental change.[175]That does not mean that that section 37(1) is to be taken as conferring an unfettered power. As Lord Brandon said in South Carolina Insurance Co. v AssurantieMaatschappij“De Zeven Provincien” NV [1987] AC 24 at 40:
“... although the terms of section 37(1) of the Act of 1981 and its predecessors are very wide, the power conferred by them has been circumscribed by judicial authority dating back many years.”
This point has often been re-affirmed by the House of Lords (and by the Privy Council) in relation to injunctions: Gouriet v Union of Post Office Workers [1978] AC 435, 500-501, 516; The Siskina [1979] AC 210, 256; Bremer Vulkan v South India Shipping [1981] AC 909, 979; British AirwaysBoard v Laker Airways [1985] AC 58, 80-81; P v Liverpool Post Plc [1991] 2 AC 370, 420-421; Channel Tunnel Group v Balfour Beatty Ltd [1993] AC 334, 341, 360-361; Mercedes Benz AG v Leiduck [1996] AC 284, 298 (PC).[176]It was for that reason that the House of Lords in The Siskina [1979] AC 210 decided that the injunctions sought in the action had to be part of the substantive relief, and the thing that it was sought to restrain the foreign defendant from doing in England had to amount to an invasion of some legal or equitable right enforceable by final judgment for an injunction. Some doubts have been expressed in the House of Lords about this aspect of the decision: see South Carolina Insurance Co. v AssurantieMaatschappij“De Zeven Provincien” NV [1987] AC at 44, per Lord Goff of Chieveley (with whom Lord Mackay of Clashfern agreed); Channel Tunnel Group v Balfour Beatty Ltd [1993] AC at 342, per Lord Browne-Wilkinson (with whom Lord Keith of Kinkel and Lord Goff of Chieveley agreed).[177]But for present purposes the important point is that these decisions, or dicta in them, are concerned mainly with the rule that an injunction is granted only in aid of an equitable or legal right. They are not authority for the proposition that a remedy can only be granted now under section 37(1) if it could have been granted before 1873. It is the early cases on receivers to which I have referred which are the source of that idea.[178]That idea is, however, reflected in Maclaine Watson & Co. Ltd v International Tin Council (No. 2) [1989] Ch 286, where this court said (at 301) that “it is well settled that [section 37(1) and its predecessors] did not introduce an unlimited power: see in particular North London Railway Co v Great Northern Railway Co (1883) 11 QBD 30 and Morgan v Hart [1914] 2 KB 183 ... [I]f and insofar as it had already been laid down that there was no power to appoint a receiver or to grant an injunction in a given situation, then the statute provided no new source of jurisdiction to alter the existing state of the authorities.”[179]A radical approach was expressed in the context of the appointment of receivers in Parker v Camden LBC [1986] Ch 162, which is not a decision involving equitable execution. Tenants of Camden Council estates sought (inter alia) the appointment of a receiver and manager over the estates because had been left unheated due to a strike by the local authority’s boilermen. The appointment was refused because it would usurp the Council’s duty to maintain the housing. But Sir John Donaldson MR, after referring to the argument for the Council, based on Harris v Beauchamp Brothers [1894] 1 Q.B. 801, that it was only permissible to appoint a receiver in circumstances in which the Court of Chancery would have done so prior to 1873, said (at 173):
“For my part I do not accept that the pre-Judicature Act practices of the Court of Chancery or any other court still rule us from their graves. In any event, that decision relates to equitable execution of a judgment and is not a matter with which we are concerned. As I see the matter the jurisdiction, as a jurisdiction, is quite general and, in terms, unlimited. Nevertheless it has to be exercised judicially and with due regard to authorities which are binding upon this court.”
[180]Browne-Wilkinson LJ agreed (at 176) that the jurisdiction under section 37 to appoint a receiver was unlimited. But this decision is not a secure source of authority, since I doubt whether these dicta can stand with the rejection by the House of Lords in P v Liverpool Post Plc [1991] 2 AC 370, 420-421 of similar statements by Lord Denning MR in Chief Constable of Kent v V [1983] QB 34, 42 in relation to the power to grant injunctions.[181]Nevertheless neither the general principle accepted in The Siskina, nor the notion that a remedy is not available after 1873 where it was not available before 1873, have prevented the development of the application of old principles to new situations. They have not prevented the courts from developing freestanding anti-suit injunctions. Nor have they prevented the court from developing the Mareva injunction. Lord Scott of Foscote said in Fourie v Le Roux [2007] UKHL 1, [2007] 1 All ER 1087, at [30]:
“Mareva injunctions could not have been developed and become established if Cotton LJ’s proposition [in North London Railway Co v GreatNorthern Railway Co] still held good.”
[182]Nor have the principles prevented the court from extending the Mareva jurisdiction to add an ancillary order for disclosure: AJ Bekhor & Co Ltd v Bilton [1981] QB 923. Nor have they prevented the development of the worldwide Mareva injunction (Babanaft International Co SA v Bassatne [1990] Ch 13). That is because the powers under section 37(1) can be adapted to new circumstances. In Derby and Co Ltd v Weldon(Nos. 3 and 4) [1990] Ch 65 Neill LJ said that it was clear that 30 years before that decision, an injunction on the lines of a Mareva injunction would not have been available in any division of the High Court; the practice in relation to the grant of Mareva injunctions was still in the course of development, and there was no reason why recent practice should become ossified when circumstances changed: at 89, 92-93.[183]So also this court was asked in Maclaine Watson v International TinCouncil (No. 2) [1987] 1 WLR 1711, affirmed [1989] Ch 286, to order an affidavit of assets, as an ancillary order, in order to support a judgment of the court, even though the court itself could grant no orders to enforce its judgment (because of the international position of the ITC). The court confirmed that the demands of justice must always be the overriding consideration in considering the scope of the jurisdiction under section 37(1) (at 302), in particular to make orders to render any other order of the court effective: at 306.[184]In my judgment there is no reason why in 2008 the court should not exercise a power to appoint a receiver by way of equitable execution over future receipts from a defined asset. There is no longer a rule, if there ever was one, that an order can only be made in relation to property which is presently amenable to legal execution. There is no firm foundation in authority for a rule that the remedy is not available in relation to future debts. There is no principle which prevents the development of existing authority to extend the remedy to the property which was the subject of the receivership order in this case.

VII Disposition

[185]I would therefore grant permission to appeal in relation to the freezing order and the affidavit of assets order, and dismiss the appeal from the three orders.

Lord Neuberger of Abbotsbury:

[186]I agree with the full and impressive analysis of the law, and with the conclusions, of Lawrence Collins LJ, and there is nothing which I can usefully add.[187]I also agree. Appendix A Order for the appointment of a receiver [2] ... Mr Lee Manning … be and hereby is appointed to receive all amounts due to the fifth defendant, Consolidated Contractors (Oil and Gas) Company SAL (“CC (Oil and Gas)”) from Nexen Marketing Singapore PTE Ltd. (“Nexen Singapore”) or any other entity to the extent that they relate to proceeds of the sale of the oil from the concession known as Block 14 (or the Masila Block), Yemen, to which CC (Oil and Gas) is entitled pursuant to the Agreement for Petroleum Exploration and Production between the Minister of Energy and Minerals and Canadian OXY Offshore International Limited and Consolidated Contractors International Company SAL dated 15 September 1986 (the “PSA”) and/or the Masila Joint Operating Agreement between Canadian OXY Offshore International Limited and Consolidated Contractors International Company SAL dated 27 April 1987, as amended, and an assignment between Consolidated Contractors International Company SAL and Consolidated Contractors (Oil and Gas) Company SAL dated 25 October 1992 and/or any further broking, sales or other agreements to which CC (Oil and Gas) is party regarding the sale of such oil (such amounts to be referred to as “Oil Revenues”). 188. [3] That the receiver be entitled to do the following: ... (b) to bring, defend, continue or compromise any proceedings or any other action in any jurisdiction as he may think fit, acting on behalf of CC (Oil & Gas) as receiver, whether using his own name and/or the name of CC (Oil and Gas), in order to collect, gather in and/or recover the Oil Revenues, provided, however, that in the case of proceedings brought in a jurisdiction outside England and Wales, such right is subject to the receiver’s right to bring such proceedings as receiver being(i) admitted by the defendant to the proceedings or(ii) recognised by the Court of the legal system of the jurisdiction where the proceedings are brought before they are commenced or(iii) raised formally by the receiver as an issue in the proceedings at his first opportunity to do so. ... 189. [7] That from the date hereof until further order, CC (Oil and Gas) and its directors or officers including Fouad Asfour and Samir Nayef Khoury, shall co-operate with the receiver in the following ways: (a) Providing within a reasonable time such information and documents falling within the following categories as the receiver may reasonably require: (i) the whereabouts at any time of the Oil Revenues or any assets representing the proceeds of the same; (ii) the arrangements, whether contractual or based on instructions given from time to time, in place at any time for the sale of the oil referred to in paragraph 1 above and realisation of the proceeds of the same; (iii) the identities of (and any other details concerning) all entities involved in the sale of the said oil and realisation of the proceeds of the same;(iv) the amounts due to CC (Oil and Gas) in respect of the Oil Revenues from time to time. (b) Providing within a reasonable time such written confirmation to third parties anywhere in the world as the receiver may reasonably require of the receiver’s rights under this order to act on behalf of CC (Oil and Gas) for the purpose of carrying out his functions as set out above, and of his rights under this order to receive the Oil Revenues in that capacity, and providing to the receiver copies of such confirmations. (c) Within three days of making any agreement for the sale of oil, or any sale of oil, providing to the receiver the following information in relation to such an agreement or sale, namely: i. If it is in writing, a copy of any such agreement. If it is not in writing, a written description of its terms and conditions. ii. The identity of the purchaser under such agreement or sale including the purchaser’s name, registered office address and contact details of the office of the purchaser involved in the purchase. iii. If an agent acted for CC (Oil and Gas) in making such agreement or sale, the agent’s name, registered office address and the address and telephone and fax numbers (if any) of the office of the agent involved in the making of such agreement or sale. iv. The details of the bank account to which any monies due to CC (Oil & Gas) SAL have been or are to be remitted in connection with such agreement or sale, including the name of the bank, the address of its branch involved, the name of the account and the number of the account. (i) the whereabouts at any time of the Oil Revenues or any assets representing the proceeds of the same; (ii) the arrangements, whether contractual or based on instructions given from time to time, in place at any time for the sale of the oil referred to in paragraph 1 above and realisation of the proceeds of the same; (iii) the identities of (and any other details concerning) all entities involved in the sale of the said oil and realisation of the proceeds of the same; (iv) the amounts due to CC (Oil and Gas) in respect of the Oil Revenues from time to time. i. If it is in writing, a copy of any such agreement. If it is not in writing, a written description of its terms and conditions. ii. The identity of the purchaser under such agreement or sale including the purchaser’s name, registered office address and contact details of the office of the purchaser involved in the purchase. iii. If an agent acted for CC (Oil and Gas) in making such agreement or sale, the agent’s name, registered office address and the address and telephone and fax numbers (if any) of the office of the agent involved in the making of such agreement or sale. iv. The details of the bank account to which any monies due to CC (Oil & Gas) SAL have been or are to be remitted in connection with such agreement or sale, including the name of the bank, the address of its branch involved, the name of the account and the number of the account. ... Persons outside England and Wales [12] Except as provided in paragraph [13] below, the terms of this order do not affect or concern anyone outside the jurisdiction of this Court. 190. [13] The terms of this order will affect the following persons in a country or state outside the jurisdiction of this Court: (A) the Defendant or its officer or agent appointed by power of attorney (B) any person who – (1) is subject to the jurisdiction of this court; (2) has been given written notice of this order at his residence or place of business within the jurisdiction of this court; and (3) is able to prevent acts or omissions outside the jurisdiction of this court which constitute or assist in a breach of the terms of this order; and (C) any other person, only to the extent that this order is declared enforceable by or is enforced by a court in that country or state. (1) is subject to the jurisdiction of this court; (2) has been given written notice of this order at his residence or place of business within the jurisdiction of this court; and (3) is able to prevent acts or omissions outside the jurisdiction of this court which constitute or assist in a breach of the terms of this order; and 191. [14] Nothing in this order shall, in respect of assets located outside England and Wales, prevent any third party from complying with – (A) what it reasonably believes to be its obligations, contractual or otherwise, under the laws and obligations of the country or state in which those assets are situated or under the proper law of any contract between itself and the Defendants; and (B) any orders of the courts of that country or state, provided that reasonable notice of any application for such an order is given to the Claimant’s solicitors. [15] Nothing in this order shall, in respect of assets located outside England and Wales, require the Defendants and/or their directors to disobey the order of any court of competent jurisdiction in relation to such assets. B Freezing order [2] Until further order Consolidated Contractors (Oil and Gas) Company SAL (the Fifth Defendant) must not assign any of its rights in the Concession pursuant to the Concession Agreements to any other person or entity or otherwise dispose of or diminish the value of such rights without the consent of the Claimant expressed to be pursuant to this provision and given in writing by his solicitor or the permission of the court. Save as provided below, any sales of, or dispositions of the interest of Consolidated Contractors (Oil and Gas) Company SAL pursuant to the Concession Agreements in, oil shall constitute a disposition or diminution in the value of the said rights within the meaning of this paragraph. 192. [3] This Order shall not prevent Consolidated Contractors (Oil and Gas) Company SAL from selling oil in the ordinary course of business for its market value. For this purpose, an agreement for the sale of oil is not made in the ordinary course of business if: (i) it provides for delivery more than three months after (a) the date of such agreement, or (b) the due date for payment for such oil; or (ii) it is made with an affiliate of Consolidated Contractors (Oil and Gas) Company SAL for which purpose the term “affiliate” means any company or other legal entity directly or indirectly controlling or controlled by Consolidated Contractors (Oil & Gas) or under the same control as CC (Oil & Gas). In this definition “control” is to be construed in accordance with section 840 of the Income and Corporation Taxes Act 1988. ... 193. [9] Persons outside England and Wales (1) Except as provided in paragraph (2) below, the terms of this order do not affect or concern anyone outside the jurisdiction of this court. (2) The terms of this order will affect the following persons in a country or state outside the jurisdiction of this court – (a) the Fifth Defendant or its officer or agent appointed by power of attorney; (b) any person who – (i) is subject to the jurisdiction of this court; (ii) has been given written notice of this order at his residence or place of business within the jurisdiction of this court; and (iii) is able to prevent acts or omissions outside the jurisdiction of this court which constitute or assist in a breach of the terms of this order; and (c) any other person, only to the extent that this order is declared enforceable by or is enforced by a court in that country or state. [10] Assets located outside England and Wales Nothing in this order shall, in respect of assets located outside England and Wales, prevent any third party from complying with – (1) what it reasonably believes to be its obligations, contractual or otherwise, under the laws and obligations of the country or state in which those assets are situated or under the proper law of any contract between itself and the Defendants or either of them; and (2) any orders of the courts of that country or state, provided that reasonable notice of any application for such an order is given to the Claimant’s solicitors. (a) the Fifth Defendant or its officer or agent appointed by power of attorney; (b) any person who – (i) is subject to the jurisdiction of this court; (ii) has been given written notice of this order at his residence or place of business within the jurisdiction of this court; and (iii) is able to prevent acts or omissions outside the jurisdiction of this court which constitute or assist in a breach of the terms of this order; and (c) any other person, only to the extent that this order is declared enforceable by or is enforced by a court in that country or state. C Order for affidavit of assets [2] Consolidated Contractors International Company SAL and Consolidated Contractors (Oil and Gas) Company SAL (the Judgment Debtors) be and hereby are ordered to serve by 21 January 2008 affidavits identifying each and every asset owned by either or both of them the value of which is equal to or greater that US$1,000,000. [3] Consolidated Contractors International Company SAL and Consolidated Contractors (Oil and Gas) Company SAL (the Judgment Debtors) be and hereby are ordered to serve by 4 February 2008 affidavits identifying each and every asset owned by either or both of them the value of which is equal to or greater than US$500,000, save that the affidavits need not include any assets identified in any affidavits served pursuant to paragraph 2 above. [4] Consolidated Contractors International Company SAL and Consolidated Contractors (Oil and Gas) Company SAL (the Judgment Debtors) be and hereby are ordered to serve by 25 February 2008 affidavits identifying each and every asset owned by either or both of them the value of which is equal to or greater than US$100,000, save that the affidavits need not include any assets identified in any affidavits served pursuant to paragraph 2 or 3 above. Addendum to judgments of April 7, 2008 Section V(C) of the judgment of Lawrence Collins LJ (paras 92-107) does not deal with the separate position of CCIC. Since it was common ground that CCIC (unlike CCOG) had a domicile in Greece, the effect of the reasoning in section V(C) is that the English court had jurisdiction to make the affidavit of assets order against CCIC for the reasons given in paragraphs 94 to 107.

order

see Maclaine Watson & Co Ltd v International Tin Council [1988] Ch. 1 (affirmed [1989] Ch 253 (CA)), at 17, per Millett J. In that case judgment creditors applied to the court to appoint a receiver over the right of the judgment debtor, the International Tin Council, to be indemnified by or demand contributions from Member States for its liabilities incurred to the judgment creditors; and that the receiver be empowered in the name of the judgment debtor to make formal demands on the Member States and to enforce payment, if necessary, by litigation in the English courts. For present purposes it is relevant that the issue was whether a receiver could be appointed over a right to indemnity notwithstanding that it could not have been the subject of a garnishee order.

Cited in 55 later judgments

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