Masri v Consolidated Contractors International Company SAL & Anor [2008] EWHC 1159 (Comm)

[2008] EWHC 1159 (Comm)Case No 2004 FOLIO 1242004 FOLIO 831
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 23/05/2008
Before
MR JUSTICE DAVID STEEL
Between
MUNIB MASRIClaimant(1) CONSOLIDATED CONTRACTORS INTERNATIONAL COMPANY SALDefendant(2) CONSOLIDATED CONTRACTORS (OIL and GAS) COMPANY SALDefendant
Simon Salzedo & Colin West (instructed by Simmons & Simmons) for ClaimantAlexander Layton Q.C. & Ben Olbourne (instructed by Olswang) for DefendantsHearing Hearing dates: 19 th May 2008
Judgment
[1]This is an application by the Fifth Defendant Consolidated Contractors (Oil and Gas) Company SAL (“CCOG”) the primary purpose of which is to seek a declaration as to the proper construction of paragraph 15 of a Receivership Order made by this Court on 20 December 2007.[2]The background is well known to the parties and can be stated relatively shortly. CCOG and its co-Defendant Consolidated Contractors International Company SAL (“CCIC”) are judgment debtors in default of orders to pay a sum in excess of $63 million to the claimant, Mr. Masri.[3]The trial on liability took place in March and April 2006 before Gloster J. Judgment was handed down on 28 July 2006. Thereafter the Defendants were ordered to make a part payment of $30 million by 16 May 2007 against the provision of a bank guarantee by Mr. Masri. No such payment was made.[4]On 6 July 2007, Master Miller made orders under CPR 71 requiring Toufiq Said Khoury (then a director of CCIC) and Samer Said Khoury (then a director of Consolidated Contractors Group SAL (Holding Company), a corporate director of CCOG) to attend court in England for examination as to the assets of CCOG and CCIC. Toufiq and Samer Khoury applied to set aside the orders on 13 September 2007.[5]On 1 October 2007 Mr. Masri issued applications for appointment of a receiver and for an affidavit of means. These orders (together with a freezing order) were duly made on 20 December 2007. The same day Master Miller set aside the CPR 71 orders for want of jurisdiction.[6]In the meantime, on 15 November Ms. Salwa Khoury, the daughter of Said Khoury made an application to the Court of First Instance in Beirut Case No. 1168/2007. She did so in her capacity as a shareholder of CCOG. The application was for an order restraining her brother from complying with the CPR 71 order. An order to this effect was made on 10 January 2008.[7]The background to the present application was an expert report on Lebanese law furnished to CCOG and deployed before Gloster J in regard to the application for a receivership. The thrust of this evidence was to the effect that a UK judgment or order would only receive recognition in Lebanon pursuant to an “exequatur” procedure. Further, absent an exequatur, a director’s liability would be engaged if any response to a foreign court’s order for information is made.[8]Gloster J commented as follows in her judgment [2008] 1 All ER 305:
“136. Nothing in the expert evidence as to Lebanese law, produced by the Defendants after the hearing, suggests that (absent insolvency or impending insolvency) a director of a judgment debtor would be in breach of his duty to that company in procuring it to comply with its obligations under the judgment or other orders of a foreign court that satisfied the requirements necessary for a Lebanese court to recognise the judgment, namely: (i) the judgment must have been rendered by a competent court according to the laws of the issuing state and not the result of jurisdiction fraud, ie forum shopping; (ii) the right of the Defendant to defend the claim must have been respected; (iii) the judge must have been issued by a country that give reciprocal recognition to Lebanese judgments without revising them; and (iv) the judgment must not be contrary to public order. 137. Necessarily, in the circumstances where all avenues of appeal have been exhausted, this court proceeds on the assumption that those conditions are satisfied. 138. It is difficult, therefore, to see what possible double jeopardy could arise so far as the individual directors are concerned, by naming them in the orders to provide documents or information to the receiver, or by confirming to third parties the receiver's entitlement to receive the oil revenues. As I have said previously, the orders are made against CCOG, and only against the individual directors insofar as CCOG acts through or by them as its officers. Thus, they are not being asked in their individual capacities to provide documents or information or confirmation to third parties; thus whether they, as directors or shareholders, for example, have personal rights to have access to the company's documents or information (which is the issue addressed in the expert evidence) is simply not in point; the company clearly has access to its own documents and information, and, as a judgment debtor in substantive proceedings where the English court has jurisdiction, it is obliged to provide relevant information if the court so directs.”
[9]For the hearing on 20 December which led to the formulation of the Receivership Order, the Defendants provided a draft order. This contained various proposed orders in regard to “persons outside England and Wales” including the following:
“19. 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 foreign court of competent jurisdiction. For the avoidance of doubt, the Defendants and/or their directors shall be at liberty to apply to a court of a foreign country for declaratory or other relief as to the scope of their obligation under the law applicable within that country so far as these may be affected by the order.”
In the course of the hearing, it was agreed that the second sentence should not be adopted: the first sentence became paragraph 15.[10]The thinking behind the draft order was spelt out in the Defendants’ skeleton argument for the hearing:
“Your Ladyship has concluded that the expert evidence of Lebanese Law does not state with sufficient clarity that compliance with the receivership order would be a breach of Lebanese law: see the draft judgment at paragraphs 135 - 137.Nevertheless, there was no evidence from the Claimants to the effect that compliance with the receivership order would not be a breach. The Court “proceed[ed] on the assumption that” “where all avenues of appeal have been exhausted” the criteria for recognition of an English judgment under Lebanese law would be satisfied. However, this may not be germane in respect of the receivership order, which is the relevant order for the purposes of double jeopardy, but against which no avenue of appeal has yet been exhausted. In the circumstances, it cannot be safely said that there is no prospect of double jeopardy in Lebanon, and indeed your Ladyship’s draft judgment does not say this. Further, the possibility of double jeopardy in other jurisdictions has not been addressed. In the circumstances, if a receivership order is made, it is appropriate that it be qualified by a provision dealing with the possibility of double jeopardy. It is limited to the situation where a foreign court has positively ordered that the Defendants shall not comply with the receivership order. Such a limitation is plainly appropriate. It would be wrong, as a matter of comity and discretion, for this court to grant extra-territorial enforcement measures backed by contempt sanctions and require a party to comply with them even if he has been ordered not to by his local court.”
[11]The terms of the Receivership Order afforded certain powers to the nominated receiver. More significantly it required CCOG to co-operate with the receiver in various ways: “7. That from the date hereof until further order, CC (Oil & 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 & Gas) in respect of 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 & 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 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 & 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 making 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 the branch involved, the name of the account and the number of the account. 8. The receiver shall hold any information provided under paragraph 7 above on a confidential basis and shall not disclose that information to any person other than himself and his staff without order of the court, save insofar as is necessary for the proper performance of his functions under this order. 9. If the receiver shall make a request in relation to paragraph 7 above which the recipients believe is unreasonable, CC (Oil & Gas) shall have the right to apply to the court for directions in respect thereof before being obliged to comply.” (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 & Gas) in respect of 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 & 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 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 & 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 making 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 the branch involved, the name of the account and the number of the account.[12]On 15 January 2008, leave to appeal against the Receivership Order was granted. A few days later, on 18 January 2008, Ms. Khoury made an application in the Lebanese proceedings to join CCOG (and others). The thrust of the application was that the new parties were not entitled to comply with the information disclosure requirements of the orders of Gloster J absent an exequatur. The response of CCOG and others to this application was to file declarations “se referrer a justice”, the effect of which is to adopt a neutral stance leaving it to the court to decide the issue.[13]On 4 April, the appeal against the orders of Gloster J was dismissed whereupon the receivership order came into effect. This led to an ex parte application in the Lebanese proceedings on 11 April for interim orders to the effect that CCOG (and CCIC) should not provide any information sought by the receivers under the order.[14]In the meantime the receivers had written to CCOG for information relating to a sale of oil made on 12 March attaching a standard form letter for despatch to the purchasers:
“…We are obliged by order of the High Court of England & Wales to inform you that a receiver has been appointed by the court to collect any oil revenue owed to CC (Oil & Gas). The term ‘oil revenues’ includes any revenues derived from the sale of CC (Oil & Gas)’s share of oil produced from the oil concession in Yemen known as Block 14 or the Masila Block; in particular, it includes the purchase price to be paid under the Oil Sale Agreement referred to above…. We hereby instruct you to pay any amounts due to CC (Oil & Gas) or its nominee under the Oil Sale Agreement to Mr Manning as receiver on our behalf. Please pay these amounts into the bank account of the receiver: we will confirm the details of this account as soon as possible. We hereby unconditionally and irrevocably confirm that we will consider payment of amounts due under this agreement to Mr Manning to constitute satisfaction of your company’s obligations to pay such amounts under the Oil Sale Agreement. In the event that any director, employee or agent of CC (Oil & Gas) informs you of anything contrary to what is stated in this letter, please inform the receiver without delay. No person has the authority of CC (Oil & Gas) to override the instructions in this letter.”
[15]On 14 April, the Lebanese Court handed down a reasoned judgment. It found that the claimants had the appropriate status as a shareholder to institute the proceedings and that CCOG was a Lebanese company governed by Lebanese laws and accordingly the court was one of competent jurisdiction. The ruling went on as follows: “And as it appears from the mentioned Article that third persons are not entitled to obtain directly the information contained in the documents enumerated in the Article 197 of the Code of Commerce. However, that in case there was any litigation between the third persons and the company, the court examining the litigation can ask the company to produce any documents it finds necessary to settle the conflict and it can require the company to produce it during the trial, and the court can also assign an expert to obtain the required information. And if the legal decision were issued form a non-Lebanese court, it shall be necessary that it be coupled with the exequatur from the competent Lebanese judicial authority in case the decision included any compulsory measure to guarantee its execution. And as both decisions issued by the British magistrate are practically investigation decision that aim at obtaining evidence present in the seat of the Lebanese company in Lebanon, meaning that both mentioned decisions shall be executed practically in Lebanon without passing through the Lebanese legal authorities. And that the party benefiting from them replaced the exequatur by the compulsory measure that guarantees the practical execution, which constitutes a fraudulent circumvention of the Lebanese law and a breach of the principle of judicial sovereignty of the Lebanese government on its territories.[16]The court accordingly made the orders sought which prohibited CCOG “from giving any information about [CCOG]…in execution of the three British decisions….”. In the wake of the dispute that then arose as to the potentially inconsistent and competing obligations imposed on CCOG as to furnishing information, CCOG issued this application on 28 April 2008. On 6 May 2008, Mr. Masri applied to set aside the orders of the Lebanese court. Mr. Masri’s application was due to be heard on 22 May but as yet however no application for exequatur has been made.[17]The principal issue on this application relates to the impact of the Lebanese court order given the provisions of paragraph 15 of the receivership order. It was the claimant’s submission that it had no impact on CCOG’s obligation to furnish information as otherwise required under paragraph 7. The basis of this submission was three-fold: i) Paragraph 15 is concerned with assets located outside England and Wales and ensures that the courts of the relevant jurisdiction (i.e. the courts of the jurisdiction where the asset is located) have priority in relation to any issues of title to, or any seizure of, that asset. ii) Such a construction is supported by the fact that(i) there is no equivalent to paragraph 15 in the order requiring the judgment debtors to make affidavits of assets and(ii) the second sentence of paragraph 15 as proposed by CCOG was excluded as being unecessary. iii) The order made by the Lebanese court was not a ruling on the status or disposition of any asset.[18]CCOG’s submission can be summarised as follows: i) The Lebanese court has competent jurisdiction over CCOG (this is common ground). ii) CCOG are the owners of various assets including the concession in the Yemen and relevant oil revenues. iii) The order of the court was to the effect that CCOG was forbidden from giving any information about CCOG “in execution of three British decisions”. iv) The receivership order required the provision of information relating to assets located outside England and Wales in the form of oil revenues. v) It follows that provision of the information would involve disobedience to the order of the Lebanese Court.[19]In my judgment, CCOG’s submission is to be preferred: i) It is more in accord with the ordinary and natural meaning of paragraph 15. ii) In contrast, under paragraph 14 which also concerns assets outside England and Wales, it is made expressly clear that a third party is entitled to comply with any obligation under the laws of the country “in which those assets are situated” (together with the orders of a court of such country subject to notice of any application). iii) The background to the inclusion of paragraph 15, as explained above, was the content of advice obtained by CCOG regarding the limitations on access to company information under Lebanese law.[20]If this is right, it is legitimate for CCOG to refuse to provide the information requested under paragraph 7(a) and (c) unless and until the Lebanese Court order is set aside or an exequatur is acquired. Less clear is the position as regards any written confirmation under subparagraph (b). It may well be that no breach of the order would be involved in requiring such confirmation since it would not on the face of it involve the “giving of any information” within the meaning of the Lebanese order. But since the scope of the Lebanese Court order is a matter for that court and since the provision of copies of such confirmation might be regarded as providing “information”, I conclude that CCOG is entitled to refuse to provide such confirmation, subject both to the provisos above and to any review of the scope of the restrictions by the Lebanese court.[21]This conclusion makes it strictly unnecessary to consider the express terms of the letter that the receiver proposes by way of confirmation to third parties. Suffice to say that I am not persuaded that CCOG’s objections as spelt out in paragraph 28 of its skeleton argument are made out.