“… no real purpose other than to make it difficult for the Owners to enforce any judgment or award they may get against [HSTPL] or HIT by removing from [HSTPL] very significant assets otherwise than in the ordinary course of business”
“What then is the principle to guide the courts in determining whether to grant Mareva relief in a case such as the present where the activities of third parties are the object sought to be restrained? In our opinion such an order may, and we emphasise the word ‘may’, be appropriate, assuming the existence of other relevant criteria and discretionary factors, in circumstances in which: (i) the third party holds, is using, or has exercised or is exercising a power of disposition over, or is otherwise in possession of, assets, including “claims and expectancies”, of the judgment debtor or potential judgment debtor; or (ii) some process, ultimately enforceable by the courts, is or may be available to the judgment creditor as a consequence of a judgment against that actual or potential judgment debtor, pursuant to which, whether by appointment of a liquidator, trustee in bankruptcy, receiver or otherwise, the third party may be obliged to disgorge property or otherwise contribute to the funds or property of the judgment debtor to help satisfy the judgment against the judgment debtor. It is that principle which we would apply to this case. Its application is a matter of law, although discretionary elements are involved.”
“30. For my part I do not believe it is necessary to establish beneficial ownership in the strict trust law sense. Clearly, if assets are held on a bare trust then the Chabra-type jurisdiction can be exercised. But, in my judgment, even if the relevant defendant of the substantive claim has no legal or equitable right to the assets in question (in the strict trust law sense) the Chabra-type jurisdiction can still be exercised if the defendant has some right in respect of, or control over, or other rights of access to the assets. The important issue, to my mind, is substantive control.”
“42. Secondly, it seems to me that once the relatively clear Chabra boundary line is breached, there is no wider boundary which has any sufficient clarity to serve as a workable condition to the existence of jurisdiction, than the broad confines of the second limb of the principle in paragraph 57 of the main judgment in Cardile. In particular, it seems to me that a rigid causation test is too narrow and potentially unjust, in particular because it would protect third party fraudsters who had in reality caused the claimant's loss from exposure to a freezing order while exposing honest third parties such as Mr. L in the C Inc. case because the claimant's claim was the cause of their exposure. By contrast, the supposed “sufficient connection test” which Mr. Shaw sought to extract from the minority judgment in Cardile, while having much to say for it in terms of justice and common sense, and being similar to the test which identifies the circumstances in which a third party may because he has become mixed up in the defendant's wrong doing, be obliged to assist the claimant with the provision of information, is by its nature so subjective and unfocused as to make it quite unsuitable as the boundary for the existence of jurisdiction. It may however be a valuable tool in the analysis of the question of discretion.” iii) In the particular circumstances of the case, Briggs J continued a freezing order against the third parties, at the suit of the Revenue, pointing out, however, that the normal course would be for a provisional liquidator to seek such relief. He said: “54. … In the ordinary course, creditors should not expect to be able to obtain freezing orders against potential judgment debtors of the company sought to be wound up, save in entirely exceptional cases (and I cannot envisage what they might be) where the ordinary course of the appointment of a provisional liquidator with the duty and power to make those decisions on behalf of the company and all its stakeholders is either impossible or impracticable.”
“25. For my part, I am also un-persuaded that Cardile contained any ‘causation’ condition. Equally in company with Briggs J, although a sufficient degree of causation or connection was available on the facts in C Inc. v L, I consider that the application of such a test in all cases would be unduly rigid. Accordingly, I would accord a question of connection or causation as pertinent to the general question of discretion to which I now turn. Discretion 26. Absent any proprietary interest on the part of the defendant in assets held by a third party it is appropriate to consider the extent to which the defendant has some interest in or control over the asset going beyond an actual or potential cause of action against the third party. This must be the more where as here it is not suggested that there is any causative link or other connection between the claimant's claim (in the form of monies due under an arbitration award) and the assets in the third party's hands (formed of the sale proceeds for oil). 27. Rosneft's interest in the funds in the third party's bank accounts is formidable: i) absent any exercise of the bank's security, the monies can only be paid to Rosneft. ii) indeed irrevocable instructions to that effect have been given by the bank to accomplish that. iii) the banks have never exercised any claim under the security documents. iv) RT are parties to a back to back sale of the oil shipments, but have no other role or involvement. v) transfer of the price apart, RT has no function as regards the sale or purchase: Rosneft acts as its agent in conducting the auction, selecting the winning bidder and preparing the documents: the buyer acts as his agent in regard to the buyer's role. vi) RT is held harmless from any liability in regard to the sale transactions (or otherwise). 28. In short, the RT companies are special purpose vehicles with no business or assets of their own. They exist solely to provide a portal for transfer of the purchase price in a manner preserving the bank's security. RT have no interest in or control over the monies. Allowing for the bank's security, the money is, as submitted by Yukos , Rosneft's in all but name.”
“The fact that the potential judgment debtor (the CAD) has substantial control over assets which are held by a party against whom no cause of action is alleged (the NCAD) - say, because the NCAD can be expected to act in accordance with the wishes or directions of the CAD (whether or not it could be compelled to do so) - is likely to be of critical importance in relation to the question whether there is a real risk that the assets will be dissipated or otherwise put beyond the reach of the claimant. But, as it seems to me, the existence of substantial control is not, of itself, enough to meet the first of the two requirements just mentioned. It is not enough that the CAD could, if it chose, cause the assets held by the NCAD to be used to satisfy the judgment. It is necessary that the court be satisfied that there is good reason to suppose either (i) that the CAD can be compelled (through some process of enforcement) to cause the assets held by the NCAD to be used for that purpose; or (ii) that there is some other process of enforcement by which the claimant can obtain recourse to the assets held by the NCAD.”
“… The main ground on which permission is sought to serve the third defendant out of the jurisdiction is paragraph 10 ofpractice direction 6B , paragraph 3.1. The object of that provision is to enable enforcement of a judgment against assets within this country that belong to a defendant who is out of the jurisdiction. It has no application to a case such as the present.”
“92. [Mr. Wood, Mr. L’s counsel, submitted that] … Mr. L cannot be a ‘proper’ party for two reasons. First because there is no substantive claim against him in the English Courts; secondly because the application for a freezing order is only indirectly connected with the appointment of a receiver. This is because the asset that the receiver has to get in is Mrs. L’s right to an indemnity from her husband. Once that asset is gathered in, the right must be exercised in the Guernsey Courts (as Miss Dias accepts); it is only if that claim succeeds that Mrs. L’s assets become relevant. He cannot be a ‘proper party’ if the link between the application for a receiver and the freezing order is so indirect.” 93. Mr. Wood further submits that even if he is wrong so far, the Court should not exercise its discretion underCPR Part 6.21 (2A). This is because the practical effect of the freezing order is to catch assets to satisfy a claim for an indemnity that must be made in the Guernsey Court. It has no connection with the English Court. So any such order should only be made by the Guernsey Court. 94. Conclusion on the territorial jurisdiction issue I have concluded that the Court does have territorial jurisdiction over Mr. L, based onCPR Part 6.30 (2) and Part 6.20(3). I have also concluded that it should exercise its discretion to give permission to serve the application notice on him. My reasons are as follows: (1) As there is not and cannot be any claim for substantive relief against Mr. L, it is inappropriate to issue and serve a claim form against him. The proper procedure is to issue and serve an application notice in the existing action, as Lord Mustill stated in the Mercedes-Benz case. It is accepted thatCPR Part 6.30 (2) applies in that case. In my view, on the proper construction of that provision, the claimant/applicant has to satisfy the Court that there is a ground withinCPR Part 6.20 which gives the Court jurisdiction to grant permission to serve the application notice on the proposed defendant out of the jurisdiction. (2) So in this case the Court has to consider whetherCPR Part 6.20 (3) applies to the application notice that the claimant wishes to serve out of the jurisdiction on Mr. L. (3) It is not disputed that there has been an ‘application’ against ‘someone’ i.e. Mrs. L (for the appointment of a receiver) and the application has been or will be served on her. In my view unless Mrs. L has agreed to the appointment of a receiver - and she has not - then there is a ‘real issue which it is reasonable for the court to try’. The issue is whether the English Court should appoint a receiver to get in an asset, Mrs. L’s alleged right to an indemnity from her husband, in aid of the execution of the judgment debt against her. (4) The claimant does wish to serve the application notice on ‘another person’, i.e. Mr. L. (5) He is a ‘proper party’ to ‘that claim’ i.e. the claim against Mrs. L for the appointment of a receiver. This is because ultimately the receiver will be making the claim for an indemnity against Mr. L. He therefore may have arguments to make on why the receiver should not be appointed by the English Court. Furthermore, it is Mr. L’s assets that would be used to satisfy the claim for an indemnity that the receiver is to pursue. It is accepted for present purposes that there is a risk of dissipation of those assets. Therefore it is proper for an application notice claiming a freezing order to be served on him out of the jurisdiction. (6) The Court should exercise its discretion to permit the service of the application notice because: (i) it is accepted that the Guernsey Court cannot appoint a receiver over the assets of Mrs. L, even those in Guernsey. So if any steps are to be taken to enforce the right of indemnity in aid of execution of the existing judgment debt, it could only be done by a receiver appointed by the English Court. (ii) Although the indemnity proceedings must be in Guernsey, if they are to be effective, the receiver appointed by the English Court must take steps to satisfy that judgment against Mr. L by executing on his assets. (iii) Those assets may be either in England and Wales or in Guernsey. (iv) Therefore as the application against Mr. L relates to the proposed actions of a receiver appointed by the English Court, England is the proper place in which to make the application for a freezing order against Mr. L.”