Marketmaker Beijing Co Ltd & Ors v CMC Group Plc & Ors [2004] EWHC 2208 (QB)

[2004] EWHC 2208 (QB)

Case No HQ04X01875

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date Friday 8 th October 2004

Before

MR JUSTICE STANLEY BURNTON

Between

(1) Marketmaker Beijing Co LimitedClaimants

(2) Obair Group International CorporationClaimant

(3) Forex Technology CorporationClaimant

(4) Naser TaherClaimant

(1) CMC Group PlcDefendants

(2) CMC Asia Pacific Pty LimitedDefendant

(3) Peter Andrew CruddasDefendant

Catherine Newman QC and James Bogle (instructed by Elston Germain) for Claimants

Mark Barnes QC, Anthony de Garr Robinson and Camilla Bingham (instructed by CMS Cameron McKenna) for First and Third Defendants

for The proceedings had not been served on the Second Defendant (a company registered and carrying on business in the Commonwealth of Australia) and it was not represented.

Hearing Hearing dates: 29, 30 July 2004

Judgment

These proceedings

[1]At 4.15 pm on 7 June 2004, the last day of the Easter law term, the Claimants applied to Fulford J, the interim applications judge, without any notice to the Defendants, for immediate and wide-ranging relief, much of it of an unusual, if not unprecedented, nature, at least on an interim application made without notice. The draft order sought ran to over 5 pages without its 6 schedules. The application was supported by the witness statement of Naser Taher, the Fourth Claimant. It ran to 73 pages and 228 paragraphs. Its exhibit consisted of 424 pages. These documents must have taken some considerable time to prepare. The judge was rightly resistant to having to consider the application so late, with no opportunity to consider the extensive documents put before him or to reflect on the nature and terms of the relief sought. None of the Claimants has a presence within the jurisdiction, and they disclosed to the Judge that they were unable to offer any security for their cross-undertaking as to damages. Presumably, that would similarly apply to their liability for costs.

[2]The Judge was persuaded that the matter was urgent, and he made a limited order, containing two injunctions, restraining the Defendants from doing any of the following:

“1. … by themselves, or by instructing or encouraging any other person, represent to anyone including, but not limited to, the Chinese government, the Shenzhen Development Bank, the principals or beneficial owners of the banks listed at Schedule 1 to this Order, or their servants or agents, the principals and/or beneficial owners of the financial websites listed at Schedule 2 to this Order, or their servants or agents, that the First and Fourth Applicants are not now and/or have not been agents of the First Respondent. 2. whether by themselves, or by instructing or encouraging any other person, do(ing) any of the following acts: a. Perform(ing) any of its obligations under the agreements listed at Schedule 3 to this Order (“the agreements”) or conduct any of its foreign currency exchange and financial derivatives business in such manner as to be in breach of Chinese law relating to trade in foreign currency and financial derivatives including, but not limited to: i) Margin trading; and ii) Combining in China with mainland Chinese customers or clients in order to transfer foreign currency out of China without Chinese government authorisation and/or to deal directly with the said mainland Chinese customers or clients including but not limited to providing them with: (1) application forms for foreign currency exchange and financial derivatives trading accounts; and (2) the banking details of the Respondents for the purpose of transferring foreign currency out of the Chinese jurisdiction without Chinese government authorisation.”

I refer below to an order like that in paragraph 1 of that order, restraining the Defendants from denying that one or other of the Claimants was their agent, as “the agency injunction”, and to an order like paragraph 2, restraining breaches of Chinese law by the Defendants, as “the Chinese illegality injunction”. i) Margin trading; and ii) Combining in China with mainland Chinese customers or clients in order to transfer foreign currency out of China without Chinese government authorisation and/or to deal directly with the said mainland Chinese customers or clients including but not limited to providing them with: (1) application forms for foreign currency exchange and financial derivatives trading accounts; and (2) the banking details of the Respondents for the purpose of transferring foreign currency out of the Chinese jurisdiction without Chinese government authorisation.”

[3]Fulford J’s order was varied by consent by Simon J on 18 June 2004 in order to delete the prohibition against the Defendants denying that MarketMaker Beijing Co Limited and Mr Taher remained their agents at the date of that order. It was further varied by Hallett J by consent so as to permit the Defendants to communicate with the Financial Services Authority or any other regulatory authority with jurisdiction over them, other than regulatory authorities in China.

[4]Fulford J’s order included an undertaking by the Claimants to file and to serve a claim form by 18 June 2004. I suspect that he may have intended to require service of the Particulars of Claim by that date, since there would normally be no reason to allow 11 days for service of a claim form on a party within the jurisdiction (as CMC is) without Particulars of Claim, and in a case of this complexity a pleading is required to identify the facts and the causes of action relied upon and therefore the issues to be addressed by the Defendants and by the Court. The claim form was not issued until 21 June. Although two of the Defendants are outside the jurisdiction, it is marked “Not for service outside the jurisdiction”. After a number of failures to meet dates fixed for their service, the Particulars of Claim, 32 pages long without attachments, containing 138 main paragraphs and numerous sub-paragraphs, were served on 5 July.

[5]The hearing before me was of the Claimants’ application for injunctions in terms of their notice of application dated 8 June 2004. Its duration was estimated as 1½ to 2 days. In a letter to the Clerk in charge of the QB Lists dated 28 July 2004, Miss Newman QC, leading counsel for the Claimants, indicated that as a result of discussions with Mr Barnes QC, leading counsel for the First and Third Defendants, issues had narrowed and 1½ days would suffice. There would appear to have been a misunderstanding between them, since no undertakings were offered by the Defendants, so that any narrowing of issues depended on the Claimants’ abandoning heads of relief, and the issues before me remained substantial. Given the volume of material put before me, consisting of 7 large lever arch files of documents, with approaching 3,000 pages, the estimate was optimistic and was adhered to only by the imposition of guillotines. Even so, submissions were not completed until about 5 pm on 30 July 2004, once again the last day of term, and in the time available I was able only to announce my decision and state that I should give my reasons subsequently. I do so now.

[6]In opening the Claimants’ case, Miss Newman made it clear that she would not be seeking orders in terms of a number of paragraphs of the notice of application. She helpfully produced a draft order setting out what she sought. No application was made formally to amend the notice of application (as to which I do not criticise Miss Newman) or required by the Defendants. The draft order contained a number of proposed undertakings to be given by the Defendants. These included an undertaking pending trial to make monthly payments to the Claimants under the written agreements between the parties, as well as undertakings to keep records of transactions and customers in China concerned with foreign currency and financial derivative trading. The Defendants, however, as already mentioned, refused to give any undertakings. The injunctions then sought are set out in Annex 1 to this judgment.

[7]Doubtless as a result of my comments on the draft order, a second proposed order was produced by the Claimants at mid-day on 30 July 2004. It did not contain any undertakings on the part of the Defendants. The injunctions sought are set out in Annex 2 to this judgment. Again, no application was made formally to amend the notice of application. If it had been, I have no reason to believe that it would not have been granted.

[8]Mr Barnes made his submissions on the basis that Annex 2 represented the order sought by the Claimants. However, at about 3.55 pm on the second day of the hearing Miss Newman produced a fourth version of the order sought by the Claimants. It is set out as Annex 3. No application was made formally to amend the notice of application. Given the lateness of its appearance, if these different forms of order had been dealt with formally, at this late stage I should have been reluctant to permit any amendment of substance to the previous form of application.

[9]The Second Defendant, a company incorporated in Australia, had not been served at the hearing before me and was not represented. For convenience, I refer to the First and Third Defendants as “the Defendants”.

The facts in summary

[10]The first three Claimants are owned and controlled by Mr Taher. Marketmaker is incorporated in the People’s Republic of China (“China”); the Second and Third Claimants are incorporated in the British Virgin Islands. The First Defendant (“CMC”) is a substantial foreign exchange dealer and market-maker. It is incorporated and carries on business in this country and is regulated by the Financial Services Authority. It is owned by the Third Defendant (“Mr Cruddas”) and his wife. The Second Defendant is a subsidiary of CMC.

[11]Mr Taher has business contacts in China. A written agreement (“the Obair Agreement”) dated 19 December 2002 was entered into between CMC and the Second Claimant (“Obair”). It recited that CMC wished to penetrate the Chinese financial market and that Obair had recognised a number of opportunities in China that might be beneficial to CMC. Obair was appointed Introducing Broker to CMC for Chinese Business, defined as all business introduced by Obair from China in relation to foreign exchange and other defined subjects, and CMC was to pay it a fee of 33.33 per cent of all net trading profits, payable monthly, plus a sum of US$ 55,000 per month for 9 months and certain localisation expenses. The Obair Agreement was exclusive: CMC was prohibited from contracting with introduced customers otherwise than through Obair. The Agreement was for an initial term of 6 months, and was terminable by 3 months’ notice which could be served on and after the expiration of that initial term. The 6-month initial term was subsequently extended to 15 months. The Obair agreement was governed by English Law.

[12]On 10 June 2003, Mr Taher sent an email to Mr Cruddas stating that he was putting all his time into CMC.

[13]On 16 July 2003, CMC entered into an agreement with Shenzhen Development Bank (“SDB”). According to the Defendants, SDB was the only customer introduced by Obair under the Obair Agreement. The Agreement required CMC to provide software to the Bank which would enable its customers to enter Forex transactions on the Internet, apparently with the Bank, which would in fact be routed through to CMC.

[14]Mr Taher alleges that on 18 July 2003 he entered into a further agreement with CMC, referred to in the Particulars of Claim as “The first agreement”, which was made with Mr Cruddas at a hotel in Shenzhen. According to the Claimants, the agreement required CMC to set up a full subsidiary in China to be named CMC-China to be headed by Mr Taher, who would give up all his other business interests. That agreement, if made, was never fulfilled. In paragraph 60 of their Particulars of Claim, the Claimants allege that by emails dated 8 and 17 October 2003, Mr Cruddas and CMC “resiled from the First agreement”.

[15]Nonetheless, according to the Particulars of Claim, Mr Cruddas on behalf of CMC entered into a further agreement (“the second agreement”) with one or more of the Claimants on 16 November 2003. It was to replace the Obair agreement and “has similar terms save that permission to use the CMC name, marks and logo was therein to be made general”. Additionally, it would extend over another 12-month period into 2004. See paragraph 67 of the Particulars of Claim. No Second agreement was signed by the parties, and the Defendants deny that any such agreement was concluded. The Particulars of Claim allege that on or around 26 November 2003, Mr Cruddas and CMC resiled from the second agreement.

[16]On 2 December 2003, CMC served notice terminating the Obair agreement with effect from 2 March 2004.

[17]Mr Taher alleges that a further agreement, referred to as the “FXT agreement” was entered into on 17 December 2003. That agreement allegedly required the making of the FXT IB agreement, referred to below, and a loan by Mr Cruddas and/or CMC to Mr Taher of US$100,000 for the purposes of that agreement, that CMC would pay 6 months’ rental for the offices of FXT and that Chinese clients which would be regarded as those of FXT for the first 6 months, howsoever introduced, for the purposes of calculating FXT’s fee. No agreement was signed other than the FXT IB agreement referred to below.

[18]The final informal agreement alleged by Mr Taher is referred to in the Particulars of Claim as “the third agreement”. The third agreement is alleged to have been a verbal agreement entered into on 27 January 2004 between Mr Cruddas and Mr Taher. Its terms are alleged to be set out in a document typed by Mr Cruddas dated 15 March 2004 and summarised in paragraphs 107 and 108 of the Particulars of Claim. They included the investment by Mr Cruddas of US$1,000,000 in a company then owned by Mr Taher but to be owned as to 80 per cent by Mr Cruddas and as to 20 per cent by Mr Taher. It was to purchase and/or invest in Chinese websites and financial companies. The Claimants allege that CMC and Mr Cruddas resiled from the third agreement, i.e., wrongfully repudiated it.

[19]CMC entered into an agreement dated 12 January 2004 (“the FXT IB agreement”) with the Third Claimant (“Forex”) appointing it Introducing Broker in similar terms to the Obair Agreement. The Products to be traded by customers introduced by Forex were defined as “an over-the-counter spot or forward foreign exchange contract and any option or future thereon, Contract for Difference and any option there on, or other derivative product which CMC may be authorised to offer to Customers from time to time”. The initial term of the agreement was two years from its date. The fees payable to Forex were set out in schedule one. A fee was payable in respect of each transaction conducted by CMC with a customer introduced by Forex, and was to be debited to the customer’s account and paid to Forex on a monthly basis.

[20]Relations between the parties, which at one time were warm and affectionate, came to an end in May 2004. By letter dated 20 May 2004, the English solicitors for CMC required Forex to cease to hold itself out as being CMC or any CMC affiliate. It warned that in the absence of confirmation of compliance with the requirements contained in the letter, they would take “such action as is necessary to protect our clients’ rights and reputation, without further notice to you”: a clear reference to litigation. There was no reply to that letter. The application to Fulford J was, as indicated above, made without prior notification to CMC’s solicitors.

The relevant terms of the formal written agreements between the parties

[21]The Obair agreement recited that CMC was authorised as to the conduct of its business “by” (i.e., under) the Financial Services and Markets Act 2000. There was no recital relating to any authorisation of CMC under Chinese law. So far as Obair itself was concerned, the agreement recited that it had recognised a number of opportunities and businesses in the Chinese market, and that it was not required to be registered by any applicable rules, regulations, laws or regulatory bodies. The effect of the recitals was that Obair did not require any legislation in order to introduce to CMC Customers as defined in that agreement. Clause 5.2.1 was an express warranty and representation that Obair was not required to be registered as an Introducing Broker.

[22]Clause 4.2 of the Obair agreement was as follows:

“All Transactions in Products will be concluded directly between CMC and Customers. Introducing Broker is not granted authority to conclude any Transaction in any Products with Customers on behalf of CMC and has no authority to receive payments, monies or securities of any kind in respect of Transactions conducted between CMC and Customers.”

[23]Clause 5.3 of the Obair agreement contained undertakings on the part of Obair stated to be imposed in order to permit CMC to monitor compliance with local (i.e. Chinese) and other laws and regulations. Clause 5.3.5 precluded Obair from holding itself out as an agent or otherwise of CMC. Clause 5.3.1 to 5.3.4 contained other restrictions but the agreement appears to have envisaged that Obair might do acts prohibited by Clause 5.3.1 to 5.3.5 inclusive with the agreement, or at least the non-objection, of the liaison officer to be appointed by CMC for the purposes of 5.3.6.

[24]Clause 6.4 of the Obair agreement conferred exclusivity on Obair in relation to any Chinese banks or financial institutions introduced by it during the term of the agreement.

[25]Clause 5 of the Obair agreement imposed on Obair undertakings to comply with all applicable provisions of laws and regulations relating to it and its customers and the Transactions placed by Obair or its customers by CMC. There was no corresponding obligation on the part of CMC.

[26]Clause 17 of the Obair agreement contained mutual undertakings by each party not to use Confidential Information of the other other than for the purposes of the agreement and not to disclose it to any other party. Confidential Information was defined as “Any information, documents or objects of a confidential nature”, including intellectual property rights.

[27]The FXT IB agreement also included provisions precluding Forex from making any representation on behalf of CMC or its affiliates or holding itself out as an agent or otherwise of CMC without CMC’s prior written consent; a warranty by Forex that it was duly registered and/or licensed or was not required to be as an introducing broker; that it would comply with all applicable provisions of laws and regulations.

[28]Both agreements, governed by English law, contained entire agreement clauses.

[29]It is common ground that the Obair agreement has been brought to an end, notice of termination having been served by CMC on 2 December 2003 taking effect on 1 March 2004. The Claimants contend that the FXT IB agreement remains in force.

The informal agreements alleged by the Claimants: (a) The first agreement

(a) The first agreement

[30]The making of the first agreement is described as follows in Mr Taher’s first witness statement:

“To this end, on 18th July 2003, and after signing the CMC-Market Maker agreements, Mr Cruddas and I returned to the hotel and went to his suite to discuss the business and the plan for the future. The meeting lasted about 1 hour. Mr Cruddas then stated that we must organise the business in China properly and set up a full subsidiary in China to be named CMC-China to be headed by me and stated “you should not be an Introducing Broker…You are CMC…I will give you the best contract…you will be the president of CMC-China…we will buy you a villa in the south of France and when you retire you can live beside me…”

. I agreed with Mr Cruddas that this would be the best way forward in that we would be able to operate in a much better fashion in China. Mr Cruddas then informed me that if I agree with his proposal then I should immediately close my offices in Dublin and solely concentrate on the CMC business. I was very hopeful in the future, I trusted Mr Cruddas, he was my friend and I agreed readily. To this end, we both stood up and we shook hands in confirmation of the first agreement. I do not have minutes of this meeting but due to its substantial importance I recall exactly the event which I described here, and the agreement reached, which I unequivocally confirm to be true (‘the first agreement’).”

[31]The italics are in the original. To a sceptic, the last sentence of this paragraph would cause red lights to flash. But scepticism is unnecessary, even if not entirely inappropriate. I am not concerned with an allegation that Mr Taher incurred expenditure on the basis of a promise that he would be reimbursed, but with an allegation that a binding contract as pleaded in paragraph 55 of the Particulars of Claim was concluded. The terms alleged by Mr Taher himself are appropriate to an unenforceable agreement of principles rather than any such contract. Moreover, a week later, on 25 July 2003, Mr Taher sent an email to Mr Cruddas:

“As you requested, when you were in Shenzhen, enclosed is the best draft proposal I could come up with. I tried to simplify it as much as possible, but matters are not so easy. Please print it, read it carefully, think about it and let us discuss.”

The italics are mine. This is not the language of someone who has made a binding agreement. The enclosure is headed “Preliminary plan for discussion purposes as per discussions between PC and NT (during the period, 14th to 20th July 2003) as to the best way forward”. The same comment applies. The content of that document is consistent with the heading. On 8 August 2003, Mr Taher sent a revised “draft proposal” to Mr Cruddas. The heading of the enclosure was the same as that of 25 July 2003. Mr Taher’s email of 12 August 2003 shows that the discussions had not concluded, as do subsequent documents: see, e.g., Mr Taher’s document enclosed with his email of 15 September 2003, and his email itself; Mr Cruddas’ email in reply of the same date; Mr Taher’s email of 16 September 2003 and that of 24 September 2003, especially the last line. In addition, Mr Taher was informed that the agreements would require the signature of a second CMC director and board approval: see the email from Kenneth Jones, an adviser of CMC, of 17 September 2003. Neither was ever obtained.

[32]I accept the submission of the Defendants that there is no triable issue as to the first agreement. The contemporaneous documents make the matter clear: there was no such concluded agreement.

(b) The second agreement

[33]The Particulars of Claim allege that the second agreement was concluded between Mr Taher and Mr Cruddas on 16 November 2003. Significantly, the Claimants are unable to specify whether the agreement was with Mr Taher or Obair or FXT. Its terms are alleged to be contained “in part or in full” in a written memorandum “which Mr Cruddas agreed and promised to return signed to Mr Taher” or in an email dated 19 November 2003 from Mr Cruddas to Mr Taher and Mr Jones. It alleged that the agreement replaced the Obair agreement and had similar terms save that whichever of the Claimants was the contracting party was given a general permission to use the CMC name, marks and logo, and it would extend over another 12 month period into 2004. Parenthetically, the need for an agreement to generalise the use of the CMC name, marks and logo suggests that until that date there was no such general permission. On the following day, 17 November 2003, Mr Taher sent to Mr Cruddas an email enclosing “a very rough, quickly drafted synopsis re IB plan as per our discussions”. Nothing in that email or the enclosure suggested that a binding contract had been entered into the previous day. Far from it, the enclosure contained what are clearly no more than proposals in broad terms. Neither the email nor the enclosure make any reference to an agreement by Mr Cruddas to return a signed document. The email of 19 November 2003 from Mr Cruddas is inconsistent with there having been a concluded agreement. It concludes:

“This should get us up and running quickly. We have until 19 December to agree this because the old agreement expires then. However, I would like to get this sorted as quickly as possible so Naser can start to introduce clients.”

[34]Later that day, Mr Taher sent another email to Mr Cruddas enclosing “new agreement with some amendments”. His email makes no reference to any undertaking to Mr Cruddas to sign and return it. On 21 November 2003, Mr Cruddas sent an email to a number of persons within CMC, which was copied to Mr Taher. Its enclosure states:

“I am negotiating a contract with Naser and his team (China) in China that will give him exclusive IB agreement to bring on clients. …”

[35]In paragraph 92 of his witness statement, Mr Taher describes a lengthy telephone conversation in the course of which a firm agreement was reached on all outstanding points. It is alleged to have led Mr Taher to have printed a written memorandum on 25 November 2003 which he faxed to Mr Cruddas for his signature and return. Mr Cruddas disputes receiving it. It is not suggested that he signed and returned it. Mr Jones’s email to Mr Cruddas on 25 November 2003 indicates that Mr Cruddas thought that the agreement was still being drafted. On the same date, Mr Cruddas sent an email to Mr Taher enclosing a draft document with further changes stating:

“It’s a good agreement and gives you one year to create wealth for yourself. You are covered on all the major issues especially the banks you want to introduce etc. However, our main concern is the CMC name and lack of control of your use of it. We cannot give you freedom to do what you want with the name so the enclosed agreement has been strengthened a little to ensure we are happy.”

[36]Mr Taher sent an email to Mr Cruddas on 26 November 2003 on another subject. It contained no reference to any disappointment of Mr Taher at his receipt of altered terms although it was written “in the frankest possible manner”, and according to his witness statement, he had been “stunned” to receive the altered draft. On 30 November 2003, Mr Cruddas sent an email to Mr Taher saying that “the proposals you have asked for are not acceptable to CMC and me”. Mr Cruddas was offering what became the FXT IB agreement. On 1 December 2003, Mr Taher sent to Mr Cruddas a document entitled “The best way forward”. It referred to a number of projects. It contained no suggestion that Mr Cruddas had resiled from a concluded second agreement or that he had to failed to sign and return any memorandum of agreement. It should also be remembered that Mr Taher had already been informed that any agreement would require a second director’s signature and board approval.

[37]Mr Cruddas wrote to Mr Taher again by email on 1 December 2003. It included the following paragraph:

“My view is that you have three months left on your contract (after this month) to get SDB up and running and bring in some I.B. clients. Instead of trying to manipulate a new contract out of me why don’t you get on with the important issues of finding clients and getting SDB up and running?”

[38]The contemporaneous documentation is overwhelmingly inconsistent with the conclusion of an agreement as alleged by the Claimants.

(c) The FXT agreement

[39]This agreement is alleged to have been made in London on 17 December 2003. It was a precursor to the FXT IB agreement. Mr Taher sent to Mr Cruddas two versions of his summary of what had been agreed, the one enclosed with his email dated 8 January 2004 and the other with his email of 12 January 2004. The latter document contains no exclusivity or quasi-exclusivity for the Claimants: its terms are entirely financial. It is therefore not pertinent to the present application. Neither document, if contractual, could justify either the agency injunction or the injunction restraining breaches of Chinese law.

[40]I add that I find the Claimants’ reliance on the alleged FXT agreement and the FXT IB agreement curious, since in their Particulars of Claim they allege that both agreements were entered into under economic duress and FXT reserves the right to claim that they should be set aside. A Claimant cannot both reserve the right to set aside an agreement and seek to enforce its alleged terms.

(d) The third agreement

[41]This is alleged to have been concluded orally on 27 January 2004 between Mr Cruddas and Mr Taher. It is alleged to have related to an investment of “up to $1 million” in CMC – MarketMaker to fund exploitation of the Financial Websites project. Leaving aside the uncertainty of “up to $1 million” its terms are said to have been reduced into writing only some six weeks later, on 15 March 2004, in a document said to be typed by Mr Cruddas. The document referred to is no more than a statement of principles requiring considerable formal documentation to implement. Mr Taher himself refers to this document as “the Heads of Agreement”. Mr Taher clearly appreciated this: on 26 March 2004 he sent an email to Mr Cruddas to which were attached seven draft agreements, totalling some eighty pages, which recognised that no binding agreement had yet been concluded. Mr Taher’s email to Mr Jones of 20 April 2004 recognises that the agreements have not been completed. Mr Taher’s email to Mr Cruddas of 28 April 2004 similarly shows that no firm agreement had been reached.

[42]In my judgment, there is no triable issue as to the conclusion of the third agreement.

The agency injunction

[43]There were 4 versions of this injunction, contained in paragraph 1 of the Notice of Application and of each of the Claimant’s draft orders. In order to keep this judgment within reasonable bounds, I shall focus on the second draft order, which sought an injunction restraining:

“the interim Respondents, and each of them, … from representing to anyone including, but not limited to the Chinese government, the Shenzhen Development Bank, the principals and beneficial owners of the banks listed at Schedule 1 to this Order, or their servants or agents, the principals or beneficial owners of the financial websites and financial institutions listed in Schedule 2 to this Order, or their servants or agents, that the Fourth Applicant has not, prior to 7th June 2004, in his capacity as General Manager of the Beijing representative office of the First Respondent located at the offices of the First Applicant, situated at 1212 Oriental Plaza, E1, Beijing 100738, been an agent of the First Respondent.”

[44]The Defendants submitted that the Claimants had shown no arguable cause of action for this injunction, and that in any event it is too uncertain in its extent and has other characteristics that make it unsuitable for injunctive relief.

[45]With the exceptions of freezing injunctions and injunctions granted for the purpose of preserving evidence or otherwise protecting the process of the Court, an injunction requires a cause of action:

“A right to obtain an interlocutory injunction is not a cause of action. It cannot stand on its own. It is dependent upon there being a pre-existing cause of action against the defendant arising out of an invasion, actual or threatened by him, of a legal or equitable right of the plaintiff for the enforcement of which the defendant is amenable to the jurisdiction of the court. The right to obtain an interlocutory injunction is merely ancillary and incidental to the pre-existing cause of action. It is granted to preserve the status quo pending the ascertainment by the court of the rights of the parties and the grant to the plaintiff of the relief to which his cause of action entitles him, which may or may not include a final injunction.”

Lord Diplock in The Siskina

[1979] AC 210

, 256. And so the first question is: what is the legal or equitable right which, if established, would entitle the Claimants to this injunction?

[46]An injunction restraining a defendant from asserting a fact (or denying it) may be granted if the assertion or denial is alleged to be defamatory or to constitute a malicious falsehood. Neither is alleged in the present case. It is clear in any event that if defamation were pleaded, the Defendants would plead that their denial was justified; and save in exceptional circumstances the Court would not grant injunctive relief against a defendant who pleads justification.

[47]An injunction such as that sought may conceivably be based on the express or implied terms of a contract between the parties. In the present case, the only undisputed contracts between the parties contain prohibitions against the Claimant contracting party holding itself out as the agent of CMC. This is not merely an inauspicious starting point for the injunction sought: it is inconsistent with it.

[48]It is not surprising, therefore, that the Particulars of Claim include no clear pleading of a cause of action. The closest one gets is paragraph 61, and it could not justify the grant of final injunctive relief, let alone interim relief.

[49]In his first witness statement, Mr Taher alleged that if the Defendants disputed his agency, he was likely to suffer criminal sanctions in China. Even if that were true, it would not of itself create a cause of action, i.e., in the absence of a plea of the constituents of defamation or malicious falsehood. No Chinese legal evidence was put before the Court on 7 June 2004 to show that Mr Taher’s alleged fears were well-founded. The risk that this relief is intended to avoid is addressed in a letter dated 28 July 2004 (i.e. the day before the hearing before me) from Capital Associates, Chinese lawyers recently instructed on behalf of the Claimants. Their advice is as follows:

“If an individual trader misrepresents himself or is misrepresented by his principal/employer with his acquiesce(nce) to Chinese banks and/or financial institutions and/or to Chinese government organs as being a servant and/or agent of a foreign financial institution when he is not, such misrepresentation might, depending on the circumstances, cause this individual to be prosecuted for financial fraud or contractual fraud in accordance with the Criminal Law of the PRC subject to fulfilment of other elements. According to Section 1 of Article 224 of the Criminal Law, the sanctions may include: 1. up to three years in jail and/or penalties; or 2. three to ten years in jail and penalties if the fraud amount is huge; or 3. over ten years to life sentences and penalties if the fraud amount is extremely big or the circumstance is extremely severe.”

According to Section 1 of Article 224 of the Criminal Law, the sanctions may include:

[50]The Defendants had no opportunity to respond to this evidence, which is in any event significantly qualified by the words “depending on the circumstances” and “subject to fulfilment of other elements”. I do not know to what circumstances or other elements the author intended to refer. Be that as it may, I do not read this advice as saying anything more than that if Mr Taher fraudulently, i.e. deliberately and dishonestly, misrepresented himself as the agent of CMC he might be liable to criminal sanctions. Even if a cause of action were shown, that risk could not justify the grant of an injunction of the kind sought in this case.

[51]Miss Newman was compelled to rely on alleged acts of holding out by the Defendants and on alleged variations of the Obair and FXT IB agreements. The variations are not pleaded as such, and in any event do not amount to an undertaking not to deny Mr Taher’s agency. Holding out does not amount to such an undertaking. The difficulty further faced by the Claimants in relation to allegations of holding out is that holding out operates on a specific basis: it must be shown that there was a holding out by the principal to the third party. It is difficult to see how it could justify a general injunction.

[52]It is clear that the Defendants did hold out Mr Taher as connected with them. I refer, by way of example, to CMC’s letter to the British Embassy in Beijing of 8 August 2003, describing Mr Taher as “General Manager of our offices in Beijing”, the letter sent by Mr Taher to SDB at page 516 of file 2 similarly describing him (although unless that is the letter referred to in Mr Taher’s email to Mr Cruddas of 3 September 2003 it is unclear who saw or approved that letter before it was sent), the email to the Foreign and Commonwealth Office of 16 October 2003 describing Mr Taher (more vaguely) as “our man in China”, and the equally vague internal email of 20 November 2003 referring to Mr Taher and Cherry “running our Chinese operation”. Mr Taher organised a video conference to promote CMC to Chinese businessmen and politicians that took place in April 2003. In July 2003 he informed Mr Cruddas of his new email address n.taher@cmcplc.com.cn; it indicates a connection with CMC, but no more, and I do not know by whom in CMC it was authorised.

[53]Care is required in considering the effect of the acts of holding out and their implications for the grant of injunctive relief. For example, in December 2002, Mr Taher signed on behalf of Mr Cruddas a proposal addressed to a Chinese bank. It is clear from Mr Cruddas’ email of 23 December 2002 and Mr Taher’s reply of 14 December 2002 that Mr Cruddas had not authorised Mr Taher to sign it, but acquiesced in what he had done. Furthermore, it is clear that there were differences between the parties as to Mr Taher holding himself out as acting for the Defendants. In an email to Mr Cruddas of 28 July 2003, Mr Taher stated:

“Moreover, you will recall when we sat down on Sunday evening at the Wuzhou Guest House (you, John and I), and I was reprimanded for somehow representing that I was acting for CMC.”

Later in that email, Mr Taher stated:

“The moral of the story is that we have to unity of instructions. We cannot afford to make mistakes, especially with major issues such as settlement, public relations and others. Until the structure in China is rectified and we know our role with CMC, we have to remain in the precarious position of pretending to act on behalf of CMC, while we are not entitled to do so. As you know SDB have set up a team from their side. My advice to you is to, at your earliest convenience, decide the proper structure in China so we can work properly.”

[54]In an email of 19 November 2003 to Kenneth Jones, Mr Cruddas stated:

“I want Naser to be able to use the CMC name can you look at this and see the easiest way forward this to include title of m.d. or president or chief bottle washer. …”

This does not suggest that Mr Cruddas thought that Mr Taher was entitled to refer to himself at that date as an agent of CMC or as general manager of its Chinese representative office.

[55]There are other difficulties inherent in the order sought. The word “agent” is notoriously vague and capable of different meanings. As a strict legal term, it means someone who has the authority legally to commit his principal, in particular by entering into a contract binding on the principal. But an estate agent, for example, has no such implied authority. Although a broker is often regarded as an agent, the introducing broker under the Obair and the FXT IB agreements was prohibited from holding itself out as an agent of CMC without the latter’s agreement. And so the question arises, what kind of agent would the Defendants be restrained from denying that the Claimants or Mr Taher was? Secondly, what was the scope of the authority of the agent? As I asked in argument, before Annex 2 appeared, what if a car dealer telephoned Mr Cruddas from China and asked for confirmation that CMC would meet the bill for a Mercedes motor car purportedly purchased by Mr Taher on CMC’s behalf? Or if there was a question from a Chinese bank as to whether the Defendants accepted liability under a forex transaction entered into by Mr Taher? Even as formulated in Annex 2, there is no limit to the disputed authority of Mr Taher, either as regards subject matter, identity of third party or value. The application does not specify the acts or statements of Mr Taher alleged to have been done or made on behalf of the Defendants. Furthermore, even as drafted in Annex 2, there was no defined beginning of the period during which the agency which could not be disputed existed; as originally formulated, there was no end to that period either.

[56]Furthermore, given that the Defendants deny that Mr Taher was entitled to hold himself out as acting as their agent, at least generally, why should they at this stage be restrained from communicating what they contend to be true? The evidence is miles away from establishing that their denial is manifestly unfounded: indeed, as has been seen, the Defendants imposed contractual prohibitions on the Claimants to restrict them from purporting to be their agent, and reprimanded Mr Taher for holding himself out as representing them. Such an injunction would be a serious infringement of the right of free speech. What if, for example, the Chinese authorities were to ask the Defendants for their account of their relationship with Mr Taher? There is no legal basis for requiring the Defendants to make any statement that they do not believe to be true; but that would be the effect of the injunction sought. To grant it in the absence of the clearest legal right must be inappropriate.

[57]The difficulties involved are highlighted both by the width of the original injunction granted and of that sought by Annex 2. The order made by Fulford J literally construed prohibited the Defendants from informing their solicitors and counsel that Mr Taher was not their agent. It would have precluded them from informing their own regulators of what they consider to be the true position. These consequences cannot be right.

[58]My criticisms of the width and vagueness of the injunction sought led to the restrictions in Annex 2 relating to the persons to whom the denial of agency might be communicated, but also to the addition of the reference to the capacity of Mr Taher as “General Manager of the Beijing representative office” of CMC. No headed notepaper or other document has been produced in evidence so describing Mr Taher; there is no evidence of even a brass plate outside an office in Beijing with these words. There is no agreement or other document so appointing him. In the second half of 2003 there were negotiations (to which I refer below) which if they had resulted in an agreement would have led to Mr Taher being appointed President of Forex, which would have become a subsidiary of CMC, but that is a very different thing from general manager of CMC itself; and Forex never did become a subsidiary of CMC. The term “representative office” is a term of art: see, for example, the Chinese legal advice obtained by Mr Taher at the beginning of April 2004 referred to below. The Defendants’ evidence is that they are in the process of applying to the Chinese authorities for registration of a representative office in Beijing. Once registered, the office comes under the supervision of the Chinese authorities (the CBRC). The implication of the order sought in Annex 2 is that CMC has been operating an unregistered representative office in Beijing; and if the injunction were granted in those terms, CMC would be precluded from denying that it had done so. The implications for its pending registration, as well as its standing with other regulatory authorities, are obvious.

[59]Moreover, the written evidence is inconsistent with any intention of the Defendants to have opened or to have been operating a representative office or to hold Mr Taher out as operating one. In an email dated 8 October 2003 to Mr Taher, Mr Cruddas stated:

“Until we deliver the SDB project I am not going to open a representative office as I need to be sure that this project is going to be delivered and that further expenses will not be incurred.”

This email is also inconsistent with any obligation at that date on the part of CMC to pay the Claimants’ office expenses. If Mr Taher were operating CMC’s representative office, one would expect him to be entitled to reimbursement.

[60]Mr Taher obtained Chinese legal advice from Zhonglun W&D Law Firm at the beginning of April 2004. He had meetings and communications with members of the firm, and sent formal instructions in a letter dated 22 March 2004. It is evident that they were given to understand that no representative office had yet been established. In paragraph 3.8.5 of their advice, they stated (with added italics):

“The representative office can employ employees, but cannot sell the business of Section 1.8. Its duty, if formed, would be to understand the market, to collect market information, to co-ordinate with the work of Market Maker’s Group in China. The business section of Section 1.8 can be supported by Market Maker’s WOFW and/or EJV in China indirectly with the specific solutions as follows.”

[61]The injunction sought, even as formulated in Annex 3, would almost certainly preclude CMC from honestly answering any questions posed by Chinese authorities as to Mr Taher’s actions and responsibilities and authority on their behalf in China; clearly, there is a real risk that it would have this effect. Strong justification is required for the grant of relief having this consequence. It is lacking.

[62]Lastly, as mentioned above, the order made by Fulford J restrained the Defendants from denying the agency of the First Claimant as well as that of Mr Taher. The Claimants did not pursue that aspect of their case, and so the basis of this part of his order was not addressed in argument. I have seen nothing to suggest that there was any justification for this aspect of that order.

The Chinese illegality injunction

[63]The injunction considered under this head is an injunction restraining the Defendants from (in summary) conducting any forex or financial derivatives business in breach of Chinese law. Again, the first question is: what is the arguable cause of action which justifies the grant of such an injunction. Miss Newman argued for an implied term of each of the agreements between the Claimants and the Defendants requiring the Defendants to comply with applicable Chinese law.

[64]There are and always have been insuperable difficulties facing the Claimants under this head. I leave aside the two alleged informal agreements referred to above which I have found were never concluded. In any event it is not suggested that any of the alleged informal agreements included any express contractual provision requiring CMC to comply with applicable Chinese law.

[65]It is too simplistic to argue that an implied term is to be found because, if asked, the parties to the contracts that were concluded would “of course” have confirmed that they would comply with applicable Chinese criminal law. If that were a sufficient test, every contract would contain an implied term requiring the parties to comply with applicable criminal law. No authority was cited to support such a ubiquitous implied term.

[66]The undoubted contracts that were entered into, namely the Obair and FXT IB agreements, did include provisions requiring compliance with Chinese law, but they were unilateral, imposed on Obair and Forex respectively, and not on CMC. The subject of the implied term was, at least notionally, considered and legislated by the parties to those agreements, and they chose not to impose one on CMC. In my judgment, it is impossible to establish an implied term in these circumstances.

[67]It follows that the Claimants have not established any arguable legal right justifying the grant of this injunction. But there are other reasons why it cannot be granted. Miss Newman accepted, as she had to, that there is a genuine difference of opinion and of advice as to Chinese law between the Claimants and the Defendants. The important difference between them is as to the legality of forex and other financial trading with CMC by Chinese residents using their offshore funds. CMC have received advice that such trading is lawful; Mr Taher has advice that it is unlawful. That the advice on which the Defendants rely was obtained by Mr Taher accentuates the genuineness of this difference. That the Chinese legal advice relied upon by the Claimants was served on 26 July 2004 (and presumably was not in written form when these proceedings were begun) makes their position even worse.

[68]In my judgment, it is not for an English court to resolve this difference unless it is necessary to do so in order to determine a dispute between the parties that is properly before it (as where there is a dispute as to the legality of a contract between the parties). It is certainly not a dispute that is appropriate to the grant of injunctive relief, which would lead this court to determine on a quia timet basis an issue that would best be determined by a Chinese court. It is even more inappropriate to grant an injunction that would either lead to an admittedly genuine issue as to a foreign law being determined in the course of committal proceedings or cause the Defendants to refrain from conduct that they are advised to be and believe to be lawful for fear of committal proceedings.

[69]The third reason to refuse the grant of this injunction is connected with the first: there is no evidence that the Defendants intend deliberately to infringe Chinese criminal law as they are advised it to be. Indeed, it is not asserted that they do. The basis for what is quia timet relief is lacking. In this connection, I refer to the email dated 11 September 2003 in which Kenneth Jones advised Mr Cruddas:

“Irrespective, even if my assumption with regard to the retention of foreign exchange remittances proves not to be correct, CMC can not risk being party to the circumvention of foreign exchange Regulations, nor, as is inferred from Naser’s comments, tax evasion.”

Similarly, in his email to Mr Taher of 20 April 2004, Mr Jones stated:

“Thank you for your email. In response, I simply wish to state that we have clear legal advice as to the activities CMC’s rep office may conduct, and the business that CMC Group may conduct with the Chinese customers (offshore). We shall obviously adhere to the regulations. But to reiterate, insofar as Internet and telephone dealing is concerned, the advice received clearly states that in the event the customer deals with CMC via the Internet or via telephone CMC will not be in breach of the regulations in China. This is, by the way, the same approach adopted by SFC in Hong Kong, with the further restriction that CMC may not advertise its services or solicit business in HK without prior registration in that jurisdiction. By operating under a rep office license in China, CMC will be allowed, among other approved activities, to promote its business in China.”

[70]Moreover, any deliberate infringement of Chinese law applicable to their trading would affect the Defendants’ standing with their UK and Australian regulators. It is not in their own interests so to infringe Chinese law.

[71]The fourth reason to refuse this injunction is that it is too broad. It is not restricted to any specified conduct on the part of the Defendants or to an identified and specific rule of Chinese law. It covers all of the Defendants’ trading and every provision of Chinese law. It is not, in the terms sought in the notice of application and in Annexes 1 and 2, limited to persons resident in China. It is not limited to persons with whom it has been shown that the Claimants have a special connection. Annex 3 sought to address this difficulty, but as drafted referred to Internet websites as persons (which they are not).

[72]There is also the position of the Claimants to consider. They are concerned, apparently, that they may suffer criminal sanctions if the Defendants commit crimes under Chinese law. But they are no longer connected with the Defendants in any meaningful sense. I fail to see that there is any real risk to the Claimants if the Defendants commit criminal offences. It is moreover curious that in these circumstances the Claimants seek to restrain the Defendants from disputing the Claimants’ connection with them.

[73]Finally, if the Claimants’ Chinese legal advice is correct, the FXT IB agreement, and possibly the Obair agreement, and all of the other agreements alleged by the Claimants, are unlawful: they provide for CMC to enter into agreements with persons in China contrary to Chinese law. If so, the Claimants can have no claims under these agreements, including money claims. That is hardly consistent with their pleading or the present applications.

[74]The Claimants are not entitled to any injunctive relief under this head.

The preservation of records and payment of sums alleged to be due

[75]I refer to sub-paragraphs a to c of paragraph 2 of Annex 2. The Defendants are required to keep records of their trading by the UK and Australian regulators. They are required to keep all documents relating to the issues between them and the Claimants for the purposes of disclosure in due course, assuming this litigation continues. There is no evidence to justify the grant of injunctive relief.

[76]The order sought in paragraph 2.d of Annex 2 is an interlocutory order for specific performance of the Obair and FXT IB agreements. The Claimants may be entitled to an account under each agreement, but there has been neither a trial nor an application for summary judgment. No good reason for interlocutory injunctive relief has been shown; indeed, I do not think any reason at all has been shown, other than that the Claimants seek an account. I add that the order sought by the Claimants would presumably lead to committal proceedings to determine whether a full account has been given by the Defendants or payment withheld. That would be wholly inappropriate.

Confidential information

[77]Annex 2 does not identify in any meaningful sense the confidential information which is to be subject to the injunction sought. That is fatal to the application for the injunction. Even Annex 3 is insufficient. The Defendants referred me to the apt statement of Laddie J in Ocular Sciences Ltd v Aspect Vision Care Ltd & Ors

[1997] RPC 289

“(d) Pleadings in a breach of confidence action. The rules relating to the particularity of pleadings apply to breach of confidence actions as they apply to all other proceedings. But it is well recognised that breach of confidence actions can be used to oppress and harass competitors and ex-employees. The courts are therefore careful to ensure that the plaintiff gives full and proper particulars of all the confidential information on which he intends to rely in the proceedings. If the plaintiff fails to do this, the court may infer that the purpose of the litigation is harassment rather than the protection of the plaintiff’s rights and may strike out the action as an abuse of process. … The normal approach of the court is that if a plaintiff wishes to seek relief against a defendant for misuse of confidential information it is his duty to ensure that the defendant knows what information is in issue. This is not only for the reasons set out by Edmund Davies LJ in John Zink but for at least two other reasons. First, the plaintiff usually seeks an injunction to restrain the defendant from using its confidential information. Unless the confidential information is properly identified, an injunction in such terms is of uncertain scope and may be difficult to enforce: See for example PA Thomas & Co v Mould [1968] 2 QB 913 and Suhner & Co AG v Transradio Ltd [1967] RPC 329. Secondly, the defendant must know what he has to meet. He may wish to show that the items of information relied on by the plaintiff are matters of public knowledge. His ability to defend himself will be compromised if the plaintiff can rely on matters of which no proper warning was given. It is for all these reasons that failure to give proper particulars may be a particularly damaging abuse of process. These principles do not apply only to the question of the content of the pleadings. Just as it may be an abuse of process to fail properly to identify the information on which the plaintiff relies, it can be an abuse to give proper particulars but of information which is not, in fact, confidential. A claim based even in part on wide and unsupportable claims of confidentiality can be used as an instrument of oppression or harassment against a defendant. … The wider the claims, the longer and more expensive the litigation. The defendant is likely to feel that he has no alternative but to challenge the confidentiality of everything, even though he believes that much or most of the technology pleaded cannot reasonably be though of as secret.”

[78]Furthermore, much of the information referred to in Schedule 5 to the Particulars of Claim is manifestly not confidential.

[79]Lastly, with reference to paragraph 3 of Annex 2, the evidence before me does not justify an inference that the grant of an injunction is necessary to secure the preservation by the Defendants of documents relating to the Claimant’s claims pending a trial, if such there will be.

Conclusion

[80]The Claimants’ application was for extravagant and unjustified relief. It was dismissed for the reasons set out above.

Annex 1

[1]The interim Respondents be restrained until trial or further order in the meantime and an injunction is hereby granted restraininga. the interim Respondents, and each of them, whether by themselves, or by instructing or encouraging any other person, from representing to anyone including, but not limited to the Chinese government, the Shenzhen Development Bank, the principals and beneficial owners of the banks listed at Schedule 1 to this Order, or their servants or agents, the principals or beneficial owners of the financial websites and financial institutions listed in Schedule 2 to this Order, or their servants or agents, that the First and Fourth Applicants have not been, prior to 7th June 2004, agents of the First Respondent.

b. the interim Respondents, and each of them, whether by themselves, or by instructing or encouraging any other person, from doing any of the following acts: i) Performing any of their obligations under the agreements listed at Schedule 3 to this Order (“the agreements”) or conducting any of their foreign exchange and financial derivatives business, including margin trading, (“the products”) in such manner as to be in breach of the Administration Rules Concerning Foreign Exchange of the PRC, the Interim Rules Regarding Administration of Transactions Concerning Financial Derivatives or any other applicable provision of Chinese law relating to trade in foreign currency and financial derivatives including, but not limited to: (1) Acts which would enable mainland Chinese entities or individuals to buy, sell or deal in the products with any entity not (a) authorised by the China Security Regulatory Commission and the State Administration of Foreign Exchange (b) registered with the state Administration of Industry and Commerce including but not limited to providing them with (c) application forms for opening foreign currency exchange and financial derivatives trading accounts; and (d) the banking details of the Respondents for the purposes of transferring foreign currency without Chinese government authorisation. Annex 2 The interim Respondents be restrained until trial or further order in the meantime and an injunction is hereby granted restraining a. the interim Respondents, and each of them, whether by themselves, or by instructing or encouraging any other person, from representing to anyone including, but not limited to the Chinese government, the Shenzhen Development Bank, the principals and beneficial owners of the banks listed at Schedule 1 to this Order, or their servants or agents, the principals or beneficial owners of the financial websites and financial institutions listed in Schedule 2 to this Order, or their servants or agents, that the Fourth Applicant has not, prior to 7th June 2004, in his capacity as General Manager of the Beijing representative office of the First Respondent located at the offices of the First Applicant, situated at 1212 Oriental Plaza, E1, Beijing 100738, been an agent of the First Respondent. b. the interim Respondent, and each of them, whether by themselves, or by instructing or encouraging any other person, from doing any of the following acts: i) Performing any of their obligations under the agreements listed at Schedule 3 to this Order (“the agreements”) or conducting any of their foreign exchange and financial derivatives business, including margin trading, (“the products”) in such manner as to be in breach of the Administration Rules Concerning Foreign Exchange of the PRC, the Interim Rules Regarding Administration of Transactions Concerning Financial Derivatives or any other applicable provision of Chinese law relating to trade in foreign currency and financial derivatives including, but not limited to: (1) Acts which would enable mainland Chinese entities or individuals to buy, sell or deal in the products with any entity not (a) authorised by the China Security Regulatory Commission and the State Administration of Foreign Exchange; (b) registered with the State Administration of Industry and Commerce (c) including but not limited to providing them with (d) application forms for opening foreign currency exchange and financial derivatives trading accounts; and (e) the banking details of the Respondents for the purpose of transferring foreign currency without Chinese government authorisation.

[2]The interim Respondents and any persons associated with then (within the meaning of Section 435(6) of the Insolvency Act 1986) shall:a. keep full and proper records and accounts of all foreign exchange or financial derivatives transactions (which expressions are to include margin trading) they enter into, or have entered into, in China; and

b. keep a list of all their foreign exchange customers or financial derivatives in china and their details; and

c. by 4 pm on Monday of each week, inform the Claimants, via a designated officer of the 1st Defendant whose name and contact details shall be communicated forthwith to the Claimant’s solicitors, of the details of any foreign exchange or financial derivatives customers the Respondents have contacted from those listed in Schedules 1 and 2 herein (including any customers obtained through any of those listed therein); and

d. By the 15th of each month, or the next working day if the 15th is not a working day, pay i) 33.3% of all Net Trading Profits, as defined by Schedule 2 to the Obair Agreement, from the Chinese business as defined by the Obair Agreement, to the Second Claimant ii) Under the FXT IB Agreement, 1.6 pips per transaction to the 3rd Claimant; and iii) Together with an explanatory schedule, signed by an appropriate officer, detailing the calculation of the sum due. In the event of a dispute that any of the sums are due to any of the Claimants, the same shall be paid into an account [details to be agreed] to await trial or further order of the court in the meantime. For the avoidance of doubt, nil returns are to be made.

[3]The First and Third Respondents shall preserve all confidential information supplied by the Claimants, or any of them, or their former employees or agents, as described in the first witness statement of Naser Taher dated 7th June 2004, until trial or further order in the meantime. Annex 3

Annex 2

[1]Without prejudice to such rights as the First and Third Respondents may have to object to any specific transactions purportedly entered into by the Fourth Claimant, the First and Third Respondents be restrained until trial or further order in the meantime and an injunction is hereby granted restraining them and each of them whether by themselves, their servants or agents or otherwise howsoever, froma. making a representation in or for communication to anyone in he People’s Republic of China, (save legal advisors in circumstances governed by legal professional privilege) including, but not limited to the PRC government, the Shenzhen Development Bank, the principals and beneficial owners of the financial websites and financial institutions listed in Schedule 2 to this Order, or their servants or agents, that the Fourth Applicant was not from 4th September 2002 until 7th June 2004 entitled to represent himself as being General Manager of the First Defendant’s office in Beijing.

b. Performing any of their obligations under the Obair or FXT IB agreements as listed at Schedule 3 to this Order (“the agreements”) or conducting any of their foreign exchange and financial derivatives business, including margin trading, (“the products”) with any of the persons listed in Schedules 1 and 2 to this Order in such manner as to be in breach of the Administration Rules Concerning Foreign Exchange of the PRC, the Interim Rules Regarding Administration of Transactions Concerning Financial Derivatives or any other applicable provision of Chinese law relating to trade in foreign currency and financial derivatives including, but not limited to: (1) Acts which would enable mainland Chinese entities or individuals to buy, sell or deal in the products with any entity not (a) authorised by the China Security Regulatory Commission and the State Administration of Foreign Exchange; (b) registered with the State Administration of Industry and Commerce (c) including but not limited to providing them with (d) application forms for opening foreign currency exchange and financial derivatives trading accounts; and (e) the banking details of the Respondents for the purpose of transferring foreign currency without Chinese government authorisation.

[2]The First and Third Respondents and any persons associated with them (within the meaning of Section 435(6) of the Insolvency Act 1986) shall:a. keep full and proper records, identifying the customers with full particulars, and accounts of all Chinese business as defined in the Obair Agreement dated 19 December 2002 Clause 1.1 and all Transactions as defined in Clause 1.1 of the FXT IB Agreement dated 12 January 2004; and

b. by 4 pm London time on the 10th working day of each month inform the Claimants, via a designated officer of the 1st Defendant whose name and contact details shall be communicated forthwith to the Claimant’s solicitors, of the details of any Chinese business or transactions a defined in the Obair and FXT IB agreements above referred to and in the event that the First Defendant asserts that no Chinese business or transactions have been carried out the designated officer is to so state in a nil return.

c. By the 15th of each month, or the next working day if the 15th is not a working day, pay i) 33.3% of all Net Trading Profits, as defined by Schedule 2 to the Obair Agreement, from the Chinese business as defined by the Obair Agreement, to the Second Claimant ii) Under the FXT IB Agreement, 1.6 pips per transaction as defined to the Third Claimant; and iii) Together with an explanatory schedule, signed by an appropriate officer, detailing the calculation of the sum due by reference to the information contained in the schedule to be supplied under Paragraph 2(b) of this order. In the event of a dispute that any of the sums are due to any of the Claimants, the same shall be paid into an account the details of which are to be agreed between the Claimant’s solicitors and the First and Third Defendant’s solicitors, and not withdrawn without the consent of both or further order of the court. For the avoidance of doubt, nil returns are to be made.

[3]The First and Third Respondents shall preserve in identifiable form all information for which confidence is claimed by the Claimants herein as more particularly set out in Schedule 4 to this Order supplied by the Claimants, or any of them, or their former employees or agents, as described in the first witness statement of Naser Taher dated 7th June 2004, until trial or further order in the meantime.