Tedcom Finance Ltd & Anor v Vetabet Holdings Ltd & Ors

LORD JUSTICE LONGMORE: The claimants in this case have issued an arbitration application in order to preserve assets which are the subject matter of the arbitral proceedings or as to which a question arises in such proceedings pursuant to section 44 of the Arbitration Act 1996.

Mr Justice Teare has refused to grant the orders requested by the claimants, in particular the injunction and associated relief, on the basis that he was not persuaded that jurisdiction existed to issue and serve proceedings on the second to fifth defendants, who were not parties to the arbitration presently constituted between the claimants, whom I will call Tedcom, and the first defendants, whom I will call Vetabet.

The judge said he was prepared to make an injunction as against the first defendants, Vetabet, but the claimants' advocate declined to pursue any application against Vetabet alone because he felt that it would be futile unless the other defendants could also be served with the application and be made the subject of an order.

Mr Justice Teare did not give any formal judgment but the effect of the interchange between the judge and Mr Flannery, who was appearing on that occasion before the judge, was that in the judge's view, neither CPR Part 62.5, which authorises the court to permit the service of an arbitration claim form out of the jurisdiction if the claim is for an order under section 44 of the 1996 Act, nor paragraph 3.1(3) of Practice Direction 6B, which permits service out of the jurisdiction where a claim is made against a defendant on whom a claim form, which raises a real issue which it is reasonable for the court to try, has been or will be served, and the claimant wishes to serve the claim form on another person, who is a necessary or proper party to that claim, could apply in this particular case.

The judge's view was that Part 62.5 could not apply because it only applied to parties to the arbitration. At any rate, where the parties sought to be served were outside the jurisdiction.

Paragraph 3.1(3) could not apply in the judge's view, partly because it only applied when a claim form had been served on a defendant and all that was proposed to be served on the first defendants in this case was an arbitration claim form, and partly because the dispute between Tedcom and Vetabet was to be in any event resolved by arbitration and not by court proceedings.

The claimants have now appealed against the judge's refusal as a matter of urgency. The claimants at this stage only have to show an arguable case for jurisdiction and nothing in this judgment should be taken to prejudice any argument by any respondent that there is in fact no jurisdiction in this case, an argument which can be pursued before the commercial judge on the return date.

A freezing injunction in respect of Vetabet's assets has already been granted by a Cyprus court and the arbitrators have also made various orders requiring Vetabet not to dissipate their assets pending any award and to preserve the assets which are the subject matter of the arbitration.

There is now some evidence, the quality of which is persuasive enough for present purposes, that Vetabet may be dissipating their assets with the assistance of the second to fifth respondents to this application, or at any rate are failing to preserve the assets which are the subject matter of the arbitration.

Section 44 of the Arbitration Act gives the court power to make orders preserving assets, which are the subject matter of the arbitration proceedings, or assets as to which any question arises in the proceedings.

The judge said that but for his doubts about jurisdiction, he would have granted the relief requested, or at least a substantal part of the relief requested.

Unlike the judge, I am persuaded that there is at least an arguable case that there is jurisdiction to make the order, the terms of which we have discussed and which will be made today.

In the first place, Mr Ho has relied on paragraph Part 62.5, which provides:

He has pointed out that section 44 has to be read with section 2(3) of the 1996 Act and that that shows that an order can be made under section 44 in support of arbitration generally and, at any rate arguably, no longer depends on any consensual agreement that there be an arbitration and that that arbitration should take place in England or be governed by English law.

In those circumstances, he submits that it is arguable that things have moved on since the decision of Mr Justice Clarke in the Cienvik [1996] 2 Lloyds Reports, page 395, and therefore that even if it was rightly decided under the terms of the 1950 Act and the terms of the rules of the Supreme Court at the time that it was decided, that it might be decided differently today.

It was that case and the case of Vale Do Rio Doce [2002] Lloyds Reports, page 1 that gave rise to the doubts in the judge's mind as to whether there was an arguable case of jurisdiction.

So far as the Vale Do Rio Doce case is concerned, Mr Ho has pointed out that it did not in terms consider an application under the then equivalent of 62.5(1)(b) but only in relation to 62.5(1)(c), which, as far as the connection with England is concerned, is more restrictive than section 62.1(b).

So in my view there is at least an argument that jurisdiction does exist in this case on the basis of 62.5.

Even if that is not right, I am also satisfied that there is also an argument that, for reasons given in Mr Ho's skeleton, that permission to serve out of the jurisdiction can be granted under Practice Direction 6B para 3.1(3). It is in my view at any rate arguable that there is an issue against the first defendant which it is reasonable for the court to try, namely whether it is appropriate for interim relief to be granted, as claimed, against the first defendant.

Mr Ho has pointed to various authorities which indicate that an arbitration claim form can be served pursuant to the Practice Direction 6B and that to that extent part 62.5 may not be an exclusive remedy for proceedings to be served out of the jurisdiction.

So for those very short reasons, which I do not expand upon because I in no way wish to inhibit any full argument that there will be in due course before the commercial judge, I nevertheless think it right, on my part, to allow this appeal and to make the order in the terms which have been discussed and will be on the transcript.

I should also add that to the extent that we have decided not at this stage to give Mr Ho everything that he has asked for in the order, that it is open for the claimants to argue on the return date for a fuller order than that which we have granted.

LORD JUSTICE RIX: I agree.