Societe Generale S.A v Saad Trading, Contracting and Financial Services Company & Anor

There are before the court three sets of applications, all made by the respondent to this appeal, which I shall call Soc Gen. Each set of applications is made against the two appellants, whom I shall call respectively Saad and Mr Al-Sanea. The first set of applications are that conditions be imposed for the two appellants’ right to proceed with the appeals. In each case the conditions sought are that (a) the appellants pay the amount of the judgment awarded by Teare J to Soc Gen in his order dated 5 October 2011, viz. US$ 49,138,545.44 plus interest awarded in the same order, viz. US$ 3,770,700.88 (although in the case of Mr Al-Sanea this is slightly less); and (b) the appellants pay the interim costs awarded by Teare J in the same order in favour of Soc Gen, viz. £250,000.

The second set of applications seeks orders that the appellants give security for costs in the appeal. The total sum sought by way of such security is £331,984.25. Soc Gen seeks an order that this security be paid into court and that if it is not, then the appellants’ appeals should be dismissed.

The third set of applications requires some explanation of the nature of the case and the appeal. Saad is a trading company which is part of the Saad Group. In 2008/9 it engaged in commodities trading including trading in gold. The case concerns a Facility Letter dated 29 January 2009 between Soc Gen and Saad and a guarantee given to Soc Gen by Mr Al-Sanea of the same date. The Facility Letter (“F/L”) was agreed so as to enable Saad to continue in gold trading. By paragraph 2(i) of Schedule 1 to the F/L, Saad could request Soc Gen to issue or confirm letters of credit and, unless otherwise agreed between Saad and Soc Gen, the UCP 600 terms would apply to such letters of credit. By clause 2(iv) of Schedule 1 of the F/L, Saad irrevocably authorised Soc Gen “in respect of all payments made by [Soc Gen] under [any letter of credit] to forthwith debit any such amount paid to the account of [Saad] with [Soc Gen]”.

Pursuant to the F/L two Letters of Credit (“L/Cs”) were issued by Soc Gen on 16 February 2009 for a value of approximately US$ 25 million each. The L/Cs were confirmed by National Australia Bank Ltd (“NAB”) on 18 February 2009. The L/Cs were stated to be required for the purchase of gold bars. Their terms required presentation of five types of documents to obtain payment under the L/Cs. One type of document was identified as “drafts for 100 percent of invoice value”.

On 18 February 2009 AGR Matthey (“Matthey”) delivered to Brinks Australia the gold which Saad had contracted to buy from Matthey, for shipment to Standard Bank PLC London. On 19 February 2009 Matthey presented the required documents to NAB as the confirming bank, including the bills of exchange, which were accepted by NAB. The documents, less the drafts, were then forwarded by NAB to Soc Gen. Soc Gen reimbursed NAB at the maturity date of the drafts.

The documents (less the drafts, obviously) were then forwarded to Saad but it refused to reimburse Soc Gen. It subsequently denied its liability to do so on the ground that the bills of exchange drawn on and accepted by NAB which were included in the documents listed in the L/Cs as being required for presentation and were in fact presented by Matthey to NAB were not forwarded by NAB to Soc Gen. It was argued at the trial that this meant that, pursuant to the UCP 600 terms, Saad was not obliged to reimburse Soc Gen. Mr Al-Sanea’s argument at the trial was that this meant he was not liable on the guarantee.

Meanwhile the gold was sold on by Saad and the judge found that Saad had title to the gold when it did so. Saad were paid for the purchase before Saad were obliged to reimburse Soc Gen. Soc Gen put forward an alternative argument at the trial that, even if it could not recover under the F/L terms, it was entitled to recover the value of the two L/Cs, viz. some US$ 50 million, by way of restitution on the basis that Saad, which had had the benefit of the value of the gold which it had sold on, would otherwise be unjustly enriched. It was said that Mr Al-Sanea was liable on the guarantee for such a claim. Teare J declined to deal with this basis of claim as he found for Soc Gen against both the appellants on the primary basis, i.e. under the F/L terms.

The third set of applications by Soc Gen is that this court now makes an order that the court hearing the appeals should also deal with the restitution claims against both appellants. Those claims are subject to a Respondent’s notice in the appeal.

Permission to appeal from the judge’s decision was granted on paper by Sir Mark Potter on 16 and 19 December 2011, although it is not entirely clear for which grounds permission has been granted so far as each appellant is concerned. The appeals are estimated to take 1.5 days. It is said that the restitution point would, if heard, take another 1 – 1.5 days.

The first two applications: the relevant provisions of the CPR on “conditions” and security for costs on appeal

With regard to the possible imposition of conditions upon the appeals of Saad and Mr Al-Sanea, CPR 52.9 (1)(c) and (2) provide:

The appeal court may-

The court will only exercise its powers under paragraph (1) where there is a compelling reason for doing so.

With regard to security for costs on an appeal, CPR 25.13(1)(a) and (b) (i) and (2)(a) (i) and (ii) and (c) provide as follows:

The court may make an order for security for costs under Rule 25.12 if-

it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order; and

(i) one or more of the conditions in paragraph (2) applies;…

The conditions are –

The claimant is –

resident out of the jurisdiction; but

not resident in a Brussels Contracting State, a State bound by the Lugano Convention or a Regulation State, as defined in section 1(3) of the Civil Jurisdiction and Judgments Act 1982;

the claimant is a company or other body (whether incorporated inside or outside Great Britain) and there is reason to believe that it will be unable to pay the defendant’s costs if ordered to do so;

Both Saad and Mr Al Sanea accept that the conditions in paragraph (a) of CPR Pt 25.13(2) apply to them and it is clear that (c) presently applies if Saad’s own evidence on these applications is accepted.

CPR 25.15(1)(a) and (2) provide as follows:

The court may order security for costs on an appeal against-

An appellant;

In support of its application for the imposition of conditions and that security for costs on the appeal be provided, Soc Gen first filed a witness statement by Mr Giles Allison, a solicitor employed by Clifford Chance, Soc Gen’s solicitors in this case. This statement, dated 12 January 2012, notes that Saad is a limited partnership organised under the laws of the Kingdom of Saudi Arabia. Saad has its head office in that country. The statement also says that Mr Al-Sanea, who is resident in Saudi Arabia, is a general partner of Saad who owns 90% of its share capital. Those facts are not disputed.

Mr Allison states that Clifford Chance has written to the appellants’ solicitors on many occasions to request payment of the sums set out in Teare J’s order, but there has been none. Nor, however, has there been any request for an extension of the time in which to pay nor an application to the court to stay Teare J’s order.

In paragraph 21 of his first witness statement, Mr Allison states that his firm has received advice from a Saudi law firm that it will be very difficult for Soc Gen to enforce Teare J’s order in Saudi Arabia as English court orders are not enforced there because there is no reciprocal arrangement for enforcement of judgments or orders. At the hearing before us counsel for the respondents to the applications accepted that, effectively, the only way that Soc Gen could enforce Teare J’s judgment in Saudi Arabia would be to start a fresh action there, based on the judgment obtained in England.

Mr Allison’s first witness statement also says, at [22], that:

However, the witness statement submits that Mr Al-Sanea has assets with which to pay lawyers to conduct the present litigation and other litigation both in the UK and in New York, the Cayman Islands and Saudi Arabia itself. Mr Allison concludes that the evidence suggests that the imposition of conditions and an order for security for costs would not “stifle” the appeal of the current appellants.

In response to this, the First Appellant filed a witness statement of Mr Edward Pearson, dated 6 March 2012. He says he is a “lawyer employed as the Deputy Group Legal Counsel” by the Saad Group of Companies and who has responsibility on behalf of Saad for the conduct of the current litigation. This implies that he is paid by the Group and that the Saad Group still has need of (at least) a deputy group legal counsel and a group legal counsel. The witness statement explains that Mr Al-Sanea’s family and business had become embroiled in the business difficulties of the Algosaibi family, to which Mr Al-Sanea is related by marriage. The consequence of this had been that the Saad Group had become entangled in complex proceedings in the UK, New York, Bahrain, the Cayman Islands and Switzerland as well as in Saudi Arabia, thus constituting a “worldwide attack” by the Algosaibi family. The staff of the Finance Department of Saad in Saudi Arabia has been cut from 60 to 3 although it is not said who pays for those three or what is the position in other parts of the globe. Saad’s contention is it now has no staff outside Saudi Arabia.

The principal consequence of the disputes has been that on 28 May 2009 a Royal Order on the command of the King of Saudi Arabia (and made on an ex-parte basis) imposed a complete freeze on all the assets of Saad and Mr Al-Sanea in Saudi Arabia as from 29 May 2009 until further order. Mr Al-Sanea was also banned from leaving Saudi Arabia. It is said that Saudi law prevents either a copy or even the terms of this Royal Order from being produced outside Saudi Arabia. Mr Pearson states that the imposition of this Royal Order was why Saad had not been able to pay any of the sums as ordered by Teare J and why it would be impossible for Saad to satisfy the conditions sought by Soc Gen if they were imposed. Mr Pearson has been advised that the Royal Order allowed no exceptions, including the payment of legal fees. None of the legal fees in this action have, he says, been paid by Saad. Instead, they have been paid for by a “third party funder” whose identity has not been revealed or required to be revealed in the proceedings: paragraph 40. The third party funder is not, however, willing to pay the judgment debt; nor has Saad any power to direct or demand any money from this funder: ibid. Moreover, there is no possibility of Saad making an application in Saudi Arabia for the release of funds for the purposes of satisfying any order in these proceedings. There is no indication of how long the Royal Order would continue.

At paragraph 28 of his first witness statement, Mr Pearson states that Soc Gen has “long known” that the assets of Saad and Mr Al-Sanea were in Saudi Arabia and that Soc Gen has taken advice on the law of Saudi Arabia on this issue. At paragraph 32, Mr Pearson states that Soc Gen could always bring its claim against Saad and Mr Al-Sanea in Saudi Arabia but “it had opted for London proceedings knowing that it would then likely have to enforce in Saudi Arabia”, but, in the time since the order of Teare J, it has not attempted to enforce in Saudi Arabia. It is not explained whether a judgment obtained by Soc Gen in the Saudi courts could be enforced whilst the Royal Order is in force, but I imagine that the submission would be that it could not be.

Mr Pearson also states that Soc Gen withdrew financial support from Saad and associated companies from about 17 May 2009 and that this caused the Saad Group financial difficulties. It is not said that this caused either Saad or any other company in the group to stop trading or that this action led to insolvencies within the group.

Mr Allison responded to Mr Pearson’s witness statement in a second witness statement dated 16 March 2012. In this he points out that on 23 September 2011 the liquidators of one of the companies in the Saad Group, Saad Investments Company Limited (“SICL”), obtained a freezing order in the Commercial Court against Mr Al-Sanea for approximately £58 million. The order referred to “any interest” of Mr Al-Sanea. That order was appealed by Mr Al-Sanea on 2 March 2012 and the appeal was allowed: see Al-Sanea v Saad Investments Co Ltd [2012] EWCA Civ 313. Mr Allison makes the forensic point that there would be no point in appealing that order if, in fact, all Mr Al-Sanea’s assets were in Saudi Arabia and the subject of the Royal Order. Mr Allison states that it was his “strong belief” that the appellants, or at least Mr Al-Sanea, did or do have assets in the UK and probably elsewhere outside Saudi Arabia.

Mr Allison also draws attention to the fact that in early 2011, before the hearing of the trial before Teare J, there was an application to adjourn that trial because of constraints on the appellants as a result of the imposition of a worldwide freezing order by the Cayman Islands court, for a total of US$ 9.2 billion, although not against Saad itself, which has not been a party to those proceedings, it seems. That order was obtained in support of proceedings brought by the Algosaibi family. The order was subsequently set aside, but Mr Allison asks again, rhetorically, why the appellants should be concerned as to its effect if all their assets were in Saudi Arabia and the subject of the Royal Order.

Mr Allison also refers to proceedings in the English courts that were brought in support of the Cayman Islands proceedings. In the English proceedings a freezing order was obtained but Mr Al-Sanea was granted living expenses, originally of US$ 10,000 a week but, subsequently, of US$ 1 million per quarter. Mr Allison points out that, prior to the defaults of companies in the Saad Group that occurred around May 2009, Mr Al-Sanea was reported in the 2009 Forbes Rich List to be the 62^nd richest man in the world with an estimated wealth of US$ 7 billion and world-wide assets. In November 2011 a New York court ordered four non- Saudi banks to disclose information relating to bank accounts of Mr Al-Sanea held by them. Clifford Chance have written to the English solicitors of the appellants asking for information as to the location of the appellants’ assets outside Saudi Arabia but they have refused to answer.

Mr Pearson then filed a second witness statement dated 27 March 2012, in response to that of Mr Allison. In this he states that Saad does not have assets outside Saudi Arabia: paragraph 13, para 37 and, by implication, paragraph 24. However, he does not indicate why that should be the case, given that Saad used to be an international trading company, as is apparent from the gold trading that it used to be involved in and the fact that it has been the subject of litigation in various jurisdictions where freezing orders against assets have been sought, although not against Saad itself outside Saudi Arabia. He says that although he has not himself seen the Royal Order’s terms, the Saudi legal firm of Jamal Abdullah Al-Muzein has seen the Royal Order. He exhibits a letter dated 3 March 2012 from that firm which repeats the terms of the Order as stated by Mr Pearson, although the letter does not state the fact that the firm had actually seen it. Mr Pearson confirms that the Royal Order cannot be disclosed according to Saudi law and custom and the actual terms of the Order can only be released by the authorities with the King’s permission. It is not clear quite why the Saudi legal firm can give the details that it does in these circumstances.

Mr Pearson also re-affirms that all Saad’s legal fees in the present action have been paid by “one or more third parties” (plural – paragraph 24) and that Saad has not met any of the legal fees and “cannot do so”. At paragraph 28 of this witness statement Mr Pearson states that Saad’s legal fees in these proceedings have been paid by a “third party funder” (singular) pursuant to an agreement between “it” and Saad “whereby payment is conditional upon the third party’s identity remaining strictly confidential”; in particular the identity could not be revealed without an order of the Saudi Court. Mr Pearson states that such an arrangement is “common practice” in Saudi commercial transactions, whereby business counterparties often enter into agreements on a strictly confidential basis and subject to the proviso that their identity is not to be revealed. He states that this is “strictly enforced” by Saudi law; if Saad were to breach this agreement it could be the subject of a claim for damages or of a fine or even imprisonment of some (unidentified) individual. He states that the position under Saudi law is that even if there were an order of the English court requiring disclosure of confidential information under an agreement that would violate the agreement under Saudi law. Therefore “for these reasons, neither I nor [Saad] can provide [Saad’s London solicitors] with instructions to reveal in these proceedings the identity of the third party funder and well-wisher”. However, Mr Pearson does state that the funder is a Saudi corporate entity and is not “owned” by Mr Al-Sanea.

A witness statement of Mr Al-Sanea dated 26 March 2012 was also filed. He states that he has not seen the Royal Order. He states that he has been advised that it is a “complete freeze in Saudi Arabia over all my assets…in Saudi Arabia” and that those assets will remain frozen until the King orders otherwise.

Paragraph 8 of the witness statement states:

Mr Al-Sanea states that he challenged the freezing orders granted by the Commercial Court and in the Cayman Islands because he believed that they had been “granted unfairly” and that he had the right to defend and resist any order that he believed had been granted unfairly. As for the payment of legal fees, Mr Al-Sanea states that the legal costs of the dispute between his family and the Algosaibi family and its concerns have been met by “various third parties”, who have agreed to do so on the basis that their identities would not be revealed. He also refers to “third parties” funding the present litigation and says that he believes that their identity is “not relevant to the issue of whether or not I, or Saad Trading, are liable to [Soc Gen]”. He continues (at paragraph 14):

Mr Al-Sanea also states that he hoped that the travel ban imposed on him by the King would be lifted soon but it was ultimately up to the King to decide.

The general principles relating to the imposition of conditions on appeal and security for costs on appeal

In Hammond Suddards, solicitors v Agrichem International Holdings Limited [2001] EWCA Civ 2065, the judgment of the Court of Appeal (given by Clarke LJ and Wall J), confirmed that this court had jurisdiction to grant permission to appeal subject to the applicant paying either a part or the whole of the judgment debt into court. But, by rule 52.9(2), such an order would only be made if there is a compelling reason to do so. Even if there is a compelling reason, the court retains a discretion on whether or not to make such an order: see [39] and [40]. At [41] the court set out the facts of that case which combined to constitute a compelling reason for making an order that the appellant either pay the judgment debt or secure it as a condition of permitting it to proceed with the appeal. In so far as those factors are relevant to the present case, they are: (1) whether the appellant is an entity against whom it will be difficult to exercise the normal mechanisms of enforcement of the judgment debt that has already been obtained. In that case the appellant was a British Virgin Islands registered entity and it had no assets in the UK. It was clear, on the evidence in that case that the appellant would not “co-operate with the enforcement process”. (2) Whether the appellant either has the resources or “has access to the resources” to enable it to instruct lawyers to prosecute the appeal and to provide a substantial sum by way of security for costs. (3) Whether there was convincing evidence that the appellant either does not have or does not have access to resources that would enable it to pay the judgment debt and costs as ordered. It is clear that this court regarded the burden as being on the appellant to demonstrate that it did not have or did not have access to such resources. (4) Whether the appellant has given adequate disclosure of its financial affairs. (5) In this regard, the court noted in that case that the appellant had “wealthy owners” and that there was no evidence that, “if they were minded to do so” they could not pay the judgment debt including the outstanding order for costs”. Therefore this appears to be another factor to consider when deciding whether there are “compelling reasons” to order a condition. I note that Moore-Bick LJ so treated it in Wittman (UK) Ltd v Willdav Engineering SA [2007] EWCA Civ 521at [7], point 5, although he regarded this as a factor on which much caution should be exercised. (6) Whether any order of conditions as to payment of the judgment debt (or part of it) or an order for security for costs would “stifle” the appeal, which, by definition, has a reasonable prospect of success or there is some other compelling reason why it should be heard. The court had already noted and adopted, in respect of security for costs, the statements of Peter Gibson LJ in Keary Developments Ltd v Tarmac Construction Ltd [1995] 3 All ER 534, 539H-542G in which he had stated that a court should consider whether a company could raise security for costs not only out of its own resources but also from its directors, shareholders or other backers or interested persons. The availability of such resources was likely to be peculiarly within the knowledge of the appellant company. At [42] of the Hammonds Suddards case the court also noted that resources might come from the “owners” of the appellant company. Furthermore, at [45] the court stated that it was for the appellant to produce “convincing evidence” that the appeal would be “stifled” if required to take steps to pay the judgment debt or provide security for costs. This court accepted that the court should not make orders that would deter “genuine appellants from prosecuting an appeal”. (7) Whether it is acceptable for the appellant, in the circumstances, to be able to prosecute its appeal whilst, at the same time, “continuing to disobey the orders of the court to pay the judgment debt and costs, as well as seeking to persuade [the court] that it cannot do so”.

The judgment also noted, at [46]-[48] that in Société Eram Shipping Co Ltd v Compagnie Internationale de Navigation & others [2001] EWCA Civ 568, Rix LJ had stated that there should be a “cautious” approach to the jurisdiction of this court to impose conditions under CPR Pt 52.9. It agreed with that approach. But in the judgment Hammond Suddards then also stated, at [48]:

In Mahan Air and others v Blue Sky One Ltd and others [2011] EWCA Civ 544, Stanley Burnton LJ stated, at [38], that whilst it was a truism that, in principle, the power to require security for costs of an appeal or to impose financial conditions on an appeal should not be used to stifle a meritorious appeal, there was a burden on the appellant if he put forward the argument that such orders would stifle his appeal. Such an appellant must, in those circumstances “put before the court full and frank evidence as to means”. That was not inconsistent with his rights under Article 6 of the ECHR. Stanley Burnton LJ continued:

Gross LJ agreed with that judgment.

The appellants drew the court’s attention to the judgment of Moore-Bick LJ in Wittman (UK) Ltd v Willdav Engineering SA [2007] EWCA Civ 521, where he was sitting as a single lord justice on an application by respondents for an order that the appellants pay the outstanding judgment debt into court as a condition under CPR Pt 52.9(1)(c). The appellants drew particular attention to [17] of the judgment. There, Moore-Bick LJ noted that the fact that there are individuals who stand to benefit if the company was successful on its appeal and “who may themselves exercise considerable informal control over its affairs” was no ground for requiring such individuals to “fund a payment into court if the appellant itself does not have the means to do so”. He distinguished the Hammonds Suddards case on its facts.

Mr Alex Layton QC for Soc Gen submitted that there are compelling reasons for the imposition of conditions in this case. He emphasised: (i) the appellants’ failure to comply with any of the orders of Teare J; (ii) the difficulty in enforcing the judgment in Saudi Arabia; and (iii) the fact that this litigation was apparently being financed by a third party, who was not prepared to reveal his or its identity. He submitted that the existence of the Royal Order, which had effect only in Saudi Arabia, did not deal with the fact that Saad was an international trading company which must have had assets outside Saudi Arabia. He submitted that there was no convincing evidence that Saad was itself impecunious; nor was there convincing evidence as to the financial state of Mr Al-Sanea who remained the general partner and 90% owner of Saad and he had considerable assets outside Saudi Arabia.

For Saad, Mr Adam Zellick submitted that (i) there was no compelling reason to impose conditions in this case; (ii) in any event the imposition of the conditions proposed would stifle what was a meritorious appeal; (iii) it would not be just to impose either conditions or an order for security for costs on the facts of this case so that the court should exercise its discretion against doing so; but in any event, (iv) the security sought was manifestly excessive and it should be no more than £60,000; furthermore (v) there should not be an order that if condition or security were not provided then the appeal be struck out but that there should be a stay of the appeal.

For Mr Al-Sanea, Mr Tom Weisselberg submitted: (i) that there was no compelling reason to order the condition of payment of the judgment debt and outstanding costs in this case; its imposition would mean that CPR 52.9 was being used as a summary means of enforcement of a judgment; (ii) Soc Gen had not attempted to enforce the judgment in Saudi Arabia, which it had been free to do; (iii) the imposition of conditions and/or an order for security for costs would stifle this appeal, which, by definition, had merit because permission had been given by Sir Mark Potter.

At the conclusion of the argument on 30 March 2012, we retired briefly to consider the applications. We told counsel that we would like to receive further, written, submissions on one particular issue, which we characterised was as follows:

The submission of Soc Gen was that the court had jurisdiction to impose such an order. But it also submitted that if this court concluded that Mr Al-Sanea had sufficient funds or access to sufficient funds and that it was just to impose such a condition on him, then the court should reach the same conclusion with regard to Saad. Soc Gen submitted that the reasoning of Peter Gibson LJ in the Keary Development case in relation to security for costs, viz. that court had to consider whether a company, or its directors, shareholders or other backers or interested parties could provide the security, applied equally to other conditions for prosecuting an appeal that might be imposed pursuant to CPR 52.9. In this regard, Soc Gen pointed to the comment at [42] of the Hammonds Suddards case, that resources might come from the owner of the appellant company. It submitted that any condition should not be imposed on Mr Al-Sanea alone. Saad’s appeal would not be stifled if the conditions sought were imposed on it as well.

On behalf of Saad it was submitted that if, as it argued, there was no compelling reason to impose conditions on it, so that the court could not do so directly under CPR 52.9, it would be contrary to principle and wrong to impose such a condition indirectly through its imposition on Mr Al-Sanea, whilst saying that was a condition to both appellants being able to bring their appeals. On behalf of Mr Al-Sanea it was submitted that this court should follow what Moore-Bick LJ stated in the Wittman case, quoted above. Saad could not force Mr Al-Sanea to back it and it was wrong to make a condition on him as a means of indirectly imposing one on Saad. There was a higher threshold to cross before a condition should be imposed and the court should be cautious lest the imposition of a condition such as the payment of the judgment debt interfered with the general principle that there should be ready access to the court of appeal if permission to appeal had been granted.

The first applications: the imposition of a condition: Discussion and conclusion

I am satisfied that both Saad and Mr Al-Sanea are subject to the Royal Order of 28 May 2009 and the effect of that order is to freeze the assets of both in Saudi Arabia. That means that the assets of Saad and Mr Al-Sanea in Saudi Arabia, which may well be very considerable, cannot be used to satisfy the judgment debt nor the order as to costs made by Teare J. I am equally satisfied that the Royal Order has no effect outside Saudi Arabia.

There is a great deal of dispute about what assets Saad and Mr Al-Sanea have outside Saudi Arabia. Mr Weisselberg accepted in argument that, so far as Mr Al-Sanea is concerned, the evidence was thin. I am unimpressed by the very high level of generality with which Mr Al-Sanea dealt with this issue in paragraph 8 of his witness statement which I have quoted above. A statement that “interests that are personal to me are presently unquantified” is not impressive from a man who, in principle, has control over his own assets, who was, as recently as 2009, said to be the 62^nd richest man in the world with assets running to billions of US dollars, who had, in 2007 acquired a 3% stake in HSBC (sold in 2009) and who, in October 2009 apparently required a court order permitting the expenditure on living expenses of US$ 1 million per quarter (not denied). That such an order was sought necessarily implies that there are assets sufficient to fund expenditure of US$ 4 million per annum and that those resources were available and needed for use outside Saudi Arabia. (The frozen assets in Saudi Arabia are, we were told, subject to no exceptions). I am not satisfied that Mr Al-Sanea has put forward full and frank evidence as to his means. I therefore approach the application for the imposition of conditions and security for costs from the standpoint that Mr Al-Sanea has considerable available assets outside Saudi Arabia which would easily enable him to fund the order for security for costs sought and would also enable him to fulfil a condition as to bringing some, if not all, of the outstanding judgment debt and order for costs into court as a condition of his pursuit of his appeal.

As for the assets of Saad outside Saudi Arabia the position is equally opaque. I appreciate that Mr Pearson states, at paragraph 28 of his first witness statement, that “the Appellants’ (plural) assets are in Saudi Arabia” and that, at paragraph 13 of his second witness statement he states that Saad does not have assets located outside Saudi Arabia. Given that Saad is, or at least was, an international trading company, I am very sceptical about these statements. They are not particularised at all. Nor is there any explanation as to why a company that was apparently buying gold from Matthey in Australia and selling it for delivery in London now only has assets in Saudi Arabia. Nor is there any particularity as to why Saad is not, or may not be, in control of such assets as it has outside Saudi Arabia. I am not satisfied that Saad has been full and frank in its evidence about the whereabouts of its assets nor, if all assets had been withdrawn into Saudi Arabia before the 28 May 2009, why that was done and how it was done.

On the basis of those facts, or the lack of them, I now consider the factors that were identified in the Hammonds Suddards case in relation to the imposition of conditions and the provision of security for costs of the appeal. I will consider the position of the two appellants under each heading, taking Saad first in each case.

First factor: enforcement of the judgment debt: in this case I have no doubt that Saad is an entity against which it will be difficult to exercise the normal mechanisms of enforcement of the judgment debt and any orders for costs. It is a Saudi limited partnership. It has not disclosed that it has assets in the UK at present. Mr Zellick accepted that the judgment could only be enforced in Saudi Arabia by bringing an action there on the merits. The same is true of Mr Al-Sanea.

Mr Weisselberg took a further point, which was that even if there was additional difficulty in enforcing a judgment in Saudi Arabia, as opposed to within the EU, this would have the effect of discriminating against the rights of non EU appellants, which would be a breach of their rights under Article 14 and 6 of the ECHR. Mr Weisselberg referred us to the decision of this court in Nasser v United Bank of Kuwait [2002] 1 WLR 1868, particularly at [37] to [63]. That case was concerned with security for costs, not the imposition of conditions. However, I would be prepared to accept that this court must not discriminate against non EU residents on account only of the fact that the appellant was a non – EU resident. But each case has to be taken on its facts. The question of how easy or difficult it is to enforce a judgment is, on the authority of the Hammond Suddards case, a legitimate factor to take into account, along with all other factors, when deciding whether, overall, there are “compelling reasons” to impose the condition sought.

Second factor: resources to pursue the appeal. Saad has access to resources to fund the costs of the appeal. It is said that the funder is a Saudi corporate entity “not owned” by Mr Al-Sanea. No further details are given. We have not been told whether Mr Al-Sanea has any non-controlling interest in this entity, or whether other members of his family have any interest in it and if so, what type or extent of interest. Both Saad and the funder are unwilling to disclose its identity voluntarily. It is not said that the parties to an agreement to provide funds for litigation cannot, jointly, volunteer to disclose the identity of the funder without breaking Saudi law. Nor are we told the reason why this undisclosed funder is willing to finance the appeal. We are told that the funder is not willing to put forward further funds for the conditions sought by Soc Gen. However, for reasons given below under the Third Factor, I am not satisfied that Saad has discharged the burden on it to show that it cannot, personally, fund the appeal.

So far as Mr Al-Sanea is concerned, in my judgment he too has not discharged the burden on him to show that he does not have the personal resources to pursue this appeal. This is developed further under the Third Factor below.

Third factor: evidence as to Saad’s resources to pay the judgment debt as ordered and the fact that it had failed to do so. As already stated, I accept that Saad’s resources in Saudi Arabia cannot at present be used to pay the judgment debt as has been ordered by Teare J; nor the outstanding costs order. However, as already noted under the discussion of the evidence above, I am not convinced that there has been full and frank disclosure of the position of Saad’s other assets outside Saudi Arabia.

As to Mr Al-Sanea’s assets outside Saudi Arabia, as I have already concluded in my review of the evidence above, I am not satisfied that we have had full and frank disclosure of the financial position of Mr Al-Sanea outside Saudi Arabia. In my judgment Mr Al-Sanea has not proved that he is not in control of substantial assets outside Saudi Arabia. Given that conclusion and the evidence of his wealth up to 2009, I will work upon the assumption that he is a man who may well have very substantial assets within his control outside Saudi Arabia.

Fourth factor: have the appellants given adequate disclosure of their financial affairs? As will be apparent from what I have already stated, I am not satisfied that either of them has satisfactorily explained their financial affairs outside Saudi Arabia.

Fifth factor: does Saad have “wealthy owners” and was there evidence that they could not, if minded to do so, pay the judgment debt on behalf of the judgment debtor corporate entity? This factor raises the difficult question of principle as to whether or not this court can legitimately impose a condition that a judgment debt (or part of it) be paid into court where, effectively, this will require an “owner”, or others, such as a director, or shareholder, or backer or other interested person, to fund that condition. (I emphasise that I am not dealing here with security for costs). I think the answer must be that, except in exceptional circumstances, it should not do so. If a condition is imposed on an appellant that it must bring the outstanding judgment debt into court in order to pursue its appeal, that does, effectively, short circuit the enforcement process against the judgment debtor. It means that if the appellant loses his appeal, the judgment creditor has the means of enforcing the judgment debt quickly and easily and in a way that he otherwise could not when the judgment debtor has no assets within the jurisdiction. Furthermore, the right to enforce is, at least in the first place, only exercisable against the assets of the actual judgment debtor, not those of any other entity or person. So a condition which has the practical effect that a third party will provide the funding to bring the judgment debt of the corporate entity into court is, potentially, an indirect way of obtaining enforcement with the funds of another. That, generally speaking, must be contrary to the principle of respecting the existence of different legal personalities, as Moore-Bick LJ pointed out at [17] of the Wittman case. Alternatively, if the funds brought into court are to continue to be treated as those of the third party, there is no point in the exercise at all, because it will not benefit the respondent/judgment creditor.

However, given the clear statement of Clarke LJ at point (4) of paragraph 41 of his judgment in the Hammonds Suddards case there cannot be an absolute bar against taking account of the position of other entities or persons close to the appellant in deciding whether there are compelling reasons for making a condition such as requiring the judgment debt to be paid into court. I think Moore-Bick LJ must have recognised that in Wittman at [18] when he distinguished the Hammond Suddards case on the facts and did not suggest that point (4) of paragraph 41 of the judgment of Clarke LJ in the Hammond Suddards case was wrong in principle or could never be applied. I would be prepared to say that the facts of the present case are exceptional. Mr Al-Sanea is not only the general partner of this Saudi limited partnership but he is also the owner of 90% of its share capital. Equally pertinent is the fact that he has provided a personal guarantee for the liability of Saad to Soc Gen under the F/L, if such liability exists. Mr Weisselberg accepted that Mr Al-Sanea’s position on the substantive appeal is “almost entirely parasitic” on that of Saad, although he does raise two additional points on the issue of interest. But, as Mr Weisselberg also accepted, those are obviously of less immediate importance.

Accordingly, if it is otherwise right to do so in the circumstances of this case, I would say that this court could require the appellants to make payment into court of the judgment debt.

Sixth factor: would an order making it a condition that all or part of the judgment debt be paid into court stifle the appeal? For reasons already given, I am not satisfied that there is “convincing evidence” from either Saad or Mr Al-Sanea that the imposition of this condition would stifle the appeal.

Seventh factor: is it acceptable for the appellants to be able to prosecute their appeals whilst, at the same time, continuing to disobey the orders of the court to pay the judgment debt and costs as well as seeking to persuade the court that they cannot do so? My answer, in respect of both appellants, is “no”. Mr Zellick and Mr Weisselberg pressed the point that the present case is not the same as other cases in which conditions have been imposed when there had been a contempt of court or a deliberate breach of court orders. I am unimpressed by that submission. The order of Teare J is unambiguous. Paragraph 1 says that judgment shall be entered for Soc Gen against both defendants “who shall pay to the claimants on a joint and several basis”, the sums of principal and interest identified. Paragraph 3 says that the defendants “shall pay” £250,000 to the claimants on account of costs. There has been no application for a stay of those orders because of difficulties created by the Royal Order or for some other reason. Those orders remain in full force and effect and both appellants have failed to obey them. In this regard we were informed that both the F/L and the Guarantee provided for English jurisdiction in the case of disputes. Therefore both appellants had agreed to the English courts deciding these matters and it rings rather hollow to suggest at this stage that it is up to Soc Gen to go to Saudi Arabia to enforce a judgment and order of the court that had been expressly chosen by the parties.

Accordingly, I have concluded that there are compelling reasons for the imposition of a condition on both the appellants. There remains the question of whether, in the exercise of the Court’s overall judgment, or discretion, a condition should be imposed on each of the appellants and, if so, what it should be.

In my judgment it would not be right to impose a condition that either Saad, or Mr Al-Sanea must pay into court the whole of the judgment debt and the costs ordered by Teare J. That would simply be too heavy a burden. However, given: the unsatisfactory state of the evidence as to the appellants’ financial affairs outside Saudi Arabia, the fact that I am not satisfied they both lack available assets to fund a condition and that in my view it is unacceptable that these appellants should be able to prosecute this appeal whilst continuing to disobey the orders of the court to pay the judgment debt and the costs order, I think a substantial condition should be imposed on both appellants. I have concluded that they should, jointly and severally, be ordered to pay into court the sum of US5 million in total. This must be paid in within 42 days of this judgment being handed down.

I do accept the submission of the appellants that it would be wrong for the appeal to stand dismissed if this condition is not complied with; in that event the appeal should be stayed. It would be open to Soc Gen to make a further application to dismiss the appeal and this court will have to deal with that issue (if it arises) on the evidence then available to it.

The second application: security for costs of the appeal

In my judgment an order for security for costs of the appeal against both appellants would be just in this case. First, the two appellants fall within the conditions. Secondly, neither has admitted to ready access to its own funds in this country. Thirdly, for the reasons given above, I am not satisfied that either appellant has demonstrated that the imposition of an order for security would stifle either appeal. It is clearly admitted that the appeals are being funded by someone who has access to funds to pay for solicitors and counsel. The person is not identified and it is said that this is usual under Saudi law. That is as may be. It is said the funder is not prepared to fund security. That is not further explained, save to say that it is the personal decision of whoever is in charge of the corporate funder. It is not said that this funder cannot afford to provide security for costs of the appeal and it seems to me to be inherently unlikely. In the circumstances, I have concluded that if this appeal is to be active, then security will have to be found.

However, the amount sought by Soc Gen is excessive. In my judgment the security ought to be in the sum of £90,000. This is for an appeal which is to last for 1 to 1.5 days, bearing in mind my conclusion so far as the third set of applications is concerned, with which I deal below.

I would make an order that the appellants be jointly and severally responsible for bringing security for costs of £90,000 into court or otherwise providing such security to the reasonable satisfaction of Soc Gen (eg by way of a bank guarantee on a first class London bank). This security must be provided within 42 days or else the appeal will be stayed.

The third application: Conduct of the Appeal

In my view we should not be definitive either way on this issue. It seems to me that the proper course is as follows: the court hearing the appeal should decide the appeal by both appellants on the issues raised for which they have permission. The court should give its judgment. Then, after that has been considered by the parties, a decision on the further conduct of the restitution issue can be taken. If the appeals are dismissed, the issue of restitution will not arise. If the appeals are allowed, then Soc Gen can, in light of this court’s judgment, decide whether it wishes to pursue the Respondent’s notice. This court will then decide whether it can and should hear the issues raised on the Respondent’s notice, if the current appellants still oppose the matter being dealt with by this court in the absence of a judgment on the issues by Teare J.

This proposition was put to the parties during the hearing and I understood that all three were content to deal with this issue in this way.

I agree.