Mengiste & Anor v Endowment Fund for the Rehabilitation of Tigray & Ors

This judgment arises out of a hearing I heard between 28th and 31st July 2014. The hearing itself arises out of a judgment I delivered on 22nd March 2013 [2013] EWHC 599 (Ch). Reference should be made to that judgment for the detailed background of the issues.

In summary the Claimants seek damages (for) it is alleged the wrongful obtaining of their share in businesses in Ethiopia. The Claimants had had extensive litigation in Ethiopia as set out in that judgment. In it they were successful as to part of their claims but unsuccessful as to others. In reality the Claimants’ case before me was that the judgments in Ethiopia were obtained by perjury and fraudulent means in particular by the deliberate withholding of material evidence. They also claimed that the Ethiopian Courts were biased against them.

The issues are summarised in paragraphs 109-133 of the judgment in the other hearing. The issue was over the delivery of machinery by the Claimants to the Second Defendant. The Second Defendant alleged that no machinery had been delivered and sought return of the purchase price which had been paid. The judgment of the Ethiopian Courts (after litigation which lasted some 7 years) was essentially in favour of the Second Defendant which obtained a judgment in their favour requiring the Claimants to pay $1,550,000. Appeals against that judgment were unsuccessful and the Second Defendant on 14th April 2003 requested execution of the judgment. That was effected by a sale of the Claimants’ shareholding in the Second Defendant which were sold for $54 per share on 30th April 2004. The Claimants allege it to be a sham auction.

As I have said there was extensive litigation in Ethiopia.

The Claimants contend however as I have said that the process was not fair. First the evidence of the Defendants’ was perjured and fraudulent. Second the Ethiopian Courts did not give them justice.

In my judgment I rejected their allegations about the unfairness of the Ethiopian Courts.

As regards the injustice two key matters survived the hearings. First there was the Inventory. This was an inventory of machinery at the Defendants’ premises. The Defendants in the Ethiopian proceedings successfully established that the machinery the Second Defendants paid for was never delivered which meant that there were payments for a failure of consideration. The Inventory was signed by a Mr Admassu on behalf of the Claimants (he did not give evidence) and by a Mr Teferie on behalf of the Defendants. He did provide evidence by a witness statement and gave evidence by video link from Ethiopia.

The Claimants’ case was that the whole of the proceedings as I said were obtained by perjury and the Inventory was according to the Claimants’ Expert a binding and conclusive statement as to the existence of the machinery at the factory and constituted admission that the machinery found at the factory was the machinery delivered by the Claimants in accordance with their contractual obligations. According to the Claimants’ Expert that the Defendants had committed serious acts of perjury and that in his view the judgments were null and void.

This fell apart because when Mr Mengiste gave evidence whilst explicitly not accepting that the Inventory was not conclusive. This (see paragraphs 53-59 of my earlier judgment) meant the entirety of the Claimants’ case as pleaded and led in opening and supported by expert evidence collapsed.

The Claimants’ counsel Mr Robin Hollington QC sought an adjournment to try and resurrect the case. This I granted on terms but this led to a complete somersault in the sense that the Claimants’ Expert had to rewrite his report on the basis that the Inventory was not conclusive and fraudulent and obtained as a result of perjured evidence as he said. I will not set out in this judgment the long and lengthy process of the earlier proceedings caused entirely by the need of the Claimants to reconstruct their case in the light of its destruction at an earlier stage in the proceedings.

There were two significant issues. First whilst the Inventory was not conclusive evidence it was arguably evidence which showed that there was the possibility that machinery had actually been delivered. This was not addressed at any of the hearings in Ethiopia because the Inventory point arose after most of those proceedings were concluded. It was therefore fresh evidence. It was never put in by the Claimants in any of the hearings in Ethiopia because by then they said they had no confidence in obtaining a fair hearing before the Ethiopian Courts.

The second point of concern was the status of one of the Judges in Ethiopia of Judge Mehertab. She was a judge in the Tigray Supreme Court and by the time the case came before me she was President of that Court. Unfortunately she was also the wife of Mr Gebrue who was the Chief Executive Officer and a board member of EFFORT (i.e. the First Defendant). She had a role in the proceedings (see paragraphs 200 and following of the earlier judgment). She was in the very first hearing when the file was opened on 26th September 1998 and then sat on 20 separate occasions in the following 2 years and 3 months and reappeared for some of the hearings in the review process in 2004.

It is accepted by the Claimants that she was not one of 3 Judges who gave judgment in the case in the Tigray Supreme Court but she was one of the 3 who heard the evidence. I accepted the Claimants’ submissions that it was impossible to know what her input into the judgments were.

The detailed involvement of Judge Mehretab was not set out in detail in the Particulars of Claim; receiving 1 reference only (paragraph 104) nevertheless in keeping with the Claimants’ ability to produce a rolling and improved case the hearing went on (because of their ability to obtain adjournments and put off the decision) and this evidence could not be ignored.

I accepted the evidence of the Claimants’ Expert that there was a possibility that the Claimants could obtain a review of the decisions that were made in the previous court despite there being a 30 day time limit in the procedural rules. This is based on a decision called Fissehaye. The Defendants’ Expert had missed the case.

Neither of these points namely the Inventory and the presence of Judge Mehretab were ever raised in the Ethiopian proceedings.

I therefore concluded that both of these matters on the basis of the Claimants’ Expert could still be raised in Ethiopia. I rejected the Claimants’ evidence that there was general bias against them as set out in their case. I therefore stayed the Claimants’ action but concluded that there might be issues over the Inventory and Judge Mehretab which the Claimants could take to the Ethiopian Courts. Also on the basis of their expert evidence it might be possible for them to obtain a retrial (paragraph 209 of my judgment). I also concluded the Claimants have an arguable case but there is no cogent evidence that they cannot present the arguable case in the Ethiopian Courts. The Defendants accepted the Claimants had an arguable case subject to some legal submissions that never arose for consideration.

Accordingly my conclusion is summarised in paragraphs 262 and 263 of my judgment as follows:-

“If the Claimants are successful then they will have their fair trial in Ethiopia based on the new material and if accepted a panel of Judges which does not involve Judge Mehretab and an independent judiciary.

On the other hand if that application fails depending on the reasons for its failure that may provide more compelling evidence that the Claimants will not obtain a fair hearing in Ethiopia. I must stress that I am not saying that a failure to obtain relief necessarily leads to the conclusion that the hearings were unfair. It depends entirely on how the hearings were disposed of.”

Accordingly I stayed the Claimants’ action but nevertheless indicated the stay could be lifted in the light of changed circumstances. I considered that the Claimants could go back to Ethiopia and if their expert was right they could seek to persuade the Ethiopian Courts to reopen the issues based on the two issues (and those two only) namely the Inventory and the role and status of Judge Mehretab. On the other hand I accepted that if they were unsuccessful that lack of success might lead to a possibility of the Claimants being able to say that they were unable to obtain justice in respect of these matters. However as I have set out above in an extract of paragraph 263 of my judgment merely because they fail to obtain relief does not mean that they have suffered an injustice. It is necessary to examine how they failed to obtain relief to see whether that is a justification for lifting the stay.

The Claimants went back to Ethiopia and were unsuccessful. They say this was because of unfair hearings in Ethiopia.

Arising out of the judgment in the earlier part of the proceedings are applications by the Defendants dated 15th April 2014 for an order dismissing the Claimants’ application on the basis that the costs order I made requiring them to pay £200,000 has not been paid.

Separately there is a Claimants’ application dated 27th March 2014 for relief from the obligation to pay the £200,000 that fell due on 31st March 2014.

Mr McLoughlin for the Claimants has adopted the skeleton argument prepared by Mr James. In part iii of the written openings Mr James helpfully summarised the position of the Claimants in respect of the 3 applications. It was submitted (and I agree) that I should determine the Claimants’ application to lift the stay first. If that was successful and then only then it would become necessary for the Court to consider whether the £200,000 should be paid as a condition of the relief sought. On the other hand it was accepted that if the application to lift the stay failed then subject to the point that any order made should not stifle an appeal the issue as to payment of the £200,000 “is likely to fade away.”

It is necessary to investigate what went on in Ethiopia after my earlier judgment.

The Claimants issued an application in the Tigray Supreme Court on 22nd April 2013 seeking a review under Article 6 of the Ethiopian Civil Procedure Code of the decisions dated 1st January 2001 and 3rd January 2003.

Under the judgments of 1st January 2001 and 3rd January 2003 the Ethiopian Court adjudicated that the Claimants were jointly and severally liable to pay in total Bir 13,422,933 together with interest.

The application was made to invoke Article 6 of the Ethiopian Civil Procedure Code which provides:-

“Article 6 of the Ethopian Civil Code provides:

Art 6 Review of judgments

(1)

Notwithstanding the provisions of Art 5., any party considering himself aggrieved by a decree or order from which an appeal lies, but from which no appeal has been preferred, or by a decree or order from which no appeal lies, may, on payment of the prescribed court fee, apply for a review of judgment to the court which gave it where: a. subsequently to the judgment, he discovers new and important matter, such as forgery, perjury or bribery, which after the exercise of due diligence, was not within his knowledge at the time of giving the judgment; and

b.

had such matter been known at the time of the giving of the judgment, it would have materially affected the substance of the decree or order the review of which is sought.

(2)

An application for review shall contain the same particulars as a memorandum of appeal and shall be supported by an affidavit containing strict proof of the fulfilment of the conditions laid down in sub-art (1)(a).

The application shall be filed within one month of the ground of application having been discovered by the applicant.

(3)

On granting the application, after giving notice to the opposite party to enable him to appear and be heard in support of the decree or order the review of which is sought, the court shall make such order in regard to the re-hearing of the case as it thinks fit.

(4)

No appeal shall lie from any decision of the court granting or rejecting an application for review.”

The application was on the basis of my accepting Mr Jones’ (the Claimants’ Expert) evidence to the effect that the Fissehaye case allowed for the possibility of such a review to take place outside the (apparently) mandatory one month provision in Article 6 (2).

The basis for the application was stated to be that they discovered new evidence that would confirm that the original judgment was made as a result of wrong and criminally tainted evidence and therefore the Claimants requested the Court to examine the new evidence and review and reverse the previous judgments.

The newly discovered evidence is the Inventory dated 18th October 2005. The Claimants contended in the original proceedings it was conclusive proof under Ethiopian law that they had indeed delivered the goods. I have already referred to the volte face. Nevertheless the presence of the Inventory with goods that are virtually identical to the goods originally covered by the orders made to the Claimants and for which they were paid raises at least an evidential issue which required further investigation. As I said in the main judgment that was never investigated in Ethiopia because the issue was never put before the Ethiopian Court.

The Claimants were plainly aware of the evidence from 2005. It follows that it is a bold submission to describe it as “newly discovered” evidence as they did.

The application made a brief reference to some aspects of the evidence that was heard before me and in paragraph 2.5 C raised for the first time the status of Judge Mehretab.

In section 4 the Claimants submitted that the original judgment could not stand in the light of the Fissehaye case because it is not correct as a matter of justice that a judgment that is obtained by matters of a criminal nature or evidence of perjury should not be valid.

The Defendants served a response on 9th July 2013.

In that document they provided a comprehensive review of the various stages of the Ethiopian proceedings and the proceedings before me.

They challenged the worth of the Inventory (see in particular paragraph 3.1.2 of their response) pointing out correctly that following the volte face of the Claimants in their case the best that could be said about the Inventory was that it showed a certain amount of equipment was present at the factory but that did not answer the question as to who purchased the equipment when and from whom. The Defendants’ case is that they purchased the goods under a separate letter of credit and obtained the goods from another supplier.

They challenged the suggestion that there was power under CPC Article 6 to extend the one month time limit (paragraph 3.1.9). Alternatively the stated reasons for not coming to the Court for 7 years namely lack of faith in the Ethiopian Courts was not an adequate reason.

As regards Judge Mehretab the stance of the Defendants was one that was a repetition of one that was put before me namely that the Claimants well knew of that connection (paragraph 3.3 of their response).

In my judgment (paragraph 204) I stated:-

“There were suggestions in the evidence that Mr Mengiste was aware of the connection but I was not convinced that was made out. In any event whether he was aware of the connection does not advance the Defendants’ position. The duty of the Judge is clear; she must address the potential appearance of injustice that would ensue if she sat on the case. This she never did. I have no doubt that if this case was tried in England and the allegations were made in respect of an English Judge that Judge would be removed if he did not remove himself. ”

For some reason which I cannot fully understand my determination and the evidence before me was withheld from the Ethiopian Courts as a result of the Claimants’ objection. That meant that whilst that decision would obviously not be binding on the Ethiopian Courts its removal deprived them of a lot of the material that might be relevant to the issues before them.

Both Mr Jones and the Defendants’ Expert (Dr Haile) initially were of the views that Article 6 presented a fatal obstacle to the Claimants proceeding in Ethiopia because of its one month period (paragraphs 190-196 of my judgment). The best that could be said and this would be a bold submission to make to the Ethiopian Court that notwithstanding the apparently mandatory time limit in Article 6 the Fissehaye case with its appeal to justice and the avoidance of judgments standing that are obtained by false evidence could be used as a basis for overcoming the 30 day limit. As I summarised in the evidence in the judgment that was the strong view of Mr Jones as well. However when he was being cross examined by Mr Spink QC for the Defendants he raised the Fissehaye case and its possible use to get behind the one month period for the first time. This was despite there being 4 previous reports and him having an opportunity to provide corrections arising out of the long adjournment following the collapse of the Claimants’ first alleged case.

It was therefore never going to be easy in Ethiopia. Even Mr Jones expressed the view that it was only “a possibility” (see my judgment and in particular paragraph 103).

In addition to the written submissions oral submissions were made, on 1st August 2013. On 7th October 2013 the Tigray Supreme Court dismissed the application.

On 30th October 2013 the Claimants appealed the Cassation Division of the Federal Supreme Court. On 2nd December 2013 the Cassation Division published its decision to dismiss the appeal on its website. On 19th February 2014 the Cassation Division handed down the reasons for its decision.

Having heard the oral argument the Tigray Supreme Court on 1st August 2013 directed that the transcript of that evidence be transcribed and included in the court record before the next appointment.

The major part of the summary presented by the Defendants addresses the preliminary objection taken by the Claimants for the production of any documents from the London hearings (including my two judgments). As none of those documents was notarised by the Ethiopian Embassy they were not admissible and could not be considered as proper evidence based on the Cassation ruling no. 32282 paragraph 11. This appears at first sight to be a surprising stance to be taken by the Claimants but it is a matter for them and their Ethiopian lawyers. However the Ethiopian Court ruled in their favour which is evidence showing a lack of bias on its part. Significantly the Defendants substantially reran the arguments in relation to the status of Judge Mehretab.

The Claimants reran several points which were either abandoned by them before me or decided against them in my judgment (see the arguments as to the Inventory for example). This might explain why they sought to exclude my judgment from the Ethiopian Courts. Whilst that was successful in the Tigray Courts the Court of Cassation clearly obtained access to some of the documents that were in the English proceedings.

The Ethiopian Court was then to make its own decision in ignorance of evidence called before me and my findings. As I have said those are not binding but they might well have been said to be indicative. It was the Claimants’ decision to have this course of action taken by the Ethiopian Courts.

The Defendants made substantive oral submissions bemoaning the lack of access to the English judgment.

They also made submissions in relation to the mandatory requirements of Article 6 and the lateness of the present application.

The judgment was handed down on 7th October 2013.

After reviewing the parties respective written and oral submissions the Court made the following determinations.

With regard to Article 6 the Court stated:-

“What should be recognised here is that CPC Article 6 was intended to rectify a situation whereby and adverse judgment was passed against another arising from a criminally tainted act but not to give an individual the opportunity to present evidence that he failed to present during the main proceedings due to personal problems or his own failings. It cannot be imagined that the legislator would pass a law that would permit endless litigation.”

The Court observed that the Claimants had not explained why they had not presented witnesses of fact in the first instance court and had not shown whether they had exercised due diligence to find and produce witnesses who testified in London. Finally they observed that there was no evidence to show that the judgment obtained as a result of a criminally tainted act and that therefore the petition did not satisfy the requirements to CPC Article 6 (a).

With regard to the issue over Judge Mehretab they reviewed the evidence and came to the conclusion that the Claimants knew of the relationship she had with Mr Zemo and that “since the request to have a duly appointed Judge acquit herself was an opportunity they had and which they did not exercise they cannot now argue on the basis of recently discovered new evidence.”

They also in the alternative expressed the view that even if the application had been made on the evidence it would not have been acceded to because there was not enough evidence to show a potential impartiality and she did not have a major role in the decisions. Finally they determined that even if the evidence was new there was no evidence to show it was maliciously concealed by the Defendants and the evidence adduced by the Defendants showing that the First Claimant was aware of the relationship showed that the Claimants had not exercised due diligence.

The Claimants appealed to the Cassation Court by petition dated 30th October 2013. In that petition the Claimants alleged that the Tigray Supreme Court made a fundamental error in rejecting the application by framing it as “who paid for them” i.e. the goods.

The Claimants contended the Tigray Supreme Court made fundamental errors in relation to the operation of Article 6. First it was submitted that it was not correct to find that there was no new evidence but that showed it held a predetermined stand of rejecting the Claimants’ application. Second it submitted it was wrong to say that the application should have been made within one month but did so after 6 years after the event was therefore time barred. The justification for that submission was that it was submitted but the time limit of a month arose within one month after my decision which seems to me to be illogical and unsustainable.

The third challenge was on the basis that the Tigray Supreme Court ruled that the evidence put forward was already known and that that was incorrect therefore.

Fourth the decision involving Judge Mehretab contained a fundamental error of law which was essentially an attempt to rerun the question of the knowledge of the relationship she had with the Chief Executive Officer.

After reviewing in outline the Claimants challenge to the decision of the Tigray Supreme Court the Cassation Court then delivered a judgment dealing first with the jurisprudential basis of Article 6.

On page 4 of the judgment they said this:-

“Its content, goal and objective, on the one hand, allow the review of judgments in the interest of correcting any misjudgement, by focusing on the proper service of justice and setting aside any expenses spent in the process arriving at a correct judgment. On the other hand, it makes the process of the review of judgments contingent upon circumstances that lend credence to the judgment passed by a judicial body so that litigation is not interminable and without resolutions.

There are three preconditions indicated in this provision, namely:

1st When new evidence is presented which proves that the evidence on which the judgment has been made was by perjury, bribery, forgery or anything obtained through criminal or illegal means.

2nd When the other litigant, during the horizontal or bottom up litigation conducted, could not have been aware of such evidence in spite of exercising due diligence, and had such matter been known it would have changed or materially affected the judgment.

3rd Provided that the Plaintiff making the appeal for review of judgment made the appeal within one month of discovering the new evidence.

It is clear, self-explanatory, and incontrovertible that the provision is applicable only when all three preconditions have been met simultaneously. Thus, according to the provision, when these three conditions have been met, it is a right given to the applicant for review to rectify a wrong judgment.”

After consideration of the 3 preconditions the Court then examined the evidence before it and the detailed arguments that had taken place before me.

It reviewed the 3 pieces of new evidence which it was said were “discovered” during the High Court pleadings. The Court concluded (page 7) that the evidence put forward by the Claimants “was not found to meet, in its kind or content, the code requirements indicated above for the proper applicability of its provision”. Thus the conclusion was the evidence did not demonstrate that the rulings were passed on the basis of evidence “obtained through criminal or improper means”. Second the Court determined that it was evidence that the Claimants could have presented in the earlier hearing. Third it concluded that the evidence in question was not “new evidence” that warranted a review of judgment.

They therefore concluded that the evidence was all available for presentation without any trouble when the Tigray Supreme Court was conducting the original proceedings and every litigant has an obligation to conduct the case with due diligence and in this case as the Claimants knew about the purported new evidence from the beginning at the time when litigation of the main dispute arose this led to the Court to conclude this was evidence either they did not want to present or failed to present.

None of the new evidence was within one month of the decision the Claimants sought to be reviewed and the Claimants did not deny that they were outside the one month period.

They then went on to consider the Fissehaye case under its reference (Cassation File No: 43821). The Court concluded that the purpose of CPC Article 6 was to give a limited power to review if the appeal process is exhausted before discovery of the new evidence as long as the other requirements of Article 6 are satisfied. Then the fact of an appeal should not be a bar to review. However they emphasised the need for such application to be made within 1 month.

They rejected (page 10) the argument that the Claimants put forward that Article 6 can be engaged at any time after discovery of new evidence and removes the time limitation in the Article. “That is not the interpretation of the law”.

The Court went on to consider the proffered evidence in case their interpretation was incorrect. They noted major differences between the evidence presented to them and the records of the proceedings and the evidence put before me. That is certainly correct. Thus they contended that the evidence was mis-characterised before them.

They observed that the Claimants put before them a case based on alleged forgery and false documents produced by the Defendants. The Court however having seen my judgment noted that that allegation was not something which was supported by the records of proceedings from the English Court (page 13).

The key issue they determined in respect of the Inventory and the goods at the factory was “who purchased the goods”. That was a matter of dispute between the Claimants and the Defendants and that the Inventory merely showed that some goods (from an unidentified source at that time) were at the factory.

As regards Judge Mehretab they rejected the First Claimant’s evidence that he was not aware of the relationship between Judge Mehretab and Mr Zemo. Further they pointed out that Judge Mehretab’s role with regards to the substantive decision making process was not significant in their view.

Secondly the review decision (namely no. 1/90 of 1st January 2001 and 3rd January 2003) were hearings in which there were 3 other judges and not Judge Mehretab.

They reiterated that a party had a right to be judged by an impartial judicial body which was a constitutional right and closely related to the rights of access to justice and even if that can be applied to Article 6 the arguments must be supported by evidence. And the Court concluded the evidence did not meet the requirements of Article 6.

The Cassation Court dismissed the Claimants’ application.

Before I go on to consider the Claimants’ basis for their contention that the stay should be lifted it is essential to consider a number of factors.

First one has to set out what is required to be established to lift the stay. This is to be derived from my judgment (which was never appealed).

Thus the Claimants have to show that there is a real risk on the basis of cogent evidence that they will have not obtained a fair trial on the earlier applications (paragraph 139 of my judgment and following). They cannot rerun their arguments in respect of the earlier proceedings. They stand rejected by me.

Second they are required to establish on the balance of probabilities that there will be no fair trial.

Third I rejected their contention as at the time of the judgment that they could not obtain a fair trial in Ethiopia. That is an important finding especially bearing in mind it was never appealed.

Fourth it was no part of my judgment to sit in some form of appeal of the processes that had taken place before the Ethiopian Courts. The only relevance of those processes was to establish whether or not there was cogent evidence that the Claimants had not had a fair trial. I rejected the Claimants’ contention in that regard.

The only two matters that were still live were the Inventory and the position of Judge Mehretab. Neither had been raised previously before the Ethiopian Courts. The reason given was that by that time the Claimants had lost confidence in the Courts.

The only way to raise these matters after the appeal process had been exhausted (and it had been) was to seek a review under Article 6.

Article 6 on its face gives a limited right to reply in the case of establishing fraud or perjury provided the application is within a month.

The Claimants’ expert (as did the Defendant’s) accepted that that was the rule. However the Claimants’ expert believed based on the Fissehaye case there was a developing jurisprudence which gave the Courts a right to interfere when the judgment in question was fraudulent or dishonest as otherwise justice would not apply.

However the Claimants could take their application for a review to the Ethiopian Courts. Merely because they were unsuccessful was not a basis for suggesting that they had thereby established that they had not obtained a fair trial in Ethiopia.

The only basis for the Claimants being able to submit that I should exercise my undoubted discretion to lift the stay is that the subsequent hearings before the Ethiopian Courts show compelling evidence that they have not obtained a fair trial.

Without such evidence the Claimants accept that the overwhelming place for the litigation is Ethiopia and not England and Wales. Thus it was accepted before me that if they failed to establish cogent evidence of such bias or injustice their action would inevitably be stayed.

The criticisms were set out in paragraph 19 of the Claimants’ submissions.

The difficulty with the submissions are that they are basically a challenge to the conclusions that the Tigray Supreme Court came to. I am not sitting in appeal from that Court. Nor with respect would it matter if I had come to a different conclusion on the evidence (which I would not, having considered it). Even if it is established that there were no reasonable grounds for the Tigray Supreme Court to come to the conclusions that does not mean that the Claimants have not obtained a fair trial. If it were every time a decision was overturned on that basis a Judge’s error would be elevated to an allegation that the parties did not obtain a fair trial.

It is true that there were findings that were at variance with my decision especially in relation to the Claimants’ knowledge of the relationship between Mr Zemo and Judge Mehretab. My decision was tentative (see above) but the Claimants are really a victim of their own actions because they objected (successfully) to the Tigray Supreme Courts seeing any of the evidence that was before me or even the judgments. As I have said my judgments would not have been determinative in any event. Further this problem appears to have been corrected in the Cassation Court which appeared to have access to all the material before me. Finally of course the Tigray Supreme Court ruled that the 1 month time limit in Article 6 was not capable of enlargement. That of course is the end of the Claimants’ case because there is no basis then for them seeking a review in the Ethiopian Courts. Try as I might I can see no criticism of its thought processes let alone a suggestion that its rejection of the contentions of the Claimants that the 1 month time limit was not final as amounting to cogent evidence that they had not been able to obtain a fair trial.

First they observe (paragraph 24) that the Cassation Court made some errors as to the evidence in the first proceedings in Ethiopia. Thus at page 11 line 357 they said “the current Defendants did not deny, either in the previous litigation or in the judgment passed, the fact that the goods were in the factory. The argument was that the [First Claimant] abusing the authority it had at the factory took the Respondents’ money for the purpose of buying the goods for the benefit of the factory then using the goods for his own benefit and did not benefit the Respondents factory.” However in the same paragraph they then went on to say “thus there is no dispute on the fact that the goods that are needed to operate the factory were in the factory. The issue was who procured these goods which were in the factory and used by the factory…..”

As I set out in my earlier judgment the issue was as to whether or not the Claimants had delivered the goods for which they had received payment. The significance potentially of the Inventory was of course that it showed virtually the same list of goods as being on the factory premises as was in the contractual documentation whereby the Claimants agreed to procure the goods in question. However the fact that those goods were there was not determinative as I set out in my judgment; it might be supportive of the Claimants’ case or it might just be neutral or it might not be evidence at all. The issue is as to whether or not the Defendants obtained those goods from elsewhere.

On page 13 starting at line 439 the Cassation Court clearly identified that the issue was as to whether or not the Defendants had arranged the purchase and delivery of the goods as opposed to the Claimants.

The real meat of the Cassation Court’s decision however is its refusal to acknowledge that there was any part of the procedure in the Ethiopian Courts that enabled a review to take place under Article 6 unless the criteria as set out in that Article are established and such an application was made within a month. That again is completely fatal to the Claimants’ case and the factual errors (if any) of the Cassation Court are irrelevant. There is nothing wrong with the conclusion that the time limits of the Article 6 procedure are required to be strictly followed. It is not part of my decision here to come to a different conclusion even if I was able to do so. I must be satisfied that their decision on Article 6 provides cogent evidence that the Claimants will not have a fair trial. There is no such evidence to support such a proposition. The Ethiopian Courts have interpreted Article 6 in a way which whilst fatal to the Claimants’ application to the Courts is one that is perfectly sustainable.

Further the Claimants in my view overstate the potential strength of the Fissehaye case. I refer to its tentative introduction by Mr Jones. When he finally proffered the view that it offered some kind of material to get round the 1 month time limit it was very tentative indeed and I so determined. However I repeat that it is no part of my function to consider what Article 6 means. That was a matter for the Ethiopian Courts and they have decided it against the Claimants in a way which in my view is simply not capable of being said to be cogent evidence that the Claimants would not have a fair trial. For the record I should also say that my order of 22nd March 2013 did not provide that there was “a discretion to extend the 1 month time limit” of Fissehay. All I did was accept Mr Jones’ tentative suggestion.

I accept that I have found the conclusions as to the facts drawn by the Cassation Court a little concerning. It is possible that I might not have come to the same conclusions (see in particular their decision in relation to Judge Mehretab). However as I have already said I am not sitting in the Court of Appeal from the Ethiopian Courts. Merely because they come to a different conclusion on the facts is not in my view a justification for saying there is cogent evidence that the Claimants have not had a fair trial. In any event the Cassation Court decision on Article 6 is a perfectly reasonable one for it to have and puts an end to any possibility of a review by the Claimants.

I therefore conclude that the Claimants have failed to establish any basis for lifting the stay which I imposed when I handed down the Judgment.

In view of my determination that there is no basis for lifting the stay there is in my view very little that can be said about the other applications.

It is necessary to set out the background. As a result of the judgment on 22nd March 2013 I ordered the Claimants to pay an interim payment of £400,000 on account of costs by 19th April 2013. Mr Mengiste provided a witness statement dated April 2013 which set out his means and led to him submitting that he could not afford to pay the £400,000 and the effect of the order would be to stifle his intended application in Ethiopia.

The Defendants opposed that application but agreed to vary it by an order made on 21st May 2013 which provided that the Claimants had to make an interim payment in respect of the Defendants’ costs in a reduced figure of £200,000 with the first instalment to be paid by 4pm 30th August 2013 and a second by 4pm 30th November 2013.

At the same time the Defendants had an application against the Claimants’ former solicitors Rylatt Chubb for a wasted costs order. That application suffered the usual difficulty of the Defendants not having access to the privilege material and Rylatt Chubb not being willing to give access to that privilege material. The Defendants therefore entered into negotiations with the Claimants whereby they waived privilege and agreed to provide assistance to the Defendants and in exchange for that the Defendants agreed that instead of the 2 instalments of £100,000 time would be extended so that the payment fell due by 4pm 31st March 2014

There is a dispute between the Claimants and the Defendants as to that agreement. However I refer to the witness statement of Mr Getachew the Defendants’ solicitor dated 15th April 2014 where he refers to that agreement and the exchange of email correspondence between Mr Beaumont who then represented the Claimants and Mr Spink QC who then represented the Defendants. Insofar as I can understand what the Claimants are saying I reject the suggestion that the Defendants completely gave up their right to the £200,000 in exchange for the obtaining of the privileged material. It might at best be an agreement alleged that the payment was deferred whilst a wasted costs application was proceeding. This does not take the Claimants any further as the Defendants’ wasted costs proceedings had been compromised on 31st March 2014. The Defendants say that there is a settlement agreement which is confidential and that the terms of the settlement do not reduce or extinguish the costs order made in the underlying action (Mr Getachew’s witness statement paragraph 20 (b) (ii)). Mr Getachew has confirmed that the costs of the wasted costs proceedings after having been taken to the Court of Appeal exceeded £250,000. Further he has deposed that had the application been brought in front of a new Judge entirely unfamiliar with the case it was likely that the costs would have been considerable. Accordingly the wasted costs application was compromised and there was a settlement agreement between the Defendants and Rylatt Chubb which is confidential. Finally he confirmed the terms of settlement do not reduce or extinguish the Claimants’ costs liability arising from the costs orders made in the underlying action and the payment made by Rylatt Chubb to the Defendants is a contribution towards the costs of defending the wasted costs claim (witness statement 7th August 2014).

That disposes in my view of any basis of bringing in to account the settlement terms obtained in the wasted costs proceedings.

As long ago as April 2013 Mr Mengiste asserted that he was unable to pay the £200,000. His production of evidence to support that has been piecemeal despite my drawing to his attention of the leading cases of Anglo Eastern Trust v Kermanshaghi [2002] EWHC 172 and Yorke Motors v Edwards [1982] 1 WLR 444 HL.

This culminated in his last witness statement after the hearing in August 2014. I refer to the chronology attached to the Defendants’ further submissions made on 12th August 2014 arising out of the Claimants’ disclosure of various bank statements for the last 12 months. The details of some of the Claimants’ bank accounts were first provided by his witness statement dated 22nd May 2014. He was cross examined at the hearing before me (inter alia) on this issue and I ordered him to produce copies of all bank account statements for the last 12 months for all bank accounts which they hold or have held over that period either in their own name or jointly. I also ordered them to annotate all relevant bank statements in respect of debits and credits to be explained by a separate document to be verified by a statement of truth. Mr Mengiste’s witness statement of 6th April 2014 does not begin to comply with that order as regards explanation of the operation of the account. For example over $120,000 to MGM Services was deposited with it over the last year including $50,000 on 13th May 2014. Mr Mengiste’s explanation is simply that “they were the monies that came from clients of MGM Service LLC directly depositing their cheques in to the MGM Service LLC account or as a result of a negotiation or shipping of service documents through City Bank NA.” This simply does not explain any of it. Similarly there is a failure to provide an adequate explanation of the source of funds to MGM Services and any explanation where sums are deposited. Nowhere in any of the various witness statements has he ever provided a full statement of assets and liabilities. The Defendants correctly identified in their closings unexplained movements of significant sums into the account and significant expenditure.

Where a party seeks relief from an obligation to pay a sum of money ordered by the Court it will only be acceded to at a first stage if the party establishes that he simply cannot pay having regard to his assets. His assets must be fully disclosed as set out in the above two cases extending to him demonstrating that he has tried and failed to obtain loans whether from commercial lenders or from friends or relatives. Mr Mengiste has failed to do that.

He is therefore in breach of the order to pay the £200,000. He can seek relief from sanctions under CPR 3.9. This particular provision has attracted a plethora of litigation starting with the case of Mitchell v Newsgroup Newspapers [2013] EWCA Civ 15378 and culminating in Denton v TH White Ltd [2014] EWCA Civ 906.

Those authorities do not apply to the present application for relief. I accept that the test the cases require me to consider first whether the non compliance is serious or significant. The answer to that is plainly yes. The second question is why did the default occur? The answer to that lies in the mind of Mr Mengiste. I do not know why he has not come clean as to his assets and liabilities. Third considering all the circumstances of the case is it just (including the need for litigation to be conducted efficiently and at a proportionate cost and the need to enforce compliance with rules and directions of a court order) to give him relief from sanctions. The answer to that is plainly no. As long ago as 22nd March 2013 Mr Mengiste was ordered to pay £400,000. He made his application to vary on 19th April 2013 and then agreed a variation on 7th May 2013 which was fine tuned on 10th September 2013. It was only after the time for payment of the £200,000 on 31st March 2014 that Mr Mengiste then revealed that he was not in a position to pay. I have set out above his piecemeal and inadequate disclosure of his means. I do not find that acceptable and I agree with the Defendants’ scepticism as to whether or not Mr Mengiste has come clean as to his assets and liabilities. If he had told them he could not pay the £200,000 reduced figure it is unlikely they would have agreed to the reduction. There would be no point.

As I have refused to lift the stay the litigation is now closed. Mr Mengiste never appealed my judgment. This is a piece of commercial litigation and there is no reason why in the interests of proportionality and finality that the Defendants should be kept out of their money or (I suspect more likely) they are only going to recover any money with great difficulty. They are entitled to say with some justification that this is the end of the line and that Mr Mengiste should have no further indulgences. I agree with that and I therefore refuse his application to vary or stay the order for payment.

In all the applications and hearings from the date of the judgment until his witness statement dated 24th April 2014 Mr Mengiste never raised any question of set off. A number of set offs then appeared in that witness statement (his 5th).

First is a claim that he has claims for damages arising out of the actions in which the Defendants were successful in Ethiopia. I do not see how that has any significance baring in mind the fact that the final application for review of those decisions in Ethiopia has ended and I have rejected an application to lift the stay. Those judgments therefore stand and he has no counter application for damages based on an allegation that those judgments were wrong and that the ensuing sale by court order of his 49% shareholding is equally wrong.

In paragraph 7 of the same witness statement he alleges that the Defendants owed the Claimants loans which are still outstanding. The amount is stated to be $330,029.15 (excluding interest) thus the amount is raised to £1,165,002.37. Finally he raises matters in the audit reports of which it is said show unlawful payments made to monies written off or converted in to the assets and/or for the benefit of the Defendants wholly owned subsidiaries.

The Defendants provided a witness statement from Shimelis Mamuye dated 7th August 2014. He is the manager of the Second Defendant. He disputes all of the alleged set offs. For example in relation to the loans that the Claimants say that they advanced to the Second Defendant in 1997 he exhibits the audited accounts of the Second Defendant for 1997 and 1998 which show no such loans it is said. He disputes that there is any basis for saying that there is misconduct in the audited account reports from 1999 to 2001. Those have not been exhibited.

Mr Mengiste provided a further witness statement in response to that witness statement dated 18th August 2014. That consists of a challenge to the contents of Mr Mamuye’s witness statement. It is impossible for me to begin to understand the competing arguments based on the witness statements. There have been no requests for cross examination on the witness statements. In any event it is far too late to do that.

It is important to appreciate what is the position of the existing litigation. The Claimants commenced proceeding against the Defendants in this jurisdiction. As I have set out in my original judgment it was plain that the natural forum for the litigation was Ethiopia. The only reason why it was said to be inappropriate for Ethiopia was the contention that the action could not be proceeded with in the Courts in Ethiopia because the Claimants would not receive a fair trial. I rejected that but gave the Claimants an opportunity (under Ethiopian law) to seek a review of the earlier judgments of the Ethiopian Courts. This they did and it failed.

That failure does not however for the reasons I set out in this judgment lead to a conclusion that there is compelling evidence to show that the Claimants have suffered a further injustice. To the contrary for the reasons I have already set out it seems to me that the Claimants have received perfectly proper consideration in the Ethiopian Courts. The result is that the action remains stayed (subject to the application that the Defendants might make).

There is no further question of these matters being ventilated within this jurisdiction. Given that finality the arguments of the Defendants in favour of achieving the finality by allowing them to enforce the costs order which has not been appealed is compelling.

That will then put an end to this action which has been a very expensive litigation. It is clearly the case that the Defendants will have significant difficulties in recovery. Nevertheless they are entitled to put an end to the action.

The set off case is fraught with complications. First it is factually disputed. Second there are challenging questions as to whether the set off is governed by Ethiopian law or the law of England and Wales. In this regard I have had extensive submissions from the Defendants but none from the Claimants. It is impossible for me to come to any conclusion on that. Third it is said that there are arguments even if the loans are established by way of limitation (according to Ethiopian law). I have a series of submissions in the Defendants’ observations relating to set off setting out what they understand to be Ethiopian law. I am plainly not in a position to evaluate that merely based on those submissions.

This leads inexorably to the conclusion that the question of these supposed set offs should be raised in the Courts in Ethiopia. The main compelling reasons for that are precisely those that led me to conclude the same in the main judgment. That will not deprive the Claimants of anything; it merely means that they have to satisfy their obligation to pay the £200,000 which they agreed to pay as long ago as May 2013.

If English law applied I doubt whether the matters even if established would constitute a set off whether in law or in equity. As regards a legal set off they are available only if the debts are due and payable or liquidated or ascertainable without valuation or estimation, are mutual and actionable in the English Court. I accept the Defendants submissions that none of these heads is clearly made out by the Claimants.

As regards equitable set off for the claims to be the subject matter of an equitable set off they need to be so closely connected that it would be manifestly unjust to allow the Defendants to enforce payment without taking into account the cross claim. I cannot see that any of the items set up are so closely connected to be manifestly unjust. The costs liability which the Claimants have to meet arises out of their failed decision to bring these proceedings within this jurisdiction. I cannot see any connection between that and the 3 heads of claims that the Claimants seek to establish.

For all those reasons I reject any suggestion that the order should not be enforced because of these so called set offs.

In the light of all of the above it seems to me that I must accede to the Defendants’ application dated 15th April 2014 to dismiss the action in its entirety. I cannot see that that dismissal has any prejudice to the Claimants as regards any future actions they might take. By that I mean if they wish to appeal it does not matter that the action is struck out as they still have locus to seek to revive the action in the Court of Appeal. Equally it will not affect any proceedings they might bring in Ethiopia in respect of the set offs.