Masri v Consolidated Contractors International Company SAL & Anor

This is my judgment in relation to a number of applications made by the claimant, Munib Masri (“Mr. Masri” or “the claimant”) following the judgments which I gave: (a) in relation to liability in this matter in July 2006 (Footnote: ¹) (“the liability judgment”); and (b) quantum in March 2007 (Footnote: ²) (“the quantum judgment”). In the liability judgment I held that the fourth defendant, Consolidated Contractors International Company SAL (“CCIC”), and the fifth defendant, Consolidated Contractors (Oil and Gas) Company SAL (“CCOG”) (together “the Defendants”) were in breach of a written agreement dated 6 November 1992 (“the Agreement”) in having failed to pay Mr. Masri ten percent of the Defendants’ ten percent share of the revenues of the Masila oil concession (“the Concession”). The main defence raised by all defendants to the proceedings was that the Agreement had been terminated by them in about May 1993, in response to Mr. Masri’s failure to meet his obligations to make payments due from him under the Agreement. I rejected this contention in the liability judgment. The Concession has, in the event, turned out to be extremely profitable, but, to date, Mr. Masri has not been paid any sum whatsoever by the Defendants in respect of his share.

In the quantum judgment I made, inter alia, the following orders or declarations:

that there was to be an account between the parties on certain terms to ascertain what sums were owing to Mr. Masri up until 31 December 2006;

that, as from 1 January 2007, the Defendants had continuing obligations to make quarterly payments to Mr. Masri under the Agreement, which obligations were more fully defined by declaration of the court;

that the Defendants were to make an interim payment to Mr. Masri in the sum of US$ 30 million, in respect of the amount owing to Mr. Masri up until 31 December 2006, (on certain terms as to security being provided by Mr. Masri against repayment in the event of an appeal against the liability judgment being successful);

that the Defendants were to make a payment on account of costs to the claimant in the sum of £722,841.11 (again, on certain terms as to security against repayment).

The relevant facts in relation to the claim are fully set out in the two judgments to which I have referred, and I do not repeat them. It is, however, necessary for the purposes of the applications before me to rehearse something of the procedural history of this matter.

The dispute about Mr. Masri’s entitlement to receive a share in the revenues of the Concession had rumbled on for many years before he brought the present proceedings in 2004. Initially, in Claim No 2004-124 (“the First Action”), issued on 18 February 2004, he sued the original first defendant, Consolidated Contractors International UK Limited (“CCUK”), and the original second defendant, Consolidated Contractors Group SAL (Holding Company) (“CC Holding”), on the basis that CCUK was a party to the Agreement, or, in the alternative, that CCUK had been an agent for CC Holding who was a party to the Agreement. CCUK and CC Holding both claimed that they were not party to the Agreement. CC Holding also claimed that service of the proceedings upon it had not been properly effected under CPR6.16 (service of claim form on agent of principal who is overseas). Both CCUK and CC Holding applied for summary judgment on the claims against them, by an application notice dated 28 July 2004.

On 8 October 2004, Mr. Masri issued a second set of proceedings, Claim No 2004-831 (“the Second Action”) by which he sued Mr. Khoury, CC Holding, CCIC and CCOG, none of whom were within the jurisdiction of the court. Mr. Masri subsequently (on 16 March 2005) discontinued the First Action against CC Holding.

The Second Action was served on the defendants to that action out of the jurisdiction. According to an agreed, signed statement of facts and issues (“the Agreed Statement of Facts”), produced by Mr. Masri and certain of the original defendants for the purposes of an appeal to the House of Lords referred to below:

After the Second Action was served, the defendants to the Second Action applied for an order declaring that the court had no jurisdiction over them and that the service of the claim form on them out of the jurisdiction should be set aside. By order dated May 2005, Creswell J dismissed the defendants’ applications on jurisdictional grounds in the Second Action, and also dismissed CCUK’s summary judgment application (Footnote: ³). In relation to the jurisdiction applications, he held that:

Mr. Masri had made out a good arguable case that the court had jurisdiction under Article 6(1) of the Regulation in relation to Mr. Khoury and CCIC. As an exception to the general rule that a defendant be sued in the jurisdiction of its domicile, Article 6(1) of the Regulation permitted the Greek defendants to be sued in England since the claim against them was so closely connected to the first claim against an English defendant that it was expedient to hear and determine the claims together to avoid the risk of irreconcilable judgments resulting from separate proceedings. The defendants’ contention that Article 6(1) only applied where all the relevant defendants were sued in the same action was rejected.

Mr. Masri had also made out a good arguable case that the place of performance of the obligation in question, under Article 5(1) of the Regulation, was England. The relevant contractual obligation was to make payments to Mr. Masri under the Agreement, the relevant time for determining the place of payment was the time when the contract was made, no mode of payment was prescribed in the Agreement and there was a good arguable case that the default rule – that payment was required to be made at the place where Mr. Masri resided at the time of the contract, i.e. England – applied irrespective of the fact that Mr. Masri was living in Jordan at the time the alleged payments became due.

In the light of his conclusions on CCUK’s application for summary judgment, and on the applications by Mr. Khoury and CCIC based on the Regulation, Cresswell J refused the applications of CC Holding and CCOG.

Upon Mr. Masri’s application, the judge ordered the consolidation of the two actions. The foreign domiciled defendants (with the leave of the Court of Appeal) appealed to the Court of Appeal on the following grounds:

Mr. Khoury and CCIC appealed on the grounds that neither of the bases for jurisdiction under the Brussels Regulation relied on, namely Articles 5(1) and 6(1), applied to them;

CC Holding and CCOG (both companies incorporated in Lebanon) appealed on the ground that the question of whether England was clearly the appropriate forum for the trial of any claim against them would fall to be reconsidered in the light of success on the appeal by Mr. Khoury and CCIC.

On 25 October 2005 (Footnote: ⁴), the Court of Appeal (Sir Anthony Clarke MR, Rix and Richards LJJ) dismissed the defendants’ appeal on the ground that the court did have jurisdiction over the claims against them under Article 6(1) of the Regulation. The Court of Appeal did not hear oral argument or consider whether there was also jurisdiction under Article 5(1). Permission to appeal that decision was granted by the Appeal Committee of the House of Lords on 24 February 2006. However, the actions were not stayed pending the resolution of the appeal to the House of Lords.

In January 2006, Mr. Masri applied to join the defendants to the Second Action (viz. the foreign domiciled defendants) as defendants to the First Action, to which all the defendants consented, subject to such joinder to the First Action being effective only so as to allow Mr. Masri to claim against the foreign domiciled defendants in the First Action in respect of such claims as had not become time-barred before 13 January 2006. In this respect, the Agreed Statement of Facts stated (at paragraph 29):

Thus, critically, before the trial on liability, the Defendants positively accepted that the English Court indeed had substantive jurisdiction over the claims against all of the defendants in the First Action.

The trial of all issues of liability in the consolidated actions took place before me between 6 March and 4 April 2006.

Jurisdiction having been established, all the defendants took a full part in the proceedings, instructing Herbert Smith and leading and junior counsel to represent them. I held that CCIC and CCOG were the contracting parties to the Agreement with Mr. Masri and that they were jointly and severally liable. No party sought to appeal from that part of my judgment.

On 14 November 2006, Waller LJ gave the Defendants (i.e. the fourth and fifth defendants) permission to appeal against the liability judgment. Thereafter, Mr. Masri applied for permission to cross-appeal on a discrete issue of construction of the Agreement which went to the quantum of the claim, namely his entitlement to a share of operating costs recoveries.

The quantum issues were then tried before me over two days on 30 November 2006. When I handed down the quantum judgment on 14 March 2007, the Defendants, in reliance on a witness statement served only the previous evening, asked for further time to put in evidence of how long it would take them to find the US$ 30 million which I had ordered by way of interim payment. The evidence of Mr. Yasser Burgan (an employee of CCIC who, according to his witness statement, spends the majority of his time working on behalf of CCOG in relation to its oil and gas projects), was to the effect that CCC (the abbreviation used to refer to the group of companies of which the original third defendant was the holding company) was “not sure” whether it had free cash available because its business had expanded so quickly, including US$ 2.2 billion worth of new work accepted by CCC in the period from 1 January to 31 March 2007 alone. In the light of this evidence, I granted the Defendants a further hearing on that point on 23 March 2007, with the Defendants required to serve any evidence on that point by noon on 22 March 2007.

In fact, on the afternoon of 22 March 2007, the Defendants’ solicitors advised Mr. Masri’s solicitors that they would not be serving any evidence, and that they would not be filing a skeleton argument for the hearing on the following day. Mr. Masri’s legal team, accordingly, prepared and filed a witness statement setting out and exhibiting such financial information about CCC and the Defendants as it could obtain, which demonstrated that the Defendants would have no difficulty in finding US$ 30 million at any time they chose to do so (Footnote: ⁵). On 23 March 2007, leading counsel then acting for the Defendants (Mr. Charles Aldous QC) said that the exercise of financial investigation had been carried out, and that he could not contend that the defendants could not pay US$ 30 million, nor could he argue that such a payment would stifle the appeal or cause irreparable harm; accordingly, he accepted that he could not apply for a stay. I thus ordered the interim payment to be made and the Defendants to pay the claimant’s costs of that hearing on the indemnity basis.

There then arose some further issues about the wording of the guarantees securing any repayment. These were minor, but the Defendants refused to agree to any resolution of them. The claimant issued an application to vary the guarantee wordings which I heard on 4 May 2007. Although the Defendants did not consent to the claimant’s application, they did not appear at the hearing either, having informed the court by letter that they had no representations to make. I made orders for payment upon the provision of the revised forms of guarantee.

On 20 April 2007, the parties agreed the amount of the final account to 31 December 2006 to be the sum of US$ 37,532,909.99. However, thereafter, the Defendants failed to respond to correspondence proposing that this final figure be reflected in a consent order. As a result, they obtained a delay of almost two months before the matter came back before the court again. On 15 June 2007, I made a final order for payment by 29 June 2007 of that sum plus interest as from 1 January 2007, a total of US$ 38,689,761.37.

On 30 April 2007, the defendants changed their representation, replacing Herbert Smith with LeBoeuf, Lamb, Greene & MacRae (as they were then known) (“LeBoeuf”) and also replacing their counsel team.

In the meantime, the Defendants had commenced proceedings in the courts of Yemen. These proceedings sought a declaration that the Agreement had been terminated by Mr. Masri’s breaches of it – precisely the issue that I had decided adversely to the Defendants in the liability judgment. On 25 May 2007, the claimant applied for, and was granted, by HHJ Mackie QC, an anti-suit injunction restraining the proceedings in Yemen and elsewhere outside the EU. The application was unsuccessfully resisted by the Defendants on, inter alia, the following grounds:

There was no jurisdiction in the court to grant an anti-suit injunction against the defendants because they were not within England and Wales, and no ground had been made out for service of the injunction application out of the jurisdiction;

Bringing Yemeni proceedings was a legitimate method of resisting enforcement of the English judgments.

On 6 September 2007, permission to appeal against the anti-suit injunction was granted by Sir Henry Brooke, sitting as a judge of the Court of Appeal, conditional on the Defendants paying, by 1 November 2007, costs totalling £108,500, and if these were not paid, the appeal was to stand struck out. I was told that the Defendants did in fact pay this sum and accordingly this appeal continues.

Guarantees in the revised form were issued on behalf of Mr. Masri, and the interim payment became due on 16 May 2007. The defendants did not pay. They also failed to comply with the orders to pay £722,841.11 in respect of costs.

On 12 June 2007, on the claimant’s application, the Court of Appeal (Lloyd LJ) imposed a condition on its earlier grant to the Defendants of permission to appeal against the liability judgment, namely that they made the interim order payment of US$ 30 million and the costs payment of £722,841.11 by no later than 4.00pm on 14 June 2007. In the event of non-payment by that date, the Court of Appeal ordered the appeal to be struck out. No payment was made by 14 June 2007 and accordingly the appeal was struck out. The Defendants petitioned the House of Lords for permission to appeal to the House of Lords against that order, but, on 7 November 2007, the Appeal Committee rejected the petition and refused leave to appeal.

I interrupt the procedural history of this matter to underline the fact that, in the Court of Appeal, Lloyd LJ clearly concluded (as I had done) that the Defendants’ failure to pay was not due to any financial inability on their part to do so, but because they had deliberately chosen to ignore their obligations in respect of the interim payment order and costs. In other words, they could pay, but had chosen not to. Indeed, the evidence before the Court of Appeal showed that persons connected with the defendants had said in terms that the Defendants did not intend to pay Mr. Masri. I refer in particular to paragraphs 12, 15-19 and 41-43 of Lloyd LJ’s judgment. That remained the evidential position before me on the hearing of the present applications. Accordingly, like the Court of Appeal, I approach these applications on the assumption that the Defendants have the funds available to pay Mr. Masri the sums due to him, but have intentionally chosen not to do so.

I resume the procedural chronology. Under paragraph 1(f) (iii) of the order of 14 March 2007, the first quarterly payment for 2007 became due from the Defendants to the claimant on 15 May 2007, but no payment was made. At the hearing before me on 15 June 2007, the Defendants argued that the order of 14 March 2007 was merely declaratory, with the result that they were not in breach of any order in this respect. I made an order for an interim payment by 6 July of US$ 1,175,915.69 in respect of this further quarterly payment and, after yet further argument on 27 June 2007, I made an order for specific performance of the Defendants’ future obligations to make the quarterly payments. On 6 September 2007, Sir Henry Brooke, sitting as a judge of the Court of Appeal, granted the Defendants conditional permission to appeal the order for specific performance, but only on condition that they paid all sums which I and the Court of Appeal had ordered them to pay. If they did not do so by 1 December 2007, then their appeal was to be struck out. No such payment was made by such date, and accordingly that appeal also stands dismissed.

The final payment of US$ 38,689,761.37, in respect of sums due to 31 December 2006, which was due to be paid by both defendants by 29 June 2007, was not made. The interim payment of US$ 1,175,915.69 due on 6 July 2007 was also not made. The Defendants have never given any explanation in correspondence, evidence or submission for their failure to pay.

On 11 July 2007, the Court of Appeal allowed Mr. Masri’s cross-appeal against the discrete construction issue relating to operational costs (which was originally dealt with at paragraphs 128-131 of the liability judgment). The result of that judgment is that the quantum of Mr. Masri’s claim against the Defendants will be increased.

The Defendants also petitioned the House of Lords for permission to appeal against this order, but, on 7 November 2007, the House of Lords also dismissed this petition and refused permission to appeal. Accordingly, there is no longer any possibility of an appeal by the Defendants against the substance of the liability judgment or the quantum judgment (as varied by the Court of Appeal in Mr. Masri’s favour).

Thus, apart from the appeal to the Court of Appeal on the anti-suit injunction, the only outstanding appeal is that by CCIC to the House of Lords against the jurisdiction judgment, which I have referred to in paragraph 9 above; even if such appeal were to be successful, it would only have the effect of reducing the quantum of Mr. Masri’s claim against CCIC by approximately 16 months, on limitation grounds.

On or about 10 July 2007, CCOG and CCIC issued proceedings in the Lebanon courts against Mr. Masri, seeking declarations that the English liability and quantum judgments are not enforceable against them in Lebanon.

On or about 3 September 2007, the Defendants also started proceedings in Greece for “negative declaratory injunctions”, in effect seeking a judgment of the Greek courts that the judgments of the English courts in these proceedings should not be recognised in Greece for the purposes of enforcement. It does not appear that such proceedings have yet been served on Mr. Masri.

On or about 7 August 2007, on the claimant’s without notice application, Tomlinson J granted an injunction prohibiting CCOG from assigning its interests in the Concession without leave of the court in the following terms:

The basis for that application was that Mr. Masri feared that the Defendants were doing all in their power to resist enforcement of the judgments and that the steps they were likely to take included assigning their interest in the Concession if they were able to do so.

The claimant has also obtained orders from Master Miller pursuant to CPR 71 for orders requiring certain officers of the Defendants to appear at court to provide information as to means and assets. Applications have been made to set those orders aside.

The claimant is now seeking to enforce the liability and quantum judgments against the Defendants. Although the proceedings in this jurisdiction continue, it is fair to say that they are extremely limited in nature. The extant proceedings are:

an outstanding appeal by the fourth defendant to the House of Lords on the jurisdictional issue (and an application for a reference to the European Court of Justice) which, as I have said, have only limited limitation consequences on the quantum of Mr. Masri’s claim; and

an outstanding appeal by the Defendants to the Court of Appeal to appeal against the anti-suit injunction granted by HHJ Mackie QC;

various costs assessments and

the CPR proceedings referred to at paragraph 34 above.

The applications made by Mr. Masri, in relation to which I have to rule, are the following:

an application to continue the freezing order against CCOG granted by Tomlinson J on 7 August 2007, preventing the assignment or other disposal of CCOG’s interest in the Concession (“the Limited Freezing Order Application”);

an application (“the Receivership Application”), which, in its revised form, as provided by Mr. Salzedo during the course of the hearing, seeks the appointment of Mr. Lee Manning, an insolvency practitioner, as receiver to receive

an application for an affidavit of means from CCOG and CCIC (“the Affidavit Application”);

an application (“the Accounts and Disclosure Application”) for accounts to be taken of the amounts owed by the Defendants to the claimant under the Agreement pursuant to paragraph 1(1) of the order dated 14 March 2007, for the first and second three-month periods of the year 2007, together with disclosure of copies of:

all documents within the control of the Defendants (whether stored electronically or in hard copy) evidencing correspondence between the Defendants (or other companies in the CCC group) and Nexen Marketing Singapore PTE Ltd or Canadian Nexen Petroleum Yemen to the extent that such correspondence relates to revenues from the Masila Concession for the period since 1 January 2007; and

all documents within the control of the Defendants (including Disbursement of Funds notices and/or any such documents as have replaced Disbursement of Funds notices) evidencing the amount of revenues received by CCOG for the period since 1 January 2007 and all documents evidencing the date of actual receipt of such revenues by the Defendants (including the relevant bank statements);

the Accounts and Disclosure Application was coupled with an application (“the Interim Payment Application”) for an interim payment, on account of sums due in respect of the above period, in the sum of US$ 2,612,715.79, (being reduced to that amount during the course of the hearing), together with directions for resolving, at a future date, outstanding issues on quantum.

The hearings in relation to the various applications brought by the claimant began on 5 October 2007 and continued (part-heard) on 26 October 2007 and 7 and 8 November 2007. Further, post-hearing submissions were made in writing to the court on 20, 22 and 30 November and 4 December 2007.

Before addressing the jurisdictional arguments advanced on behalf of CCOG, it is necessary to describe the choses in action whose disposition Mr. Masri seeks to restrain. The draft order recites that CCOG

CCIC was and is a Lebanese incorporated company, but has always asserted that it is domiciled in Greece for the purposes of Article 60 of the Regulation; Canadian OXY appears to have been incorporated in and subject to the laws of Bermuda. The PSA governs the relationship between the contractors and the Yemeni Ministry of Oil. The JOA governs the relationship between the participant contractors in relation to the exploration and extraction of oil. CCOG’s interest in the Concession consists of its rights under the PSA and the JOA which it obtained by the Assignment. It is the disposition of those interests which Mr. Masri seeks to restrain.

Following the ratification by the People’s Democratic Republic of Yemen (“PDRY”) of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, clause 27.3 of the PSA provides that disputes arising out of the PSA are to be resolved by arbitration in London under the jurisdiction of the International Center [sic] for Settlement of Investment Disputes. Any such tribunal is to apply principles of law common to the PDRY, Canada and Lebanon and, in the absence of such common principles, the principles of law normally recognised by nations in general, including the relevant rules of customary International Law.

Clause 17.2 of the JOA between Canadian OXY and CCIC (now CCOG) provides that it should be construed in accordance with English law and that all disputes arising in connection with it should be resolved pursuant to English arbitration pursuant to the Arbitration Act 1950.

Both agreements entitle the parties physically to take the oil that is produced under the Agreement, but they do not provide for any agreement between the parties for selling of the oil or the split of oil revenues or entitlement to the oil revenues. That is a matter for the respective individual parties themselves. Thus under Clause 9.10 of the PSA:

According to the 11^th statement of Mr. Burgan:

The 12^th Statement of Mr. Burgan, dated 14 November 2007 and produced after the hearing before me, states that, although, previously, Nexen Marketing Singapore Ltd (“Nexen Marketing”) was engaged by CCOG as the broker for the sale of the oil to which CCOG is entitled, on 30 August 2006 CCOG gave notice terminating Nexen Marketing’s services as at 31 December 2006. Mr. Burgan states that the decision to terminate was “a commercial decision”. He further stated:

Both the PSA and the JOA contain provisions against assignment without consent. Thus, under clause 24.1 of the PSA:

Under the terms of Article 2 of the JOA, no party has the right “to assign, transfer, convey, encumber, hypothecate or otherwise dispose” of any interest under the JOA, save to an Affiliate (as defined) or with the prior, written consent of the other partner to the Agreement, such consent not unreasonably to be withheld.

Thus, in summary, the position is that:

the oil is produced in and shipped from Yemen;

sales of the oil could be made by CCOG, or agents acting on its behalf, pursuant to contracts concluded in any country anywhere in the world;

receipts from CCOG’s sales of oil from the Concession could be paid into any bank account anywhere in the world, depending on the contractual arrangements with CCOG’s third party purchasers or any agents that CCOG had retained to sell the oil;

an assignment of CCOG’s interest in the Concession could take place in, or subject to the laws of, any country, albeit that consent would have to be obtained (if the assignment was not to an affiliate) from the Oil Ministry in Yemen and Canadian OXY in Bermuda (and from any other parties now party to the JOA and/or PSA); and

any claim by CCOG to enforce its rights under the PSA or the JOA against the other parties thereto would be determined in London arbitrations between the relevant parties to those agreements and neither the courts of Greece or Yemen would be involved.

Professor Arnaud Nuyts appeared on behalf of the fourth and fifth defendants to argue the jurisdiction points. (Footnote: ⁶) The main thrust of his arguments opposing the grant of the Limited Freezing Order on jurisdictional grounds was that there was no jurisdiction in the court to make such an order, and even if, technically, such jurisdiction existed, the discretion to make such an order should not be exercised in this case, given the absence of any connecting facts to England, and the failure of Mr. Masri to take steps to enforce the judgments in Lebanon or elsewhere.

There was some debate before me as to whether, for the purposes of Article 60 of the Regulation, CCOG was domiciled in Greece (as the Defendants contended) or in Lebanon. In paragraph 2 of the liability judgment, I described CCOG as being “principally operated from Athens”. However, CCOG’s domicile was not an issue in the proceedings then before me, and no argument was addressed to me at that stage as to whether any of the requirements of Article 60(1)(a), (b) or (c) were satisfied so as to demonstrate that CCOG was domiciled in Greece. Indeed, during the prior jurisdiction hearings, the Defendants had positively advanced the case that they were not domiciled in the EU. Moreover, in the recently issued Lebanese and Greek proceedings, they have made assertions that are wholly inconsistent with - and indeed contrary to – any domicile in Greece or within the EU for the purposes of Article 60. Although the Defendants submitted that CCOG was domiciled in Greece for the purposes of the Regulation, both Professor Nuyts and Mr. Salzedo agreed that the actual domicile of CCOG was irrelevant to the principal arguments on jurisdiction that Professor Nuyts was seeking to advance in relation to the court’s jurisdiction and discretion to grant the orders sought. What mattered, for the purposes of Professor Nuyts’ principal arguments, was whether the assets in relation to which enforcement or relief was sought were within or without the jurisdiction of the English Court, and thus whether enforcement action was going to take place in the UK. Professor Nuyts submitted that the actual domicile of CCOG and CCIC did not matter because: “the rules of jurisdiction that govern this matter, apply irrespective of where the domicile of the defendant is established” (Footnote: ⁷). Accordingly, both counsel accepted that there was no need for me to decide the domicile of CCOG for the purposes of these applications.

The following is a brief summary of the extensive arguments presented by Professor Nuyts, both in writing and orally, over the course of the hearing, in opposition to the claimant’s Limited Freezing Order Application:

a post-judgment freezing order is “a measure of enforcement”;

the English court does not have the power to make a post-judgment freezing order in relation to an asset situated abroad, because the territoriality of measures of enforcement is a fundamental principle of the regime of the Convention and the Regulation (see Article 22(5) of the Regulation) and indeed of private international law;

even if the freezing order is to be characterised as a provisional or protective measure, the English court does not have power to make a freezing order in relation to assets situated abroad in aid of enforcement abroad, because there is no real connecting link between the subject matter of the measure sought and the English court’s jurisdiction; this was a requirement for the application of Article 31 of the Regulation, as construed in Van Uden Maritime BV v Deco-Line C-391/95 [1998] ECR I-7091;

the Defendants have not submitted to the jurisdiction of the English court, because, although they played a full part in the proceedings leading to the liability and quantum judgments, that did not bring Article 24 of the Regulation into play because:

these were enforcement proceedings governed by Article 22;

there was no submission here in any event, because the Defendants had contested jurisdiction;

the claim for the Limited Freezing Order (and the other applications) were different claims from the original claims; thus, any submission there may have been was limited to the substantive claims and not to the new claims for the Limited Freezing Order; and

jurisdiction to grant a freezing order must be assessed in the light of the situation of the Defendants at the time the injunction is applied for and granted; but the original basis of jurisdiction, found by the Court of Appeal to have been established on the grounds of Article 6(1) of the Regulation, can no longer be maintained in relation to the new claims for the grant of injunctions (or, indeed, for the appointment of a receiver and other relief sought) in the light of the court’s conclusion in the liability judgment that CCUK was not a party to the Agreement; since both Defendants are domiciled outside the jurisdiction, Article 6(1) cannot provide a basis for jurisdiction;

as a matter of discretion, even if jurisdiction, in the technical sense of power to make the order, exists, the court should not, as a matter of principle, exercise its power in respect of an asset located outside England when the defendant is also non-resident here; rather, the freezing order should be sought from the courts of the state where the assets are located.

In support of these propositions, Professor Nuyts relied, amongst many others, upon the following authorities: Denilauler v Snc Couchet Frères [1980] ECR 1553; Mario Reichert v Dresdner Bank AG [1992] ECR I-21149; Van Uden Maritime BV v Deco-Line C-391/95 (supra); Credit Suisse Fides Trust SA v Cuoghi [1998] 1 QB 818; Mietz v Internship Yachting Sneek BV [1999] ECR 1-2277; Turner v Grovit [2004] ECR I-1935; Glencore International AG v Metro Trading International [2002] EWCA Civ 528; Société Eram Shipping Co Ltd v Cie International de Navigation [2004] 1 AC 260; Kuwait Oil Tanker Co SAK v Qabazard [2004] 1 AC 300; Banco Nacional de Commercio Exterior SNC v Empresa de Telecommunicaciones de Cuba SA [2007] EWCA Civ 662; and Le Fourie v Le Roux and Others [2007] UKHL 1.

I do not accept Professor Nuyts’ submissions in relation to the Freezing Order Application. My reasons (which largely reflect the submissions made by Mr. Simon Salzedo, on behalf of Mr. Masri) are as follows.

Under English law, the court clearly has jurisdiction, in the strict sense of “power”, to make a world-wide freezing order and an order requiring a defendant to provide information about the whereabouts of relevant property, as a protective measure in support of substantive English proceedings; see section 37(1) of the Supreme Court Act 1981 and CPR Part 25.1. In such circumstances there is no need to invoke section 25 of the Civil Jurisdiction and Judgments Act 1982, or the Civil Jurisdiction and Judgments Act 1982 (Interim Relief) Order 1997, as those processes only apply where there are no substantive proceedings in England and Wales.

Under European law the position is the same. Thus in case C-391/95 Van Uden (supra) the European Court of Justice said, at paragraphs 18-22 and 48:

Likewise in Case C-99/96, Mietz v Intership Yachting (supra), the European Court of Justice said:

That this is the correct analysis of the European authorities is confirmed in Dicey, Morris and Collins, The Conflict of Laws, (14^th edition 2006) at paragraph 8-021 and Briggs and Rees, Civil Justice and Judgments, (4^th edition) p 466 where the authors state:

Thus the result is that, because the court (here the English court) having jurisdiction over the substance of the case does not derive its jurisdiction to grant interim relief from Article 31, but rather from the provisions of the Regulation conferring substantive jurisdiction (here Article 6(1) and, possibly, Article 5), none of the restrictions set out in the European case law in relation to Article 31 apply.

Nor, contrary to Professor Nuyts’ submissions, is there any basis for the contention that the substantive jurisdiction principle does not apply where the freezing order is sought post-judgment, rather than pre-judgment. There is no logical juridical basis for such a distinction; nor is there any support for it in the authorities or in the textbooks. Professor Nuyts’ reliance on Dicey op cit at 8-021 to support this argument was misconceived; see also Dicey at paragraph 8-014. Protective relief here is also available in relation to future payments that will accrue under the Agreement.

I also reject Professor Nuyts’ submission that the Freezing Order Application can be characterised as “proceedings concerned with the enforcement of judgments” for the purposes of Article 22, so as to remove the Limited Freezing Order Application from the general principle described above and to subject it to the restrictions upon the exercise of the Article 22(5) jurisdiction. As Mr. Salzedo submitted, a freezing order is an in personam measure binding the defendant, not an attachment of assets. It is inherently temporary, as it will be released, in the case of a post-judgment order, once the judgment against the defendant has been paid (or abrogated on appeal). It is therefore correctly viewed as an interim measure, and not a measure of execution, still less as “proceedings concerned with enforcement”. In Babanaft International Co SA v Bassatne [1990] Ch 13, a case of an English post-judgment worldwide freezing order, Kerr LJ said at page 35B-D:

In the same case, Nicholls LJ said, at page 46B-D:

Thus the Court of Appeal, in relation to what are now articles 22(5) and 31 of the Regulation, held that there was jurisdiction in precisely the same situation as in the present case. Moreover, it has now become clear, from the decisions of the ECJ in Van Uden and Mietz, that, in fact, the Court of Appeal in Babanaft took an unnecessarily long way round the problem, because, as a matter of European law, where a court is seised with substantive proceedings, it is not necessary for that court to have recourse to Article 31 of the Regulation (formerly Article 24 of the Convention). The effect is that the requirement introduced by the ECJ in Van Uden, for a “real connecting link between the subject matter of the measures sought and the territorial jurisdiction of the contracting state of the court before which those measures are sought,” does not apply to a case where the relevant court has jurisdiction over the substantive proceedings. The approach in Babanaft was endorsed by the Court of Appeal in Derby & Co Ltd v Weldon (Nos 3 and 4) [1990] 1 Ch 65, in particular at pages 79E-G, 80G, 82C-E, 93E-G and 95F-G.

Professor Nuyts submitted that Banco Nacional (supra) was later authority to the contrary, which demonstrated that Babanaft could not longer be regarded as good law. However, in Banco Nacional the English court was not seised with any substantive proceedings, and the applications were made under Article 31. Indeed, I accept Mr. Salzedo’s submissions that, properly understood, Banco Nacional is an authority which undermines the Defendants’ submissions. That case involved an application to the English court for a worldwide freezing order in support of an application to enforce an Italian judgment in England. The Court of Appeal held that the English court had no jurisdiction to grant a worldwide order, because the conditions set out in Van Uden in relation to jurisdiction to grant interim relief under Article 31, and, in particular, the requirement for a real connecting link with the territorial jurisdiction of the court, were not met. The basis of the decision is therefore that a freezing order is an interim order falling under Article 31. If a freezing order were a measure of enforcement, and not an interim order, then Article 31 would not have been relevant at all.

The approach in the English authorities reflects the test set out by the Court of Justice for whether proceedings fall within Article 22(5). In Case C-261/90 Reichert v Dresdner Bank (supra), the Court of Justice stated that the provisions on exclusive jurisdiction in Article 16 of the Convention (now Article 22 of the Regulation) should be given a narrow interpretation (paragraph 25 of the Judgment), before going on to hold that Article 16(5) of the Convention (now Article 22(5)) was concerned only with proceedings involving “recourse to force, constraint or distraint on movable or immovable property in order to ensure the effective implementation of judgments”. The reason for this was that:

Professor Nuyts’ main attack on the conclusion reached in Babanaft, as endorsed by Derby v Weldon (Nos 3 and 4) (supra), was that the decision could no longer be regarded as good law because it had, in effect, been over-ruled, or demonstrated now to be bad law, by reason of the subsequent House of Lords cases Société Eram Shipping Co Ltd v Cie Internationale de Navigation (supra) and Kuwait Oil Tanker Co SAK v Qabazard (supra) and the European case of Turner v Grovit (supra). He argued that, in the light of these authorities, the position could no longer be maintained that a post-judgment freezing order did not interfere with the exclusive jurisdiction of the foreign court, on the grounds that it is made in personam and binds only the defendant. He submitted that, by analogy with the third-party debt orders which were the subject of the two House of Lords cases, a post-judgment freezing order must be regarded as “directed at the assets”, as opposed to the person of the defendant, and that, accordingly, any such order indirectly interfered with the powers of the foreign court where enforcement against the assets takes place. In the present case, he submitted, necessarily any enforcement measures against the single asset that was intended to be the subject of the freezing order, namely CCOG’s interest in the Concession, would have to take place outside the jurisdiction, and, accordingly, the grant of the post-judgment freezing order would, albeit indirectly, interfere with the jurisdiction of the foreign court.

In my judgment, Professor Nuyts’ attack on the English court’s jurisdiction (whether “jurisdiction” is used in the strict sense, or in the sense of the exercise of a principled discretion, which respects the limited territorial reach of the legislative powers of Parliament and the adjudicative powers of the courts, as well as respecting the rights of other sovereign states outside the jurisdiction (Footnote: ⁸)) to make a post-judgment freezing order in the circumstances of the present case, is ill-founded. There is a real distinction in law between a third-party debt order and a freezing injunction, and nothing in the House of Lords cases or in Turner v Grovit suggests to the contrary.

A third-party debt order is a direct order against a third party requiring him to pay the judgment creditor the amount of the debt due to the judgment debtor from the third party; see CPR Part 72.2. In effect, such an order has the proprietary effect of charging the debt owed to the judgment debtor in favour of the judgment creditor; see per Lord Bingham in Société Eram at paragraph 24; and per Lord Hoffmann at paragraphs 62-63.

The vice, so far as the exercise of the jurisdiction in relation to the attachment of a foreign debt pursuant to Part 72 is concerned, is that it operates in rem against the debt itself and purports to bind a non-party in a foreign jurisdiction acting in accordance with foreign law. On the contrary, as described in Babanaft, a freezing order is an in personam order which binds a party who is subject to the equitable jurisdiction of the English court. Thus it only binds the owner of the debt situate abroad, not the debt itself. This analysis was also endorsed by the Court of Appeal in Flightline v Edwards [2003] 1 WLR 1200 at paragraphs 43-37. It is useful to cite paragraphs 43, 44 and 47 of that case:

I also refer to Franses (Liquidators of Arab News Network Limited) v Somar Al Assad [2007] EWHC 2442 at paragraph 100, per Henderson J. Franses was a case where the judge made a post-judgment freezing order in English substantive proceedings in relation to Spanish assets, where the liquidator was intending to take Spanish enforcement proceedings to enforce the English judgment, but had not yet done so. The defendant accepted that the English court had jurisdiction to make an order in relation to the English assets, but the type of arguments run in the present case by Professor Nuyts were not rehearsed, nor were the authorities upon which he relies cited.

In my judgment, there is absolutely no indication in either Société Eram or Kuwait Oil Tanker to suggest that their Lordships considered that Babanaft had been wrongly decided, or that a freezing order had, in that case, been wrongly characterised by the Court of Appeal as an in personam remedy. Nor is there anything to suggest that the House of Lords considered that a freezing order should be equated with a third party debt order, or be regarded as having the same proprietary in rem effect. On the contrary, as Mr. Salzedo submitted, any such contention is wholly inconsistent with Lord Bingham’s implied approval, at paragraph 23 of his speech, of the practice in relation to freezing orders established in Babanaft (as subsequently varied pursuant to the judgment of Clarke J in Baltic Shipping Co v Translink Shipping Limited [1995] 1 Lloyd’s Reports 673). It is also inconsistent with Lord Hoffmann’s similar remarks in relation to freezing orders at paragraphs 56 to 58 of his speech. Moreover there is no conceptual difficulty in the English court telling a defendant to English proceedings, over which the English court has substantive jurisdiction, what to do and what not to do with his property, even if it is abroad.

Nor does Turner v Grovit assist Professor Nuyts’ submissions. The carefully drawn Babanaft/Baltic Shipping provisos are designed to prevent the mischief of any interference with any foreign court. Moreover, nothing which Mr. Masri seeks to achieve by virtue of the freezing order interferes with the jurisdiction of the foreign court to decide its own jurisdiction. Thus, a freezing order in the terms sought would not interfere, for example, with the Greek court’s deciding the action brought before it by the Defendants for declarations that the English court’s judgments cannot be enforced in Greece. Nor would the order interfere with the Lebanese proceedings, started by the Defendants for similar declarations.

In my judgment, there is nothing in the authorities relied upon by Professor Nuyts which would suggest that it would not be an appropriate or principled exercise of my discretion here to grant a limited freezing order restraining CCOG from disposing of its interest in the Concession.

The reality is that, absent an injunction, CCOG can enter into an assignment or other disposition of its interest in the Concession anywhere in the world. There is no reason for the claimant to bring proceedings in Greece to “attach” the asset represented by the interest in the Concession there. For there to be a conflict with the exclusive jurisdiction provisos of Article 22(5), there would have to be an enforcement. The Defendants say that the enforcement proceedings should be understood as taking place in Greece, on the basis of their claim to be domiciled there. However, it is wholly unclear why any enforcement proceedings against CCOG should be viewed as taking place in Greece, even if CCOG were domiciled there. None have been started there. The subject matter of the freezing injunction is not situate there. Further, notwithstanding the description of CCOG in the liability judgment, the present position is that, in the Greek and Lebanese proceedings now begun by the Defendants, they are contending for the purposes of those proceedings that they are both domiciled in Lebanon. Thus, the Lebanese proceedings state:

Similarly, the Greek proceedings state:

Thus, on the logic of the Defendants’ own arguments by reference to their domicile, the contention appears to be that the enforcement proceedings should be brought in the Lebanon. Again, the reality is:

that the Defendants themselves have brought proceedings there seeking a declaration that the English judgments are not enforceable;

the asset(s) at which the freezing order is directed are not located in Lebanon or, indeed in any Member State or Participating State under the Convention, so no enforcement proceedings could take place in such countries;

although the Defendants have contended that CCOG’s rights under the Concession are situate in the Yemen, the fact is that any enforcement by CCOG of those rights, whether against PDRY or the other parties to the PSA or the JOA would have to take place in London, in London arbitration proceedings, as required by the provisions of the PSA and the JOA (albeit that, theoretically, the assistance of the Yemen courts might have to be invoked if CCOG had to enforce physical rights to take delivery of its oil entitlement);

any rights which CCOG wished to enforce in relation to the receivables from its oil contracts against third party purchasers of oil (i.e. the Oil Revenues, as defined in the Receivership Application) would fall to be enforced wherever was appropriate under the terms of the particular contracts for the sale of oil to third parties (which could be anywhere in the world);

the Defendants’ evidence does not appear to show that they have any assets situated in England or any EU Member State;

the evidence shows that proceedings to enforce the English judgments in Yemen or Lebanon would be very difficult in the light of the stance adopted by the Defendants.

In the circumstances, I conclude that the grant of a limited freezing order in the terms sought would not interfere with the enforcement jurisdiction of a foreign court, or be otherwise contrary to the principles of comity articulated in Société Eram and the other cases referred to by Professor Nuyts.

Professor Nuyts’ jurisdiction arguments also, as I have indicated above, included the contention that the Defendants have not submitted to the jurisdiction of the English court in relation to the claim for the Limited Freezing Order. He submitted that a fresh inquiry into jurisdiction had to be carried out before any freezing injunction could be granted. The cases relied on by Professor Nuyts were, however, cases in which fresh claims, in the sense of new causes of action, were raised within existing proceedings. But a claim for a freezing injunction is not a fresh cause of action, but merely a claim for interim relief in relation to a contractual cause of action which the claimant has already pleaded (and, in this case, proved). Thus, for example, in ET Plus v Welter [2006] 1 Lloyd’s Rep 251, relied upon by the Defendants at paragraph 26 of their skeleton argument on jurisdiction for the hearing on 5 October 2007, the claimants sought permission to add two new defendants and to plead new claims under Articles 81 and 82 of the EC Treaty. Although in Youell v Kara Mara Shipping [2002] 2 Lloyd’s Rep 102, the claimant’s claim for an anti-suit injunction was treated as a cause of action for which permission to serve out was required that was because, unusually, the claim was for a final and permanent anti-suit injunction, to which the Claimant claimed to be entitled by reason of a contractual exclusive jurisdiction clause in favour of the English courts. In those circumstances Aikens J held that the bringing of proceedings before a foreign court could amount in itself to a breach of contract, thus giving rise to a separate cause of action in respect of which the Claimant could seek permanent, and not merely interim, relief.

Ordinarily, however, a claim for an anti-suit injunction would not have to be pleaded as a separate cause of action in a party’s statement of case, and no permission for service out would be required if such an injunction was sought in existing proceedings; see the judgment of Rix LJ (with whom Robert Walker LJ and Sir Andrew Morritt V-C. agreed) in Glencore v Exter (supra):

The judgment of HHJ Mackie in the present proceedings is further authority to the same effect. The same applies to an application for a freezing injunction. It follows that there is, in my judgment, no need for a fresh inquiry into the jurisdiction of the Court.

Accordingly, I conclude that not only do I have jurisdiction in the strict sense to grant the Limited Freezing Order sought, but (subject to the arguments on risk of dissipation, which I address below), the exercise of my discretion to grant such an order would be in accordance with principle, notwithstanding that CCOG’s interest in the Concession and the proceeds of the sales of its oil derived from the Concession, may be situated outside England and Wales. At the conclusion of the jurisdiction proceedings, and after the amendment to add the new parties to the First Action, the Defendants submitted to the jurisdiction of this court and played a full part in the trial process. The asset, namely CCOG’s interest in the Concession has a real and substantial connection with this jurisdiction, in the sense that any claim to enforce it under the PSA or the JOA would be subject to English arbitration proceedings under (now) the Arbitration Act 1996. If this court were not to grant relief to preserve the benefit of CCOG’s interest in the Concession to satisfy the Defendants’ obligations under the judgments to Mr. Masri, it is unlikely that any other court would do so in the necessary time frame to prevent a disposition of CCOG’s interest, if indeed there is a risk of dissipation. It is accordingly to this issue which I now turn.

The last argument put forward on behalf of the Defendants to resist the Limited Freezing Order was the contention that Mr. Masri had not shown that there was indeed any risk of CCOG disposing of its interest in the Concession so as to defeat the claim. Allied to this submission was the contention that Mr. Masri had delayed in seeking relief and not adequately explained why he had not taken enforcement proceedings in other jurisdictions.

In particular, Mr. Mark Hoyle, on behalf of the Defendants, argued that no such risk of dissipation had been shown by Mr. Masri to justify such an order and that, given the length of the time that the dispute over the Agreement has been running, and the delay between the start of the proceedings and the current applications, it was now far too late, as a matter of principle, for any form of freezing order now to be granted. He supported these submissions by emphasising the fact that no apparent attempts had been made by Mr. Masri to enforce the judgments, either in Lebanon or in Greece.

Despite these submissions, I am more than satisfied that there is a real and substantial risk of dissipation. Since the date of the liability judgment, the actions of the Defendants have demonstrated in a patently obvious fashion that they propose to take advantage of any opportunity open to them to resist enforcement of the judgments of the English courts, to evade their responsibility to pay Mr. Masri what is due to him, as found by the English courts, and to put every obstacle in his way to prevent him from enforcing judgment against them.

This refusal to abide by the orders of the English court is dressed up in the Defendants’ evidence as being a position that CCOG:

The reality of this so-called “position” is that the Defendants, having played an active part in a full evidentiary hearing before the English court, having involved themselves in the appeal process, and involved Mr. Masri in the enormous expense of suing them to judgment, are now not prepared to accept the consequences of the jurisdiction of the English courts which they, albeit after protest, accepted, and are determined to put every obstacle in the way of Mr. Masri to prevent him from enforcing his judgment. I have absolutely no doubt, on the basis of the evidence before me, and the manner in which this litigation has been conducted, that, if there were a way open to the Defendants to assign or otherwise dispose of CCOG’s interest in the Concession in order to defeat Mr. Masri’s claim, they would do so. Not only have they gone to the lengths of starting pre-emptive proceedings in Yemen, Greece and Lebanon to prevent enforcement, but they have also made inconsistent allegations in those various proceedings to improve their case.

I remind myself that the court should be more ready in appropriate circumstances to make a freezing order post-judgment than pre-judgment; see Babanaft v Bassatne (supra), at page 37, per Kerr LJ, and at page 40 per Neill LJ. I have absolutely no doubt that, if injunctive relief is refused, there is a real risk that the judgment will go unsatisfied; see Ketchum v Group Public Holdings [1997] 1 WLR 4 at 13.

Nor do I consider that delay is a factor here that would otherwise prevent Mr. Masri from obtaining relief. During the course of the trial, and in the period leading up to it, there was no real reason to suppose that CCC, apparently a hugely successful group, with a substantial international reputation, would not honour any judgment awarded in Mr. Masri’s favour against them. That perception, however, is one that has dramatically altered since the end of the trial. Moreover, the evidence shows that, shortly after the handing down of the liability judgment at the end of July 2006, CCOG transferred the bank account into which it receives its oil revenues from the Concession from Switzerland to Lebanon, the latter being a jurisdiction where the Defendants themselves assert the judgments are not enforceable. Although Mr. Burgan has deposed that the reasons for this transfer were purely commercial, the juxtaposition between the date of the liability judgment and the transfer of the account necessarily raises suspicion in the absence of any supporting documents to confirm the asserted commercial rationale.

In the Defendants’ submissions at the hearing on 5 October 2007, they suggested that there was no proper evidence available to the court regarding the process of enforcement in Lebanon and that the presumption must be therefore that Lebanon had measures in place to allow enforcement of foreign judgments. However, it subsequently became apparent that the Defendants had already commenced proceedings in Lebanon seeking a declaration that the English judgments could not be enforced in Lebanon. The evidence of the solicitors acting for Mr. Masri shows that enforcement in Lebanon of the English judgment would be difficult and time-consuming, even apart from the difficulties now occasioned by the start of the Defendants’ proceedings there. There was no offer, for example, of any undertaking to this court not to dispose of CCOG’s interest pending any enforcement proceedings that Mr. Masri might take in Lebanon.

Accordingly, I am satisfied that there is indeed a real risk of dissipation if the Limited Freezing Order is not granted, and accordingly that it is appropriate in principle to grant an injunction restraining CCOG from assigning any of its rights in the Concession Agreements (as defined) to any other person or otherwise disposing of or diminishing the value of such rights without the permission of the court. It was not suggested by the Defendants that I should not make the order because it would have no effect, as it could not be realistically enforced. On the contrary, CCOG has indicated that it will comply with the terms of any such order if made by the court (Footnote: ¹⁰).

However, after the hearing before me, a dispute arose as to the precise wording of the freezing injunction which, despite lengthy submissions made during the hearing, was not raised by counsel for the Defendants at the time. In correspondence (Footnote: ¹¹) between the parties after the hearing, the Defendants’ solicitors wrote:

The claimant’s solicitors responded to this suggestion by pointing out that, although the claimant did not contend that there would be any breach in selling oil on an ongoing basis, as and when it was produced, the sale, or grant, of a charge over its interest in current and future oil production (i.e. that has yet to be produced) would constitute a diminution of CCOG’s rights in the Concession Agreements in breach of the current interim freezing injunctions, notwithstanding that the purchaser was a third party contracting at arm’s length. I agree.

In my judgment, it is obvious that, from a commercial perspective, the Limited Freezing Order should not prevent the sales of CCOG’s oil produced from the Concession in the ordinary course of business to third parties at arm’s length. Indeed, to prevent such sales would be to frustrate the purpose of the freezing injunction which is to preserve a fund from which, ultimately, the claimant’s judgment can be paid. However, there should be no ambiguity about the scope of the Freezing Order. A sale of oil that has not yet been extracted might well amount to a disposition of CCOG’s interest under the Concession, and I agree that the wording of the order should make it clear that such dispositions are prohibited. But the suggested wording in Simmons & Simmons letter dated 19 November 2007, which proposes to restrict sales of oil that may have been extracted, but under “arrangements whereby payment in respect of future oil sales is accelerated so that it takes place sooner than would otherwise be the case (whether in exchange for legitimate commercial benefits granted to a third party acting at arm’s length or otherwise)” is arguably an injunction restricting sales by CCOG of its own oil, rather than the disposition of any interest in the Concession. The ambiguity lies in the phrase: “future oil sales” which could be taken as referring to a future sale, as opposed to a sale of oil that has yet to be extracted. Such wording could also wrongly restrict genuine commercial arrangements. In my view, the order should make it clear in its main operating provision whether it indeed restricts sales by CCOG of oil which has become CCOG’s oil after extraction or allocation. I propose to hear fuller argument, on the hand-down of this judgment, as to the precise terms of the order. As at present advised, I am of the view that the clearest way to frame the order is in fact to injunct all sales or other dispositions of oil, but subject to the normal type of freezing order proviso that sales of oil, which has been extracted at the date of contract, being sales in the ordinary course of business, at arm’s length to third party purchasers, are excluded from the scope of any prohibition. However, I need to be addressed on behalf of CCOG whether such an order would cause an unwarranted interference with its commercial ability to sell the oil; I also need to hear argument on behalf of the claimant as to whether permission under such a proviso to conduct sales of oil in the ordinary course of business should be subject to a provision of information requirement as to details of the sales contracts, along the lines of that proposed in paragraph 6(a) of the proposed draft receivership order (irrespective of whether I make an order for the appointment of a receiver). Again, such an information requirement is a standard feature of freezing orders; see CPR Part 25.1(g).

It is unfortunate that these points were not raised during the course of the hearing before me, particularly as I continued the injunctions on an interim basis and there was every opportunity to raise the point.

Subsidiary questions (which were raised at the hearing) arise as to whether:

the two individual directors of CCOG, Mr. Fouad Asfour and Mr. Samir Nayef Khoury (“the CCOG Individual Directors”); and

the individual directors of CC Holdings, the corporate directors of CCOG, namely Mr. Said Tawfic Khoury, Mr. Tawfic Said Khoury, Mr. Sonheil Hamib Sabbagh and Mr. Samir Said Khoury (“the CC Holding Individual Directors”),

Mr. Hoyle and Professor Nuyts argued that:

there was no jurisdiction for the order to name the Individual Directors as the jurisdiction had to be assessed separately from the court’s jurisdiction in respect of CCOG; in this context (and in the context of the Receivership Application) reliance was placed on MODSAF v Faz Aviation Ltd and Al-Zayat [2007] EWHC 1042

the proposed order breached the traditional principle of territoriality under international law because it subjected to penal liability foreign officers of a foreign company in relation to the conduct of foreign activities; and

the naming of the directors made them “personally responsible and liable for the engagements and obligations of the corporation”; that it was a fundamental principle of the conflict of laws that the law of the place of incorporation determines the nature and extent of the duties owed by the directors to the corporation, and the extent of the individual director’s personal liability for its debts and engagements; see Dicey Morris and Collins, Conflict of Laws, 14^th Edition paragraph 30-024; and that under Lebanese law:

In support of these propositions, the Defendants relied upon two expert reports of a Lebanese lawyer, Elie Melkane, which were supplied after the hearing concluded; Olswang are the new solicitors who have acted for the Defendants since 26 November 2007.

I reject the submissions put forward by the Defendants that the Individual Directors should not be named in the Limited Freezing Order. Provided that their capacity (i.e. in the first case, “as directors of [CCOG]”, and in the second case, as “directors of [CC Holdings], a corporate director of [CCOG], to the extent that, in such capacity, they are acting as a director of [CCOG]”) is clearly stated, I see no conflict with the principles of private international law or of the Regulation in naming them in the freezing order. Indeed, the standard form order for worldwide freezing orders provides in paragraph 10(2)(a) that: “the defendants or their officer or agent appointed by power of attorney” (my emphasis) are bound by the injunctions, notwithstanding they are in a country or state outside the jurisdiction of the English court, and notwithstanding that the order has not been declared enforceable or enforced by a court in the foreign jurisdiction.

The basis for the court’s jurisdiction to name the directors of CCOG in the freezing order is the court’s jurisdiction over CCOG. The Individual Directors are not named in the order in their personal capacity, but in their capacity as directors of CCOG, or directors of CC Holding insofar as they are acting as a director of CCOG. There is therefore no need to establish any separate jurisdiction against the directors in their personal capacity. The reason why there is jurisdiction to name the Individual Directors is that the company can only act through its officers or other agents having authority to act on its behalf. The acts and states of mind of those officers, when acting in that capacity, are the acts and states of mind of the company; see generally the judgment of Lord Reid in Tesco v Nattrass [1972] 1 AC 153 pages 170-171. For the purposes of the Freezing Order, the directors act as the company within the meaning described by Lord Reid. It is that which confers jurisdiction on the English court to require that they act or refrain from acting in a certain way, as part of the order made against CCOG itself. The case of MODSAF v Faz Aviation Ltd and Al-Zayat (supra), relied upon by Professor Nuyts in his post-judgment submissions, was of no assistance in this context. MODSAF was a case where the director, Mr. Al-Zayat, was sued as a co-defendant, i.e. as a separate party, in fraud, conspiracy and dishonest assistance; see paragraph 10 of the judgment. No question arose in that case as to whether, purely in his capacity as a director, he should be named in an order against the company, or whether jurisdiction could be asserted against him, other than under Article 6(1), on the basis that he was an officer of the company. The case is wholly irrelevant.

The circumstances in which particular individuals are treated as the company is not a question of EU law, but a question of English law. There is no basis for the contention that naming the directors in the freezing order on the basis that they are individuals who act as the company for the purposes of that order would somehow be contrary to the Regulation, or that any principle of territoriality is offended in circumstances when the court has substantive jurisdiction over CCOG. The fact that the order imposes penal consequences upon the Individual Directors (which necessarily could only be enforced if they were within this jurisdiction) is only a consequence of this court’s substantial jurisdiction against CCOG and the fact that they are officers of CCOG.

Nor, in my judgment, is there any conflict with Lebanese law. The expert opinion provided does not suggest that the CCOG Individual Directors and the CC Holding Individual Directors (in their capacity as such), or CC Holding in its capacity as corporate director of CCOG, are not officers or agents of CCOG. Naming the Individual Directors in the Freezing Order does not raise any question concerning the internal governance of CCOG, or any question concerning the liability of the directors to the company or its shareholders for breach of duty. The proposed order does not seek to make the Individual Directors liable in any way personally for the debts and obligations of the company, such as the claimant’s judgment debt. The issue here is whether the court can ensure the effectiveness of the Freezing Order made against the company, CCOG, by requiring compliance on the part of the company’s directors, as individuals by whom the company acts for the purposes of the order. The expert evidence of Lebanese law is thus irrelevant.

Moreover, as submitted by Mr. Salzedo, an analogy may be found in the decision in The Ikarian Reefer [2000] 1 WLR 603, which concerned an application under section 51 of the Supreme Court Act 1985 for costs against a non-party, following the trial of an insurance claim in England. The non-party, C, contended that the English court had no jurisdiction to make an order for non-party costs against him, and that any proceedings had to be brought against him under Article 2 of the Convention (as it then was). The Court of Appeal held that it was not necessary to establish jurisdiction separately against C under the Convention for the purposes of the application of section 51, because an application for costs against a non-party did not amount to “suing” or “bringing proceedings against” that third party; see per Waller LJ (with whom the other members of the court agreed) at page 616B:

The rationale of the decision in The Ikarian Reefer is that the individual in question (C) had involved himself sufficiently in the proceedings (in that case, by funding and directing them) to make himself amenable to an application for non-party costs by way of an ancillary application in the main proceedings. Thus, Waller LJ said, at page 611:

It is clear, contrary to the submissions of Professor Nuyts, that the basis of the decision in The Ikarian Reefer was not that C was the alter ego of the company, so that the corporate veil could be pierced. The question whether C was the alter ego of the company was one of the issues in the section 51 application, but the Court of Appeal decided the question of jurisdiction without deciding that point. That appears from page 617 of the report.

Accordingly, I propose to make the Freezing Order and name the Individual Directors as the claimant proposes, but the precise wording must make clear the capacity in which the Individual Directors are named.

As I have set out above, in its revised form, as provided by Mr. Salzedo during the course of the hearing, the draft order seeks the appointment of Mr. Lee Manning, an insolvency practitioner, as receiver to receive the Oil Revenues.

Other relevant provisions of the proposed order, for present purposes, are the following:

It is to be observed that the order does not contain any provision requiring third party debtors of CCOG to pay the receiver what they owe CCOG. It is also to be observed that, in its revised form, the order does not seek an order that the monies collected by the receiver are paid to the claimant at this stage. Rather, they are to be subject to the court’s further direction.

Professor Nuyts’ submissions opposing the appointment of a receiver may be summarised as follows:

The English court does not have jurisdiction to appoint a receiver by way of equitable execution as a means of enforcement of an English judgment over the foreign assets of a foreign company; there is no reported case where this has happened;

the decision in Société Eram governs this case by way of analogy because the appointment by the court of a receiver by way of equitable execution is materially identical to a final third-party debt order; the order produces the result that the third party who owes the money to the judgment debtor does not pay that money to his creditor, but either to the judgment creditor direct (in the case of a third-party debt order), or to the receiver (for transmission to the judgment creditor); the fact that the proposed order, in its revised form, provides for the receiver to pay the money into court to await its further direction (as opposed to the claimant, in satisfaction of the judgment debt) makes no difference to the argument; the reality is that ultimately the proceeds of any receivables are intended to and will be used to satisfy the claimant’s judgment debt;

as in Société Eram, the correct characterisation of such an order is that it is an in rem, not an in personam, remedy; the in rem effect takes place as and when the receiver collects the debt from the third party; that is because the simple fact of the receiver giving notice of his appointment to the third party debtor prevents the third party from paying the judgment debtor and satisfying its debt to the latter; see Allied Irish Bank v Ashford Hotels Ltd [1997] 3 All ER 309. So the legal theory that the appointment of a receiver is an equitable remedy in personam is not relevant for the purpose of the issue of jurisdiction over foreign debts, in the same way as it is not available in respect of third-party debt orders (Société Eram paragraph 24 per Lord Bingham and paragraph 62 per Lord Hoffmann);

the principle that a third-party debt order in respect of foreign debts is an infringement of a foreign court’s territorial jurisdiction (as upheld in Société Eram – paragraph 54, per Lord Hoffmann) also applies to the appointment of a receiver; from the point of view of international law, the appointment of a receiver is only distinguished from a third-party debt order because it is more, not less interventionist, insofar as it seeks to have an officer of the court being involved, on pain of the exercise of coercive remedies, in the recovery of the debt situate abroad;

alternatively, at the very least, the court must have a “sufficient connection” to justify it assuming jurisdiction: see by analogy Schemmer v Property Resources Ltd [1975] Ch 273, where the court refused to accept the title of a US receiver because of the lack of “sufficient connection” between the defendant and the US court; the English court must apply a symmetrical approach to its own receivers as it does to foreign receivers; there is no sufficient connection here, as it is not enough that a foreign company has been brought before the court under a special jurisdiction (which is now known to be a false basis) where that foreign company otherwise has no connection with the jurisdiction;

further, to the extent that the assets are located in the Brussels/Lugano zone, the appointment of a receiver over them is precluded by Article 22(5) of the Regulation or Article 16(5) of the Convention; see Kuwait Oil Tanker v Qabazard [2004] 1 AC 300;

a receiver cannot be appointed in respect of property that is not capable of assignment; thus, if, as here, the chose in action over which it is intended to appoint the receiver is subject to a contractual bar against assignment, then the chose cannot be the subject of a receivership order.

I reject Professor Nuyts’ submissions. In my judgment, I have jurisdiction, both in the sense of a power to do so (see section 37(1) of the Supreme Court Act 1981 and Part 69 of the CPR) and in the sense that the exercise of such power would be in accordance with principle and would not offend the territoriality principle that orders of this court should not improperly interfere with the rights of foreign sovereign states.

It is perhaps helpful to start with an analysis of the nature of the relief sought by the claimant in this case by the appointment of a receiver. In one sense, contrary to Professor Nuyts’ contention, it is truly a protective measure because it is sought to protect and preserve the receivables from the sales of oil by CCOG, i.e. the Oil Revenues, pending the claimant’s actual enforcement against those monies and the satisfaction of the judgment debt out of any monies collected. But it is also fair to say that the appointment sought is also by way of equitable execution, as it is intended to assist in the enforcement process. Mr. Salzedo fairly conceded this, although the terms of his proposed order, as revised, do not actually provide for the judgment debt to be satisfied out of any monies paid into court.

In my judgment, insofar as any appointment of a receiver over the oil receivables were made as a protective measure, it would clearly be an in personam remedy and, for similar reasons to those I have given in relation to the Limited Freezing Order Application, nothing in Société Eram would affect the characterisation of such a remedy. Indeed, that the appointment of a receiver over foreign assets is an in personam remedy was clearly stated by Dillon LJ in Derby & Co Limited v Weldon (No 6) [1990] 1 WLR 1139 CA at 1149 to 1150F:

Taylor LJ expressly agreed with the judgment of Dillon LJ at 1152, and on this point, so, it appears, did Staughton LJ at 1153D-E. I also refer to the comprehensive discussion of the problems relating to the exercise of rights by receivers appointed by the English court over overseas assets, and the corresponding problems relating to the reciprocal recognition in England of receivers appointed by foreign courts, in one of the leading text books on the subject of receivers: The Law of Administrators and Receivers of Companies Lightman and Moss, 4^th Edition, 2007, at paragraph 32.014 – 31. I also refer to Dicey, Morris and Collins op cit at paragraphs 30-127 – 129 and 30-130 – 134.

These passages are premised on the proposition that, whatever may be the difficulties of a court-appointed receiver exercising his powers abroad, there is power, in appropriate cases, in the English court to appoint one. Equally, both textbooks state that it is likely that a foreign court-appointed receiver would be recognised on a reciprocal basis: “if the defendant submitted to the jurisdiction of the court by whose order the appointment was made”: Dicey, Morris and Collins at paragraph 30-127 and see cases, including Schemmer (supra) cited at footnote 56 and also Dicey, Morris and Collins at 31-16. There is nowhere any suggestion that the decision in Société Eram has had any effect upon the court’s power to make an order appointing a receiver in respect of foreign assets in appropriate cases. Interestingly, no distinction is made between the exercise of a power to appoint a receiver as a protective measure on the one hand, and a power to appoint a receiver by way of equitable execution on the other. This is perhaps not surprising since both have their statutory basis grounded in section 37(1) of the Supreme Court Act 1981 and, upon what I regard as the correct legal analysis, are similar in effect. Nor am I impressed by Professor Nuyts’ submission to the effect that there are no reported cases of a receiver being appointed by way of equitable execution over foreign assets. I find this to be unlikely given the fact that receivers are often appointed post-judgment over foreign assets subject to the appropriate Banabaft/ Baltic Shipping provisos.

Nor do I accept Professor Nuyts’ submission that, in the present case, on the basis of the wording in the proposed receivership order, the remedy of a court-appointed receiver should be characterised as a remedy in rem in the light of the decision in Société Eram even if such remedy is a remedy in aid of enforcement or by way of equitable execution. My reasons are as follows:

The appointment of a receiver by way of equitable execution may be made wherever it is just and convenient so to do, over any assets of a company including future debts; see Soinco SACI v Novokuznetsk Aluminium Plant [1998] QB 406. The effect of such an appointment is as follows: first, that it operates as an injunction restraining the defendant (here CCOG), subject to the jurisdiction of the court, from itself dealing with the asset in question; second, that it may authorise the receiver to realise or otherwise bring to account the asset in question, and, in the case of a chose in action, to sue in the name of the company; third: “the order will operate to create a charge in favour of the judgment creditor, if, and only if, the receiver is directed by the order to hold the asset for, or pay its proceeds or other realisation, to the judgment creditor”; see Lightman and Moss, op cit at paragraph 29-004, and cases there cited, namely: Re Potts [1893] 1 QB 648; Re Pearce [1919] 1 KB 354; and Flightline v Edwards (supra).

Here, the proposed order does not confer any equitable charge in favour of the claimant at the time the order is made, nor, indeed, if and when the monies are paid into court. If there were an intervening insolvency of CCOG before application had been made to the court for further directions, the claimant would have no priority; that is the effect of the decision in Flightline. It is only when the English court orders the monies to be paid out to the judgment creditor (by which time the monies are necessarily in and subject to this jurisdiction and in court), that any in rem effect takes place. Nor, contrary to Professor Nuyts’ submissions, does the remedy have an in rem effect prior to that date. On the wording of the proposed order (as revised) with its Babanaft and Baltic Shipping provisos, a third party out of the jurisdiction with notice of the order, is not prevented from paying CCOG the debt it owes CCOG or otherwise discharging its liability to CCOG, or regarded as being in breach of the English court’s order it if does so; see paragraphs 9, 10(c) and 11(A) of the proposed order. If directed by CCOG to make a payment to the receiver, whether such third party would comply with such a direction, would no doubt depend on whether the law governing the chose in action of the debt recognized such a direction as valid. The authority relied upon by Professor Nuyts, Allied Irish Bank v Ashford Hotels Ltd (supra) is not, in my view, authority for the proposition that the appointment of a receiver by way of equitable execution automatically or invariably binds third parties out of the jurisdiction with notice of the order. First, that particular point was simply not in issue in that case; second, the relevant alleged third-party debtors were themselves subject to the personal jurisdiction of the English court in their own action, and indeed, seeking to become parties to the action in which the receiver had been appointed; and, third, there does not appear to have been any type of revised Babanaft proviso in the order appointing the receiver. The authority is also inconsistent with the analysis in Re Potts (supra), Re Pearce (supra) and Flightline (supra).

Accordingly, in my judgment, an order for a receivership operates very differently from a third-party debt order. Third-party debt orders effect a direct attachment of an asset or debt; as a result, they carry the risk for a third party debtor of double jeopardy if they are granted by the English court in respect of debts in other jurisdictions. For this reason, such orders are not granted if the third-party debtor is overseas. But these reasons do not apply to an order for the appointment of a receiver by way of equitable execution on the terms of the proposed revised order, even though, ultimately, any monies recovered by the receiver will no doubt be the subject of an application by the claimant for a direction that the receiver applies them in satisfaction of the judgment debt. Thus, no risk of double jeopardy can or should arise. One cannot argue that the third-party debtor is affected indirectly because of the principles of contempt of court, because this is precluded by the Babanaft provisions in their revised form.

Nor is there any conflict with the Société Eram principle in the court making the order sought against CCOG (in paragraph 6(b) of the proposed order), as owner of the third-party debt, requiring it to direct its third-party debtors to pay the debts they owe CCOG to the receiver. Such an order is necessarily an order in personam against the judgment debtor itself; if the third-party debtors are voluntarily prepared to abide by such a direction from the judgment debtor that is an end to the matter; if they are not, because of concerns about the validity of such a direction in the absence of an order of the foreign court recognising the English court-appointed receiver, then there is no double jeopardy because of the operation of the Babanaft provisos that any person outside the jurisdiction of the court is not in breach of the order if he obeys what he reasonably believes to be the law of the country where the assets are, or which governs any contract between the third party and the judgment debtor. A good analysis of the legal position is to be found in the helpful article by Adrian Briggs Owing, owning and the garnishing of foreign debt (Footnote: ¹³).

For similar reasons as those which I gave in relation to the Freezing Order Application, I consider that there is a sufficient connection between CCOG and the English court to justify the appointment of a receiver over the Oil Receivables and that Professor Nuyts’ argument to the contrary based on the contra-indications identified in Schemmer are not well-founded. Nor, again for similar reasons, do I find there to be any conflict with Article 22(5). Even to the extent that the receiver’s appointment is to be characterised as an aid to enforcement, as opposed to a protective measure, the making of such an order does not purport to confer jurisdiction in relation to enforcement proceedings in any other country in which the assets may be situate; moreover, here there is no evidence that the Oil Receivables are or will be situate in any other Member State.

Professor Nuyts’ next point was that no receivership order could be made because of the contractual bars on assignment contained in the PSA and the JOA, which I have set out above. In support of this proposition, he relied upon Field v Field [2003] 1 FLR 376 and a statement at paragraph 6.46 of Commercial Enforcement by Sarah Payne, 2005, to the effect that, if there was a contractual bar on assignment, no receiver by way of equitable execution could be appointed.

In my judgment, neither Field nor the passage in Payne prevents the appointment of a receiver in this case.

First, the proposed order only seeks the appointment of a receiver over amounts due to CCOG from any third party:

However, the terms of the provisions against assignment in the PSA and the JOA (as set out above) do not, on their proper construction, prevent any sale, transfer, assignment or other disposition of oil owned by any party to those agreements; nor, on any basis, do they prohibit assignment of any debts or receivables owed to CCOG, or other parties, in respect of sales of their own oil to third party purchasers. As Mr. Burgan points out in his 11^th witness statement (see paragraph 43 above), each partner is responsible for arranging the marketing and sale of its own oil. That being so, the so-called principle to which Professor Nuyts referred is irrelevant, since the contractual bars on assignment upon which he relies, simply do not catch the relevant choses in action over which the claimant seeks the appointment of a receiver, namely CCOG’s rights to receive payment for oil under sales contracts with third parties.

A clear distinction has to be drawn between the right to receive something under a contract (here, the oil) and the fruits of the sale of the oil; see, for example, Barbados Trust Co v Bank of Zambia [2007] EWCA Civ 495 at paragraphs 68 – 70; Linden Gardens Trust Limited v Lenesta Sludge Disposals Ltd [1994] 1 AC 85, 104 – 105.

In any event, with respect to Mr. Justice Wilson (as he then was) I do not agree with the proposition that a mere contractual provision against assignment of a chose in action would prevent the appointment by the court of a receiver by way of equitable execution over that chose.

First, as in the present case, there is no need for the appointment to create any equitable charge (even assuming the creation of an equitable charge to be caught by a provision against assignment – see generally Barbados Trust Co (supra).)

Second, a contractual provision against assignment of a chose does not prevent the court from treating the owner of the chose as effectively trustee of its proceeds so as to give effect in personam to the rights between the owner and the third party seeking the appointment of a receiver; see for example Linden Gardens (supra) at 106-E; Don King Productions Inc v Warren [2000] Ch 291 at 335, paragraph 26 and Barbados Trust generally.

As explained in Gee, Commercial Injunctions, 5^th Edition paragraph 16.014, in Field v Field, the relevant clause prohibited assignment of the husband’s right to call for the lump sum or annuity under his pension scheme, prohibited assignment of benefits to be paid under the scheme, and provided for the consequences if a benefit ceased to be payable. No call could be made by an assignee because, under the clause, the rights were not ‘capable of’ assignment. But the clause did not prevent any transfer of the fruits of any call made by the husband, whether for a lump sum or an annuity, once they came into existence in the hands of the husband. Those proceeds, once received, could be bound by an assignment or an injunction. Further, the clause did not prevent the husband making such a call unless he also expected personally to enjoy the proceeds, and therefore it did not invalidate such a call if it was made by the husband pursuant to a court order. In these circumstances, as Gee points out, the court could have made a mandatory order requiring the husband to make a call for a lump sum and granted an injunction restraining him from dealing with the proceeds when received, pending enforcement of the unsatisfied order against that cash.

Accordingly, on this point, I would not follow the decision in Field or conclude that it in any way prevented me from appointing a receiver in the present case over the Oil Revenues.

It follows that I reject the Defendants’ submissions that the alleged non-assignability of rights under the PSA and the JOA prevents the appointment of a receiver.

The proposed mandatory orders sought in the Receivership Application require CCOG and the CCOG Individual Directors to cooperate with the receiver by:

providing information to the receiver about the whereabouts of the Oil Receivables; and

confirming to third parties that the receiver is entitled to act on CCOG’s behalf in demanding debts due to CCOG from such third parties and in receiving payment of such debts.

Professor Nuyts submitted (in addition to his arguments opposing the appointment of a receiver, and naming the individual directors) that in any event no such orders should be made on the following grounds:

that it was wrong to expose the CCOG Individual Directors to the double jeopardy of, on the one hand, being in contempt of court in England and, on the other hand, potentially being in breach of their duties as directors of CCOG;

that any order that either CCOG or the Individual Directors should provide documents or information about the location of the Oil Receivables or other documents to the receiver cannot be made as a protective measure; that is because Article 31 does not apply to measures for the taking of evidence, which is what in essence such an order is;

the original substantive jurisdiction against the defendants cannot be extended to measures for the taking of evidence that is located in another Member State; that can only be done by means of the Evidence Regulation (No 1206/2001 of 28 May 2001);

an order made with attached penal sanctions for the provision of documents and information would subvert the principles on which the taking of evidence is regulated in the Evidence Regulation;

that, in any event, no such order should be made in the terms sought requiring CCOG to confirm to its third party debtors the receiver’s right to receive payment of the Oil Revenues, and subjecting non-compliance with such an order to the penal sanction of committal, because section 11 of the Administration of Justice Act 1970 (“the 1970 Act”) abolished imprisonment for the non-payment of judgment debts, and such an order is tantamount to requiring a judgment debtor to pay a judgment debt; he also relied upon section 40 of the 1970 Act which makes it an offence for falsely representing that criminal proceedings lie for failure to pay a debt.

Certain of the above submissions were, of course, also relevant to the Affidavit Application and the Accounts and Disclosure Application.

I do not accept Professor Nuyts’ submissions. First of all, it is relevant to point out that the claimant’s evidence, not disputed by the Defendants, is that there do not appear to be any significant assets of CCOG’s or CCIC in any Member State of the EU. It is not known where the choses in action representing the Oil Revenues are situated.

Be that as it may, Article 22(5) of the Regulation does not in any event prevent an English court having jurisdiction in substantive proceedings from ordering a judgment debtor to disclose the existence and location of his assets, even if they be located in another Member State. This is because neither CPR Part 71 (which allows the examination of a judgment debtor), nor ancillary disclosure orders in aid of a freezing order or an order appointing a receiver purport to confer on the English court jurisdiction in relation to enforcement proceedings in another Member State; see Dicey, Morris and Collins op cit at paragraph 11-418. The same is true in relation to enforcement proceedings in a non-Member State.

Secondly, the Evidence Regulation applies where the requesting court wants another Member State court to take evidence, or itself to take evidence directly in another Member State; see recitals (7) and (8) and Article 1. That is not this case. The Evidence Regulation does not apply to the situation where an order is made against a judgment debtor to substantive proceedings over which the court has jurisdiction, requiring the debtor to provide evidence to the English court as to nature and location of his assets. So there is no evasion of the Evidence Regulation. Moreover, there is nothing in the point made by Professor Nuyts that any failure to provide documents or information would have to be enforced in Greece. The only enforcement proceedings that would take place would be the contempt proceedings in England, if and to the extent that the Defendants had assets here or any of the Individual Directors were present within the jurisdiction of the English court.

Nothing in the expert evidence as to Lebanese law, produced by the Defendants after the hearing, suggests that (absent insolvency or impending insolvency) a director of a judgment debtor would be in breach of his duty to that company in procuring it to comply with its obligations under the judgment or other orders of a foreign court that satisfied the requirements necessary for a Lebanese court to recognise the judgment, namely:

the judgment must have been rendered by a competent court according to the laws of the issuing state and not the result of jurisdiction fraud, i.e. forum shopping;

the right of the defendant to defend the claim must have been respected;

the judge must have been issued by a country that give reciprocal recognition to Lebanese judgments without revising them; and

the judgment must not be contrary to public order (Footnote: ¹⁴).

Necessarily, in the circumstances where all avenues of appeal have been exhausted, this court proceeds on the assumption that those conditions are satisfied.

It is difficult, therefore, to see what possible double jeopardy could arise so far as the Individual Directors are concerned, by naming them in the orders to provide documents or information to the receiver, or by confirming to third parties the receiver’s entitlement to receive the Oil Revenues. As I have said previously, the orders are made against CCOG, and only against the Individual Directors insofar as CCOG acts through or by them as its officers. Thus, they are not being asked in their individual capacities to provide documents or information or confirmation to third parties; thus whether they, as directors or shareholders, for example, have personal rights to have access to the company’s documents or information (which is the issue addressed in the expert evidence) is simply not in point; the company clearly has access to its own documents and information, and, as a judgment debtor in substantive proceedings where the English court has jurisdiction, it is obliged to provide relevant information if the court so directs.

Nor do I accept Professor Nuyts’ argument to the effect that any order for co-operation with the receiver requiring CCOG to confirm to its third party debtors the receiver’s right to receive payment of the Oil Revenues, subject to the penal sanction of committal, would be in breach of section 11 of the 1970 Act. Such an order is not equivalent to an order requiring a judgment debtor to pay its judgment debt, let alone is it an order requiring CCOG’s directors to do so. As with a UK director of a UK company in a similar position, CCOG’s directors have the alternative of resignation if they do not wish to be subject to the English court’s orders in their capacity as a director of a judgment debtor. Moreover, as Moore-Bick LJ said in Kensington International Limited v Republic of Congo [2007] EWCA Civ 1128:

Mr. Hoyle argued that the provision sought in the proposed receivership order conferring power on the receiver “to bring … defend, continue or compromise any proceedings or any … action in any jurisdiction as he may think fit, acting in his own name and/or the name of [CCOG], in order to collect, gather in and/or recover the Oil Revenues” went far too wide as it was not subject to any proviso that required the receiver first to obtain the recognition of the foreign court of his appointment and status. He also made the different point that the better course would be to provide that, in each case where the receiver wished to bring proceedings in a foreign jurisdiction, he should first make a specific application to the English court identifying the particular jurisdiction where the funds were located. I agree with the first point to the extent that the order should make it absolutely clear (and the standard revised Babanaft provisos in the proposed order perhaps do not do so adequately in relation to this point) that his power to do so outside this jurisdiction is dependent upon the foreign court’s recognition of his appointment by the English court and his authority to act as receiver, and/or sue in the name of CCOG, or his own name, whether such recognition is effected by order, registration, or any other means, including as a matter of law without formality. I do not agree with the second point. The receiver may need to take proceedings in a foreign court, simultaneously seeking his recognition and relief against third party debtors or Oil Revenues, with some considerable degree of urgency, in the event that Oil Revenues are located. So far as the English court is concerned, I see no reason why, as between CCOG and the claimant, that power should not be conferred now.

Finally, I am satisfied in the exercise of my discretion that it is indeed just and convenient to make an order for the appointment of a receiver in the terms sought in the Receivership Application. I have regard, as directed by CPR Part 69 PD 5, to the amount claimed by the judgment creditor, the likely amount to be obtained by the receiver and the costs of his appointment. This is, in my judgment, indeed a paradigm case for the appointment of a receiver coupled with the type of mandatory in personam orders envisaged in Gee op cit and Adrian Briggs’ article (supra) to require CCOG to:

inform the receiver of the nature and whereabouts of the Oil Revenues;

confirm to CCOG’s third-party debtors under sales contracts that the receiver has authority to receive the Oil Revenues from such debtors; and

generally to co-operate with him.

Unless such orders are made, it will be extremely difficult for the claimant to locate the Oil Revenues and take effective steps in relevant jurisdictions to enforce his judgment against them. Again, no argument was presented to me by the Defendants to the effect that any such order would be futile as being practically incapable of enforcement. On the contrary, there appears to be a real concern on the part of CCOG not to be subject to any such order.

For similar reasons to those given above in relation to the arguments about the provision of disclosure of information in the context of the Receivership Application, I reject Professor Nuyts’ and Mr. Hoyle’s arguments that I should not make an order for the provision by CCOG of an affidavit of means. Nothing in Société Eram suggests that such an order has an in rem effect.

As Mr. Salzedo submitted, the basis of the jurisdiction to make such an order is, in essence, no different from the jurisdiction to make a freezing order. The order for disclosure is, in effect, a provisional measure in support of English proceedings. The incidental nature of this kind of order, and its availability post-judgment, was confirmed by the Court of Appeal in Maclaine Watson v ITC [1989] 1 Ch 286.

The Defendants suggest that, because they have so many assets, it is impractical for them all to be disclosed. However, an order for the listing of all assets (including receivables accruing due) worth at least US$ 100,000, should deal with the issue on practicality. The Defendants’ evidence also seeks to suggest that they would have difficulty in complying with the order because their ownership of certain assets is transitory. So far as concerns certain low-value assets such as the “building materials” mentioned by Mr. Burgan, the limitation to assets worth more than US$ 100,000 should prevent this problem arising. But so far as the concern relates to assets falling above this threshold, the suggestion that the Defendants, as commercial organisations, are somehow unable to keep track of their ownership or otherwise of high-value assets of this nature is simply not credible. Accordingly, I make the order sought.

This application seeks an order for accounts to be taken of the amounts owed by the Defendants to the claimant under the Agreement pursuant to paragraph 1(1) of the order dated 14 March 2007, for the first and second three-month periods of the year 2007, together with disclosure of copies of:

all documents within the control of the Defendants (whether stored electronically or in hard copy) evidencing correspondence between the Defendants (or other companies in the CCC group) and Nexen Marketing Singapore PTE Ltd or Canadian Nexen Petroleum Yemen to the extent that such correspondence relates to revenues from the Masila Concession for the period since 1 January 2007; and

all documents within the control of the Defendants (including Disbursement of Funds notices and/or any such documents as have replaced Disbursement of Funds notices) evidencing the amount of revenues received by CCOG for the period since 1 January 2007 and all documents evidencing the date of actual receipt of such revenues by the Defendants (including the relevant bank statements).

Again I propose to make such an order. The Defendants contend that the account and disclosure sought are excessive and unnecessary, because they assert that the claimant already has sufficient information to calculate his entitlement. However, the evidence served on behalf of Mr. Masri, as set out in the sixth and eighth witness statements of Mr. Bartlett, shows that there are still a number of important gaps in the factual information. In particular, since Nexen Singapore is apparently no longer acting as a broker for the sales of oil, it is important that a transparent picture of actual oil revenues is provided. The Defendants appear not to wish to disclose the direct evidence (i.e. the contemporaneous correspondence and bank statements) recording the amounts of the actual oil revenues received. But the claimant has no way of knowing whether the schedule relied on by the Defendants lists all amounts paid by Nexen to CCOG. The contemporaneous primary documentation would establish the actual position.

The next problem is that the schedule provided to date does not disclose when payments were received by Nexen Singapore. The date of payment is relevant to the interest calculation. Mr. Burgan asserts that the date on which payment for oil sale due is always 30 days from the loading date, but again, I do not see why, in the circumstances of this very hostile litigation, where no sums to date have been paid to the claimant, he should have to accept this in place of, at least limited, available contemporaneous primary documentation in support.

Thirdly, the information provided purports to show the total revenues from oil sales rather than the actual amounts paid to CCOG. No evidence has been provided in regard to deductions. Mr. Burgan’s position is that this benefits the claimant, as he has been credited with gross sums. In my view, however, it is not right that any order for payment in the claimant’s favour should be based on possibly inaccurate information, even if the Defendants assert that this benefits Mr. Masri. The background to this application is the Defendants’ continuing refusal to honour the existing judgments of the English court, and their efforts to resist enforcement in other jurisdictions. In such circumstances, there is a need, in my view, for correct figures to be produced by way of account, together with adequate disclosure of primary source documents.

There is a dispute as to whether the cash calls made on the claimant should, or should not, be taken into account in calculating what is due to Mr. Masri under the Agreement in respect of the first 6 months of 2007. This may depend upon whether proper demands have been made upon him by the Defendants. The issue is one which both sides have agreed should be determined at a future date and in relation to the resolution of which I shall give appropriate case management directions upon the handing down of this judgment.

Mr. Salzedo agreed that, for the purposes of the claimant’s interim payment application, credit should be provisionally given in respect of the cash calls and other contras claimed by the Defendants. On this basis, and without prejudice to both sides’ contentions both as to jurisdiction and generally, the non-disputed amount owing for the purposes of the claimant’s interim payment application was $2,612,715.79. Apart from the above points on quantum, and otherwise reserving their position in all respects, the Defendants did not put forward arguments to suggest that it was not appropriate for an interim order to be made in respect of Mr. Masri’s entitlement in respect of the first six months of 2007. Accordingly I make an order in that amount.

I do not consider that it is appropriate for the claimant to be required to give a cross-undertaking in damages in relation to the Limited Freezing Order, largely for the reasons set out in paragraph 62 of Mr. Morgan’s 10^th witness statement; in particular it is not usual practice to do so post-judgment; see the notes at CPR Part 25.1.27, page 607, particularly here where all relevant avenues of appeal have been exhausted.

However, in my judgment, it is appropriate that the claimant should give such an undertaking in relation to the orders to be made on the Receivership Application, where the relief (if it takes effect) may be extensive and there is the potential, at least, for interference with CCOG’s relationships with its third party customers. I do not require such a cross-undertaking to be fortified by a guarantee or other financial provision, given CCOG’s substantial liabilities as a judgment debtor.

Accordingly I shall make orders in the terms indicated above. The precise wording of the order, if not agreed, can be dealt with at the hand-down of this judgment.