Trafigura Pte Ltd & Anor v Emirates General Petroleum Corporation

MR JUSTICE TEARE: This is an application by the claimants, Trafigura, for orders that the defendants, Emirates General Petroleum Corporation and Mr Al Midfa, are in contempt of court. The claimants have been represented by Mr Bright QC today. Neither the defendant nor Mr Al Midfa has appeared today.

The application is set out in a notice dated 12 October 2010. It firstly seeks permission for the application notice and supporting documentation to be served on the defendant and on Mr Al Midfa by alternative means. That application has been dealt with by Cooke J, who on 14 October made an order in which he gave the claimants permission to serve the application notice and supporting documentation, firstly, on the defendant by alternative means, which he then sets out, secondly, on Mr Midfa out of the jurisdiction at the offices of the defendant in Dubai, and, thirdly, for service on Mr Midfa by alternative means. They are set out.

There is evidence before the court in the form of the first affidavit of Lisa Jane Mason, that the application notice and the supporting documents have been served on the defendant and Mr Al Midfa in one of more of the ways permitted by Cooke J. In particular, the application notice and supporting documents have been served by email to Mr Al Midfa’s email address. That was done on 19 October and also on the same date by airmail. In addition, the application notice and supporting documents were served by fax on 19 October late in the evening and attempts have also been made to deliver the application notice and supporting documents by courier to the defendant’s address in Dubai.

It appears that on 26 October a local law firm in Abu Dhabi known as House of Justice instructed a courier to deliver the application notice and supporting documents to the premises of the defendant. It appears that the courier company did so, obtaining a signature indicating receipt of the documents.

I am told by Mr Bright and accept (though this must be put in an affidavit confirming this matter) that the documents have since been returned by the defendant to House of Justice, thereby indicating that they have been opened and a decision taken to return them to House of Justice. In those circumstances it appears that this application notice has been properly served on the defendant and on Mr Al Midfa.

Notwithstanding that, I must consider whether I am also satisfied that these methods of service have been sufficient to bring this application to the notice of the defendant and Mr Al Midfa. I am satisfied that they have been sufficient for that purpose. The email address of Mr Al Midfa is one which the documents in this case show has been used by him, and, as I have indicated already, the application notice and supporting documents were returned by the defendant to the House of Justice, the Abu Dhabi lawyers. I am therefore satisfied that the court can proceed to hear and determine the application which has been brought.

Returning to the application notice, it seeks an order that, upon the court being satisfied that the defendant has been guilty of contempt in failing to comply with an anti-suit injunction granted by Flaux J on 26 June 2009, and also with a worldwide freezing order granted by Tomlinson J on 11 February 2010, that the claimants have permission to issue a writ of sequestration against the property of the defendant and that Mr Al Midfa, the general manager of the defendant, be committed to Her Majesty’s prison in Pentonville for such period from the date of his apprehension as the court considers appropriate.

The application notice goes on to set out the grounds upon which that order is sought. It identifies with particularity the acts of contempt which are alleged and it identifies the reasons why it is appropriate to make an order for committal against Mr Al Midfa. In particular, it is said that he is an officer of the defendant within the meaning of CPR Schedule 1, RSC order 45.5(i)(iii), also that he was at all material times and continues to be the general manager of the defendant, and, thirdly and importantly, it is said that he has actively participated in the breach by the defendant of the anti-suit injunction and also of the freezing order.

The application is supported by the first affidavit of Paul Antony Skeet, dated 12 October, and also by the affidavit of Lisa Jane Mason, dated 1 November 2010, to which I have already referred.

It is plain that the orders which it is alleged have been breached by the defendant with the active participation of Mr Al Midfa, were, indeed, orders which have been made by this court. On 26 June 2009 Flaux J made a final anti-suit injunction against the defendant. It is entitled Order to Restrain the Prosecution of Foreign Proceedings. It contains a penal notice warning the defendant that if it disobeys the order it may be held to be in contempt of court and fined or its assets seized. It goes on to say that if the defendant disobeys the order, directors and/or officers of the defendant may be held in contempt of court and fined or liable to imprisonment. The order then provides that the defendant is restrained from taking any proceedings in relation to certain contracts, except by way of legal proceedings commenced in the High Court of England and Wales. Paragraph 4 in particular provides, in relation to all the aforesaid disputes, that the defendant must not proceed and an injunction is hereby granted restraining it from proceeding with or taking any steps other than steps to abandon or discontinue the proceedings in any legal proceedings before the courts of the United Arab Emirates.

Provision was then made as to how that order may be served. The order made provision for, amongst other methods of service, email to Mr Al Midfa. The evidence before the court shows that that order was served by one or more of the methods permitted.

The worldwide freezing order was made by Tomlinson J (as he then was) on or about 11 February 2010. It was made following Tomlinson J having given judgment to the claimants of its claims arising out of certain contracts. That order, as all freezing orders do, made provision for the giving of information as to assets by the defendant. The relevant part of the order is paragraphs 7 and 8. They provide for certain evidence to be given as to cargoes within 24 hours and evidence as to worldwide assets exceeding $10,000 in value to be given within 72 hours of service of the order and with an affidavit setting out those two sets of information to be sworn within five working days.

The next question is whether the court is satisfied that those orders have been breached. I have had the assistance, not only of Mr Bright’s oral submissions but of a skeleton argument provided by him in writing. That argument, coupled with the oral submissions and the evidence to which I have referred in the two affidavits, persuades me so that I am sure that there has been a breach of both orders. On 18 February 2010 proceedings were commenced in Abu Dhabi. It is clear from the terms of the document to which I have been referred that those proceedings were in relation to the very contracts which were the subject of the proceedings in this court and the subject of the anti-suit injunction ordered by Flaux J. There is also no doubt that no information as to cargoes or assets has been provided by the defendant contrary to the terms of the freezing order.

I am further satisfied that Mr Al Midfa has been fully aware of the orders which have been made in this court. Indeed, he appeared before Flaux J on behalf of the defendant when Flaux J determined that this court had jurisdiction over the contracts in question. It is also apparent that although the defendant was not represented at the hearing on the merits before Tomlinson J, that Mr Al Midfa was well aware of what was going on because he communicated with the court after the hearing and before judgment. I am also satisfied that he actively participated in the breaches of the orders of this court for the reasons set out in the Application Notice.

So far as the making of a sequestration order is concerned, that is a matter within the discretion of the court. The claimants are unaware of any assets of the defendant within the jurisdiction, and, indeed, Mr Bright has said that I may assume that there are none. In those circumstances I have given consideration as to whether it is appropriate to make a sequestration order as sought. In that regard I have been referred to the case of Hulbert v Cathcart 1896 Appeal Cases, page 470. The head note of that decision reads as follows:

“When application is made for leave to issue a sequestration for non-payment of costs the court or judge should be satisfied that the application is reasonable, but it is not necessary to point to any particular property which may be made available for the payment of the costs by sequestration.”

The matter is considered by Lord Herschell at page 474 of the judgement, in which he said this:

“I think it was intended to enable the debtor to bring before the judge any reason which would satisfy him that the sequestration ought not to issue. One of those reasons undoubtedly would be proof to the judge that the sequestration would be a mere idle and futile proceeding, adding to the costs and securing no advantage to the creditor. No doubt that would be a ground upon which a judge might refuse to issue a sequestration. Or it might be shown that the debtor was about to pay -- had given notice that as soon as certain rents were received payment would be made, or had given security. Numberless other cases might be suggested in which the judge might have refused to issue the sequestration; but I cannot myself agree with the view which seems to have been entertained, that it rests with the creditor who has obtained from the court an order for the payment of his costs to ferret out, first, information as to the means of the debtor, and then to secure proof that, if he gets the sequestration order, the sequestrator will be able practically, by the stringency of the process, to procure for him his costs. I think that puts the issue upon the wrong person. Prima facie, the person who has obtained an order of the court, which has been treated with contempt has a right to the process of the court to secure that its orders shall not be so treated; and it seems to me to rest upon the debtor who alleges that the proceeding would be futile to show to the court that it would be so.”

That guidance seems to be of assistance in the present case and I will follow it. In the particular circumstances of this case, although it is not known that there are assets within the jurisdiction assets may come into the jurisdiction in the future. It seems just and convenient that in circumstances where there has been a clear breach of two orders of the court that leave to issue a writ of sequestration should be given.

So far as the application is made for seeking committal of Mr Al Midfa is concerned, I have already stated that it has been established on the evidence so that I am sure that Mr Al Midfa has actively participated in the breaches of the injunctions by the defendant. He was clearly aware of those orders and must have been aware of the breaches of those orders by the defendant. He has taken a leading role in representing the defendant in some parts, at any rate, of these proceedings. It therefore seems just and convenient and indeed necessary that an order for committal be made.

I have to determine the period of any such committal. The maximum sentence is two years. In this case there have been two breaches of orders of this court: firstly, the anti-suit injunction, and, secondly, the worldwide freezing orders. Those orders are made to assist in justly determining claims brought before this court by claimants. It is necessary that they be obeyed in order that justice can properly be administered. The consequences of the breaches in this case, particularly the breaches of the freezing order, are to frustrate the attempts by the claimants to enforce the orders of the court. The sums for which the claimants have obtained judgment are very substantial. Indeed, the judgment amount is of the order of USD 90 million.

In those circumstances, I consider the appropriate period of committal is 12 months in respect of each injunction which has been broken. Those sentences, will, of course, be concurrent.

I will summarily assess the costs of this application, having considered the statement of costs provided to me in the sum of £50,000.