Masri v Consolidated Contractors International Co Sal & Ors

Listed before me on 13 June 2011, with three days set aside, were several interlocutory applications, by which six of the seven Defendants sought to challenge the jurisdiction of the Court and/or to set aside service in these proceedings, brought against them for damages for conspiracy and unlawful interference with contract, by the Claimant Mr Masri (“the Conspiracy Action”). By agreement between the parties, I dealt first with the applications by the Third, Fourth, Fifth and Seventh Defendants, who were seeking orders that the Commercial Court should decline jurisdiction or stay proceedings pursuant to Articles 27 and/or 28 of the Judgments Regulation (Council Regulation (EC) No 44/2001 of 22 December 2000). It was suggested to me (by reference to a passage in European Civil Practice (2^nd Ed, 2004) by Mr Alexander Layton QC and Mr Hugh Mercer), that, if necessary, and if persuaded by the Defendants who were making such applications, I could, not only under Article 27 but also under Article 28, exercise such jurisdiction of my own motion in favour of the other Defendants. However, rather than resolve such interesting question I allowed, and Mr Gavin Kealey QC (leading Mr Colin West) for the Claimant did not resist, an application by the First and Second Defendants, and by the Sixth Defendant, to serve their own similar applications short, so that Article 27/28 applications by all Defendants were in the event in front of me.

The jurisdiction, in whose favour the English court was said to be required to decline or stay its jurisdiction, was that of the Greek courts, where there was, at the date of commencement of these proceedings, as is common ground, a pending action (“the Greek Action”). The Third to Seventh Defendants have, as I understand it, already served Defences in the Greek Action (that of the Seventh Defendant was before me) and thereby, they asserted, have plainly submitted to the jurisdiction of the Greek court, but they, for the avoidance of doubt, and in any event the First and Second Defendants, who are not parties to the Greek Action, have, through Counsel, in each case given undertakings to this Court that, if they have not already done so, they do and will now submit to the jurisdiction of the Greek court, both in respect of the Greek Action as presently constituted, and, if the result of this application is that these proceedings are recommenced in Greece by the Claimant and consolidated with the Greek Action, then in respect of such consolidated proceedings.

In the event, the argument in respect of the Articles 27 and 28 applications took up not only the three days set aside, but a fourth; and by the third day it was apparent to all that the other outstanding applications, save for a severable part of one such application (relating to non-disclosure by the Claimant of the Greek Action when permission to serve these proceedings out of the jurisdiction on the First, Second and Seventh Defendants was obtained ex parte from Field J on 22 September 2010), which could sensibly be taken together with the Article 27/28 applications, should, by agreement of all parties, be adjourned over to be dealt with, if appropriate, in the light of the outcome of this hearing before me.

Articles 27 and 28 of the Judgments Regulation replaced Articles 21 and 22 of the Brussels Convention, and it is common ground that the jurisprudence with regard to the latter continues to apply to the former. Article 27 reads as follows:

“Article 27

1.

Where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established.

2.

Where the jurisdiction of the court first seised is established, any court other than the court first seised shall decline jurisdiction in favour of that court.”

Article 28 reads as follows:

“Article 28

1.

Where related actions are pending in the courts of different Member States, any court other than the court first seised may stay its proceedings.

2.

Where these actions are pending at first instance, any court other than the court first seised may also, on the application of one of the parties, decline jurisdiction if the court first seised has jurisdiction over the actions in question and its law permits the consolidation thereof.

3.

For the purposes of this Article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.”

A point was raised by the Claimant’s Greek law expert Professor Yessiou-Faltsi, by reference to the official Greek report made upon the accession of Greece to the Brussels Convention (the “Evrigenis/Kerameus Report” ([1986] OJ C298/1)), that it is necessary to show, before Article 28(2) can apply, that the law of the court first seised permits consolidation between proceedings in different jurisdictions, or at any rate in different courts. But this was not pursued by Mr Kealey as a matter of substantive argument, and it certainly seems to me that it is not required by the wording of Article 28(2) above, and has never arisen as a point in English authorities where Article 28 has been applied and consolidation considered (eg Sarrio SA v Kuwait Investment Authority [1996] 1 Lloyd’s Law Rep 650 per Mance J at first instance at 663, and in the House of Lords [1999] 1 AC 32 per Lord Saville at 42, to which Mr Kealey himself drew attention) or in Scotland (Jacobs & Turner Ltd v Celsius SARL [2007] SLT 722 at paras 16, 78). I am satisfied that the question to be asked for the purposes of Article 28(2) is simply whether, if jurisdiction were declined by the court second seised, the proceedings could be recommenced in the court first seised and consolidated with the prior action. There is no doubt in this case that such consolidation could be available in Greece.

What might be called the Masri Jurisprudence could, by reference to hearings in courts in this jurisdiction alone, almost fill an entire textbook, and indeed has given rise to a number of significant legal decisions of interest to the legal profession. There are, in the papers before me, more than fifty orders or judgments of the courts of England and Wales, ranging from the Queen’s Bench Division and Commercial Court through to the Court of Appeal, and on more than one occasion in the House of Lords, all stemming from the steps taken by the Claimant which led to judgment in his favour against the First and Second Defendants (though not against the Third and Seventh), and the steps taken thereafter by the Claimant (for this purpose I leave out of account the numerous proceedings in other jurisdictions than England and Wales) to seek to recover the sums of more than $75m owing and unpaid to the Claimant pursuant to that judgment.

The Claimant brought two actions in 2004, one in February and one in October, which were subsequently consolidated (“the Original Action”), against what are now the First, Second, Third and Seventh Defendants, and another company Consolidated Contractors International (UK) Ltd (“CCUK”) arising out of his claim that he was entitled to a share of the profits from an oil field in Yemen (the Masila Concession) pursuant to a written contract entered into on 6 November 1992 (“the 1992 Agreement”) between him and the Third Defendant. Jurisdiction for the Original Action was founded in the English court by reference to the ‘necessary or proper party’ gateway (or its EU equivalent), the ‘anchor Defendant’ being CCUK, a company admittedly resident in England, it being at that stage accepted that all the other Defendants to the Original Action were not otherwise amenable to the jurisdiction of England and Wales, the Third Defendant being resident in Greece and the First, Second and Seventh Defendants all being companies incorporated in the Lebanon and based either in the Lebanon or in Greece. In the event, when Gloster J gave judgment for the Claimant on 28 July 2006, she found that the case failed against CCUK, the anchor defendant: much has been made by the Defendants of the fact that the Claimant’s case thus failed against the anchor defendant whose joinder had thus founded such jurisdiction against the other defendants.

Gloster J said as follows, at paragraphs 72-3:

“72.

In my judgment the suggestion that Mr Khoury was contracting on behalf of CCUK, an English company with a limited role within CCC, merely because its writing paper was used for the purpose of setting out the terms of the 1992 Agreement, has an air of total unreality about it. … Not only was Mr Masri aware that the entity that held the legal interest in the Concession was CCIC and that it was the contracting party under the PSA, but he had never suggested at any time, prior to serving his proceedings in June 2004, that CCUK, the English company, was in any way involved or liable to him. Nor is there any basis for suggesting that Mr Khoury, in his personal, individual, capacity was a party to the 1992 Agreement. He clearly contracted as an officer, and on behalf of, the relevant CCC entities and there is no reason to suppose that he was assuming any personal liability thereunder.

73.

In my judgment, the correct analysis, given the facts which I have set out above, was that Mr Khoury, as the controlling shareholder in the CCC group, with Mr Sabbagh’s blessing, had the necessary actual authority to enter into the 1992 Agreement on behalf of whichever one or more company, or companies, within the CCC group was the appropriate corporate entity to agree to grant Mr Masri an interest in the Concession.”

These companies were, she found, the First Defendant (“CCIC”) and the Second Defendant (“CCOG”), against whom alone she gave judgment, dismissing the case against the other defendants. As I have set out above, at least $75m remains due and unpaid, notwithstanding worldwide execution proceedings; none of the judgment debt has been paid, but only some of the costs orders.

This lamentable state of affairs, so far as a successful judgment creditor before the English courts is concerned, has been brought about, according to the Claimant, by what has been described before me as an “Anti-Enforcement Strategy”, and has formed the subject matter of the Conspiracy Action, now before me. In the Particulars of Claim such Anti-Enforcement Strategy is characterised as an unlawful conspiracy between the seven Defendants: CCIC and CCOG (the Judgment Debtors), the Third Defendant (SK) (the Head of the Khoury family, which, together with another family, the Sabbagh family - in the proportions 60:40 as between the families - owns and controls (through their ownership (in that proportion) of CC Holdings, referred to below) the Consolidated Contractors Company Group (“CCC”), of which SK is ‘President’), the Fourth, Fifth and Sixth Defendants, SK’s sons (“TK, SSK and WK”) and the Seventh Defendant (“CC Holdings”), which owns more than 99.9% of CCIC and CCOG, and which is owned 60:40 by the Khoury and Sabbagh families as referred to above.

The conspiracy/strategy is summarised in the Particulars of Claim as follows:

“48.

As the conspiracy developed, the goal of the Conspiracy has been achieved, pursuant to the combination of the Defendants, through the following unlawful means:

(A)

Breach of the Quantum Orders by the non-payment of the sums due to Masri thereunder.

(B)

Breach of the 1992 Agreement and the Specific Performance Order by the non-payment of the sums due to Masri thereunder.

(C)

Breach of the Concession Information Order by failing to provide the Concession Information to Masri in respect of any quarter following the making of the Concession Information Order.

(D)

Disposing of the assets of the Judgment Debtors for the purpose of defrauding the Judgment Debtors’ creditors and in particular for the purpose of putting assets out of the reach of Masri contrary to section 423 of the Insolvency Act 1986.

(E)

Further breaches of the Orders of the court, including the Affidavits of Assets Orders Nos 1 and No 2 and the CCIC and CCOG Receivership Orders, designed to keep Masri out of the sums due to him and/or to frustrate his attempts at enforcement of the Quantum Orders.

49.

In entering into the Conspiracy it was the predominant purpose of the Defendants to cause Masri loss and damage, namely to deny Masri the sums to which he was entitled under the 1992 Agreement and the Quantum Orders, alternatively, this was the intention of the Defendants (or each of them). This is to be inferred inter alia from the facts that:

…

(D)

The CC Group, directed by the Khoury Defendants and CC Holding, has … undertaken a wide-ranging and expensive anti-enforcement strategy in order to evade payment to Masri of the sums properly due to him. Mr Justice Tomlinson found in a judgment of 21 October 2008 reported at [2008] EWHC 2492 (Comm) that the Judgment Debtors “will put every obstacle in the way of Masri in his efforts to enforce the judgment in whatever jurisdiction those efforts may be made” (at paragraph 5).

…

63.

As to the diversion of business, contrary to the previous practice of the CCC Group, no significant new projects have been conducted through CCOG since at least the date of the Liability Judgment.

64.

The Defendants have restricted and diverted the oil and gas business of the CC Group and CCOG towards new companies CC Energy and CC Energy Development within the S & K Group …

…

66.

The Defendants have restructured the main construction business of the CCC Group and CCIC by replacing CCIC with a new company CCC Group Offshore.

(A)

Following its incorporation on 8 August 2007, CCC Offshore has been used as a vehicle to conduct the business of the CCC Group that previously was or would have been conducted by CCIC.

(B)

CCC Offshore operates out of the same offices as were previously occupied by CCIC at 62B Kifissias Avenue, Athens and the majority of CCIC’s employees have been transferred to CCC Group Offshore.

…

69.

In this respect, there have been numerous changes to the de jure directors of CCIC and CCOG since the liability trial in March 2006 directed at shielding the Khoury Defendants from personal liability for contempt of court by the companies and shielding them from orders requiring the provision of information under CPR Part 71. In particular:

(A)

Despite the fact that the Khourys and Sabbaghs had been directors of CCIC since the company’s incorporation (for 24 consecutive years), on 14 January 2008, a board meeting was held at which CC Holding, [SK], [TK] and Samir Sabbagh resigned as registered directors. They were replaced as registered directors on 18 January 2008 by Souheil Nasser, Fadi Homsi and Tarek Estaytieh whose names were recorded at the Lebanese company registry and who each acquired nominal shareholdings.

…

(G)

On 8 or 12 December 2008, the replacement directors of CCIC and CCOG … all resigned and applied to the Lebanese Court for the appointment of “judicial administrators” to fill the vacancy left by their resignation. The application was supported by the shareholders of CCIC and CCOG, being CC Holding. The appointment was described (in the Lebanese court’s order dated 20 December 2008) as being aimed “primarily at electing a new Board of Directors” and three judicial administrators were appointed, Mr Sakhour, Dr Jihad Al-Hajjar and Mr Edgard Joujou. However, no new board of directors has been appointed by the judicial administrators as at the date of this statement of case.

70.

The above steps must have been undertaken with the agreement of and/or at the direction of the Khoury Defendants. They have not reflected any actual changes in the management and control of the companies’ affairs, which remain controlled by the Khoury Defendants directly and/or through the corporate vehicles of CC Holding, CCIC and CCOG irrespective of the identity of the de jure directors of the relevant companies at any particular time.

71.

Such transactions and the restructuring of the CCC Group’s oil and gas business away from CCOG and of its construction business away from CCIC formed part of the Conspiracy and could only have been made with the agreement of the Defendants and/or each of them.”

In a recent judgment by Gloster J on 3 March 2011 when she refused an application by the Judicial Administrators referred to in paragraph 69(G) quoted above to discharge a receivership order which had been made against CCOG on 1 December 2010, she said as follows:

“71.

The recent history of the Judgment Debtors’ and their shareholders' deliberate attempts to obtain orders of the Lebanese Court blocking the Judgment Debtors from paying the judgment debts to the Judgment Creditor, the subsequent wholesale resignations of CCOG's and CCIC's directors and those directors' application (not opposed by the shareholders) for the appointment by the Lebanese Court of Judicial Administrators, and the refusal of any shareholders to constitute quorate shareholders' meetings of CCOG and CCIC, leads to the drawing of only one inference. That inference is that the application to the Lebanese Court for the appointment of the Judicial Administrators, so that the management of the Judgment Debtors could be carried out by the Judicial Administrators, and the refusal of the shareholders to participate in shareholders' meetings so as to re-elect directors, is the implementation of a deliberate strategy on the part of the Judgment Debtors and their shareholders, designed to frustrate any attempt by the Judgment Creditor to enforce the judgment debt and to render the Judgment Debtors effectively judgment-proof in any jurisdiction.”

Against this background it is not surprising that, in addition to numerous attempts by and on behalf of the Claimant to enforce the judgment in Lebanon, Greece, Bermuda (with a pending appeal to the Privy Council from the Bermuda Court of Appeal by CCIC), the Cayman Islands, Switzerland, Nigeria, Palestine and Qatar, the Claimant or his advisers conceived what has been called before me the “anti-Anti-Enforcement Strategy”. This has three strands, which I shall first summarise and then describe in more detail:

Subject to what I say hereafter in respect of the parties’ respective cases with regard to the content of the Greek Action, the Claimant’s claim is, on the face of his Claim Form, based upon Article 10 of the Greek Civil Code and Article 22 of the Greek Law of Commerce. The claim is that, albeit that CCIC is a foreign company (registered in Lebanon), it has in fact its seat in Greece, so that, according to Greek law, the company should have complied with various registration formalities, and has not, such that those who have carried on its business must be treated as partners or quasi-partners and are responsible for its debts, and in particular for the judgment debt owed to the Claimant. So far as the individual defendants in the Greek Action are concerned, CC Holdings, as set out above, is the owner of almost 100% of the shares. SK, TK, SSK and the two Sabbagh sons are, and have at all material times been, directors of CC Holdings. Until their resignation on 14 January 2008, CC Holdings, SK, TK and one or other of the two Sabbagh sons were directors of CCIC - and held a very small shareholding in CCIC, it being a requirement of Lebanese law that directors of a company must hold at least one share in that company. WK was not a director or shareholder of CCIC, but held, and still holds, the title of ‘Executive Vice-President of Strategic Development’ of CCC, alongside TK and SK, who are also Executive Vice-Presidents. The case in the Greek Action is that all those defendants are personally liable pursuant to Articles 10 and 22 for CCIC’s unpaid judgment debt. The material paragraphs setting out, or particularising, what is described (in the official translation) as “A4 The overall and uninterrupted control of CCIC by the rest of the defendants” reads in material part as follows:

“9.

Founding partners and first members of the purported [Board of Directors] of CCIC were [CC Holdings] and Hassib Sabbagh. As already stated, CCIC has been constantly to date subject to the direct and full capital and operational control of [SK], as well as of his [direct descendants … TK, SSK and WK] who gradually participated in the share capital as well as the management of its affairs …

…

11.

… the administration of [CCIC’s] affairs was based and is still actually based on the “family values” between the members of the two families, Khoury and Sabbagh … This is the reason why the shareholdings as well as the management of all CCC companies always essentially remain with the two families …

12.

At this point it is worth mentioning that for reasons which are related to my dispute with CCIC before the UK courts … the [Board of Directors] of [CCIC] seems to have been reformed in January 2008 after the replacement of the above mentioned defendants with three nominee directors … With the purpose of impeding the satisfaction of my claims, the herein defendants ostensibly attempted to appoint by a court order judicial administrators for the company CCIC at the end of 2008. Not only the election of the above mentioned nominee persons in the CCIC’s [Board of Directors] but also the following attempted appointment of a judicial administrator by court order could not by any means conceal or cover overall, exclusive, continuous, capital and managerial control exercised by the defendants over the said company, as already mentioned herein above.”

There then follows, in the next section, “A5. The real seat of CCIC in Greece under the shell of the establishment of “an office””, a case that the defendants in fact carried on the business of CCIC in Greece. The conclusions are said to be:

“42.

Whereas CCIC is purportedly incorporated under the laws of Lebanon, as a societe anonym commercial company (Societe Anonyme Lebanese – SAL), with statutory seat in Beirut of Lebanon. In reality however, it is a pseudo-foreign company since its seat has operated in Greece since the commencement of its commercial activities, as was set out in detail in the chapter titled “Factual Background” of the present action, without the formalities of Law 2190/1920 for the incorporation, approval and publicity of the Societe Anonyme, which is absolutely identical to SAL company incorporated under the laws of Lebanon, having been complied with.

43.

Whereas CCIC has exercised and continues to exercise commercial activities by undertaking the execution of any kind of technical projects/work, namely its aim is the exercise of objectively commercial activities under a corporate name and for that reason it has operated and continues to operate as a de facto (personal-commercial) partnership with separate legal personality.

44.

Whereas all the defendants hereby have been at the time of creation and of the judicial recognition and adjudication of the debts of CCIC vis-à-vis me arising from the Agreement of 1992 and continue to be until today, according to what has been mentioned in detail for each one of them in the factual background of the present (par. 9-12), founders, partners, administrators formally and substantially of CCIC affairs, beneficial owners of the proceeds, assets and wealth generating from the commercial activity of CCIC, and are – therefore – personally, unlimitedly, jointly and severally liable under article 22 CC, for the irrevocably recognised and adjudicated by the UK Courts, debts of CCIC against me.”

The nature of the conspiracy is adequately described by my citation from the Particulars of Claim in paragraph 11 above. The role of the individual Defendants is summarised in paragraph 13 of the Particulars of Claim:

“The Khoury Defendants are responsible for any and all important or high level decisions made in respect of the CCC Group. The Khoury Defendants and each of them are the senior figures within the CCC Group and each exercises the highest levels of general authority to bind companies in the CCC Group, including CCIC and CCOG, and to make (individually and collectively) key strategic decisions irrespective of the individuals formally appointed as de jure directors or managers from time to time.”

The outstanding contempt application depends upon whether the Claimant can establish that WK is, as it is put in paragraph 254 of the third affidavit of Mr Andrew Bartlett of the Claimant’s solicitors, “one of a small group of individuals continuing to exercise ultimate control over the CCC Group including the Judgment Debtors and, in particular, significant decisions relating to the Judgment Debtors’ anti-enforcement strategy in this litigation.” This includes the assertion (at paragraph 254(G)) that “the resignation of the Khoury and Sabbagh family members and their replacement by low-ranking employees based in Beirut had no discernible impact in the judgment debtors’ anti-enforcement strategy; neither did their replacement by the appointment of a judicial administrator”. Mr Shuttleworth, WK’s solicitor, summarises his client’s case by reference to what is described as an undisputed fact of “fundamental importance”, being that WK had never been a member of the Board of Directors of CC Holdings as follows, at paragraph 24 of his affidavit of 9 July 2010:

“… It is the Board of Directors of CC Holding which exercises ultimate authority on all significant business decisions in respect of all CCC Group activities, including (before Judicial Administration) those of CCIC and CCOG. Since WK is not and has never been a member of the CC Holding Board, he is not and was never in a position to make any significant business decision at all. All such decisions had to be referred to the CC Holding Board of Directors.”

In WK’s own affidavit of 22 November 2010, he states (at paragraph 7) that the “activities and interests and the finances of the CCC Group generally have always been managed and administered from outside London, principally in Athens”, and he describes how, whereas (paragraph 57) he had always lived and worked in London, the “Head offices of the CCC Group … are located in Athens … from where the management functions are based. Around 400 personnel are based at these head offices. This includes my father, my two older brothers and other senior members of the management team of the CCC Group” (paragraph 13).

If Article 27 applies, a stay by the court second seised in favour of the court first seised is mandatory, and if the jurisdiction of the court first seised is established (which in this case it would be, if not prior to this hearing certainly now, with the undertakings given by the Defendants to which I referred in paragraph 2 above) then the court second seised must decline jurisdiction, i.e. a dismissal of the proceedings (I bridle at the use of the word “declinature”). If Article 28 applies, then a stay or (if consolidation be possible, as here) a dismissal is discretionary. Article 28(3) spells out what underlies, or at any rate triggers, the availability of such discretionary order, namely the avoidance of the risk of irreconcilable judgments resulting from separate proceedings. But this plainly also underlies the mandatory provisions of Article 27. It seems to me clear that the intention of the “Lis pendens-related actions” Chapter II Section 9 of the Judgments Regulation is to prevent conflicting judgments in different jurisdictions, and it is common ground that this can be achieved (in some cases must be achieved) by reference to two underlying presumptions:

There are some significant and unusual factors here:

There are the following five undisputed premises, or givens, against which my decision must be reached:

Does Article 27 apply as between the Greek Action and the Conspiracy Action? By reference to the European authorities, and in particular Gubisch Maschinenfabrik GmbH v Palumbo [1987] ECR 4861, Overseas Union Insurance Ltd v New Hampshire Insurance Co [1991] ECR 1-3317 and, especially, The Tatry [1994] ECR 1-5439, the principles have emerged. Before the mandatory operation of Article 27 as between “proceedings involving the same cause of action and between the same parties … brought in the courts of different member states”, there must be consideration of the following:

Although each of these three aspects must be separately considered, there are statements (Overseas Union at paragraph 16 of the judgment of the court and Erich Gasser GmbH v MISAT Srl [2003] ECR 1-14693 at paragraph 41), that “in the interests of the proper administration of justice within the community, to prevent parallel proceedings before the courts of different contracting states and to avoid conflicts between decisions which might result there from”, Article 27 must be interpreted broadly: see also Football Dataco Ltd v Sport Radar GmbH [2011] EWCA Civ 330 per Jacob LJ at paragraphs 32-37, where encouragement was given to look for the “heart” of the actions being compared. On the other hand Rix LJ, in Glencore International AG v Shell International Trading and Shipping Co Ltd [1999] 2 Lloyd’s Law Rep 692 at 697 and in Stribog Ltd v FKI Engineering Ltd [2011] EWCA Civ 622 at 87, pointed out the availability of Article 28 with its “more flexible discretionary power to stay in the case of related proceedings”, which indicated that there was no need to “strain to fit a case” into Article 27.

As I have set out in paragraph 20(ii) above, the only two examples of a single claimant scenario from which assistance could be drawn were Sarrio and Haji-Ioannou. In the first case, after consideration at first instance, in the Court of Appeal and in the House of Lords, the conclusion was that (per Mance J at 657) although “the evidential enquiry will focus on the relationship between the KIA and its subsidiaries with specific reference to the negotiation and agreement of the sale to Sarrio” in both actions, “still there is in my judgment an important difference between the basis of the two sets of proceedings”, one, in England, relating to alleged misrepresentation inducing Sarrio to enter into a sale to GT, with the loss claimed being by reference to the value of the assets with which Sarrio parted, and the other, in Spain, alleging that KIA were liable, by lifting of the corporate veil, for the sums unpaid by GT. Rix LJ explained concisely in Glencore at 696 why it was concluded in Sarrio that neither the cause of action nor the object were the same:

“… The cause was not the same because the basis of the liability in the Spanish action depended on the relationship between Torraspapel/Grupo Torras and KIA, whereas in the English action it depended on the communications and relationship between KIA and Sarrio. The objet was not the same because in the Spanish action the claim was in contract for the amount unpaid under the put option, whereas in the English action the claim was in tort for the loss suffered by entering into the contract.”

In Haji-Ioannou the claimant was seeking to recover, in England and in Greece, reparation for an alleged embezzlement by the claimant’s son-in-law. In the English court this was being done by a tracing claim into assets in the name of the defendant, by reference to the missing $49m. In the Greek court there were criminal proceedings for embezzlement, to which a civil claim was attached for 15,000 drachmas for moral damages. The Court of Appeal, per Lord Bingham CJ, concluded, at 351, that “the same facts and rule of law form the basis of each proceedings … although in England the plaintiffs are asserting that the same underlying agreement gave rise to different legal consequences from which different obligations and, therefore, different legal remedies flowed, the cause would appear to be the same in both countries”. He continued:

“Article [27] does not, however, apply, because the object of the proceedings is not the same. In Greece the civil claim is a claim for the recovery of money. In England the end the proceedings have in view is not the simple recovery of money, but in large part the tracing of that money into the assets which were acquired with it, and the claim to a beneficial interest in those assets, based on allegations of breach of duty of fidelity. This is a different object within the meaning of Article [27].”

Mr Schaff, with whom Mr Popplewell and Mr Walford associate themselves, invites me to compare the Greek Action and the Conspiracy Action for the purpose of Article 27, it being conceded and plain that, of the two, the Greek court was first seised. Interpreting Article 27 broadly, in accordance with the guidance of the European Court, he submits that the requirements are satisfied:

I am satisfied, insofar as the Defendants invite me to apply Article 27 to the Greek Action as ‘first seised’ and the Conspiracy Action as ‘second seised’, that the two are not “proceedings involving the same cause of action”, applying the European principles broadly, but nevertheless paying attention, as Rix LJ would in any event guide us to do, to the necessary distinction from, and availability of the concept of “related actions” in Article 28.

The factual enquiry in the Greek Action will relate, leaving aside the probably uncontroversial aspect as to whether the Lebanese company CCIC did indeed comply with Greek registration requirements, to whether CCIC had its real seat in Greece, and if so, which of the Defendants, by virtue of their role in the family and in the CCC Group, had a sufficiently material role in the establishment and control of CCIC to qualify for the concept of de facto partners for the purposes of Article 22, as described in paragraph 5.11(d) of Professor Polyzogopoulos’s Report.

The rule of law relied upon, in my judgment, is however materially different in the two actions. In the Greek Action it is sought to make the defendants personally liable for the debts of CCIC (in particular for the judgment debt). In the Conspiracy Action it is sought to establish that the defendants are parties to a conspiracy whose purpose was to cause loss to the Claimant, including taking every possible step to deprive the Claimant of the opportunity to recover any part of the judgment debt. Whereas in paragraph 47 of The Tatry it is made clear that “the distinction drawn by the law of a Contracting State between an action in personam and an action in rem is not material” for the interpretation of Article 27, such that the mere distinction between a claim in debt and a claim for damages will not be sufficient, I am not persuaded that a claim to render defendants personally liable for the debts of a company because it has failed to comply with its registration requirements constitutes reliance upon the same rule of law as one which asserts that they have become parties to an international conspiracy.

As for whether there is the same object, this does not arise for consideration if I am right that there is not the same cause of action. However, there is very close similarity on this aspect with the decision of the Court of Appeal in Haji-Ioannou, and in particular I do not see how I can distinguish the conclusion of Lord Bingham, set out in paragraph 25 above. In both actions in that case the object could be said to have been to make recovery in respect of the loss suffered by the claimant as a result of his son-in-law’s embezzlement, but there is a careful distinction between the object or purpose of the two actions, as there set out as between tracing and compensation. In this case there is an analogous difference in object, upon Lord Bingham’s analysis, and the Court of Appeal in that case obviously did not accept the proposition of an ‘overriding’ object or purpose on the part of the Claimant. In any event some guidance can also be drawn from Sarrio. In that case, the Spanish proceedings had the object and/or were based upon the cause of action, or rule of law, of rendering KIA the alter ego of the other contracting party, while the English Action aimed at recovery of loss. In this case, the aim of the Greek Action, albeit through the route of corporate obligations (not dissimilar to the old English cases where trading had been done without the use of the word “limited”), is to cause the principals of the company to be personally liable for the company’s debts while the Conspiracy Action seeks the recovery of loss caused by unlawful acts.

I am satisfied, for all the above reasons, that Article 27 does not apply.

Mr Kealey however did not restrict himself to the submission made in his skeleton argument in opposition to the arguments of the Defendants, which I have accepted as above. In the course of the oral hearing before me, he developed a new argument, namely that neither Article 27 nor Article 28 applies at all, because the comparison here is not, or not simply, between the Greek Action and the Conspiracy Action: but he relies on the fact that there are actually three actions presently pending, the Original Action, as continued by the various forms of execution, but more significantly as now reactivated by the contempt motion, which he characterises as the ‘first seised’ action, the Greek Action (brought, as he submitted, and I have found, on the basis of the exclusive jurisdiction of the Greek courts in accordance with Article 22), which thus falls to be regarded as ‘second seised’ and the Conspiracy Action which thus becomes ‘third seised’. He submits that Article 27, but particularly Article 28, must be considered in that context, and that there is nothing to restrict their application to a comparison between two pending proceedings, albeit that might well be the norm (and indeed no Counsel has been able to draw to my attention any authority where there have been more than two pending proceedings being considered). He has no inhibition in asserting that the Original Action is, of the three, ‘first seised’, because that can have no impact on the Greek Action (which, of course, in any event, no-one has sought to stay) because the Greek Action could not be prevented, since it is protected by Article 22, as set out above. Thus his case is that, of the three sets of proceedings, the Greek Action is not the ‘first seised’, and cannot be used as the foundation for an Article 27 or 28 argument to be mounted in respect of the Conspiracy Action by reference to the Greek Action.

This is obviously a novel argument, and seems to me to have arisen in part because of the fact that the Defendants were asserting the closeness of the relation between the Conspiracy Action and the pending contempt application, for the purposes of their arguments on the applications which have in the event been adjourned (see paragraph 3 above), in particular by reference to whether WK or CCOG can be used as an anchor defendant.

As referred to in paragraphs 17 and 18 above, much of the evidence in the contempt application is now going to involve consideration of who runs the CCC Group, and from where it is run, in order to consider how far WK, based in London, can be said to have been responsible for the ten breaches of court orders by the Judgment Debtors found by Christopher Clarke J. Mr Kealey submits that the question of authority, in the sense of who was responsible for what within the Group, was already an issue in the Original Action, where the question of SK’s authority to act on behalf of the various companies at the time of the 1992 Agreement was in issue (see paragraphs 7 to 9 above). However, it seems to me plain that that would not begin to be sufficient of itself to make the Original Action a related action for the purposes of Article 28 to either the Greek Action or the Conspiracy Action.

However, it may be said that the launching of the contempt applications within the Original Action is of more significance. As set out in paragraph 13 above, the launch of the contempt application was the third step in time in the anti-Anti-Enforcement Strategy, and therefore that application of itself, using Mr Kealey’s approach, would not be ‘first seised’; but given that it arose in the Original Action, that could now be said, insofar as the content of the contempt application is related, to render the Original Action retrospectively a related action. This is where the recent decision of the Court of Appeal in Stribog would come into play, where the Court concluded, reversing my decision at first instance ([2010] 2 Lloyd’s Law Rep 524) that the question of relatedness fell to be considered at the time of the Article 27/28 application (although a proviso was entered by Rix LJ at paras 115 and 128 as to the effect of the plea of “an entirely new cause of action”).

I do not accept Mr Kealey’s new case to the extent upon which he seeks to rely on it:

I accordingly reject Mr Kealey’s submission that Articles 27 and/or 28 do not apply – although I had already concluded, in paragraph 31 above, that Article 27 does not apply. However, what Mr Kealey’s unsuccessful submissions do highlight, and what, on any basis, I accept, is that, in the exercise of the discretion which Article 28 gives to the court ‘second seised’, the existence of the earlier English action is a factor to be considered in weighing whether or not to grant a stay in favour of the Greek court with regard to the second English proceedings.

I turn to consideration of Article 28. Guidance as to the law can again be derived from The Tatry and from Sarrio, particularly in the speech of Lord Saville at 39-42. In addition there is a seminal passage in the opinion of Mr Lenz as Advocate General in Owens Bank Ltd v Bracco [1994] ECR 1-117, at paragraphs 75-76:

“75.

The decision required in the context of Article 22 of the Convention is a discretionary decision. It goes without saying that the circumstances of each individual case are particularly important here. The national courts must bear in mind that the aim of this provision is to ‘prevent parallel proceedings before the courts of different Contracting States and to avoid conflicts between decisions which might arise therefrom’, as the Court stated in its judgment in Overseas Union Insurance. It would therefore be appropriate in case of doubt for a national court to decide to stay its proceedings under Article 22. [Emphasis in original.]

76.

Furthermore, there are three factors which may be relevant to the exercise of the discretion vested in national courts by virtue of Article 22, but this does not mean that other considerations may not also be important:

- the extent of the relatedness and the risk of mutually irreconcilable decisions;

- the stage reached in each set of proceedings; and

- the proximity of the courts to the subject-matter of the case.”

It was common ground between Counsel before me both that the factors listed by the Advocate General are, as he makes clear in paragraph 76, non-exclusive, and that the third of his bullet points can, on the facts of this case, be properly characterised as “Englishness”.

The issues for me to consider appear to be:

With regard to the first question, it is clear from The Tatry that what is required to be considered (see paragraph 58 of the judgment) is whether “separate trial and judgment would involve the risk of conflicting decisions, without necessarily involving the risk of giving rise to mutually exclusive legal consequences”. In Dicey, Morris and Collins on the Conflict of Laws (14 Ed) Vol I, 12-064 it is succinctly stated that “actions are “related” for the purposes of … Article 28 … if they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings”, but (at 12-065) a stay of proceedings “will presumably be in the situation where judgment in the action of the court first seised appears in the eyes of the court seised second to be likely to render res judicata issues raised for determination by it, and therefore a stay should be imposed until the court seised first gives judgment.” Helpful guidance is given by Lord Saville in Sarrio at 41F:

“41.

… I am of the view that there should be a broad commonsense approach to the question whether the actions in question are related, bearing in mind the objective of the article, applying the simple wide test set out in article 22 and refraining from an over-sophisticated analysis of the matter. It seems to me that this was the approach adopted by Mance J … who concluded that the allegations (common to both proceedings) in relation to whether the negotiations leading to the sale were conducted by or on behalf of the defendant, as well as the circumstances of the Grupo Torras group in Spain and the defendant’s relationship with it, raised a risk of irreconcilable judgments in circumstances where the two actions were so closely related that it was expedient that they should be heard and determined together to avoid that risk.”

Mr Kealey redefined this guidance so as to suggest that Lord Saville’s formulation is that “the disputed allegations in both sets of proceedings do not raise such a risk of irreconcilable judgments in circumstances where the actions are so closely related that it is expedient that they should be heard and determined together in order to avoid that risk”, such that he submitted that I should first ask myself what are the “incontrovertible facts”, secondly what are the facts about which there “can be no real dispute subject to fanciful argument”, and, thirdly, what are the substantial issues, legal and factual, in both actions. This was really his way of combining a consideration as to whether there is an overlap with what the extent of that overlap is, and hence what the risk is of conflicting decisions, and what the extent of that risk is.

It was common ground that, if there is such a material risk, then the presumption, always subject to consideration of Lenz AG’s factors in paragraph 76 of his Opinion would, as he himself stated in paragraph 75 (and see also Ognall J in Virgin Aviation Services Ltd v CAD Aviation Services [1991] I.L.Pr 79 at 88 and Rix LJ in Stribog at paragraph 130), be in favour of its being expedient to stay, pending consolidation or otherwise, or dismiss the second action.

Consideration of the overlap between the Greek Action and the Conspiracy Action starts with the Defendants’ proposition that, in order to establish the conspiracy, the Claimant must establish, even though he will be primarily interested in the overt acts relating to the Anti-Enforcement Strategy, the overriding control of, and participation in, the CCC Group from at least 2004 (when the Claim Forms in the Original Action were issued) by the Defendants; and there must be similar consideration in order to arrive at the conclusion that the affairs of the CCC Group were, during the same period, run from the top and from Athens, such that, inter alia, the real seat of CCIC was in Athens and there was a quasi-partnership between the Defendants.

The Defendants point to the conclusory paragraphs 42 to 44 in the Greek Claim Form, set out in paragraph 15 above, and then to the following:

I turn to consider the issues in the Greek Action, bearing in mind Mr Kealey’s guidance as to the need for consideration of the incontrovertible. In order for the Claimant to succeed in the Greek Action, he must establish (i) the existence of the unpaid English judgment (ii) the establishment of the real seat of CCIC in Athens (iii) the fact that CCIC was not relevantly registered in Greece (iv) that the defendants in the Greek Action were in control of CCIC. As to those four factors, he submits that the judgment and (most likely) the lack of relevant registration is incontrovertible, that the seat, by reference to the head office of CCIC, is likely to be incontrovertible, and that the existence of the directorships, shareholdings, direct and indirect, and titles of the relevant defendants in relation to the CCC Group, Holdings and CCIC, will be sufficient to establish liability in the Greek Action. As for the Conspiracy Action, that will involve establishment of high level decision making by the Defendants in relation to the Anti-Enforcement Strategy (and not or not simply the control and management of the business of CCIC) and Mr Kealey asserts, by reference to the second witness statement of Mr Morgan of 6 May 2011, that the time periods under consideration are different in the two sets of proceedings. Mr Morgan said as follows:

“37.

I understand from the Claimant’s Greek lawyers, KLC Law firm, that the key factual issues for the [Greek Action] are:

(A)

whether Athens was the place of real seat (which is equivalent to the central administration) of CCIC during the period that the original indebtedness of CCIC towards Mr Masri was incurred;

(B)

whether CC Holding, the members of the Khoury family and Sabbagh family (the defendants in the [Greek Action]) were the underlying partners/beneficial owners of CCIC in its capacity as a Greek de facto partnership.

38.

It is apparent from the above that the facts relevant to the [Greek Action] derive from a different time period to the facts relevant to the [Conspiracy Action]. The [Greek Action] concern[s] CCIC’s incorporation in Lebanon and commercial establishment in Greece prior to the 1992 Agreement and in any event prior to the English judgments whereas the [Conspiracy Action] concern[s] CCIC’s (and the other Defendants’) conduct in evading enforcement of the English judgments and their contractual obligations after the English judgments.”

Mr Schaff takes issue with this. Whereas Mr Kealey makes it look as though the issue of real seat in Athens or not is beyond argument, in the light of the expert Report of Professor Polyzogopoulos it is, submits Mr Schaff, plain that this will be very much in issue (see, in particular, paragraph 5.11 of his first Report), and will, it is clear, depend on very much the same arguments as will be needed in the Conspiracy Action to establish the high level decision-making relied upon in order to infer the existence of the unlawful conspiracy between the Defendants. In particular however:

The similarity of the two sets of proceedings is highlighted by Mr Schaff’s reliance upon Professor Polyzogopoulos’s opinion, referred to in paragraph 26(ii) above, that there is an implicit reliance in the Greek Claim Form upon Article 281, which, save for its lack of consequence in terms of damages (because of the lack of a plea of Article 914, as discussed in paragraph 21(iv) above), is said to lead to the need for conclusions which are closely similar to the motivation for an unlawful conspiracy in English law. Professor Yessiou-Faltsi does not, in terms, address this argument, because she concentrates on pointing out the absence of a plea of Article 914, but I am perfectly prepared to accept Mr Kealey’s assertion that his clients have not pleaded, and do not intend to have pleaded, reliance upon Article 281. However:

Addressing therefore the question of the extent of overlap and the risk and extent of conflicting decisions on issues and facts in play in both proceedings (leaving aside the incontrovertible or inevitable), I am satisfied that, at least as long as there is an arguable, and arguably material, extant issue in respect of (i) the role and responsibility of SSK and WK (and possibly TK) (ii) whether the events of January and December 2008 were irrelevant to prevent (or indeed symptomatic of the continuation of) on-going control and responsibility within the Group and/or for CCIC and/or CCOG, there is such a risk and it is material.

Against this background, and in the light of the presumption to which I have referred in paragraph 43 above, I turn to consider the various aspects of discretion, and first the “Englishness” of the Conspiracy Action. The first factor is a matter which was canvassed, but only briefly, on these applications, but may be of more significance if the other adjourned applications continue, namely what law will govern the alleged conspiracy in the Conspiracy Action. Both the Claimant and the Defendants set out their stall, and much will depend upon whether, in relation to a conspiracy alleged to have commenced in 2006 and still to be continuing, the proper law will fall to be considered by reference to the Private International Law (Miscellaneous Provisions) Act 1995 (“the 1995 Act”) or to Regulation (EC) No 864/2007 of 11 July 2007 (“The Rome II Regulation”). I shall not recite, or decide, the arguments at this stage. Suffice it to say that, if the 1995 Act applies, then it would appear that there is a nicely balanced argument as to whether Greek law or English law applies (by reference to where the events constituting the tort in question occurred (or the most significant of them)), while, if Rome II applies, then there would be an issue as to where the damage was suffered (the Claimant arguing for this jurisdiction, the Defendants for Jordan or Switzerland), alternatively whether, by reference to the fall back provisions of Article 4(3), a closer connection with Greece could be established, such as to apply Greek law. There is plainly a good arguable case for the application of Greek law, or, indeed, for the application of English law but in the Greek Action (with expert evidence), but I do not conclude that this issue, unresolved as it must be, begins to be determinative or even significant in the decision-making process.

That apart, there is clearly a powerful argument by Mr Kealey that, irrespective of where overt acts may have occurred which fall to be proved in the Conspiracy Action, the overall wrapper is conspiracy to avoid the consequences of an English judgment. The scenario in which this question falls to be considered is what the position would be if I declined jurisdiction, at the instance of the Defendants under Article 28(2), on the basis that the conspiracy claims can be reissued and consolidated in Greece, or if, pursuant to Article 28(1), I stayed the proceedings with a view to their being subsequently consolidated if so advised (no doubt with a subsequent dismissal of these proceedings if they were subsequently so consolidated). The problem so far as the second suggestion is concerned, is that it appears to me clear that the Claimant will not wish to seek to consolidate the proceedings, and, because this is a single claimant scenario, this is not a situation in which the Defendants can force such a scenario in the event of a stay, by themselves launching proceedings in Greece, or amending the existing Greek Action. There is not, in any event, so far as I know, any cause of action yet postulated of a declaration that there has been no conspiracy (analogous to a declaration of non-liability under a contract). Nevertheless, I must consider the question of dismissal under 28(1) by reference to the possibility of consolidation, and must consider the expediency of such a course.

The English court orders, upon breach of which the Claimant relies, are, Mr Kealey submits, better dealt with by an English court. However:

I start with the presumption of making an order under Article 28, which prevents the simultaneous prosecution of the two actions. This is so, whether or not it is also appropriate to decline jurisdiction so as to direct or enable consolidation, for the one thing that appears to me to be clear is that, notwithstanding that the contempt application must go forward, it is not consistent with the principles underlying the Judgments Regulation, and the earlier Convention, that there should be simultaneous litigation of related actions, both with concomitant expense, and with the risk of simultaneous inconsistent decisions on the same related factual issues.

One of the factors which Advocate General Lenz raised was the stage which each of the proceedings has reached. The evidence before me is that the Greek proceedings will come on for trial in November this year, when there will be the opportunity for some oral submission and examination or cross examination, but that it is expected that such oral hearing will be concluded in a day, and that the court will then take some months thereafter to consider all the papers and reach a decision some time next year. It appears to be the case that, if there were consolidation in Greece of a freshly issued conspiracy claim (and/or one by reference to Articles 281 and 914), there would still be time for such special proceedings to be consolidated, without disturbing the timetable, unless an adjournment were sought. It does seem to me a wholly unlikely prospect that such consolidated proceedings could possibly be dealt with in Greece on the basis of the existing timescale and plan. Neither do I wish, nor am I entitled, to be sceptical about the procedures of another European Union court, but it seems to me, given the length of, and issues apparently raised by, the one defence which I have seen (and I am told that there are others), unlikely that even the present action can be satisfactorily disposed of within the present timescale. However, quite apart from the fact that I doubt, as I have stated above, that the Claimant will wish to recommence his proceedings and consolidate, I am wholly unconvinced by the expediency of the importation into the Greek Action of the additional factual and, certainly, legal complexities of the Conspiracy Action. It seems to me not inapt to describe such Conspiracy Action in those circumstances as being “tacked on as an appendage” to the existing Greek Action (as, in very different circumstances, Lord Bingham described the moral damages claim in Haji-Ioannou (at 352)).

I also do take into account the lingering effect of Mr Kealey’s argument set out in paragraphs 32 to 37 above. In considering the exercise of my discretion, I do take into account the existence in this country of the Original Action, and the continuing contempt application, which, like the Greek Action itself, will inevitably continue. Albeit that the First and Second Defendants have undertaken to submit to the jurisdiction of the Greek courts, there is no real benefit in their doing so, as their liability to the Claimant is already established. My analysis of expediency does not in any way depend upon a conclusion, by reference to the concept of forum non conveniens or otherwise, that the English court is best suited to try the Conspiracy Action, but rather upon the basis that, in the exercise of my discretion, consolidation with the existing Greek Action of the Conspiracy Action is not a sensible course.

I have already described in paragraph 13 above that these two proceedings were part of the anti-Anti-Enforcement Strategy of the Claimant, launched in April/May 2010. Mr Kealey at one stage pointed out that the issue of the Conspiracy Action in this country at least had the benefit to him of preventing any limitation argument. Much of his submission before me – by reference to the incontrovertibility of the facts in the Greek Action – could be said to infer a calm confidence that the Claimant will succeed in Greece. If the Claimant succeeds in Greece in establishing personal liability on the part of these Defendants, then it will not be necessary to proceed with the Conspiracy Action in any event.

I am entirely satisfied that the proper course is to prevent these two proceedings continuing in tandem, and to stay the English Conspiracy Action, which, I conclude, is a related action in the court second seised. I do not so order in the expectation that there will subsequently be consolidation, although, if there is, then the question of a stay would fall to be reconsidered by reference to Article 28(2). There may also be reconsideration in the event of any change in the circumstances described by me in paragraph 49 above. That apart, I simply would order a stay of the English proceedings on the Defendants’ applications. I have already referred to the undertakings that are to be given, and Mr Hunter’s brief attendance on behalf of WK, so that his Article 27/28 application could be issued and served short, enabled him to give that undertaking on his client’s behalf, as did the other Counsel.

The law as to non-disclosure is of course well established: the ‘golden rule’ is that, on an ex parte application - it seems to me particularly where this is made on paper where the judge is left to consider on his own in his or her room what may often be a pile of undigested exhibits - the party making the application must identify any material facts, and in particular any which may constitute a defence or some ground for not granting the order sought. The most significant consequence is where an ex parte injunction, such as a drastic freezing order with immediate effect and possibly long-lasting consequences, is made which might not have been made if material facts had been disclosed. But the duty arises on any ex parte application, and certainly so on one for service out of the jurisdiction, where what is being sought is the exercise of an exorbitant jurisdiction, bringing a foreign defendant within the jurisdiction even if only to incur the cost and inconvenience of fighting a jurisdiction application successfully.

One of the matters which may well be material on an ex parte application is the existence of foreign proceedings, and, for example, in Behbehani v Salem [1989] 2 AER 143, the non-disclosure of such pre-existing foreign proceedings was considered particularly material. In a service out case, not only may the existence of foreign proceedings go to the issue as to whether it is an appropriate case to be tried in England, but, in particular, where there may be questions of the applicability of Articles 27 and/or 28, the existence of potentially relevant or related actions in other jurisdictions is obviously material.

In the Hida Maru [1981] 2 Lloyd’s Rep 510 the Court of Appeal upheld a decision by Neill J not to set aside service, because he took the view that, if the full facts had been before the judge, he would still have given leave. This was also the case in Network Telecom (Europe) Ltd v Telephone Systems International Inc [2003] EWHC 2890 (QB). However in Ophthalmic Innovations International (UK) Ltd v Ophthalmic Innovations International Inc [2004] EWHC 2948 (Ch), [2005] I.L.Pr 10, where Lawrence Collins J stated (at paragraph 45) that “the existence of overlapping proceedings in a foreign jurisdiction between the same or related parties (whether pending or prospective) is likely to be a particularly relevant matter which in normal circumstances must be disclosed, and the non-disclosure of which may well of itself lead to the order for permission being set aside”, the learned judge did set aside the order granting permission for service out. Again, rather similarly to the case of Bank Mellat v Nikpour [1985] FSR 87 (CA) where, after material non-disclosure on an ex parte application for a Mareva, the injunction was discharged and not re-granted until after the defendant had been given an opportunity to remove his assets from the jurisdiction, so in Re Yugraneft [2008] EWHC 2614 (Ch) Christopher Clarke J concluded that, by virtue of the substantial non-disclosure, he would discharge the application for service out of the jurisdiction, so that the issue of the defendant’s residence would fall to be reconsidered as at the date of the new proceedings (paragraph 107).

Much depends upon the seriousness of the non-disclosure, and whether or not it is accompanied by other non-disclosures. In this case, the First, Second and Seventh Defendants rely on other matters of non-disclosure, which I have not addressed, having only considered the effect of the non-disclosure in relation to the Greek Action, because of its obvious relationship with the matters being considered in relation to Articles 27 and 28, while adjourning the balance (see paragraph 3 above).

There were two mentions of Greek proceedings in the first Morgan statement, namely in paragraphs 13 and 45-6. Paragraph 13 was dealing with the address in Athens of CCIC and Mr Morgan simply stated: “However, an officer of CCIC has recently stated, in the related Greek enforcement proceedings, that CCIC has moved offices to” a new address. Then, under the heading “Other contentions that may be raised by the respondents”, he states the following:

“45.

The claimant is currently pursuing proceedings for contempt of court and the committal of [WK] in the [Original Action] as well as foreign enforcement proceedings in numerous jurisdictions including Greece. Mr Masri also commenced an application under CPR 71 seeking the provision of information about CCOG’s assets from [WK]; this application is currently stayed.

46.

In the contempt proceedings, [WK] has contended that it is an abuse of process for the claimant to pursue both the conspiracy proceedings and the contempt proceedings (and related enforcement proceedings in Greece) at the same time alleging that the aim is to coerce the Judgment Debtors into paying the amounts due under the judgments. I do not consider that this allegation has any proper basis but I draw it to the attention of the court so that it is aware of the allegation. This allegation has been raised in an application by [WK] to strike out the committal application against him. Judgment on the strike out application has not yet been handed down.”

When this was first addressed by Mr Kealey in oral argument, he submitted that the reference in paragraph 13 was indeed to enforcement proceedings in Greece, namely by reference to a transcript of a hearing at which such evidence was given on 1 December 2009. There were indeed such Greek enforcement proceedings at that time, which were nothing to do with the Greek Action now being considered. He then submitted that the references in paragraphs 45 and 46 were also to the same Greek enforcement proceedings. This would not be surprising, as exactly the same description, “related enforcement proceedings in Greece”, is used in the latter paragraphs. This would however have meant that there was no disclosure at all of the Greek Action. This explanation was not right, as he appreciated, when he obtained instructions, and an explanatory third witness statement was put in by Mr Morgan. He gives the following explanation as to paragraph 46:

“16.

The reference to “enforcement proceedings in Greece” at paragraph 46 of my first witness statement was intended to be a reference to the Greek Partnership Proceedings (since [WK] is not involved in any of the other Greek proceedings). I do not recall why this particular form of wording was used (other than that I considered the broad aim of the proceedings to be to enforce the English judgments against CC Holding and the members of the Khoury and Sabbagh families) but there certainly was no intention to mislead or to conceal the precise nature of the proceedings. This reference was made in the context of [WK’s] abuse of process arguments.

17.

When drafting the conspiracy claim documents earlier in 2010, Mr Masri’s legal team did, from a general perspective, consider the relationship with the Greek [Action]. Without waiving privilege in the advice given to Mr Masri, our view was that there was nothing inappropriate about the pursuit of the two sets of proceedings given that they were based on totally different legal grounds and were in no way inconsistent with each other, and this is the point that was made on Mr Masri’s behalf in response to [WK’s] abuse of process allegations. Furthermore, we were of the view that the factual issues that needed to be proved in the two claims were quite different; in Greece we understood the key issue to be the legal status of CCIC up to the date of the judgments and in the conspiracy claim we understood the key issue to be who had directed the predominantly post-judgment anti-enforcement strategy.”

Mr Walford referred to the affidavit by Mr Shuttleworth, WK’s solicitor, in the contempt proceedings, in which Mr Shuttleworth had complained of WK’s having to face both the contempt application and the Greek Action, which had then been recently issued, and in particular asserted that there was a “substantial overlap” between the Greek Action and the issues raised by the contempt application.

It seems to me that the use of the same words in paragraph 46 about the Greek Action as had been used in paragraph 13 by reference to quite different Greek enforcement proceedings was most unfortunate, and it is not easily comprehensible why, in the light of Mr Shuttleworth’s affidavit, which was apparently considered at the time, there was not a proper dealing with the Greek Action, rather than a shuffling off of it as enforcement proceedings. There plainly could and should have been some reference to the Greek Action, and an explanation as to why it was the Claimant’s case that Articles 27 and/or 28 did not apply.

The position is made worse by the fact that, in relation to the issue and service without leave on the Third to Fifth Defendants in Greece of the Conspiracy Action, the Claimant’s solicitors were required, as part of the standard procedure in such cases, to tick a box to the effect that there are no relevant proceedings pending between the parties. Mr Morgan signed a statement of truth in respect of a ticked box, which contained the standard form which I shall set out, but then with a specific handwritten addition which I shall underline:

“I state that the High Court of England and Wales has power under the Judgments Regulation (as defined in CPR Rule 6.31(d)) to hear this claim, that the defendant is domiciled in a member state and that no proceedings are pending between the parties in the courts of any other parts of the United Kingdom or any other member state in relation to this claim.”

I conclude that in this case, it not being suggested by the Defendants that there was a deliberate concealment by the Claimant, there was a serious misjudgement by Mr Morgan and/or those advising or advised by him. The fact that the Claimant was already suing the Seventh Defendant in the Greek Action so as to render it personally liable for the judgment debt was plainly material in relation to the application to serve the Seventh Defendant out of the jurisdiction with the new Conspiracy Action. If it were appropriate to apply the Hida Maru test, I am far from certain that, had the existence of an arguably related action been disclosed, the judge would necessarily have made the order ex parte, at least without further explanation. In any event, since, as it turns out (and this is part of the argument that has been adjourned), the Claimant was relying on this application against the First, Second and Seventh Defendants only in the alternative to a case based upon entitlement to serve CCOG in England, CC Holdings in Greece and all of the Defendants by reference to WK (and/or CCOG) as anchor defendant, it might have been thought appropriate for there to be inter partes argument.

In the event, there has been inter partes argument, and I have decided for reasons above given to stay the Conspiracy Action, permission to serve which on the First, Second and Seventh Defendants out of the jurisdiction was supported by the first Morgan witness statement. Although I conclude that the non-disclosure was very material, in the exercise of my discretion I do not conclude that it is appropriate or necessary to discharge the order. In any event, depending upon what occurs hereafter, it may be that, if and when the other non-disclosures fall to be considered, this non-disclosure can and should also be reconsidered. However, I conclude that the right course, by reference to the matter now before me, is in any event to disallow all the Claimant’s costs of making and obtaining the ex parte order, so that they will not in any event be recoverable against the Defendants. This order also applies to the costs of the explanatory third witness statement referred to in paragraph 63 above.