This is an application under s. 37(1) (Footnote: ¹) of the Senior Courts Act 1981 (“the 1981 Act”) for an order compelling the Defendants to provide disclosure verified by an affidavit of a proper officer of all their assets worldwide. In the case of the 1^st and 2^nd Defendants, the proposed order is limited to assets exceeding US$ 1 million in value.

The order is sought in aid of execution to enforce a Partial Award and a Final Award made in LCIA Arbitration proceedings, namely: Partial Award No. 2 (against the 1^st and 2^nd Defendants) and Final Award No. 3 (against the 3^rd Defendant). A third award, Partial Award No. 1 (made against the 2^nd and 3^rd Defendants) was the subject of a successful jurisdictional challenge before Andrew Smith J and is not sought to be enforced. A jurisdictional challenge to Partial Award No. 2 failed.

The arbitrations concerned a joint venture arrangement (the “Santacruz Project”) between the Claimant and the Defendants for the commercial development, management and operation of certain land in Mumbai. In order to facilitate the parties’ investments in the Santacruz Project, an SPV, Kerrush Investments Limited (“Kerrush”), was incorporated which at the outset of the Santacruz Project was owned 50% by the Claimant and 50% by the 3^rd Defendant. The disputes arose out of a Shareholders’ Agreement entered into between, inter alios, the Claimant, the 3^rd Defendant and Kerrush on 6 June 2008 (the “Shareholders’ Agreement”) and a Keepwell Agreement between the Claimant, and the 1^st and 2^nd Defendants, under which the 1^st Defendant agreed to maintain the solvency of the 2^nd Defendant.

In Partial Award No. 2 (“Award 2”) the Tribunal ordered, inter alia, that the 1^st and 2^nd Defendants must pay to the Claimant US$298,382,949.34 for all of the Claimant’s shares in Kerrush with interest at 8% p.a., compounded quarterly, from the date of the award until payment. In Final Award No. 3 (“Award 3”) the 3^rd Defendant was ordered, inter alia, to pay the Claimant US$2,900,000 in respect of its legal fees and other costs and expenses with interest at 8% p.a. compounded quarterly from the date of the award until payment.

The Defendants have paid nothing towards satisfying Awards 2 and 3.

At the end of January 2013 Cooke J made orders under s.66(1) of the Arbitration Act 1996 Act (“the 1996 Act”) permitting the Claimant to enforce Awards 2 and 3 in the same manner as judgments or orders of the court. Cooke J also permitted service of the underlying enforcement applications to be made on Skadden, Arps, Slate, Meagher & Flom (“Skadden”), the solicitors who had acted for all the Defendants in the arbitrations and for all the Defendants in the jurisdictional challenges to Awards 1 and 2.

The Arbitration Claim Form was issued on 5 February 2013. It was stamped “not for service out of the jurisdiction” and, by order dated 8 February 2013, Cooke J permitted service on Skadden of the Claim Form and the affidavit in support of the application for the disclosure of assets. On the same date, the Claim Form and the affidavit were served by hand on Skadden but the Acknowledgement of Service Form was mistakenly excluded from the documents served at this time.

On 19 March 2013 copies of the Claimant’s further evidence and skeleton argument in respect of the instant application were served at the offices of Skadden pursuant to an order of Andrew Smith J of even date permitting service of these documents in this manner.

In support of the application for disclosure of assets worldwide, Mr Wolfson QC placed substantial reliance on Maclaine Watson & Co Ltd v International Tin Council (No 2) [1989] 1 Ch 286 and The Naftilos [1995] 1 WLR 299. In Maclaine Watson the claimant sought an injunction against the ITC compelling disclosure of its assets worldwide in aid of enforcing an arbitral award that had been converted into a judgement for £6 million odd. At first instance, Millett J held that RSC Order 48 (that gave the court power to order an officer of a corporate judgement debtor to be orally examined on the debtor’s assets) could not be invoked against the ITC because it was an unincorporated association. However, he found that the court had jurisdiction under s. 37 of (1) the Supreme Court Act 1981 to make the order sought and granted an injunction compelling disclosure of the ITC’s assets worldwide. In upholding Millett J’s decision, the Court of Appeal (per Kerr LJ who delivered the judgement of the court) expressly approved the following two passages in Millett J’s judgement.

At p.303 D-G, Kerr LJ said:

Citing Interpool Ltd v Galani [1988] 738, the Court of Appeal also confirmed that the court had jurisdiction to order disclosure of assets outside the jurisdiction as well as inside the jurisdiction (at 306 F).

In The Naftilos, the claimants had obtained two arbitration awards made in London awarding substantial sums by way of unpaid charter hire and had been given leave to enforce the first award as a judgement under s. 26 of the Arbitration Act 1950 (“the 1950 Act”). The claimants also had a third arbitration on foot claiming damages for wrongful repudiation of the time charter. On application by the claimants made ex parte, Colman granted a Mareva injunction restraining the removal of assets in the jurisdiction or otherwise dealing with such assets. The Defendant was also ordered, inter alia, to identify all of its vessels and related charterparties and details of all bank accounts where freight and other remuneration from its vessels were received whether the vessels and bank accounts were within or without the jurisdiction. On application by the defendant under the liberty to apply, the question arose whether the disclosure obligation should be limited to assets within the jurisdiction, on which question the judge heard further argument at an adjourned hearing by when judgement had been entered on the first award and Counsel for the claimant had become aware of the decision of the Court of Appeal in Maclaine Watson. Colman J held that the court had jurisdiction under s. 37 of the 1981 Act to make disclosure orders ancillary to a Mareva injunction granted in relation to an arbitration claim or award just as it did in relation to court proceedings and, having considered the judgement of the Court of Appeal in Maclaine Watson, went on to say (at pp. 309-310):

The Defendants oppose the Claimant’s application on two separate grounds. First, it is submitted that the service of the Claim Form and the further documents relating to this application on Skadden should be set aside and for that reason alone the application must be dismissed. Skadden were not authorised to accept service and Cooke J ought not to have permitted an alternative method of service under CPR 6.15 (1) since there were here no sufficiently exceptional circumstances to justify such an order. Second, it is argued that, to the extent Maclaine Watson decided that a foreign defendant can be ordered by injunction to make disclosure of assets outside the jurisdiction in aid of execution of a judgement, it is no longer good law by reason of the decision in the House of Lords in Masri v Consolidated Contractors International (UK) Ltd and others (No 4) [2008] UKHL 43; [2010] AC 90.

The Acknowledgement of Service was served on 20 March 2013 with a tick in the boxes “I intend to contest this claim” and “I intend to dispute the court’s jurisdiction”. This was 22 days after the date it ought to have been served (26 February 2013). On the following day (21 March 2013) the Defendants applied to set aside the orders of Cooke and Andrew Smith JJ permitting service on Skadden. Mr Wolfson submitted that the Defendants by their application were disputing the court’s jurisdiction and having failed to serve the Acknowledgement of Service form within the time prescribed by CPR10 they were precluded from making the application. I do not accept this submission. In my opinion, the Defendants are not disputing at this stage the court’s jurisdiction. However, in case I am wrong about that, I extend time to serve the Acknowledgement of Service to the date it was in fact served.

In Cecil v Bayat [2011] EWCA Civ 135; [2011] 1 WLR 3086, the Court of Appeal (per Stanley Burnton LJ, with whom Rix and Wilson LJJ agreed) stated (obiter) as follows:

These observations were accepted and applied by the Court of Appeal in the later case of Abela v Baardarani [2011] EWCA Civ 1571.

In neither Cecil v Bayat nor Abela was there any reference to the invariable practice in the Commercial Court in relation to arbitration applications relating to arbitrations seated within the jurisdiction to permit service upon a party’s solicitor who has acted for that party in the arbitration, provided that that solicitor does not appear to have been disinstructed and absent other special circumstances. This practice was referred to by Tomlinson J in Kyrgyz Republic Ministry of Transport Department of Civil Aviation v Finrep GmbH [2006] EWHC 1722 (Comm); [2006] 2 CLC 402. In that case, it was argued on the basis of Knauf UK GmbH v British Gypsum Ltd [2001] EWCA Civ 1570 that, even in relation to an arbitration claim, a mere desire for speed was unlikely to amount to a good reason to authorise service by an alternative method and that the defendant was entitled to be served pursuant to the provisions of the European Union Service Regulation no. 1348 of 2000. Paragraphs 29 and 36 -39 of Tomlinson J’s judgement read as follows:

Although not referred to in Cecil v Bayat or Abdela, neither of which involved an arbitration claim, Tomlinson J’s reference to the practice in the Commercial Court in arbitration claims relating to arbitrations seated within the jurisdiction was noted without disapproval by the Court of Appeal in the later case of Joint Stock Asset Management Co Ingosstrakh-Investments v BNP Paribas [2012] EWCA Civ 644. One of the issues there was whether the court had jurisdiction under the necessary and proper party “gateway” in respect of an anti-suit injunction to restrain foreign proceedings taken in breach of an arbitration agreement. When obtaining leave to serve the claim form on a Russian party, the claimant had represented that it would serve the claim form on the first defendant by serving it in London. In dealing with the argument that until permission is obtained, it cannot be said that a defendant will be served in the jurisdiction, Stanley Burnton LJ held that, whilst this must be right where there is a real question as to whether permission to serve out will be granted, the instant case was not such a case. The learned Lord Justice cited paragraph 29 of Tomlinson J’s judgement in Kyrgyz and went on to say:

It follows, in my judgement, that it is open to the Commercial Court to continue to implement its invariable practice in respect of arbitration applications concerning arbitrations which have their seat within the jurisdiction if it be the position, as it will be in the vast majority of cases, that there is good reason for service to be achieved faster than it would be under the relevant service Convention.

Mr. Hirst QC for the Defendants submitted that the invariable practice was not applicable to the claim herein because it was not an arbitration claim as defined by CPR Pt. 62.2, and therefore the claim form should not be treated as an arbitration claim form.

An “arbitration claim” is defined as follows in CPR Part 62.2 as follows:

Mr Hirst submitted that even though Award 2 was a partial award in which the tribunal had directed it would determine any dispute that might arise from the imposition of future taxes or other implementation matters, the arbitration proceedings were effectively concluded and it followed that the claim did not fall within the definition. No implementation disputes had been referred to the tribunal. Mr Hirst also pointed to the fact that although s. 44 of the 1996 Act is prayed in aid in the Claim Form, the Claimant now relies only on s. 37 of the 1981 Act as the basis of its application for disclosure of assets.

I decline to accept Mr Hirst’s submission. In my judgement, the claim being one whose purpose is to enforce two arbitral awards, it is an “application affecting arbitration proceedings”, even though the application is made under s. 37 (1) of the 1981 Act and not under the 1996 Act. As Colman J remarked in The Naftilos , (Footnote: ⁴) it is the policy of the law that judgements and arbitration awards should be enforced and I am of the firm opinion that CPR Part 62.2 should be construed in the light of this policy.

Mr Hirst also submitted that the Claimant ought to have applied for permission to serve the Claim Form out of the jurisdiction whereas what had been applied for was simply permission to serve the Claim Form and other documents on Skadden as a form of alternative service. This raises an extremely technical point. On balance, I think that, if what is sought is an order for alternative service within the jurisdiction, it is unnecessary to apply for permission to serve out provided the court is informed that the proposed defendants are outside the jurisdiction. So technical is the nature of Mr Hirst’s submission I would have had no hesitation in treating the Claimant’s application to Cooke J as an application for permission to serve out if I had been persuaded that the submission was correct

In my judgement, the invariable practice of this court in respect of applications concerning arbitrations seated in the jurisdiction applies in this case. The seat of the LCIA arbitrations was and continues to be London. Skadden acted for all the Defendants in those arbitrations and for all the Defendants in the jurisdictional challenges and at the relevant time they did not appear to have been disinstructed. Further, the Defendants having paid nothing to satisfy Awards 2 and 3 since they were made on 6 July 2012, the quicker these applications for disclosure in aid of enforcement are brought before the court the better.

The Defendants’ application to set aside the orders of Cook and Andrew Smith JJ permitting service on Skadden is accordingly dismissed.

In Masri (No4), the issue was whether the court had jurisdiction to make an order under CPR Pt 71.2 (Footnote: ⁵) directing a named individual resident and domiciled in Greece who was the chairman, general manager and a director of a judgement debtor to attend court and provide information about the means of the judgement debtor against whom judgement had been given in English High Court proceedings. CPR Pt 71 is the successor to RSC Ord 48.

Relying on the presumption against extraterritoriality, Lord Mance (with whom the rest of the Committee agreed) held that CPR Pt 71 should be construed as not having extraterritorial effect. It did not contemplate an application and order in relation to an officer outside the jurisdiction (para 26). This conclusion was reinforced by a consideration of the position relating to service. The CPR contained no provision authorising service of an order made against an officer under CPR Pt 71 (paras 27 – 38).

Mr Hirst contended that the effect of Masri No 4 was that Maclaine Watson could no longer be relied on for the proposition that an order could be made post judgement or award for disclosure of assets by a judgement or award debtor who was outside the jurisdiction. He contended that by Pt 71, the CPR provided a settled means for a judgement creditor to apply for an order to obtain information from an officer of a corporate judgement debtor to attend court to provide information about the judgement debtor’s assets and if that means is unavailable because the officer of the debtor is outside the jurisdiction, the judgement creditor cannot out-flank Masri No 4 by applying for a disclosure order under s. 37 of the 1981 Act. In support of this submission, Mr Hirst observed that: (i) in the five years since Masri (No4), CPR Pt 71 has not been amended so as to allow for orders to be made against officers outside the jurisdiction and nor has CPR Pt 6 been amended to allow for orders made under CPR Pt 71 to be served out of the jurisdiction; (ii) in Maclaine Watson the Court of Appeal proceeded on the basis that RSC Ord 48 did not apply to unincorporated associations, whereas CPR Pt 71 does apply to foreign corporations and officers thereof within the jurisdiction can be ordered to attend court to be examined; and (iii) the ITC was a London based organisation and thus presumably had officers within the jurisdiction.

In my judgement, Masri No 4 does not prevent the court from granting the order sought in this case under s. 37 (1) of the 1981 Act. Here the order requested is not an order addressed to a non-party outside the jurisdiction of the court but is an order against the Defendants who are subject to the court’s jurisdiction. It is true that the court is asked to require the Defendants “to provide disclosure … verified by an affidavit of a proper officer …” and all of the proper officers are very likely to be outside the jurisdiction, but this does not mean that the order will be against or addressed to a party other than the Defendants. The situation is therefore closely analogous to that where, in the course of the Masri litigation, Gloster J made post-judgement orders under s. 37 of the 1981 Act against the judgement debtors, inter alia, for a freezing order and disclosure of assets --- and it was not suggested in Masri No 4 either in the Court of Appeal or the House of Lords that such orders might be invalid because CPR Pt 71 did not have extraterritorial effect. It is also to be noted that in Vitol SA v Capri Marine Ltd et al [2010] EWHC 458 (Comm); [2011] 1 All ER 366, decided well after Masri No 4, Tomlinson J cited with approval Maclaine Watson and The Naftilos for the proposition that the court has a free-standing power derived from s. 37 of the 1981 Act to order disclosure after judgement to render the judgement effective in the sense of capable of enforcement.

I accordingly hold that the court has jurisdiction to make the order sought under s. 37 (1) of the 1981 Act and I now consider whether it is just and convenient to do so. By virtue of the awards themselves, the Claimant has a contractual right to be paid the sums awarded. The Claimant has also been granted permission by the court to enforce the awards as judgements. As I have already observed, it is the policy of the law that judgements of the court and arbitration awards should be enforced, and this applies a fortiori where the award in question, as here, was made in an arbitration whose seat was within the jurisdiction. The 2^nd and 3^rd Defendants are both SPVs and the Claimant is not aware of the extent and nature of the Defendants’ real estate assets, or other assets, in India or the manner in which such assets are held, or what assets the Defendants may hold outside India (other than shareholdings identified in publicly available documents, although the corporate structure of the group is not clear). In my view, the order sought has the potential for materially assisting the Claimant in enforcing Awards 2 and 3 and I readily find that it is just and convenient that the Defendants should be ordered to provide disclosure verified by an affidavit of a proper officer of their assets worldwide.