Orexim Trading Ltd v Mahavir Port and Terminal Private Ltd & Ors

On 30 August 2016, I granted permission to the claimant, Orexim Trading Limited, a Maltese company (“Orexim”) to serve a claim form out of the jurisdiction against the three Defendants. The first Defendant is now known as Mahavir Port and Terminal Private Limited (“ MPT”) and was previously known as Fourcee Port and Terminal Private Limited. The second Defendant, Singmalloyd Marine(s) Pte Limited (“Singmalloyd”) has played no part in these proceedings and did not appear before me on the present applications. The third Defendant is Zen Shipping and Ports India Private Limited (“ Zen”). On the same occasion I made a freezing order in favour of Orexim and against Zen only.

By an application notice dated 26 May 2017, MPT applied to discharge my order granting permission to serve out on the grounds that (1) there was no relevant available gateway, (2) there was no serious issue to be tried, (3) England was not clearly the appropriate forum and (4) there was in any event material non-disclosure. By an application notice dated 26 May 2017 Zen made a similar application save that it sought the discharge of the freezing order as well.

On or about 19 December 2013 Orexim agreed to sell and Atlantis ME FZE (“Atlantis”) agreed to buy approximately 10,000MT of Ukrainian sunflower seed oil at US$913 per metric ton plus freight. Atlantis required Orexim to charter a ship from MPT for this purpose and also that a company called Turanli MMC (“Turanli”) be Atlantis’s performance guarantor. Orexim accordingly entered into a charterparty with MPT dated 19 December 2013 and with Turanli as guarantor, for the charter of the vessel “Bon Vent”. At that stage, the charterparty provided for the discharge port to be either Bandar Abbas or Bandar Imam Khomenei (“BIK”).

There was in fact a sub-purchaser of the goods from Atlantis called Global International Imex Private Limited (“Global”) pursuant to a contract dated 25 November 2013 “the Atlantis-Global Sale Contract”). Another company, Zarrin Persia (“Zarrin”) was the sub- purchaser of the goods from Global.

The Chairman and co-owner of MPT is Mr Rajesh Lihala. His son, Sahil, owns and controls Zen. In addition, Orexim alleges (although MPT denies) that Mr Lihala has an interest in Global.

On or about 31 January 2014 Atlantis provided revised instructions with the port of discharge now to be Bandar Abbas and new bills of lading were produced. The vessel sailed from Nikolaev in the Ukraine on 1 February 2014. When MPT raised an invoice against Orexim for US$573,300 in respect of freight, Orexim paid US$80,000 and the balance was paid later, on 12 March 2014.

On or about 3 February 2014, Orexim issued its invoice to Atlantis for the balance of the purchase price being some US$7,694,700 and this was presented for payment together with shipping documents on 10 February 2014. However, that invoice was not paid then or at any time later, save for a sum of US$466,364.80.

In the meantime, there were various disputes between Orexim and MPT. MPT said that Orexim was late in paying freight and load port demurrage and that it had not provided clear instructions as to the discharge port. For its part, Orexim said that it was clear that the vessel should discharge at Bandar Abbas and that MPT was not providing regular ETA messages. And because Orexim had still not been paid the balance owing on the goods, it told MPT not to discharge the goods at any port. Finally, the vessel anchored off Fujairah apparently on the instructions of a Mr Yigit who, it now appears is Mr Yigit Caliskan, the finance director of Atlantis although the instruction purported to come from him on behalf of Turanli who in any event had no right to instruct the vessel where to go. The role of Mr Caliskan and what had been said about him on behalf of MPT in the arbitration referred to below is in dispute but in my view it is not of key importance here.

MPT brought a claim against Orexim in the Bombay High Court for unpaid freight and demurrage and obtained an order permitting it to discharge the sunflower oil into tanks at BIK together with a lien over the goods for the sums due, and it appointed Mr Raj Nachania as sole arbitrator on its claim.

For its part, Orexim gave Atlantis a notice of arbitration in London and appointed an arbitrator. Much later, on 17 March 2015 the arbitrator awarded to Orexim the balance of the purchase price of the goods in the sum of US$7.228m as against Atlantis. It remains largely unpaid.

Although Orexim had instructed MPT not to discharge at BIK it did so on the basis of the order from the Bombay High Court. On 30 April 2014 Orexim commenced the first of three different sets of proceedings against MPT in Ukraine after the vessel had sailed to the port of Yuzhny. On each occasion Orexim procured the arrest of the vessel only for the arrest to be subsequently discharged by the Court. The final discharge was on 11 June 2014.

Meanwhile, on 8 May 2014 bills of lading had been produced to the agents Pars Parine (“PP”) at BIK with instructions to deliver the goods from the discharge tanks to Zarrin. MPT accepts that they were forged because they purported to contain the signature of Capt. Singh the master of the vessel but he denies that he signed them. Zarrin duly obtained the goods and subsequently paid Global for them but Global never paid Atlantis. Accordingly, by this stage, Orexim no longer had the goods and had not been paid for them.

There is an issue as to the involvement of Mr Lihala in the production of the forged bills of lading. It is denied on his behalf that he was involved but there is strong evidence to the contrary. First, by his email to PP dated 8 May 2014, he instructed them to release the goods to Zarrin. Second, in an email from PP to Orexim dated 2 July 2014, PP stated that it had been ordered to release the goods on 8 May and had been presented by the owner with the owners order and the bills of lading. That point and the fact that Mr Lihala provided the bills to Zarrin, was then stated on its behalf by its Iranian advocate in submissions made in later proceedings (see section 5 p433).

It is also alleged, though denied by Mr Lihala, that he was responsible for the non-payment by Atlantis for the goods because he wanted the price paid by Zarrin to Global (and otherwise due from Global to Atlantis) to go to MPT instead in order to discharge pre-existing debts which Atlantis owed to MPT. Mr Budnyk, the ultimate beneficial owner of Orexim stated that Mr Lihala told him this at a meeting on 15 May 2014 (see paragraph 97 of Mr Budnyk’s witness statement) when he also said that Global was his company.

Orexim makes a number of points as to Mr Lihala having had an interest in Global. First there is a resolution of Global’s directors dated 27 September 2013 stating that “Mr Rajesh” was appointed as “Business Head – International Marketing” for “negotiating and finalized the export deal”. Second, there purports to be the signature of Mr Lihala on the Atlantis-Global Sale Contract alongside his printed name. It is correct that he is not signing on behalf of the buyer or seller but nonetheless the signature is there. The Iranian annotations on the copy of the Atlantis-Global Sale Contract in translation say that Mr Lihala had signed as a witness. For his part he denies that the signature was his at all. Third, Mr Lihala agreed to cause Global to make payment for the goods in the Settlement Agreement referred to below, and indeed Global did make one payment to Orexim. Finally, there is the evidence of Mr Budnyk referred to above. I do not need to make any findings at this stage but I can say that despite Mr Lihala’ s denial of any interest in Global there is strong circumstantial evidence that he did have such an interest.

Orexim, Atlantis and MPT entered into a written settlement agreement dated 15 May 2014 (“the Settlement Agreement”). By paragraph 2(i), it was agreed that MPT “shall cause Global… to deposit on behalf of Atlantis as part of monies payable by Global to Atlantis, an amount of US$7,391,600… with the Bombay High Court within… 10 business days from the date of the signing date of this Settlement Agreement”. By paragraph 2(v), on the deposit of those monies Orexim would release the vessel from arrest and withdraw all criminal proceedings against MPT. Paragraph 2(vi) then entitled Orexim to withdraw the total amount deposited. Paragraph 7 provided that the agreement was subject to English law and that any dispute arising out of it would be referred to the High Court in England and Wales.

Global subsequently paid US$466,364.80 to MPT but no more. Accordingly, MPT did not cause the balance of the US$7.39m to be paid into the Bombay High Court and so the provisions of the Settlement Agreement remain unfulfilled.

Orexim’s position on the original hearing before me was not merely that payment was due under the Settlement Agreement but that Orexim’s agreement to sell to Atlantis had been procured by fraud in the first place. It was said that Atlantis in fact had no intention of paying for the goods and that Mr Lihala was involved in this and that he was able to and did, stop Global from paying Atlantis. He ensured that Zarrin would pay Global, however, because he assisted in procuring the release of the goods to it. All of this is denied by MPT.

But in addition, Orexim learned that MPT had purported to transfer the vessel to Singmalloyd and Singmalloyd transferred it to Zen, along with another vessel the MT Bon Chem. This gave rise to a concern that MPT had at the same time been disposing of its, or some of its, assets, so as to prejudice claims made against it by, among others, Orexim. I refer below to the details of these transactions.

On 30 August 2016 Orexim commenced the present proceedings here against MPT, Singmalloyd and Zen. In the Particulars of Claim, it made three claims as follows:

Damages for breach of the Settlement Agreement (“the Damages Claim”);

A claim made pursuant to s 423 of the Insolvency Act 1986 (“the Act”) that the transfer of the vessel to Singmalloyd was either made for no consideration or was at an undervalue, that this was designed to put it beyond the reach of creditors and that Orexim was a “victim” of this transaction, such that the transaction should be set aside and the vessel be made available for the creditors of MPT (“The Insolvency Act Claim”);

A claim for a declaration that the transaction was a sham such that MPT retained the legal and beneficial ownership of the vessel (“the Declaration Claim”).

MPT cannot challenge the jurisdiction of this court in respect of the Damages Claim because of the English law and jurisdiction clause in the Settlement Agreement. However it (and Zen) do challenge the Court’s jurisdiction in respect of the other two claims.

It is common ground that for the purpose of obtaining permission to serve out of the jurisdiction, a claimant must show:

a good arguable case that each of the pleaded claims falls within a relevant gateway;

a serious issue to be tried in respect of the merits of the claims; in this regard it is common ground that this is equivalent to a real prospect of success which is what has to be shown to avoid summary judgment; and

that England is clearly the appropriate forum.

Section 423 of the Act relates to “transactions entered into at an undervalue” which are then defined to include gifts or transactions where the other party provides no consideration or where the consideration is significantly less than the value of the consideration provided by the transferor. Such an order shall only be made if the Court is satisfied that it was entered into by the transferor for the purpose of putting assets beyond the reach of a person who is claiming against him or otherwise prejudicing the interests of such a person in relation to the claim which he is making or may make. There is no express limitation on the class of transferee defendant against whom such a claim can be brought whether by reference to their location or otherwise.

Section 423 is similar but not identical to s238 of the Act which applies only to transactions effected by a company registered in England and Wales and which is now in liquidation or administration. A claim of this kind falls within the definition of “insolvency proceedings” for the purpose of the Insolvency Rules 1986 (see paragraph 13.7) and now the Insolvency Rules 2016 (see paragraph 1.1 (2)). See also the decision of Evans-Lombe J in Jyske v Spjldnaes[2000] BCC 16. It is common ground that a claim made under s 423 does not constitute “insolvency proceedings”.

Orexim argues first that there is a good arguable case that the claim falls within PD6B para. 3.1 (20) (a) which refers to a claim made “under an enactment which allows proceedings to be brought and those proceedings are not covered by any of the other grounds referred to in this paragraph…”. Orexim argues that s423 is such an enactment and there is no limiting factor within it to suggest that this gateway is not applicable. In response MPT and Zen say that s423 is not within the gateway because it does not expressly confer a right to bring the claim against a person out of the jurisdiction. To understand these arguments it is necessary to refer to a number of cases.

The first is Re Harrods (BA)[1992] Ch. 72. The question there was concerned with service out of the jurisdiction of a minority shareholders petition under what was then s 459 of the Companies Act 1985. As with this claim, that claim did not constitute “insolvency proceedings”. The gateway relied upon there was the then Order 11, r. 1 (2) of the RSC which allowed for service out of the jurisdiction without the permission of the Court where the claim was one which “the High Court has power to hear and determine notwithstanding that the person against whom the claim is made is not within the jurisdiction of the Court or that the wrongful act, neglect or default giving rise to the claim did not take place within its jurisdiction.” At p116C, Dillon LJ (with whom Stocker and Bingham LJJ agreed) stated that in order for an enactment to be within this rule, it must “at least indicate on its face that it is expressly contemplating proceedings against persons who were not within the jurisdiction of the court or where the wrongful act, neglect or default giving rise to the claim did not take place within the jurisdiction. It is not enough, in my judgment, that the enactment… gives a remedy in general cases… without any express contemplation of a foreign element.” He went on to say that if it were otherwise, then on the face of, it a party could issue a claim for an injunction against any person anywhere without the need for permission since the power to make an injunction derives from an enactment namely s37 of the Supreme Court Act 1981, and that could not be right. Accordingly, the claim brought under s459, could not be served out of the jurisdiction.

In Re Paramount Airways[1992] Ch 223, the Court was concerned with a claim under s238 of the Act which, as noted above, constituted “insolvency proceedings”. The administrators of the relevant company sought to serve such a claim against the Jersey-registered bank which was the recipient of monies the subject of the claim and which had come from the company. The relevant gateway there was contained in what was the then rule 12.12 of the Insolvency Rules 1986. This stated that Order 11 of the RSC did not apply in insolvency proceedings. It went on to say that “where for the purposes of insolvency proceedings any process or order of the court or other document is required to be served on a person who is not in England and Wales, the court may order service to be effected within such time… at such place and in such manner as it thinks fit…”

Sir Donald Nicholls VC first had to consider whether there was in rule 12.12 itself any limiting factor in relation to serving out a claim made under s 238. In the end he could find no such limitation. See his judgment at p237G-238A. At p239C-E he made reference to the increasingly international nature of trade and fraud so that the Courts were more willing to grant injunctions against foreign nationals. No implied limitation could be read into the words “any person” in the section which should bear their ordinary and natural meaning. All of that, of course, is in the context where for there to be a claim under s238 at all, there first had to be a company registered in England or Wales now in liquidation or administration.

However, Sir Donald Nicholls said that there were other limiting factors beyond the words of the section which could mitigate any potentially adverse consequences of serving such a claim out of the jurisdiction. First, the grant of any relief pursuant to s 238 is itself a discretionary remedy. And if a foreign element is involved, the Court will need to be satisfied at the end of the day that in respect of the relief sought, the defendant is sufficiently connected with England to make it just and proper to grant the particular relief – see p240A-E. The need to see that there is a sufficient connection with this country will require the Court to look at all the circumstances including the residence and place of business of the defendant, his connection with the insolvent, the nature and purpose of the transaction being impugned, the nature and locality of the property involved, the circumstances in which the defendant became involved in the transaction or received the benefit from it or acquired the property in question whether the defendant acted in good faith and whether under any foreign law the defendant had acquired unimpeachable title to the property concerned. The weight of such factors would vary from case to case.

Second, the Court would have to examine the strength of any case that there was a sufficient connection right at the start because this would form part of the Court view of the underlying merits of the claim in the context of the party seeking permission to serve out having also to satisfy the Court that there is at least a serious issue to be tried.

In those ways, therefore, the interests of the foreign defendant or a party with foreign assets would be taken into account.

Jyske concerned a s423 claim. This in fact had been added by amendment to the existing claim and it was pursued at trial. In his judgment, Evans-Lombe J dealt with the question of jurisdiction. He stated that the claim fell within Order 11, r 1(2) (b). However, Harrods was not cited to him. Had it been, he would have had to consider the interpretation placed upon that rule by Dillon LJ. Although this was a s423 claim and not a minority shareholders petition, I can see no relevant difference for these purposes. Neither constituted “insolvency proceedings” and both were entirely general in their terms. In my judgment, Evans-Lombe J was bound by Harrods and since it was not referred to him and plainly would have required a different result, his decision on the scope of a s423 claim was, with respect, per incuriam.

Evans-Lombe J went on to consider that he should find there to be a sufficient connection with the defendant for the purposes of the s423 claim before him. This was not by reference to any of the particular connections which had been referred to by Sir Donald Nicholls in Paramount. Rather, he did so because if the s423 claim were not now enforced by him, the claimant would have to start all over again in Ireland. Further, there had been no application to stay the proceedings by the defendant on the grounds of forum non-conveniens and indeed the claim had already been tried and with no apparent disadvantage to the defendants.

In Banco Nacional de Cuba[2001] 1 WLR 2039, the question before Lightman J was service out of the jurisdiction of another s423 claim. By now, however, the relevant gateway was CPR 6.19 (2) which permits service out of the jurisdiction “where each claim included… is a claim which, under any other enactment, the court has power to determine”. I do not consider that provision to be materially different from para. 3.1 (20)(a) which is the relevant one here. Lightman J concluded that the point was authoritatively covered by Dillon LJ’s judgment in Harrods in respect of what he regarded as the predecessor to CPR 6.19 (2). He said that the dicta of Evans-Lombe J were themselves obiter but anyway he had not been referred to Harrods. The decision of Lightman J is in my view directly supportive of the proposition that para. 3.1 (20) must be interpreted narrowly so that a s423 claim does not fall within it simply because it is made pursuant to an enactment. Its words are entirely general, as with the provisions of s459 of the Companies Act 1985, but that is not sufficient.

It is true that in Erste v JSC [2013] EWHC 2926 Flaux J stated at paragraph 150 of his judgment that a s423 claim did fall within para. 3.1 (20) (a) subject only to the Court’s usual discretion on questions of service out. There does not appear to have been much argument about this because the principal contention made on behalf of the defendant was that s423 was itself a statutory tort and therefore subject to the particular requirements of paragraph 3.1 (9). Flaux J said that as it was not in fact a statutory tort the defendants were “constrained” to accept that para. 3.1 (20) (a) covered the s423 claim. It therefore seems that the Harrods point, as it were, was not taken and there was no reference to that case or to Banco Nacional. In the Court of Appeal, the defendants accepted that para. 3.1 (20) (a) applied and so there was no further argument about it.

In those circumstances I consider that any decision by Flaux J that a s423 claim was within that paragraph is clearly wrong.

Accordingly, this gateway is not available to Orexim here. There is nothing surprising about that in my view. It is one thing to stress the need for extra-territorial jurisdiction in circumstances where the relief is sought in connection with insolvency proceedings here in respect of an English registered company; but it is quite another where the claim has no such factor which intrinsically connects it to this jurisdiction. In those circumstances to leave the question merely to general considerations of “sufficient connection” is too uncertain. The other gateways generally have some feature which links the claim to this jurisdiction as part of their basic requirements and I see no reason not to take the same view of para. 3.1 (20) (a). It is true that the present gateway is not in as explicit terms as the gateway in Harrods but I would respectfully take the same approach as that taken by Lightman J which was to adopt the Harrods rationale in respect of later versions of the gateway.

On that basis, there is no good arguable case for service out of the s423 claim against either MPT or Zen pursuant to this gateway.

The only other gateway now relied upon by Orexim as against MPT on this claim is paragraph 3.1 (4A). This provides that where a claim is made against a defendant in reliance on one or more of (most of) the sub-paragraphs of paragraph 3.1 there can be service out of “a further claim… made against the same defendant which arises out of the same or closely connected facts.”

It is said that the s423 claim against MPT is one such further claim by reference to the already pleaded Damages Claim. However, and notwithstanding the compendious way in which the matter is presently pleaded in the Particulars of Claim, I cannot see how the Insolvency Act Claim arises out of the same facts as the Damages Claim or facts which are closely connected with it. The latter claim is straightforward and at first blush, it is hard to see what the defence to the claim might be, although I understand that it is going to be said by MPT that the obligation upon it pursuant to paragraph 2 (i) was only for it to use its “best endeavours” to persuade Global to transfer the money to the High Court of Bombay. I find that a somewhat surprising submission but that is for another day. The point here is that the facts requiring to be proved for the s423 claim are of a quite different and more extensive order and they deal with different points. I accept that MPT is a defendant to both claims but that cannot be enough. The logic behind paragraph 3.1 (4A), introduced in October 2015, must be rather like that of section 35 of the Limitation Act 1980. Where the “new claim” does not raise any substantially different facts and could be said generally to fall within the same matrix of facts as the existing claim, it should not require separate permission for service out or be faced with a time bar, since the Court is already concerned with the core points. This view is supported by the commentary on this gateway at para. 6HJ.12 at p365 of the White Book Vol. 1 which says that the aim of the new gateway was to enable related claims in, for example, tort restitution and constructive trust to be joined in one action. The case before me is not that type of case. Given the much wider and different scope of the Insolvency Act Claim I cannot see how it can be said to have arisen out of the same or closely connected facts as the Damages Claim.

It was submitted by Mr Adair for Orexim that any substantive claim which is designed to protect the position of the successful claimant on the “main” claim, or which can be regarded as “parasitic” upon it, must be viewed as arising out of the same facts. I do not agree. As a matter of analysis that simply does not follow. Nor do I accept that one can properly say that the Damages Claim relies upon a “course of dealing” which encompasses the transactions impugned in the Insolvency Act Claim. It simply does not.

On that footing, Orexim cannot show a good arguable case under this gateway either, so far as MPT is concerned.

As for the Insolvency Act Claim against Zen, the other gateway relied upon is paragraph 3.1 (3). This allows a claim to be served out of the jurisdiction where a claim has already been made against a person and there is between the claimant and that person a real issue which it is reasonable for the Court to try but then the claimant wishes to serve the claim form on another person who is a “necessary or proper party” to that claim. In other words, it is said that Zen is a necessary or proper party to the Damages Claim made against MPT. While the operation of this sub-paragraph is not confined simply to cases where for example the two persons are to be co-defendants on the basis of joint liability etc there has to be some connecting factor. See paragraph 130 of the judgment of Flaux J in Erste and also paragraphs 46-49 of the judgment of Christopher Clarke LJ in the decision of the Court of Appeal in Carvill v Camperdown [2005] EWCA Civ 645 which refer to cases where both claims would involve one investigation or where there was a “common thread” or they would be closely bound up with one another. That is not the position here.

Indeed the only way in which Orexim says that paragraph 3.1 (3) could be satisfied here is by saying that the Insolvency Act claim against Zen was “parasitic” upon the Damages Claim. But that is only to the extent that the debt owed by MPT to Orexim could be said to form part of the background matrix for the Insolvency Act claim. It is also said both here and in other contexts that the Insolvency Act claim is required so that Orexim does not turn out to be an unpaid judgment creditor because its judgment has been frustrated. I see that, but the fact remains that the Insolvency Act Claim involves the pleading and proof of an entirely different and more complex set of matters than those pertaining to the Damages Claim. I do not see that para. 3.1 (3) applies, therefore.

If there had been a basis for service out of the jurisdiction against MPT of the Insolvency Act Claim then I can see how Zen could then be said to be a necessary and proper party and indeed I did not understand Mr Gruder QC for Zen to be arguing otherwise. But there is no such basis.

Accordingly, there is no available gateway for the Insolvency Act claim against Zen either.

If there is no available gateway for the Insolvency Act Claim then I cannot see how Orexim could use paragraph 3.1 (4A) for the purpose of service out of the Declaration Claim as against MPT or paragraph 3.1 (3) for the purpose of service out of that claim as against Zen. The invocation of those gateways would fail for the reasons already given.

It follows that the permission for service out of the jurisdiction which I originally gave to Orexim in respect of the Insolvency Act and Declaration Claims as against MPT and Zen must be set aside. Likewise the freezing injunction against Zen must be discharged.

It is therefore not necessary for me to deal with the merits of the claims. However I do so briefly, given that I heard full argument on this and lest I be wrong in my analysis above.

As noted above, the test of serious issue to be tried is a modest one. On the other hand I also accept that merely because some dealings between the relevant parties are suspicious it does not follow that a real prospect of success is shown on either the Insolvency Act or Declaration Claims. That said, such claims often have to be established by inference rather than direct evidence especially on the question of intent and one needs to recognise that the material available at trial (especially from disclosure) may not be available at this early stage.

I consider that a serious issue to be tried has been made out for the following reasons.

First, the transactional history of the purported sale of the Bon Vent is extremely odd. By a memorandum of sale dated 4 June 2013 MPT agreed to sell it to Singmalloyd for US$6m with delveiry by 30 September 2013. This was later extended to 25 February 2014. Then by another memorandum of sale Singmalloyd agreed to sell it to Zen for US$7.4m with delivery by no later than 30 April 2014. By a further agreement effective 5 December 2013, Singmalloyd agreed to pay to MPT a further US$3.47m at that point in addition to the initial deposit of US$1.225m making a total payment of around US$4.7m. That is an unusual amount to pay upfront between two apparently arms-length parties where delivery was some months off. Singmalloyd apparently agreed to do this because MPT was facing “financial stress”. As between Singmalloyd and Zen, the delivery date was put back to 1 December 2014.

By a letter from MPT to the Director-General of Shipping in India dated 13 January 2014, it said that “it has been decided to sell” the vessel even though according to the documents, this decision was taken much earlier. There is then an instrument of sale dated 13 February 2014 stating that the price of the vessel was now US$4.7m and that Singmalloyd had paid that price to MPT. This is inconsistent with the price according to the earlier documents which was US$6m. In paragraph 22 of his witness statement Mr Lihala attempts to explain this along the lines that it was agreed not to show the full price at that stage but it is unconvincing.

There is then a bill of sale dated 28 March 2014 stating that Singmalloyd had received US$7.4m from Zen for the vessel, again, long before the delivery date. On the face of the two most recent documents Singmalloyd was thereby making a profit of US$2.7m.

In an email exchange of 3 and 12 June Singmalloyd purports to say that it will now only pay the US$4.7m it has already paid to MPT because of a lack of clean title and the arrests of the vessel. This is odd since it was released on 11 June. There is a letter agreement dated 13 June 2014 stating that because of the arrests, the price is therefore reduced from US$6m to US$4.7m with a delivery date of 30 June. It is very unclear why MPT should have agreed to such a reduction and anyway, on the face of the instrument of sale the price was already only US$4.7m by February 2014.

Further, in MPT’s statement of claim in its Indian arbitration against Orexim and Turanli, it stated that it had decided to sell the vessel to Singmalloyd “under duress” (why, it is not clear) and that Singmalloyd’s final offer had been US$4.7m because of the arrests. Since the vessel was worth US$9.3m according to a valuation obtained and exhibited by MPT, it had made a loss of US$4.6m which it then claimed against Orexim and Turanli. That makes little sense if there was a genuine earlier contract between MPT and Singmalloyd at US$6m. Also the price of US$4.7m had been agreed back in February. But if one takes the value of US$9.3m as asserted by MPT then to accept only US$4.7m is a very large drop indeed especially as there does not appear to be any real basis for making any reduction on account of the arrests which had terminated by 11 June.

Mr Drury, the solicitor for MPT seeks in paragraph 77 to give a further explanation of the sales (of the Bon Vent and the Bon Chem) by reference to the fact that MPT no longer wished to own them now because it had no relevant experience of maintenance, and so it changed its business model. This is not really consistent with the notion of a “sale under duress” and makes little sense. If MPT had no relevant experience it is hard to see why it bought the vessels in the first place especially as there was Zen which could manage them.

There is then some evidence from Mr. Singh at paragraphs 6-9 of his witness statement that what was intended was a sale to Singmalloyd which would then refurbish and repair the vessel and this would explain the difference in price. But if so, it is not clear why Zen would just not buy direct from MPT. Moreover there is in fact no contractual document evidencing the repair/refurbishment obligation on Singmalloyd, nor any evidence that it did the work. There is an internal assessment report from Zen dated 7 December 2014 which appears to set out all the various defects and then the work done to rectify them, at a cost of US$1.4m. But that is no evidence of the work being done by Singmalloyd. Moreover this document is simply exhibited to Mr Wise’s witness statement (on behalf of Zen) without comment.

In the light of all of that I consider that there is sufficient material to say that there is a serious issue first that the vessel was sold at an undervalue using MPT’s US$9.3m figure as a starting point and second that the purpose of all this was to put it beyond the reach of MPT’s creditors. This applies to both the sales to Singmalloyd and to Zen. As against this, MPT and Zen point to the fact that the documents show the sales being agreed back in June 2013. So they do (although unsurprisingly, Orexim at this stage does not admit their authenticity) but on the other hand the actual instruments of sale are dated much later, and on any view there is no delivery until late on in 2014 (MPT does not actually say when the vessel was delivered to Singmalloyd). By early 2014, Orexim and MPT were in dispute and on its own documents, MPT says that it was experiencing “financial stress”. There is also the evidence from Mr Budnyk of Mr Lihala telling him that he wanted to take from Global the monies owed to MPT by Atlantis. Even if it cannot be said that the intention was directed at Orexim specifically, it does not need to be; it can be to creditors generally even if not identified. For present purposes there is enough evidence that MPT may well have been in financial difficulties. Finally, there is a serious issue to be tried that Orexim is the “victim” of the impugned transactions.

In addition, it is said that even if the s423 claim is made out, the remedy sought could not be made here, however, because it would affect the interests of the Srei Infrastructure Finance Limited (“Srei”), an Indian finance company which lent US$7.4m to Zen secured by a mortgage over the vessel. While it may turn out to be the case that the sums owed by Zen to Srei are more than the present value of the vessel, there is little evidence at the moment of the background to this financing transaction and there are various options to the Court as far as remedy is concerned – see s423(2). Suffice it to say that I do not consider the possibility that the Court would not order the return of the vessel to MPT for the purpose of enforcing any judgment in favour of Orexim to be such that it means that there is no serious issue overall on the Insolvency Act Claim.

The final point in respect of the Insolvency Act Claim is the question of “sufficient connection” as referred to by Sir Donald Nicholls in Paramount. Orexim says that there is because, again, that claim is parasitic on the Damages Claim and is needed in order to ensure that any judgment which Orexim might obtain on the Damages Claim can then be meaningfully enforced. It also suggests that in the absence of being allowed to make the claim here, Orexim would have to wait until after judgment on the Damages Claim. As to that last point I do not think that this follows. As for the rest, MPT and Zen both say that in truth there is no sufficient connection at all. The fact that the Damages Claim is brought here pursuant to a English jurisdiction clause is of little or no weight since the underlying contracts for the sale of the vessel, which are the more pertinent documents, have jurisdiction clauses in favour of Singapore and they are both Indian companies. I think there is considerable force in the points made by MPT and Zen. On the other hand this issue only arises on the hypothesis that I was wrong to find that no gateway applied. If a gateway did apply so that prima facie the additional claims would be litigated here alongside the Damages Claim the position is not so straightforward. In the case of MPT it would be hard then to argue no sufficient connection at the end of the trial to avoid any remedy being imposed on it when the Court was otherwise hearing the Damages Claim. In the case of Zen, the hypothesis would be that it was a necessary and proper party and/or para. 3.1 (20) applied and again, in those circumstances it is not clear that there could be no sufficient connection. Accordingly, in those somewhat hypothetical circumstances I would have been prepared to accept for present purposes that there was also a serious issue to be tried on this question.

For broadly the same reasons, I would have concluded that there is a serious issue to be tried on the Declaration Claim.

In the event, however, the question of serious issue is academic.

Again, this only arises if (contrary to my findings above) there are applicable gateways. In those hypothetical circumstances and essentially for the reasons given in relation to sufficient connection in paragraph 61 above I would have said that England was clearly the appropriate forum.

This is also academic now. Had the position been (contrary to my findings above) that there was jurisdiction in respect of the Insolvency Act and Declaration Claims, I would not have discharged the permission to serve out or the freezing injunction, for the following brief reasons:

there is no evidence of any deliberate non-disclosure here;

in general terms the disclosure made to the Court on the original hearing was very full and clearly stated in both the witness statements and the skeleton argument;

on this hypothesis I would have found that the order for service out granted originally was proper and on that footing I can see no basis for saying that there was any non-disclosure in respect of the law;

it was said that it had not been pointed out that Mr Lihala’s signature on the Atlantis-Global Sale Contract was not in any event on behalf of the seller or the buyer. However it was there and must have been there for a reason. It is hardly to the point that the translation of the Iranian manuscript notes on the document said that he signed as a witness given that Mr Lihala says that the signature was a forgery;

Orexim was entitled to stress the connection between the forged bills of lading and Mr Lihala for the reasons given in paragraph 13 above;

it is correct that Orexim had alleged that the tracking device of the vessel had been switched off during the voyage but it now appears that this was not correct. However there is no evidence that this was other than a mistake;

while Mr Budnyk did not in his evidence go into detail about the Ukrainian proceedings initiated by Orexim and why they were discharged, it was plain that they could not have been justified;

it is also said that it was not pointed out that MPT had co-operated with Orexim in order to prevent the release of the cargo from the tanks at BIK. But the only documents relied upon here are emails from MPT on 17 and 26 June which required PP not to release the goods because MPT was asserting a lien over them for unpaid freight; MPT was not therefore seeking to protect the interests of Orexim. Moreover, if Orexim is right and Mr Lihala was party to the production of the forged bills of lading, he presumably did so with a view to protecting MPT’s own interests somehow and this was all counter to Orexim’s interests as unpaid seller;

it is correct that Orexim did give the impression that it had a clear case on breach of the Settlement Agreement by MPT. But that was a fair presentation given the nature of the defence which apparently will be asserted here. See paragraph 40 above; as to the point made by Mr Drury in his witness statement at paragraphs 140-142 that MPT will argue that the Settlement Agreement was made under duress, sufficient reference was made to this in paragraph 76 (3) of the original skeleton argument for 30 August 2016;

complaint was made about the suggestion made by Mr Budnyk in paragraph 80 of his first witness statement that Global’s invoice to Zarrin included an amount for freight, which MPT had recovered from Orexim. So if MPT obtained from Global the monies paid to it by Zarrin, it would have recovered twice as far as the freight was concerned. Accordingly, MPT had acted dishonestly by claiming further losses against Orexim in respect of the carriage of the goods in the Indian arbitration and High Court proceedings. Mr Lihala denies that MPT was paid twice and it is said that there was non-disclosure on the part of Orexim here. I do not agree. Orexim’s whole point here was the relationship (through Mr Lihala) between Global and MPT and if Orexim was right that MPT was in receipt of the monies which otherwise would have gone from Global to Atlantis then there could have been double recovery. In any event the main point was the notion that it was Mr Lihala who diverted the monies paid to Global but which otherwise would have gone to Atlantis;

a further allegation is that it was wrong to suggest that MPT was responsible for the wording on the original bill of lading because it was Nika Trans Group. But this was the agent of Capt Singh/MPT not Orexim.

Overall, this was not a case where the orders I made on 30 August 2016 should be set aside if they were otherwise proper.

At hearing I heard brief submissions on the adequacy of the £100,000 guarantee obtained by Orexim to support its cross-undertaking in damages on the freezing injunction. In the event, this point is now academic.

In the event, service of the proceedings upon MPT, insofar as they relate to the Insolvency Act and Declaration Claims must be set aside. Service of the proceedings upon Zen must be set aside entirely along with the freezing injunction. Singmalloyd has played no part in these proceedings and at the handing down of this judgment I will hear brief submissions on what should be done about it. I am grateful to counsel for the excellence of their oral and written submissions.