Cyprus Popular Bank Public Co Ltd v Vgenopoulos & Ors

This high value case raises two interesting and apparently novel questions: first, whether, in the case of a worldwide freezing order obtained in a foreign jurisdiction, the effect of obtaining an order under Article 38 of the Judgments Regulation (Council Regulation (EC) No. 44/2001 of 22 December 2000) (the ‘Judgments Regulation’) permitting the registration of the worldwide freezing order as a judgment of the Queen’s Bench Division of the High Court of Justice of England and Wales is that the worldwide freezing order becomes immediately effective and fully enforceable or whether it only becomes effective and fully enforceable if there is no appeal brought in respect of the registration order within two months of its being made or, if there is an appeal in that time period, on determination of that appeal; and secondly, whether “measures of enforcement” (as referred to in Article 47.3 of the Judgments Regulation) includes service of the worldwide freezing order on, and/or notification of its terms to, third parties or whether “measures of enforcement” are confined to processes in which the Court is involved in securing enforcement.

As to the first of these questions, the Claimant argues for the former position whilst the Defendants argue for the latter. As to the second question, the Claimant argues for the latter position whilst the Defendants argue for the former. The Defendants contend that it is appropriate in this case that the Court should exercise its inherent power to vary its own orders to make the meaning and intention of the Court clear (see Practice Direction 40B, paragraph 4.5) and to grant declaratory relief as to the parties’ rights under a Court order, as happened in Masri v Consolidated Contractors (Oil & Gas) Company SAL [2009] EWCA Civ 36 and as also happened, in a freezing order context, in JSC BTA Bank v Ablyazov [2015] UKSC 64, a case in which Lord Clarke described at [16] the “sole question” as being “what the freezing order in fact made means”.

Before I come on to address the questions to which I have referred, I should firstly describe the factual context in which the questions come to be considered. That factual context, which is either not in dispute at all or which for present purposes is not in dispute, was helpfully summarised in the skeleton argument submitted by Mr Charles Samek QC and Mr James McWilliams on the Claimant’s behalf, as well as in the witness statements of Dr Fotios Karatzenis, who is Chief Legal Counsel of the Twelfth Defendant (‘Marfin’), and Mr Jeremy Andrews, a partner in DLA Piper LLP, dated, respectively, 9 May 2016 and 7 June 2016.

The Claimant is a registered Cypriot entity, which until 2012 offered a full range of banking, insurance and other related financial services and products operating in Cyprus, Greece, the United Kingdom, Serbia, Romania, Ukraine, Malta and Russia. On 18 May 2012, the Cypriot Government decided to underwrite the new issue of shares in the Claimant valued at €1.8 billion on the basis of the provisions of the Cypriot Law on Financial Crisis Management of 2011, Law 201/2011. On 26 March 2013, Mrs Andri Antoniadou of Nicosia was appointed as Special Administrator of the Claimant pursuant to Order 94/2013 of the provisions of the Cypriot Law on Resolution of Credit and Other Institutions 2013 (L.17(I)/2013). The Claimant is now under a process known as ‘resolution’ in Cyprus.

On 26 November 2012, the Claimant issued a writ of summons in the District Court of Nicosia against the First, Second and Third Defendants along with 8 others. The claims brought in those proceedings allege, on the Defendants’ part, various breaches of fiduciary duties, breach of trust, negligence, abuse of position, conflict of interest, and conspiracy in a manner contrary to the interests of the Claimant. Subsequently, on 29 April 2013, the same day as the writ of summons was amended by the Claimant to add Marfin to the proceedings (as the Twelfth Defendant), the Claimant filed an ex parte application in the District Court of Nicosia which sought worldwide freezing orders and discovery orders against the then defendants. On 8 May 2013, this application was granted and a worldwide freezing order was obtained on an interim basis up to the value of €3,790,000,000 in the case of the First and Second Defendants and up to the value of €1,500,000,000 in the case of the Third Defendant. The same order prohibited Marfin from transferring assets to the First, Second and Third Defendants. The following month, on 23 May 2013, the Claimant filed an ex parte application and obtained an order for permission to serve the writ of summons and the interim worldwide freezing order out of the jurisdiction on the Defendants in Greece. Following this, on 28 June 2013, the First and Fourth Defendants applied to set aside the writ of summons and the interim worldwide freezing order on procedural grounds, something which was also done by the Second and Third Defendants a few days later on 1 July 2013. The next day, the First, Second and Third Defendants filed oppositions to the interim worldwide freezing order.

These applications were ultimately unsuccessful, the District Court of Nicosia on 23 May 2014 issuing a final judgment following an inter partes hearing which had the effect of making the interim worldwide freezing order a final worldwide freezing order which is to remain in force until the completion of the proceedings before the District Court of Nicosia. This final order (the ‘Cypriot Freezing Order’), like the interim worldwide freezing order, deals with each of the Defendants separately and provides as regards the First, Second and Third Defendants (but not Marfin) as follows:

“iv (1) Save as provided in paragraph (2) above, the conditions of this Order do not affect or concern anybody outside the jurisdiction of the Courts of the Republic of Cyprus.

(2)

The conditions of this Order affect the following persons which are found in a country or state outside the jurisdiction of the Courts of the Republic of Cyprus:

…

b Any person, including any banking institution or other financial organization,

…

ii in relation to which this Order has been determined as being applicable and/or otherwise executable by the Courts of a country which has jurisdiction on the said person or on the assets of this person.”

Before turning to deal with the steps which the Claimant has taken to register the Cypriot Freezing Order in this jurisdiction, I should mention that I have been made aware of the fact that the First Defendant and Marfin are claimants in an ICSID arbitration brought by them against the Republic of Cyprus. In his witness statement Dr Karatzenis suggested that the claims in that arbitration cover the same ground as that covered by the claims made by the Claimant against the Defendants in the proceedings before the District Court of Nicosia. He went on to suggest that the latter proceedings have been pursued by the Claimant, which he described as being state-owned and state-controlled, as part of an attempt by the Republic of Cyprus to “hamper” the Defendants’ pursuit of the ICSID arbitration claim, and that the obtaining of the Cypriot Freezing Order, as well as its registration in this jurisdiction, also forms part of that attempt. On the Claimant’s behalf, Mr Andrews explained in his responsive witness statement that this is not accepted. It is, in any event, for immediate purposes not a matter which is relevant.

Somewhat more relevant is the fact that, on 12 February 2015, the Claimant (then instructing Eversheds LLP rather than DLA Piper LLP, but with Mr Samek QC acting at that stage also) made an application to the Queen’s Bench Division of the High Court of England and Wales to register the Cypriot Freezing Order as a judgment pursuant to Article 38 of the Judgments Regulation. Although registration applications are normally dealt with on paper, and indeed the Claimant’s application requested that the application be addressed “without a hearing”, it is apparent that Master Leslie was not willing to proceed in that way because he made a note on the application notice stating: “See me in Practice, if so advised. See Art 31 of EC Reg 44/2001”. He clearly had in mind that it would be open to the Claimant to apply for a freezing order (a “protective measure” as described in Article 31: see below) and was querying whether, in those circumstances, the appropriate course was to seek an order permitting registration of the Cypriot Freezing Order.

At the hearing which subsequently took place before Master Leslie, on 26 February 2015, he raised the point which was concerning him as regards Article 31. Indeed, he asked, somewhat prophetically and certainly relevantly, what the effect would be were the Cypriot Freezing Order to be registered. Mr Samek QC’s response was to say that “it would be as if it were an English freezing order and that … the Applicant was considering going off to the High Court to seek specific interim relief as would be available here against third parties”. Master Leslie was ultimately persuaded that he had jurisdiction to make the registration order sought and that he should make such an order. Indeed, I did not understand Mr Malek QC and Mr Evans to dispute that this is the position. They accepted, in fact highlighted during the course of Mr Malek QC’s oral submissions, the fact that, as appears from the wording of Article 32 of the Judgments Regulation, as set out below, the definition of “judgment” is wide enough to embrace a worldwide freezing order, and furthermore there is authority from the Court of Justice of the European Union, then called the Court of Justice of the European Communities, (the ‘CJEU’) in the form of Denilauler v SNC Couchet Frères 125/79 [1980] ECR 1553 at [17] that, provided that the freezing order has been made after an inter partes hearing, the Judgments Regulation applies.

The other matter to note is that, in making the order which he did, Master Leslie would have been aware of what had been stated in the witness statement made by Mr David Flack, a partner in Eversheds LLP, and dated 12 February 2015. In paragraphs 35 and 36 of that witness statement, Mr Flack stated as follows:

“35.

The Judgment subject of [the Claimant’s] present application was delivered on 23 May 2014. There has been a delay in bringing this application primarily because of the bureaucratic internal approval processes of the Resolution Authority of [the Claimant] (i.e., the Central Bank of Cyprus), without whose approval [the Claimant] cannot take any foreign legal advice and/or legal measures outside of Cyprus.

36.

Despite this delay, it is important to [the Claimant] that the Judgment is registered so that it may serve it on the Respondents and take appropriate measures for its enforcement in England and Wales. In relation thereto, after filing this application, [the Claimant] intends to give notice of the Judgment and this application to third party financial institutions in the UK there [the Claimant] believes the Respondents have/had substantial assets. Again, because of the reasons for delay explained above, [the Claimant] has been unable (until now) to give notice of the Judgment to the third party financial institutions with a view to gaining information about preserving the assets of the Respondents. [The Claimant’s] application for registration of the Judgment is therefore the first step in its efforts in seeking future relief before the English court.”

It follows that the Claimant was making no secret of its intentions, specifically that it planned on notifying third party banks about the Cypriot Freezing Order.

The order which Master Leslie made (the ‘Registration Order’) was in standard terms and stated as follows:

“1.

The Judgment dated 23 May 2014 of the District Court of Nicosia, Cyprus, with Action No. 8400/2012 between the Claimant/Applicant and the Defendants/Respondents 1, 2, 3 and 12 (which itself made final and absolute until trial or further order the interim orders dated 8 May 2013 of the District Court of Nicosia, Cyprus, with Action No. 8400/2012 between the Claimant/Applicant and the Defendants/Respondents 1, 2, 3 and 12) may be registered as a judgment of the Queen’s Bench Division of the High Court of Justice of England and Wales pursuant to Article 38 of the Judgments Regulation (Council Regulation (EC) No. 44/2001 of 22 December 2000), for enforcement in England and Wales.

2.

Respondents 1, 2, 3 and 12 pay the Applicant’s costs of this application to be assessed if not agreed, with a payment on account thereof to be made within 28 days of service of this order in the total sum of £10,000.00.

3.

The party entitled to the benefit of the judgment is Cyprus Popular Bank Public Co Ltd (also known as ‘Laiki’) under resolution pursuant to the provisions of the Resolution of Credit and Other Institutions Law 2013 N. 17(I)/2013 (acting by its Special Administrator, Andri Antoniadou, from Nicosia, Cyprus) and its address for service within the jurisdiction is the address of its instructed solicitors Eversheds LLP at One Wood Street, London EC2W 7WS (Ref: FLACKD/300174.000001).

4.

Respondents 1, 2, 3 and 12 have the right to appeal against this Order by making an appeal within 2 months after the date of service of this order on them. No measures of enforcement will be taken by the party entitled to the benefit of the judgment before the end of that period, other than measures ordered by the court to preserve the property of the judgment debtors.”

The Registration Order was subsequently varied by an order made by Master McCloud on 26 August 2015 but not in a manner which is material for present purposes.

It is a curiosity of this case that, having obtained the Registration Order in February 2015, it was not until almost a year later that the Claimant did anything with the Registration Order and the Cypriot Freezing Order to which it relates. On 4 February 2016 DLA Piper LLP wrote to Union Bancaire Privée (‘UBP’) in, inter alia, the following terms:

“3.

On 23 May 2014, Cyprus Popular Bank obtained a judgment against (i) Mr Andreas Vgenopoulos, (ii) Mr Efthimios Mbouloutas, (iii) Mr Kyriacos Mageiras and (iv) Marfin Investment Group Holdings S.A. (‘MIG’) (together the ‘Defendants’) in the District Court of Nicosia, Cyprus (the ‘Cypriot Judgment’), a copy of which we enclose, together with a certified English translation.

4.

The Cypriot Judgment provides that the interim order issued by the District Court of Nicosia in Cyprus on 8 May 2013 (the ‘May 2013 Order’) be rendered absolute and valid until the final trial of the action. You are invited to consider the English translation of the May 2013 Order enclosed with this letter in detail.”

The letter then explained what the various prohibitions in the Cypriot Freezing Order were, highlighting as follows at paragraph 4.5:

“The terms of the May 2013 Order affect banks and financial organisations outside the jurisdiction of the Courts of the Republic of Cyprus who have been given notice of the May 2013 Order (paragraphs A.3.iv(2)(b), B.3.iv(2)(b), C.3.iv(2)(b)).”

DLA Piper LLP continued:

“5.

Following the award of the Cypriot Judgment, Cyprus Popular Bank obtained an Order in the English Court dated 26 February 2015 that registered the Cypriot Judgment as a judgment of the Queen’s Bench Division of the High Court of Justice of England and Wales pursuant to Article 38 of the Judgments Regulation (Council Regulation (EC) No. 44/2001 of 22 December 2000), for enforcement in England and Wales (the ‘English Order’). A copy of the English Order is also enclosed, together with a copy of a further Order of the English Courts dated 26 August 2015 which noted the change of administrator and law firm identified in the English Order.

6.

The prohibition on disposing or dealing with or diminishing the value of assets includes any cash or assets held by any of the Defendants whether in their own name or not, whether solely or jointly owned, and whether their interest in any asset is legal or beneficial.”

The letter concluded as follows:

“7.

We seek your written confirmation by 5 pm on 5 February 2016 that, in respect of any assets of the Defendants in your custody, possession or power, you will not permit the Defendants to remove these from England and Wales or to dispose or to deal with them or to diminish their value. In the absence of hearing from you, we may apply to the court without further notice to you.

8.

We further request that you confirm by return (i) whether or not any of the Defendants hold any accounts at your bank; and (ii) if so, the sums held in those accounts.

9.

For the avoidance of doubt, you are now considered to be on notice of each of the May 2013 Order, the Cypriot Judgment and the English Order. Should you fail to comply with the terms of those orders and judgment you may be found in contempt of court.”

UBP’s response the next day was to send a letter signed jointly by Joanna Claydon-Voyce, Head of Legal at UBP, and by Peter Drew, Head of Compliance at UBP, in which the following was stated:

“Pursuant to your request, we confirm that we now have notice of and we will comply with the Order of the High Court of England and Wales registering the judgement of the District Court of Nicosia, Cyprus, Action No. 8400/2012 with immediate effect.

As regards your request for confirmation and information in paragraph 8 of your letter, we are advised that the Order of the High Court does not oblige us to provide you with such information. As a result, we are bound by our duties of confidentiality and personal data protection owed to our clients and, subject to any further directions or orders that the Court may make at this stage are unable to assist you with your request.”

This was followed, after certain telephone exchanges, by an email from Miss Claydon-Voyce to Jamie Curle, a partner at DLA Piper LLP, on 25 February 2016, in which she stated that “we are being told that the order is unenforceable in the UK as it has not been registered”. Mr Curle’s response to this took the form of an email the next day, in which he stated as follows:

“While it is obviously not for us to advise you, our client’s position is as follows:

1

By Order of the English Court dated 26 February 2015, the Judgment of the District Court of Nicosia in Action no. 8400/2012 dated 23 May 2014 (the ‘Cypriot Judgment’) was registered as a judgment of the High Court of England and Wales.

2

The effect of such registration is that the Cypriot Judgment takes effect in England and Wales as though it were a judgment rendered by a Court in this jurisdiction. Accordingly, having received notice of it, UBP are bound by the English Order and must ensure that its terms are complied with.

3

Paragraph 4 of the English Order, which provides for certain of the Respondents to have a right of appeal, does not impact on the Order’s validity or enforceability as against the Respondents (or you). The purpose of that provision is to allow a period in which enforcement against an executory judgment may not take place, but this does not impact on the prohibition on disposition, which is [a] measure designed to prevent the Respondents from taking any steps that may prejudice a final judgment. That prohibition falls within the category of ‘measures ordered by the court to preserve the property of the judgment debtor’.

4

Accordingly, and as communicated to you in our letter of 4 February, our client’s position is that the English Order is a fully effective and enforceable order of the English Court that is binding on UBP.”

Mr Malek QC was highly critical of this response. He submitted, in particular, that, in circumstances where the Claimant had not sought a freezing order in this jurisdiction, Master Leslie having raised the point specifically with the Claimant at the hearing on 26 February 2015, Mr Curle was wrong to characterise the Cypriot Freezing Order, in effect, as though it were such a freezing order. Mr Samek QC, in contrast, submitted that what Mr Curle told Miss Claydon-Voyce was both accurate and appropriate, with the exception of what was stated in the last sentence of paragraph 3 which Mr Samek QC accepted was wrong but which he described as being of no consequence.

Be that as it may, the Defendants having instructed Three Crowns LLP, correspondence then ensued between the parties’ solicitors. It is that correspondence which has culminated in the making of the present application, alongside the bringing of an appeal against the Registration Order which will be heard before the end of July. In the meantime, as Mr Malek QC and Mr Evans pointed out at the hearing, in practical terms the position remains as described in UBP’s 5 February 2016 letter in that the Defendants’ various bank accounts at UBP in London are frozen.

It is next necessary to set out certain parts of the Judgments Regulation, starting with Article 31 (“Provisional, including protective, measures”) which states as follows:

“Application may be made to the courts of a Member State for such provisional, including protective, measures as may be available under the law of that State, even if, under this Regulation, the courts of another Member State have jurisdiction as to the substance of the matter.”

As will appear shortly, the particular relevance of Article 31 in the present case is the later reference in Article 47 to there being a power “to proceed to any protective measures” once a “declaration of enforceability” has been obtained.

Article 31 is the last of the provisions in Chapter II (“Jurisdiction”). The next chapter, Chapter III, is concerned with “Recognition and Enforcement” and starts with Article 32 making it clear that the word “judgment” as it is used in Chapter III has a broad ambit. Article 32 provides:

“For the purposes of this Regulation, ‘judgment’ means any judgment given by a court or tribunal of a Member State, whatever the judgment may be called, including a decree, order, decision or writ of execution, as well as the determination of costs or expenses by an officer of the court.”

In the circumstances, there was no issue between Mr Samek QC and Mr McWilliams on behalf of the Claimant and Mr Ali Malek QC and Mr James Evans on behalf of the Defendants that the Cypriot Freezing Order comes within the scope of Article 32.

Articles 33 to 37 are then concerned with “Recognition” and, as such, do not require to be quoted here. It is, however, to be noted that a judgment will not be recognised in certain circumstances, namely where recognition would be manifestly contrary to public policy, where it is a default judgment and insufficient notice was given to the defendant, where the judgment is irreconcilable with a judgment given in a dispute between the same parties in the Member State where recognition is sought, and where the judgment is irreconcilable with an earlier judgment given in another Member State or a third party State involving the same cause of action and the same parties (see Article 34).

More pertinently for present purposes, as for the section dealing with “Enforcement”, this spans Articles 38 to 52. Specifically, Article 38.1 states as follows:

“A judgment given in a Member State and enforceable in that State shall be enforced in another Member State when, on the application of any interested party, it has been declared enforceable there.”

Article 40.1 then states:

“The procedure for making the application shall be governed by the law of the Member State in which enforcement is sought.”

This is followed by Article 41, which is in the following terms:

“The judgment shall be declared enforceable immediately on completion of the formalities in Article 53 without any review under Articles 34 and 35. The party against whom enforcement is sought shall not at this stage of the proceedings be entitled to make any submissions on the application.”

This is followed by Article 42.1, which states:

“The decision on the application for a declaration of enforceability shall forthwith be brought to the notice of the applicant in accordance with the procedure laid down by the law of the Member State in which enforcement is sought.”

Article 43.1 then deals with the right of appeal:

“The decision on the application for a declaration of enforceability may be appealed against by either party.”

Most significant in the context of the present dispute is, however, Article 47. This provides as follows:

“1.

When a judgment must be recognised in accordance with this Regulation, nothing shall prevent the applicant from availing himself of provisional, including protective, measures in accordance with the law of the Member State requested without a declaration of enforceability under Article 41 being required.

2.

The declaration of enforceability shall carry with it the power to proceed to any protective measures.

3.

During the time specified for an appeal pursuant to Article 43(5) against the declaration of enforceability and until any such appeal has been determined, no measures of enforcement may be taken other than protective measures against the property of the party against whom enforcement is sought.”

I do not propose setting out the parties’ submissions in full detail. I shall address the substance of the submissions which were made in the next section of this judgment. It is nonetheless convenient to summarise the respective contentions, and I do that at this juncture. In so doing, I focus on the rival submissions as they ended up in the hearing before me. I do not, therefore, necessarily deal with every point which was made along the way. I can confirm, however, that I have had regard to everything which was submitted, even if I do not mention every detail.

Mr Malek QC and Mr Evans submitted that the effect of Article 47.3 of the Judgments Regulation (as echoed in paragraph 4 of the Registration Order) is to mean that the worldwide freezing order (in this case the Cypriot Freezing Order) is not enforceable immediately on the making of the order permitting registration. They further submitted that where the judgment which is made the subject of an order for registration is a worldwide freezing order, then, whatever the position as regards other forms of judgment (specifically money judgments), it is the giving of notice of the worldwide freezing order to third parties which represents enforcement. It follows, Mr Malek QC and Mr Evans submitted, that in this particular type of case a “measure of enforcement” (as referred to in Article 47.3 and paragraph 4 of the Registration Order) is not confined to enforcement through any further court involvement but includes the serving and giving of notice of the Cypriot Freezing Order. It was their submission that what the Claimant in this case has done is to use Article 38 of the Judgments Regulation as an alternative to seeking equivalent freezing order relief in this jurisdiction notwithstanding that it was always open to the Claimant to apply for such relief by virtue of what is stipulated in Articles 47.2 and 47.3, which both make it clear that a claimant can take “protective measures”. The Claimant having chosen not to adopt this course of action, possibly because of an appreciation that a freezing order might not be obtainable owing to the delay which occurred between May 2014 and early 2015 when the Registration Order was obtained, Mr Malek QC and Mr Evans submitted that the Claimant should not be permitted, in effect, to translate the Cypriot Freezing Order into the equivalent of a freezing order obtained in this jurisdiction. The more so, in circumstances where, had a freezing order been obtained on a without notice basis in this jurisdiction, it would have been open to the Defendants in the usual way to seek the discharge of that order, yet in the case of the Registration Order the only option available to the Defendants is to bring an appeal.

In response, it was the submission of Mr Samek QC and Mr McWilliams that, in making their argument, Mr Malek QC and Mr Evans failed to distinguish between, on the one hand, a judgment being “declared enforceable” in a Member State (the precise language used in Article 38.1 and Article 41 and language which is mirrored also in Article 43.1 and Article 47 itself) and, on the other hand, “measures of enforcement” (as referred to in Article 47.3). This distinction, Mr Samek QC and Mr McWilliams submitted, means that the Cypriot Freezing Order became enforceable immediately once the Registration Order was made. Furthermore, the position with a worldwide freezing order, they submitted, is no different to the position with a money “judgment”: in both cases, there can be no objection to informing a party about the existence of an order to which it is subject, and it is only if there is non-compliance that “measures of enforcement” involving the further intervention of the Court need to be taken.

At the start of the hearing, Mr Malek QC and Mr Evans provided me with a draft amended form of the order which they explained they were inviting me to make. I need not set out the terms of that draft in all its respects, but it is right to acknowledge that, as Mr Samek QC highlighted when he came to make his oral submissions, the order as ultimately sought included something which had not previously been included in the draft order accompanying the application notice, albeit that it was touched upon in the skeleton argument submitted by Mr Malek QC and Mr Evans. The two forms of order each included wording designed to make it clear that the reference to “measures of enforcement” in paragraph 4 of the Registration Order include, in the present context, serving the Cypriot Freezing Order on a third party bank or giving notice of its terms. However, the draft amended order contained a new first paragraph which stated that the Cypriot Freezing Order “is not enforceable by the Claimant in England and Wales until the determination of the appeal” against the Registration Order. Mr Samek QC’s submission was that, on any view, such an order would go too far since the effect of such a declaration being made would be that the Court would be declaring that the UBP bank accounts were no longer frozen. He pointed out that this would permit a particular payment concerning a company called Lucca Properties Ltd to be made. He highlighted, in particular, that instructions had been given to UBP that that payment should be made the very day, 23 February 2016, that the Cypriot Freezing Order had been served on the Defendants in Greece. This is apparent from a letter which was sent to UBP by Three Crowns LLP on Lucca Properties Ltd’s behalf three days later on 26 February 2016, in which UBP was asked to allow the payment to be made. UBP has not to date agreed to this in view of the Cypriot Freezing Order and the Claimant’s insistence that UBP is subject to the Cypriot Freezing Order by virtue of the Registration Order having made the Cypriot Freezing Order enforceable.

In these circumstances, it seems to me to be both inevitable and highly desirable that I should determine whether the additional relief sought in the draft amended order should be granted in the present case, and not confine myself to deciding whether serving the Cypriot Freezing Order on UBP or any other third party in this jurisdiction, or giving notice of its terms to such third parties, amounts to the Claimant taking a “measure of enforcement” for the purposes of paragraph 4 of the Registration Order and Article 47.3 of the Judgments Regulation. For reasons which I shall now explain, I am satisfied that the Cypriot Freezing Order is not currently fully effective and enforceable, and nor did it become fully effective and enforceable on the making of the Registration Order, but that it will only become fully effective and enforceable on determination of the Defendants’ appeal against the Registration Order. I am satisfied also that, in relation to an underlying order which is a worldwide freezing order, included in the description of “measures of enforcement” is service of the freezing order and notification of its terms to third parties, and that it is artificial and wrong to limit “measures of enforcement” to measures which involve a party in the Claimant’s position going to the Court and obtaining further orders of an enforcement nature after obtaining an order for registration.

I deal, first, with the question of enforceability. I agree with Mr Malek QC’s submission that it is artificial and unrealistic, adopting the terminology of Article 32, to seek to distinguish between a “judgment” which is enforceable and a judgment in relation to which “measures of enforcement” can legitimately be taken. Commonsense seems to me to dictate that if “measures of enforcement” cannot be taken, then, the “judgment” is not, in a real and practical sense, fully effective and enforceable. Put another way, it is difficult to see how a claimant could say, on the one hand, that it has a “judgment” which is enforceable whilst also saying, on the other hand, that it cannot take “measures of enforcement” in relation to that “judgment”. I struggle, in essence, to see how there really is the distinction which Mr Samek QC and Mr McWilliams urged upon me. Indeed, reading Articles 38 to 47 together and recognising that this is how, quite obviously, they were intended to be read, and not, therefore, each of the provisions in isolation, I regard it as tolerably clear that Article 47.3 qualifies everything which has been stated in Articles 38 to 46 concerning “enforceability” and that, in the circumstances, it would be wrong to seek to divorce enforceability from the ability to take “measures of enforcement” in the manner which the argument advanced by Mr Samek QC and Mr McWilliams necessarily requires. It is important, as I see it, in particular, to consider what is stated in Article 38.1, the first of the articles concerned with “Enforcement”, and to read this alongside what is stated in Article 47.3. Focusing on these provisions demonstrates that there is not the distinction which the Claimant’s argument would suggest. True it is that Article 38.1 provides that a “judgment … shall be enforced in another Member State when, on the application of any interested party, it has been declared enforceable there”. However, if anything, with its reference to actual enforcement (“shall be enforced”), I consider that this makes it less, rather than more, likely that the intention would be that a “judgment” could somehow be fully effective and enforceable yet not something which a claimant can actually enforce. Once Article 47.3 is then considered, leaving aside for present purposes Articles 39 to 46, that this is the proper approach is, in my view, confirmed. Article 47.3 is absolute in its prohibition on “measures of enforcement” being taken; in other words, it is very clear that a claimant is not at liberty to enforce notwithstanding the declaration of enforceability which has been obtained.

When the intervening provisions, Articles 39 to 46, are taken into account and it is appreciated that the other party has no entitlement at all to make submissions on the claimant’s application for a declaration of enforceability (Article 41) and its only entitlement is to bring an appeal (Article 43.1), this serves to underline the inappropriateness of the suggested distinction between enforceability and the claimant’s ability to take “measures of enforcement”. I consider it obvious that, in circumstances where the application for a declaration of enforceability is made without notice, with the other party only becoming aware of the decision once it has been made (Article 42), the declaration of enforceability cannot mean that the decision is fully effective and enforceable in advance of an appeal or the expiry of the time limited for an appeal (two months in accordance with Article 47.3). Mr Malek QC and Mr Evans described the quid pro quo for the streamlined procedure set out in the Judgments Regulation as being that a claimant cannot proceed to enforce the “judgment” until the defendant has had the opportunity to bring an appeal against the making of the registration order. I agree with that characterisation of the position. I agree also that it is surely only right and fair that, before effect is given to the “judgment” in this jurisdiction, the defendant should have the ability to have its say about the registration order having been made in its absence.

Furthermore, I struggle to see why a claimant which has obtained a declaration of enforceability should find itself in a better position pending an appeal, or in the two month period when an appeal can be brought if an appeal is, in the event, not brought, than a claimant would be in if an appeal were to be brought within the two month period and that appeal were to prove to be successful. Until it is known whether an appeal is to be brought and, if it is, whether it is going to succeed, it seems to me that it is appropriate that the position should, in effect, be neutral. The logical consequence of Mr Samek QC’s and Mr McWilliams’s submission being accepted is, however, that the claimant is in a better position simply by dint of having obtained a registration order on a without notice basis, and nothing more than that. I see no justification for adopting such an approach. This is all the more the case, given that Articles 47.2 and 47.3 both expressly permit a claimant, having obtained a registration order or, more accurately, using the language of Articles 47.2 and 47.3, a “declaration of enforceability”, to take “protective measures”, in the case of Article 47.3 specifically pending the resolution of any appeal. In view of this, pending an appeal a claimant has an appropriate level of protection and its position is safeguarded, provided obviously that it can persuade the Court in this jurisdiction to grant it relevant protective relief. In my view, there can be no justification for Article 38 effectively being used in such circumstances as, to use Mr Malek QC’s and Mr Evans’s label, a “short cut” to the obtaining of a freezing order in this jurisdiction. It cannot be right, and it would be wholly at odds with the scheme of the Judgments Regulation, were a claimant to be able to achieve the immediate freezing of bank accounts in this jurisdiction by obtaining an order pursuant to Article 38 without, pending an appeal, having to persuade the Court (in this jurisdiction) that it ought itself to grant a freezing order on conventional grounds.

Mr Samek QC and Mr McWilliams disagreed. They suggested that there is, as they put it, “an illogicality” in the position being as it is portrayed by Mr Malek QC and Mr Evans. The “illogicality”, they submitted, arises from the fact that, whereas in a case where the “judgment” is a money judgment a claimant can, in line with Articles 47.2 and 47.3, pursue “protective measures”, in a case, such as the present, where the “judgment” is a worldwide freezing order, and so a protective measure granted abroad, the claimant is in a worse position since it would, as Mr Samek QC and Mr McWiliams submitted, be “absurd” for a claimant in such a case to have to seek a further freezing order in this jurisdiction in support of a freezing order which, in consequence of the registration order, has itself become an order of the Courts of England and Wales. For my part, I do not recognise either the illogicality or the absurdity which Mr Samek QC and Mr McWilliams identify. Until such time as any appeal has been determined, the position is clear: under Articles 47.2 and 47.3, the only measures which can be taken by a claimant are protective measures which, in accordance with Article 31, will be whatever protective measures are available in this jurisdiction (as the Member State where the Cypriot Freezing Order is being sought to be enforced). It may be that a freezing order will be obtainable in this jurisdiction in the same way as it was in Cyprus; it may be, however, that a freezing order will not be obtainable. It will depend on the Claimant being able to satisfy the Court here that a freezing order is appropriately granted, including justifying the making of such an order notwithstanding what, at least on the face of it, appears to have been unjustifiable delay.

My conclusion, in the circumstances, is that the Cypriot Freezing Order is not currently fully effective and enforceable, and nor did it become fully effective and enforceable on the making of the Registration Order, but that it will only become fully effective and enforceable on determination of the Defendants’ appeal against the Registration Order. It follows from this that I reject the submission made by Mr Samek QC and Mr McWilliams that, by virtue of what was stated in the Cypriot Freezing Order about it applying to “Any person, including any banking institution or other financial organization, …in relation to which this Order has been determined as being applicable and/or otherwise executable by the Courts of a country which has jurisdiction on the said person or on the assets of this person”, the Cypriot Freezing Order is currently fully effective and enforceable as regards UBP in accordance with its terms. I do not consider, in the circumstances, that it can be right to suggest that it “has been determined” in this jurisdiction that the Cypriot Freezing Order is “applicable” or that it is “otherwise executable”. All that has so far happened is that the Claimant has obtained an order on a without notice basis and, in circumstances, where the Defendants are seeking to appeal against the Registration Order.

This is a conclusion which I have arrived at without reference to authority and having regard instead to what seems to me to be the correct position both as a matter of principle and by reference to the structure and contents of Articles 38 to 47 of the Judgments Regulation. Neither side was able to point me to any authority which would demand, or even justify, a different conclusion. Rather, the cases to which I was referred were generally relevant (or said to be relevant) not to the enforceability issue but to the question of what amounts to a “measure of enforcement” for the purposes of paragraph 4 of the Registration Order and Article 47.3 of the Judgments Regulation. I shall, therefore, deal with those authorities in that context. It is, however, worth mentioning two cases at this juncture.

The first is Calzaturificio Brennero S.A.S v Wendel GmbH Schuhproduktion International (Case 258/83)[1986] 2 CMLR 59, in which Advocate-General Slynn (as he then was) considered the forerunner to the Judgments Regulation, namely the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (the ‘1968 Convention’), specifically Article 39 (which Article 47.3 of the Judgments Regulation essentially mirrors) as follows:

“During the time specified for an appeal pursuant to Article 36 and until any such appeal has been determined, no measures of enforcement may be taken other than protective measures taken against the property of the party against whom enforcement is sought.The decision authorising enforcement shall carry with it the power to proceed to any such protective measures.”

At pages 64 to 65, the Advocate-General stated:

“The provisions of Articles 31 et seq. of the Convention envisage that a foreign judgment may only be reviewed as to its substance in the State in which it was given, not that in which it is to be enforced. The role of the courts in the enforcing State is correspondingly limited. Articles 38 and 39 affect the immediate enforceability of the judgment in two specific cases. In the first place, when the judgment sought to be enforced is not final in the sense that it is still subject to an ordinary appeal, the court in the enforcing State may stay the proceedings under Article 38; there is a discretion. In the second case, when an appeal is brought against 65 the authorisation of enforcement (or the time for bringing such an appeal is still running) the court of the enforcing State can only issue protective measures; it has neither the discretion nor the power to do more. …

By ‘protective measures’ Article 39 of the Convention envisages those forms of relief available under the law of the enforcing State to prevent the judgment debtor from removing the assets on which execution is to be levied. By ‘measures of enforcement’ which may not be taken, Article 39 means, in consequence, all other measures of enforcement, which usually take the form of the sequestration of the judgment debtor’s property.

… The object of Article 39 is ‘to ensure at the enforcement stage a balance between the rights and interests of the parties concerned, in order to avoid either of them suffering any loss as a result of the operation of the rules of procedure’. That balance may be safeguarded, not threatened, by the adoption of protective measures. Article 39, thus, does not exclude protective measures which have the same effect as an order for protective measures in the judgment sought to be enforced merely because they do give effect to that order. These are not the sort of measures which are prohibited by Article 39.”

As I shall come on to explain, Mr Samek QC relied on these passages in relation to the submissions which he made as regards “measures of enforcement”. For present purposes, however, their significance lies in the emphasis by the Advocate-General on the 1968 Convention striking a balance between the interests of claimants and defendants “as a result of the operation of the rules of procedure”. That balance, as far as a defendant is concerned, involves the right to appeal and, as far as a claimant is concerned, involves the ability to take protective measures. I consider that the same balance exists in the Judgments Regulation applicable in the present case, and that it is that balance which means that Mr Malek QC and Mr Evans are right in the submissions which they make concerning enforceability and that Mr Samek QC and Mr McWilliams are wrong.

The other aspect to be noted in relation to what the Advocate-General had to say in the Brennero case, also supportive of the submissions made by Mr Malek QC and Mr Evans, is the express reference to Article 39 not excluding “protective measures which have the same effect as an order for protective measures in the judgment sought to be enforced merely because they do give effect to that order”. This seems to me to confirm that the suggestions of illogicality and absurdity made by Mr Samek QC and Mr McWilliams are without foundation.

The second authority to which I would refer at this stage is Banco Nacional de Comercio Exterior SNC v Empresa De Telecommunicaciones De Cuba SA [2007] EWCA Civ 662, [2008] 1 WLR 1936. This, too, runs counter to the suggestion that there is an illogicality and absurdity about the Defendants’ position. In that case a foreign judgment was registered as happened in the present case, but (unlike in the present case) a separate freezing order was obtained in this jurisdiction. At [25] Tuckey LJ helpfully explained how Article 47 operates:

“…All parts of article 47 are directed at enforcement. Article 47(1) is simply dealing with the position before a declaration of enforceability/registration has taken place. All it is saying is that if the applicant is able to show that he has a judgment which must be recognised he is not prevented from availing himself of protective measures before the formalities which lead to registration have been completed. Such measures might well be necessary the moment judgment has been given in another member state or at least before the formalities required for registration, which include translation, have been completed. Each of the provisions of article 47 deals with the time at which things can or cannot be done. Thus article 47(1) deals with the time before registration; (2) with the time after registration; and (3) with the time after registration where there is an appeal pending.”

More pertinently still, Tuckey LJ went on, later in the judgment, to underline the important point that, as far as protective measures are concerned, these will only be granted in accordance with the law of the member state in which the “judgment” is sought to be registered. He said this at [44]:

“… As the Capelloni case [1985] ECR 3147, para 20 makes clear, the Convention and now the Regulation confine themselves to laying down the principle that the party who has a declaration of enforceability/registered a judgment may proceed with protective measures. Matters not covered by specific provisions are left to the procedural law of the court hearing the proceedings. Neither article 47 nor any of the other provisions of the Regulation says anything about the character or scope of the protective measure required or indeed about the need to have any such measures at all. It seems to us therefore that an applicant for such measures must take them as he finds them in the jurisdiction where he seeks to enforce his judgment. So, if a particular measure has a certain feature, either the applicant accepts it or chooses not to avail himself of it. In this country a freezing order is available as a protective measure, but it has certain features which include the requirement for an undertaking to protect third parties. It does not seem to us that an applicant for this measure can say that he will not give the undertaking and is entitled to the measure without it. If this was the case such an applicant would be in a better position than a judgment creditor seeking to enforce an English judgment here.”

He continued in the next paragraph:

“In the Capelloni case it seems that the judgment creditor was able to arrange for protective sequestration of the judgment debtor’s property without a court order. There is no equivalent right here. The applicant must apply to the court for a freezing order but if, for example, as a condition of granting such relief the court required him to prove the claim which gave rise to the judgment, that would obviously not be compatible with article 47. Similarly, as in the Capelloni case, the court could not impose a time limit on the freezing order which was different from that laid down in article 47(3). But there is nothing incompatible with the Regulation in saying to an applicant who seeks a particular measure in a particular jurisdiction that he must take the measure as he finds it or not at all.”

Although Mr Samek QC took issue with whether Tuckey LJ was right to say that in the Capelloni case the protective sequestration was arranged without Italian court involvement, this does not matter for present purposes since what matters is that what Tuckey LJ was making clear was that a claimant must apply in this jurisdiction for any protective measure and that, in doing so, the claimant must effectively take the domestic court as it finds it. In the present case, therefore, there is nothing remarkable about the Claimant being under an obligation to make a separate freezing order application by way of a protective measure under Article 47.3 even though the “judgment” is itself a freezing order, namely the Cypriot Freezing Order.

Turning then to the second question, I agree with Mr Malek QC and Mr Evans when they submitted that, “in any ordinary sense”, as they put it, the Claimant has effectively enforced the terms of the Cypriot Freezing Order, and the Registration Order, by serving those orders on UBP and seeking compliance with them by UBP, in effect insisting on the immediate freezing of UBP’s bank accounts in the face of a threat of immediate contempt proceedings. In context, bearing in mind that the underlying “judgment” is a worldwide freezing order, I am confident that what the Claimant has done in the present case amounts to a “measure of enforcement”. As the Advocate-General observed in his opinion in the Brennero case at page 66:“Enforcement isthe carrying out of the original judgment”. In my judgment, by sending the Cypriot Freezing Order to UBP, the Claimant has carried that order out and, as such, should be regarded as having taken a “measure of enforcement” in relation to it.

I acknowledge that, as Mr Samek QC was at pains to point out, the Advocate-General’s observation in the Brennero case was made in the context of a discussion which appears to have had in mind Court processes of enforcement rather than enforcement without the involvement of the Court. This is illustrated by the first paragraph of the passages from pages 64 to 65 which I have set out previously. It is also illustrated by the fact that the sentence which follows from the reference to enforcement being “the carrying out of the original judgment” is in the following terms:

“It is only when the court hearing the appeal decides that enforcement may proceed that it has power to require security. That decision is only taken on the final hearing of the appeal; only on the final determination of the appeal can security be ordered.”

The focus there was clearly on the Court being engaged in the enforcement process. The same point is apparent from other authorities relied upon by Mr Samek QC during the course of his oral submissions. Thus, in Deutsche Genossenschaftsbank v Brasserie du Pecheur S.A. (Case 148/84) [1986] 2 CMLR 496 the CJEU, having cited the Brennero case, stated at [18]:

“The Convention merely regulates the procedure for obtaining an order for the enforcement of foreign enforceable instruments and does not deal with execution itself, which continues to be governed by the domestic law of the court in which execution is sought, so that interested third parties may contest execution by means of the procedures available to them under the law of the State in which execution is levied.”

Again, this demonstrates a focus on the Court being involved in execution, as opposed to enforcement simply involving the claimant taking particular measures. The same applies to another case to which I was taken by Mr Samek QC, namely Hoffman v Krieg (Case C-145/86) [1988] ECR 645, [1990] I L Pr 4, in which the CJEU stated as follows at [18]:

“Thus the answer to be given to the national court is that a foreign judgment whose enforcement has been ordered in a Contracting State pursuant to Article 31 of the Convention and which remains enforceable in the State in which it was given must not continue to be enforced in the State where enforcement is sought when, under the law of the latter State, it ceases to be enforceable for reasons which lie outside the scope of the Convention.”

Mr Samek QC also relied, in this respect, on Capelloni v Pelkmans (Case 119/1984) [1985] ECR 3147, [1986] 1 CMLR 388, another case involving Article 39 of the 1968 Convention, which Tuckey LJ had cited in the Banco Nacional case. Mr Samek QC highlighted, in particular, the following paragraphs in the judgment of the CJEU:

“[18] As the first paragraph makes clear, during this period the party in question cannot proceed with measures of enforcement strictly so-called but must, if he considers it necessary, confine himself to taking protective measures against the property of the party against whom enforcement is sought. As the second paragraph states, the power to take such protective measures arises from the decision authorising enforcement.

[19] The manifest purpose of this provision is to enable the party who has obtained authorisation for enforcement, but who cannot yet proceed to take enforcement measures, to prevent the party against whom enforcement is sought from disposing of his property in the meantime so as to render future enforcement unsuccessful or even impossible.

[20] However, as in relation to enforcement proper, also with regard to the protective measures referred to in Article 39 the Convention confines itself to stating the principle that the party seeking enforcement may proceed with such measures during the period indicated in that Article. On the other hand the Convention leaves the task of settling any matter which is not the subject of specific provisions in the Convention to the procedural law of the court in question.”

Mr Samek QC and Mr McWilliams emphasised the reference at [18] to “measures of enforcement strictly so-called”, suggesting that this shows that what enforcement entails is enforcement with the involvement of the Court and nothing else.

Mr Samek QC and Mr McWilliams also referred to West Tankers Inc v Allianz SpA [2012] EWCA Civ 27, [2012] Bus LR 1701 at [35] and [36] to similar effect. This case was concerned with section 66 of the Arbitration Act 1996 and so enforcement of an arbitral award. It was not, therefore, concerned with the Judgments Regulation. Nor were various other authorities which they cited, such as Dadourian Group International Inc v Simms & Ors [2006] EWCA Civ 399, [2006] 1 WLR 2499 (a case in relation to the enforcement abroad of worldwide freezing orders obtained in this jurisdiction), McGuffick v Royal Bank of Scotland plc [2010] Bus LR 1108 (a consumer credit case, in which Flaux J held that notification of a debtor’s default to credit reference agencies did not amount to enforcement within the meaning of section 77(4)(a) of the Consumer Credit Act 1974 but was instead simply a step taken with a view to enforcement), and Ryan v Williams unrep. 13 January 2000 (a case in which Buxton LJ, on an application for leave to appeal, considered that the judge at first instance had been “right to conclude that an application for a charging order nisi is not a breach of the obligation not to enforce a costs order without the leave of the court”).

Mr Samek QC and Mr McWilliams justified their reliance on these additional authorities on the basis that, although clearly Mr Malek QC was right when he observed that the Judgments Regulation is an EC regulation, he was wrong to suggest that, as such, regard should not be had to domestic authorities dealing with what enforcement is because enforcement is a matter for the member state where the “judgment” is sought to be enforced. Whether that is right or wrong is, in my judgment, not, however, important in the present case. This is because I am clear that, whether regard is had to the authorities which address the Judgments Regulation and the 1968 Convention or domestic authorities arising in different contexts, the position is the same: in none of these cases was the issue which arises before me in the present case considered. Accordingly, I have not found any of the cases to which I was referred especially helpful. The issue for me is a very particular issue: it is whether, in the case of a “judgment” which is a worldwide freezing order, enforcement can include serving the worldwide freezing order on a third party or notifying the third party of its terms, these being measures which, in practical terms, represent enforcement of such a type of order without having to involve the Court. Authorities which deal with how a money “judgment” is enforced, in other words through Court processes, provide no assistance in a case such as the present for the simple reason that, in the case of a money “judgment”, merely sending it to a party (whether the defendant or a third party), even if combined with a request (to the defendant but not presumably to the third party) that the relevant sum of money is paid, clearly does not entail any element of enforcement. Service of a money judgment, even on the judgment debtor, has no effect other than to serve as confirmation that the judgment creditor or claimant requires that payment is made. The same cannot be said about a worldwide freezing order because, in contrast to a money judgment, it is the service of a freezing order, or notification of its terms, which makes it effective as against third parties and which, in practical terms, carries the freezing order into effect and so represents, or entails, enforcement of it. This is sufficient without more to warrant the conclusion which I have reached, but that conclusion is all the more justified given that DLA Piper LLP not only served UBP with the Cypriot Freezing Order but went further, asking that UBP confirm that payments would not be made out of relevant accounts in the light of the Cypriot Freezing Order.

In short, I am clear that the Claimant’s service of the Cypriot Freezing Order and the Registration Order on UBP, particularly when allied with DLA Piper LLP’s threats of contempt proceedings which have resulted in UBP’s decision to freeze its accounts, constitute “measures of enforcement” within the ambit of Article 47.3 of the Judgments Regulation and paragraph 4 of the Registration Order. Mr Malek QC did not suggest that DLA Piper LLP and the Claimant, in doing what was done, were acting in anything other than good faith, believing that there was an entitlement so to act. I am clear about this also. However, what matters is that the Claimant has achieved its objective of freezing the UBP accounts. As matters stand, as regards such accounts there is nothing left for the Claimant to do which has not already been done to carry the Cypriot Freezing Order into effect and thereby, again in practical terms, enforce that order. Furthermore, there is no need, if the Claimant’s submissions are right, for the Claimant to pursue “protective measures” in the form of a freezing order obtained in this jurisdiction as permitted, and expressly envisaged, not only by Article 47.2 but also by Article 47.3 in the context of any appeal. That cannot be what is intended by virtue of the Judgments Regulation. I cannot accept that pending an appeal the effect of Articles 38 to 47 of the Judgments Regulation, and paragraph 4 of the Registration Order, is to permit service of an underlying freezing order on a bank combined with threats of contempt for any failure to comply. I agree with Mr Malek QC and Mr Evans that this would be a commercial nonsense since a freezing order is given effect to as against third parties such as a bank, and so enforced, by service of the freezing order on such third parties – as demonstrated in the present case by UBP’s decision to freeze its accounts in London when served with the Cypriot Freezing Order and the Registration Order. Nor is it an answer for Mr Samek QC to contend, as he did during his oral submissions, that the Claimant was entitled to tell UBP that the Cypriot Freezing Order was effective as against UBP because the Registration Order means that the Cypriot Freezing Order is immediately enforceable, with the result that, in accordance with what was stated in the Cypriot Freezing Order, that order applies to third parties such as UBP. For reasons which I have previously given, I cannot accept that that is the case. It follows that nor can I accept Mr Samek QC’s follow-on submission that the Claimant was entitled to serve the Cypriot Freezing Order on UBP on the basis that, as he put it, the Claimant was entitled to “serve an order on somebody who is subject to it”. UBP was not, and is not at the moment, subject to the Cypriot Freezing Order. Whether UBP or any other third party becomes subject to the Cypriot Freezing Order will depend on the outcome of the Defendants’ appeal due to be heard next month.

Before coming on to state my conclusion, I need first to address an authority which was drawn to my attention in the hour or so before I was due to hand down judgment on Friday 17 June 2016. This is the recent decision of the CJEU in Rudolfs Meroni v Recoletos Ltd (Case C-559/14) which was reached on 25 May 2016. Mr Samek QC explained that it was only on Monday 13 June 2016, and so following submissions on Friday 10 June 2016, that he and Mr McWilliams became aware of the Meroni case. At that point, I was told that Mr Samek QC and Mr McWilliams took the view that there was no need to refer me to the decision because, in their then assessment, (i) there is nothing in it which is adverse to any of the submissions which they had made to me at the hearing on 10 June 2016, and (ii) it is a case concerned principally with the application of the public policy ground in relation to challenging recognition and enforcement of a judgment and so is not directly in point. Mr Samek QC explained, however, that, upon further consideration and in the light of the terms of the draft judgment which I had sent to the parties first thing on the morning of Wednesday 15 June 2016, he and Mr McWilliams had changed their mind, considering that I should be made aware of the authority after all. On this basis, in an email to my clerk timed at 8.12 am on Friday 17 June 2016, Mr Samek QC invited me not to hand down judgment as planned at 9.30 am that very day, but instead to defer the handing down of judgment at that hearing in order to give Mr Malek QC an opportunity to make submissions in relation to the decision and to enable me to consider those submissions and the authority before handing down judgment.

It was regrettable that this should have been what happened. It was clear to me, having read what Mr Samek QC and Mr McWilliams had to say in their 8.12 am email, that I would have to do as requested and defer the handing down of judgment. Mr Malek QC himself acknowledged at the abortive hand-down hearing that this was the almost inevitable consequence of the Meroni case having only just been drawn to my (and his) attention. It is particularly regrettable, as I explained to Mr Samek QC at the hearing, that, having become aware of the authority on Monday 13 June 2016 and having then received my draft judgment two days later, he and Mr McWilliams did not at that stage send the case to me. I make no criticism of Mr Samek QC and Mr McWilliams for not being aware of the Meroni case until after the hearing on Friday 10 June 2016. Nor do I criticise Mr Samek QC and Mr McWilliams for deciding on Monday 13 June 2016 that the authority did not need to be cited to me as it was a matter for them to form a view about what was appropriate in that regard. However, I do consider that the authority ought to have been drawn to my attention after the draft judgment was received in view of the reasons given as to why it was provided to me two days later on the morning of the hand-down: those reasons applied as much on Wednesday 15 June 2016 as they did on Friday 17 June 2016. Had the authority been drawn to my attention earlier, I would quite likely have been able to obtain Mr Malek QC’s and Mr Evans’s submissions in writing, so enabling me to produce a final judgment which could have been handed down, as envisaged, on Friday 17 June 2016. In the event, I was only able to hear what Mr Malek QC had to say about the authority at the hearing itself, hence the deferral of the handing down and my having to spend further time in relation to the judgment.

It is against this background that I turn now to consider the Meroni case and whether it changes my analysis and conclusions as set out in this judgment. As I shall explain, I do not consider that the authority changes matters. In the Meroni case, legal proceedings were brought by Recoletos Ltd against various parties (Aivars Lembergs, Olafs Berķis, Igors Skoks and Genādijs Ševcovs), with an order for provisional and protective measures being made by the Commercial Court in London, initially on an ex parte basis and then after a ‘with notice’ hearing. In particular, the order froze assets belonging to Mr Lembergs and contained wording as follows:

“The terms of this order will affect the following persons in a country or state outside the jurisdiction of this court:

…

(c)

any other person, only to the extent that this order is declared
enforceable by or is enforced by a court in that country or state.”

Recoletos Ltd subsequently lodged an application with the Ventspils tiesa (Ventspils Court, Latvia) for a declaration that the contested order (the order made at the ‘with notice’ hearing) was enforceable (presumably under Article 38 of the Judgments Regulation) and for enforcement of the order to be ensured by means of interim measures (presumably under Article 47). The former application was allowed by the Ventspils tiesa but not the latter. On appeal by a third party, a Mr Rudolfs Meroni, the Kurzemes apgabaltiesa (Regional Court of Kurzeme) rejected the argument that recognition and enforcement of the freezing order made by the Commercial Court was contrary to public policy because it infringed property rights of third persons not party to the action before the Commercial Court. Mr Meroni subsequently lodged a cross-appeal before the Augstākās tiesas Civillietu departaments (Supreme Court, Civil Division, Latvia) seeking to have the decision of the Kurzemes apgabaltiesa set aside. The Augstākās tiesas Civillietu departaments (Supreme Court, Civil Division) decided to stay the proceedings and to refer certain questions to the CJEU for a preliminary ruling. One of these questions was this:

“(1)

Must Article 34(1) of Regulation No 44/2001 be interpreted as meaning that, in the context of proceedings for the recognition of a foreign judgment, infringement of the rights of persons who are not parties to the main proceedings may constitute grounds for applying the public policy clause contained in Article 34(1) of Regulation No 44/2001 and for refusing to recognise the foreign judgment in so far as it affects persons who are not parties to the main proceedings?”

The CJEU decided that since the third party, Mr Meroni, had the right under the freezing order to appear, there was no absence of protection for the third party. The CJEU explained its reasoning as follows:

“49.

In the main proceedings, it is clear from the order for reference that the contested order has no legal effect on a third person until he has received notice of it and that it is for the applicants seeking to enforce the order to ensure that the third persons concerned are duly notified of the order and to prove that that notification has indeed taken place. Furthermore, once a third person not party to the proceedings before the court of the State of origin has been notified of the order, he is entitled to challenge that order before that court and request that it be varied or set aside.

50.

That system of judicial protection reflects the requirements laid down by the Court in its judgment of 2 April 2009 in Gambazzi (C‑394/07, EU:C:2009:219, paragraphs 42 and 44), with regard to procedural guarantees giving any third persons concerned a genuine opportunity of challenging a measure adopted by a court of the State of origin. It follows that that system cannot be regarded as a breach of Article 47 of the Charter.

…

54.

In the light of all the foregoing considerations, the answer to the question referred is that Article 34(1) of Regulation No 44/2001, considered in the light of Article 47 of the Charter, must be interpreted as meaning that, in circumstances such as those at issue in the main proceedings, the recognition and enforcement of an order issued by a court of a Member State, without a prior hearing of a third person whose rights may be affected by that order, cannot be regarded as manifestly contrary to public policy in the Member State in which enforcement is sought or manifestly contrary to the right to a fair trial within the meaning of those provisions, in so far as that third person is entitled to assert his rights before that court.”

Mr Samek QC submitted that the Meroni case is supportive of his submissions for two essential reasons. First, he highlighted that there is no suggestion in the Meroni case that the freezing order made by the Commercial Court ceased to be enforceable or effective in view of the appeal brought against its recognition in Latvia after it had been declared enforceable. Secondly, Mr Samek QC suggested that it is apparent from what is stated at [49] that notification of the freezing order to third persons is not a measure of enforcement, observing that it was not argued by Mr Meroni, the third party in that case, that the notification and service of the freezing order on him was an infringement of the Judgments Regulation. His position was that, on the contrary, the paragraph suggests that notification to the third party and proof of the same are steps which are necessarily preparatory to taking an enforcement measure, and that notification does not itself amount to enforcement.

I do not agree with Mr Samek QC about either of these two points. As to the first of Mr Samek QC’s points, I agree with Mr Malek QC when he submitted that the Meroni case does not assist since the enforceability point was not the subject of the decision and there is nothing to indicate that any argument was put forward which dealt with the question which arises in the present case. This leaves the second point made by Mr Samek QC. If anything, it seems to me that what is stated at [49] supports the Defendants’ position more than it does the Claimant’s position. The reference to it being “for the applicants seeking to enforce the order to ensure that the third persons concerned are duly notified of the order” confirms that it is notification (or service) of the worldwide freezing order which makes it effective as against third parties and that this is why an applicant “seeking to enforce” it must notify (or serve) the freezing order on third parties. In these circumstances, in my view, consistent with the reasoning which I have set out earlier in this judgment, notification or service itself amounts to the carrying into effect, and so the enforcement, of a worldwide freezing order. That seems to me to be all the more the case when (as happened in the present case) that notification or service is accompanied by threats of contempt for any failure to comply. I acknowledge that, if contempt proceedings are brought, that will entail enforcement also. This does not mean, however, that in the case of a worldwide freezing order the involvement of the Court through contempt proceedings is the only means by which that type of order can be carried into effect and enforced. I do not accept, in short, that in a case concerning a worldwide freezing order it is only when contempt proceedings are initiated, and not before, that a measure of enforcement can be regarded as having been taken.

I would lastly also observe that what was done in the Meroni case was that Recoletos Ltd applied not only for a declaration of enforceability (as the Claimant has done in the present case) but also for an interim protective measure (as the Claimant has not done in the present case). This, Mr Malek QC submitted and I agree, underpins the appropriateness of that being the right approach to adopt in a case where the “judgment” sought to be enforced is a worldwide freezing order.

In conclusion, therefore, my decision is:

The precise form of order which is appropriate to reflect the terms of this judgment is a matter which will be addressed when the judgment is handed down. The parties are invited, in advance of that hearing, to try to agree a form of order.