Belletti v Morici [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Flaux J. |
| Judgment Date | 24 September 2009 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 24 September 2009 |
Queen's Bench Division (Commercial Court).
Flaux J.
Dominic Chambers QC and Thomas Munby (instructed by Withers) for the claimants.
Charles Samek QC (instructed by PCB Litigation LLP) for the fifth and sixth defendants.
The following cases were referred to in the judgment:
Banco Nacional de Comercio Exterior SNC v Empresa de Telecommunicaciones de Cuba SA [2007] 2 CLC 34; [2008] 1 WLR 1936.
Brink's Mat Ltd v ElcombeWLR [1988] 1 WLR 1350.
C Inc plc v L [2001] CLC 1054.
Congentra AG v Sixteen Thirteen Marine SAUNK [2008] EWHC 1615 (Comm); [2008] 2 CLC 51.
Credit Suisse Fides Trust SA v Cuoghi [1997] CLC 1187; [1998] 1 QB 818.
Dadourian Group International v Simms [2006] 1 CLC 744; [2006] 1 WLR 2499.
ETI Euro Telecom International NV v Bolivia [2008] 2 CLC 153; [2009] 1 WLR 665.
Haiti v DuvalierELR [1990] 1 QB 202.
Masri v Consolidated Contractors International Co SALUNK [2009] UKHL 43; [2009] 2 CLC 366.
Masri v Consolidated Contractors International Co SALUNK [2008] EWCA Civ 303; [2008] 1 CLC 657; [2009] 2 WLR 621 (CA).
Memory Corp plc v SidhuWLR [2000] 1 WLR 1443.
Mobil Cerro Negro Ltd v Petroleos de Venezuela SAUNK [2008] EWHC 532 (Comm); [2008] 1 CLC 542.
Motorola Credit Corp v Uzan [2003] 2 CLC 1026; [2004] 1 WLR 113.
Refco Inc v Eastern Trading CoUNK [1999] 1 Ll Rep 159.
SCF Finance v MasriWLR [1985] 1 WLR 876.
Siskina, TheELR [1979] AC 210.
TSB Private Bank International SA v ChabraWLR [1992] 1 WLR 231.
Van Uden Maritime BV v Kommanditgesellschaft in Firma Deco-LineECAS (Case C-391/95) [1998] ECR I-7091; [1999] QB 1225.
Conflict of laws — Freezing order — Chabra order — Service out of jurisdiction — Claimant victims of investment fraud obtained Italian judgment against first defendant — Commercial Court made worldwide freezing order — Discovery of assets concealed in Monaco in name of corporate entities — Defendant's parents involved in dealing with assets — Court made Chabra order restraining parents from dealing with assets — Parents resident in Italy had no connection with jurisdiction — No issue between claimants and defendant to which parents were necessary or proper parties — Claimants had to show order expedient — Claimants had to show real connecting link between jurisdiction and subject matter of measures — Inexpedient to make order against parents in absence of any connection between England and parents or assets — Parents had no intention of complying with English court's order and court had no means by which it could enforce order against them — Civil Jurisdiction and Judgments Act 1982, s. 25 — Regulation 44/2001, art. 6, 31 — Civil Procedure Rules 1998, Pt. 6, Practice Direction B, para. 3.1(3), (5).
This was an application by the fifth and sixth defendants to set aside orders made against them, on grounds that the English court had no jurisdiction over them and that there had been material non-disclosure by the claimants when obtaining the orders.
The Italian claimants obtained a judgment for some 4m Euros against the first defendant within criminal proceedings against him in Italy for fraud. The first defendant, although Italian, had a British passport and lived in London at least for a proportion of the time. The claimants obtained a worldwide freezing injunction against him from the Commercial Court.
The claimants later discovered that, in breach of the worldwide freezing order, the first defendant had concealed substantial assets in accounts in Monaco and had transferred and/or dissipated those assets. The fifth and sixth defendants were the first defendant's parents. They were resident in Monza, Italy and had no connection with England. The parents were involved in the management of the Monaco accounts and (whether wittingly or unwittingly) had assisted the first defendant in the transfer and dissipation of assets, contrary to the worldwide freezing order.
The claimants obtained ex parte orders in exercise of the so-called Chabra jurisdiction (TSB Private Bank International v ChabraWLR[1992] 1 WLR 231) restraining the parents from dealing with or disposing of any assets of the first defendant or the corporate defendants which he controlled and requiring the delivery up of such assets and the disclosure of information. The Proceedings were served out of the jurisdiction on the parents pursuant to para. 3.1(5) of practice direction b to CPR, pt. 6.
The parents submitted that it was “inexpedient” to grant relief against them under s. 25 of the Civil Jurisdiction and Judgments Act 1982 because there was no connection between the English jurisdiction and either the parents or the assets. Further, the parents had no intention of complying with the court's order and the court had no means of compelling them to do so or otherwise enforcing the order. A connecting link between the subject matter of the measure sought and the territorial jurisdiction of the court was also a requirement of Community law.
The claimants argued that the court had jurisdiction to order service out of the jurisdiction under para. 3.1(3) of Practice Direction B on the basis that the parents were necessary and proper parties to the claim against the first defendant.
Held, setting aside the orders against the parents:
1. Paragraph 3.1(3) could not be relied upon in a case such as the present, where the substantive dispute was before a foreign court and the jurisdiction of the English court against the principal defendant was only engaged by virtue of s. 25 of the 1982 Act. Where the substantive dispute was before the Italian courts, the only basis for jurisdiction against the first defendant was s. 25 and para. 3.1(5). Even if para. 3.1(3) was capable of applying to the parents in principle, there was in reality no dispute between the claimants and the first defendant, let alone between the claimants and the parents. There was no substantive claim against the first defendant in England and thus there could be no claim against the parents by virtue of art. 6 of Regulation 44/2001. (C Inc plc v L[2001] CLC 1054considered.)
2. Equally, the short answer to any reliance upon para. 3.1(10) of the Practice Direction was that there was no claim against the parents to enforce the judgment obtained against the first defendant in Italy.
3. Unless there was some basis for the English courts to assume territorial jurisdiction over the parents who were resident in Italy, the court had no power to make a Chabra order against them. Nothing in s. 25(2) suggested the contrary. When the sub-section talked about the court having no jurisdiction apart from the section, it went on to provide “in relation to the subject-matter of the proceedings in question”. That was clearly a reference back to the substantive proceedings commenced in another Regulation state than the UK (here Italy) referred to in subs. (1). The English courts clearly had no jurisdiction in respect of the substantive dispute, a fortiori against the parents. Accordingly, there was no basis for not applying the condition of “expediency” under s. 25(2) as interpreted by the English courts. Equally, there was no basis for the suggestion that the criterion of a “real connecting link” considered to be necessary by the ECJ should somehow not apply because the relief sought was ancillary to other interim relief. (Van Uden Maritime BV v Kommanditgesellschaft in Firma Deco-LineECAS(Case C-391/95)[1998] ECR I-7091; [1999] QB 1225applied.)
4. It followed that in order to justify permission to serve the parents out of the jurisdiction, the claimants had to satisfy both the criteria as regards expediency established by the various Court of Appeal cases and the Van Uden criterion. There were two related factors which made it inexpedient to make the order against the parents: first, the absence of any connection between the parents and England. It was no answer to say their son, the first defendant, had a connection with England, since the position of each defendant had to be considered separately. There was no evidence that any of the assets over which the parents might have control were situated in England or had any connection with England. Where the relevant defendants had no connection with the jurisdiction and the relevant assets were not located within the jurisdiction, it would rarely if ever be appropriate or expedient for the court to assume jurisdiction under s. 25 of the 1982 Act. (Motorola Credit Corp v Uzan[2003] 2 CLC 1026; [2004] 1 WLR 113applied;Mobil Cerro Negro v Petroleos de VenezuelaUNK[2008] EWHC 532 (Comm); [2008] 1 CLC 542followed.)
5. The second and related factor was that the parents had no intention of complying with the English court's order and the court had no means by which it could enforce the order against them. The fact that a defendant had no connection with the jurisdiction and no intention of complying with the court's order, leaving the court with no sanction over him or her to enforce the order, was an important pointer to it not being expedient to make the order in the first place. (Motorola applied.)
6. The claimants also could not satisfy the Van Uden criterion of a real connecting link between the subject matter of the measures sought and the territorial jurisdiction of the English court.
7. It followed that it was not expedient to make an order against the parents under s. 25 of the 1982 Act and permission to serve out pursuant to para. 3.1(5) of Practice Direction B to CPR Part 6 should not have been granted. Therefore the order had to be set aside.
Flaux J:
1. This is an application by the fifth and sixth defendants (to whom I will refer in this judgment as “the parents”) to set aside orders made against them by Andrew Smith J in May 2009 on grounds (i) that the English courts have no jurisdiction over them and (ii) that there was material non-disclosure by the claimants on the applications...
To continue reading
Request your trial
-
Parbulk II as v PT Humpuss Intermoda Transportasi TBK and Others
...Investment Co Ltd [2010] CICA 1. Babanaft International Co SA v BassatneELR [1990] Ch 13. Belletti v MoriciUNK [2009] EWHC 2316 (Comm); [2009] 2 CLC 525. Ben Hashef v Ali ShayifUNK [2008] EWHC 2380 (Fam). Caltex Trading Pte Ltd v Metro Trading International Inc [2000] CLC 114. Cardile v LED......
-
Cruz City 1 Mauritius Holdings v Unitech Ltd
...Telecommunicaciones de Cuba SAUNK [2007] EWCA Civ 662; [2007] 2 CLC 34; [2008] 1 WLR 1936. Belletti v MoriciUNK [2009] EWHC 2316 (Comm); [2009] 2 CLC 525. Bluston, ReELR [1967] Ch 615. BNP Paribas SA v OJSC Russian MachinesUNK [2011] EWHC 308 (Comm); [2011] 2 CLC 942; [2012] EWCA Civ 644; [......
-
JSC VTB Bank v Pavel Skurikhin
...v Eastern Trading Co [1999] 1 Lloyds Rep. 159; Motorola Credit Corporation v Uzan and others (No. 2) [2004] 1 WLR 113; Beletti v Morici [2009] 2 CLC 525; and RBS v Fal Oil [2012] EWHC 3628 (Comm). 10 The principles were also considered, both by Mrs Justice Gloster in her judgment in this ca......