Crédit Suisse Fides Trust S.A. v Cuoghi
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE MILLETT,LORD JUSTICE POTTER,LORD CHIEF JUSTICE |
| Judgment Date | 11 June 1997 |
| Neutral Citation | [1997] EWCA Civ J0611-8 |
| Judgment citation (vLex) | [1997] EWCA Civ J0611-1 |
| Docket Number | QBCMI 96/0020/B |
| Court | Court of Appeal (Civil Division) |
| Date | 11 June 1997 |
[1997] EWCA Civ J0611-1
The Lord Chief Justice of England
(Lord Bingham of Cornhill)
Lord Justice Millett and
Lord Justice Potter
QBCMI 96/0020/B
QBCMI 96/0400/B
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
(MR JUSTICE MANCE)
Royal Courts of Justice
The Strand
London
MR JEFFERY ONIONS (instructed by Messrs Clifford Chance, London EC1) appeared on behalf of THE PLAINTIFF
MR MICHAEL BRIGGS QC (instructed by Messrs Judge Sykes Frixou, London WC2) appeared on behalf of THE DEFENDANT
Wednesday 11 June 1997
On 17 November 1994 the Plaintiff, Credit Suisse Fides Trust SA ("CSFT") commenced civil proceedings in Switzerland against Mr Cuoghi alleging his complicity in the misappropriation of US $21.66 million by one of its employees, a Mr Voellmin. Sums totalling US $70.5 million were ostensibly deposited with CSFT at rates of what was described as "commission" of between 40% and 50% per annum. If the commission was not paid, repayment of the sums deposited could be demanded. It is not clear whether the deposits or the depositors actually existed or were merely fictitious creations of Mr Voellmin. The money was ostensibly paid out by CSFT at Mr Voellmin's direction to entities under Mr Cuoghi's control. Subsequently, with Mr Cuoghi's knowledge and encouragement, Mr Voellmin misappropriated US $21.66 million from the accounts of two customers of CSFT. In a confession Mr Voellmin later explained that the misappropriation was necessary to enable him to meet a shortfall in commission payments due to the depositors.
Criminal proceedings were opened in Switzerland at CSFT's instigation in October 1994 in relation to both the US $70.5 million and the US $21.66 million. In the Swiss civil proceedings CSFT has made no claim against Mr Cuoghi in relation to the US $70.5 million. CSFT believes that it has a complete defence to any possible claim by the depositors to the return of their money.
Mr Voellmin is a Swiss resident. Mr Cuoghi, however, lives in England and is domiciled here within the meaning of the Civil Jurisdiction and Judgments Act 1982. The Swiss authorities are seeking his extradition to Switzerland. On 18 November 1994 Mance J granted CSFT an ex parte world-wide Mareva injunction against Mr Cuoghi in aid of the Swiss proceedings together with an ancillary disclosure order relating to his assets world-wide. He also ordered Mr Cuoghi to make available for inspection certain documents in the possession of Amhurst Brown and Colombotti ("ABC"), a firm of English solicitors. On 23 November 1994 he extended an earlier order made by Gatehouse J in a separate action brought by CSFT against ABC restraining ABC from delivering up those documents to the order of Mr Cuoghi.
Mr Cuoghi subsequently applied to confine the scope of the Mareva injunction to his assets in England and Wales. By a further application in the other action, to which he was admitted as an intervener, he applied to set aside a Norwich Pharmacal order which had been made against ABC in relation to the documents in their possession.
On 24 March 1995 Mance J:
(1) Confirmed inter partes the world-wide Mareva injunction against Mr Cuoghi which he had made on 18 November 1994 and the ancillary disclosure orders relating to Mr Cuoghi's assets world-wide, and dismissed his application to confine the orders to assets located in England and Wales;
(2) Confirmed his order requiring Mr Cuoghi to make the documents in ABC's possession available for inspection by CSFT;
(3) Accepted undertakings from CSFT not without the leave of the Court (i) to bring proceedings (other than the existing proceedings in Switzerland) against Mr Cuoghi (ii) to use information obtained as a result of his orders for the purpose of civil or criminal proceedings in any jurisdiction (including Switzerland) or (iii) to enforce his orders in any jurisdiction outside England and Wales or to seek orders of a similar nature including orders conferring a charge or other security against Mr Cuoghi or his assets;
(4) Ruled against Mr Cuoghi's claim to privilege against self-incrimination by reason of any risk of exposure to criminal proceedings in England;
(5) Ruled in favour of Mr Cuoghi as a matter of discretion by limiting his disclosure orders to the extent that it should appear, from a further affidavit to be sworn by Mr Cuoghi, that the disclosure might expose him to the risk of incriminating himself in the Swiss criminal proceedings.
The Judge granted CSFT leave to appeal against (5) above but refused Mr Cuoghi leave to appeal. This Court subsequently gave Mr Cuoghi leave to appeal against (1) and (2) above. ABC have since complied with the order in the other proceedings by making the documents in their possession available for inspection by CSFT, with the result that Mr Cuoghi's appeal against (2) has become academic and has not been pursued before us.
Accordingly, the questions which arise on this appeal and cross-appeal are as follows:
Whether the preconditions which are required to justify the grant of world-wide as opposed to purely domestic Mareva relief in aid of foreign proceedings are satisfied.
Whether the Judge was right to exercise his discretion to refuse to order Mr Cuoghi to make disclosure which tended to expose him to the risk of incriminating himself in the Swiss criminal proceedings.
The World-wide Mareva Injunction
By granting a world-wide Mareva injunction in aid of substantive proceedings abroad, the Judge combined two far-reaching jurisdictions of recent development and with international aspects. CSFT recognises that such an order should be made with caution. Mr Cuoghi submits that it should not be made at all save in very exceptional circumstances and that no such circumstances exist in the present case.
The Mareva jurisdiction was established in 1975 as an exceptional remedy to prevent a foreign defendant from defeating any ultimate judgment by removing his assets from the jurisdiction. It was progressively extended, in 1979 to English defendants, in 1982 by restraining defendants from dissipating their assets within the jurisdiction as well as removing them from the jurisdiction, and finally in 1990 by restraining defendants from dealing with their assets both inside and outside the jurisdiction. This last step was taken in Babanaft Co SA v Basatne [1990] Ch. 13, in which the Court was concerned not to make an unwarranted assumption of extra-territorial jurisdiction. It recognised that it would be wrong to make an order which, though purporting merely to restrain the actions of a defendant already subject to the jurisdiction of the Court, might be understood to impose obligations upon persons resident abroad and not subject to its jurisdiction. This danger was avoided by including provisions in the order which made it clear that it was not to affect parties not subject to the jurisdiction of the Court in respect of acts outside the jurisdiction save to the extent that the order might be enforced by the local courts. The jurisdiction to make such orders is now firmly established. It is exercised with caution, and a sufficient case to justify its exercise must always be made out; but such orders are nowadays routinely made in cases of international fraud and the conditions necessary in order to preserve international comity and prevent conflicts of jurisdiction have become standardised. Before 1982 the Court could not grant interlocutory relief when the substantive proceedings were taking place abroad: The Siskina [1979] AC 210. Section 25 of the Civil Jurisdiction and Judgments Act 1982, however, conferred power on the High Court to grant interim relief when substantive proceedings were pending in a Brussels or Lugano Contracting State and the subject-matter of the proceedings was within the scope of the Brussels or Lugano Conventions. The jurisdiction of the High Court has recently been further extended by The Civil Jurisdiction and Judgments Act 1982 (Interim Relief) Order 1997 which came into force on 1 April 1997. This extends the effect of Section 25 to non-Convention countries and to proceedings outside the scope of the Conventions. The position has now been reached, therefore, that the High Court has power to grant interim relief in aid of substantive proceedings elsewhere of whatever kind and wherever taking place.
Article 24 of the Lugano Convention provides:
"24. Application may be made to the Court of the Contracting State for such provision, including protective measures as may be available under the law of that State, even if, under the Convention, the Courts of another Contracting State have jurisdiction as to the substance of the matter."
Article 24 authorises but does not require a Contracting State to make protective orders in support of substantive proceedings which are pending in another Contracting State. Section 25 of 1982 Act was enacted in order to prevent the rule established by The Siskina from preventing our Courts from giving effect to Article 24. So far as material the Section provides:
"25.—(1) The High Court in England and Wales or Northern Ireland shall have power to grant interim relief where—
(a) proceedings have been or are to be commenced in a Brussels or Lugano Contracting State other than the United Kingdom or in a part of the United Kingdom other than that in which the High Court in question exercises jurisdiction; and
(b) they are or will be proceedings whose subject-matter is within the...
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