Cruz City 1 Mauritius Holdings v Unitech Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Lady Justice Gloster |
| Judgment Date | 22 November 2013 |
| Neutral Citation | [2013] EWCA Civ 1512 |
| Docket Number | Case No: A3/2013/1501 |
| Court | Court of Appeal (Civil Division) |
| Date | 22 November 2013 |
[2013] EWCA Civ 1512
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
COMMERCIAL COURT
MR JUSTICE FIELD
2013FOLIO171
Royal Courts of Justice
Strand, London, WC2A 2LL
Lady Justice Gloster
Case No: A3/2013/1501
Jonathan Hirst QC and Craig Morrison (instructed by Skadden, Arps, Meagher & Flom (UK) LLP) for the Appellants
Neil Kitchener QC and Nehali Shah (instructed by White & Case LLP) for the Respondent
Introduction
This is an application by the respondent ("Cruz City" or "the Respondent") that the permission to appeal granted by Moore-Bick LJ on 12 July 2013 to the appellants, Unitech Limited ("Unitech"), Burley Holdings Limited ("Burley") and Arsanovia Limited ("Arsanovia") (collectively "the Appellants") be made subject to the condition that the Appellants pay the whole or a substantial proportion of sums in excess of US $300 million, due under certain arbitration awards into court, or alternatively secure such payment by a written guarantee issued by a first-class bank with a place of business within England or Wales.
The application was originally made in a letter from Cruz City's solicitors dated 12 June 2013. By an order dated 24 July 2013 Moore-Bick LJ dismissed the application for conditions to be attached to the grant of permission and stated that such dismissal was:
"without prejudice to the Respondent's right to make a formal application for such relief on notice to the appellants, if so advised."
By his order dated 12 July 2013 Moore-Bick LJ also granted a stay of the disclosure order made by Field J.
At the end of the hearing I announced my decision that I would impose conditions on the permission to appeal which had been granted to the Appellants. Subsequently, by order dated 11 November 2013, I ordered that the conditions subject to which the appeal from the order of Mr Justice Field dated 23 May 2013 could be brought, was the payment by the Appellants into court within 28 days from 6 November 2013 of the sums of US$333,620,492 and £182,882, due under the relevant awards, failing which the appeal would be struck out and the stay of execution of the order of Mr. Justice Field would be lifted. The order also provided that any monies paid into court pursuant to this order would be held pending further order of the Court of Appeal. The order was made subject to an undertaking from Cruz City that, pending further order of the Court of Appeal, it would not seek to attach or freeze or in any way seek any form of enforcement against any money paid into court pursuant to the order.
These are the reasons for my decision and the order which I made on 11 November 2013.
Factual background
The background to these proceedings can be summarised as follows.
The appeal arises out of awards made in 3 London-seated arbitrations: LCIA Case No. 111791 ("Arbitration 1"), LCIA Case No. 111792 ("Arbitration 2"), and LCIA Case No. 111809 ("Arbitration 3"), all heard in January 2012.
The arbitrations concerned a joint venture arrangement ("the Santacruz Project") between Cruz City and the Appellants for the commercial development, management and operation of certain land in Mumbai. In order to facilitate the parties' investments in the Santacruz Project, an SPV, Kerrush Investments Limited ("Kerrush"), was incorporated. Kerrush was (at the outset of the Santacruz Project) owned 50% by Cruz City and 50% by Arsanovia. The disputes arose out of a shareholders' agreement entered into between, inter alios, Cruz City, Arsanovia and Kerrush on 6 June 2008 ("the Shareholders' Agreement"), and a Keepwell Agreement between Cruz City, Unitech and Burley.
Cruz City issued the proceedings in Arbitration 1 against Arsanovia and Burley under the Shareholders Agreement and in Arbitration 2 against Unitech and Burley under the Keepwell Agreement. Arsanovia issued the proceedings in Arbitration 3 against Cruz City.
Before the arbitral tribunal Cruz City succeeded in each of the arbitrations. In summary, by partial final awards in the case of Arbitrations 1 and 2 ("Award 1" and "Award 2", respectively) and a final award in the case of Arbitration 3 ("Award 3"), each dated 6 July 2012, the Tribunal ordered the Appellants to pay Cruz City US$298,382,949.34 against delivery of the Cruz City's shares in Kerrush, and Cruz City's costs and legal fees and expenses of the arbitrations. In detail, the orders required the Appellants to pay:
i) under Awards 1 and 2: US$ 298,382,949.34 (plus interest) against the delivery by Cruz City of its shares in a joint venture company; Cruz City's costs of the arbitrations of £165,000; and Cruz City's legal fees of US$ 2.9 million; and
ii) under Award 3: Cruz City's costs of the arbitrations of £165,000; and Cruz City's legal fees of US$ 2.9 million.
The Appellants challenged Awards 1 and 2 in the English Commercial court on jurisdictional grounds pursuant to section 67 of the Arbitration Act 1996 ("the 1996 Act"). The applications were heard by Andrew Smith J who handed down judgment on 20 December 2012. The Appellants' challenge to Award 1 under section 67 was successful, but the Appellants were unsuccessful in their section 67 challenge to Award 2, which was upheld. They did not pursue any challenge in respect of Award 3. Accordingly, Awards 2 and 3 are final and binding (not least by virtue of section 58 of the 1996 Act). The Appellants did not seek to appeal against the judgments of Andrew Smith J.
The Appellants have paid nothing towards satisfying Awards 2 and 3. Nor have they paid any sum in respect of costs orders, whether of the Tribunal or of the English court. Other than shareholdings identified in publicly available documents, Cruz City is unaware of what assets the Appellants may hold outside India or the full extent or nature of the Appellants' real estate assets (or other assets) in India or the manner in which they are owned.
It was common ground before me that the Appellants owe Cruz City the sum of over $300 million plus costs and that interest was accruing at 8% per annum compounded quarterly.
It was also common ground before me that the Appellants have sufficient funds with which to satisfy Awards 2 and 3. Unitech is a company incorporated under the laws of India. Its balance sheet, as contained in its audited accounts for the year ended 31 March 2013, and published in August 2013, shows a surplus of approximately US$1.6 billion. The consolidated balance sheet of the entire Unitech group as at the same date shows a surplus of approximately $1.8 billion. Mr Jonathan Hirst QC, leading counsel for the Appellants, accepted that there was no evidence before the court which could suggest otherwise.
At the end of January 2013, Cooke J granted orders under section 66(1) of the 1996 Act ("the Enforcement Orders"), permitting Cruz City to enforce Awards 2 and 3 in the same manner as judgments or orders of the court to the same effect. Cooke J also permitted service on Skadden, Arps, Slate, Meagher & Flom (UK) LLP ("Skadden"), the solicitors who had acted for the Appellants in the arbitrations and in the subsequent proceedings before Andrew Smith J. The Enforcement Orders were served on Skadden by hand on 31 January 2013, and no application was made by the Appellants to set them aside.
The chronology in relation to this application may be summarised as follows:
i) By an arbitration claim form issued by Cruz City on 5 February 2013 Cruz City applied for:
a) disclosure of the Appellants' assets, wherever located throughout the world, and over a specified value threshold, to be verified by an officer of each of the Appellants on affidavit ("the disclosure application"), pursuant to section 37 (1) of the Senior Courts Act 1981 and/or section 44 of the 1996 Act; and
b) an order pursuant to CPR 6.15 for permission to serve the claim form and supporting evidence at the offices of Skadden, by means of alternative service, instead of upon the Appellants themselves ("the service application").
ii) The service application was granted, ex parte, by an order of Cooke J dated 8 February 2013. The claim form and affidavit were served by hand on Skadden on the same date.
iii) On 19 March 2013, copies of Cruz City's further evidence and skeleton argument in respect of the two applications were served at the offices of Skadden pursuant to an order of Andrew Smith J of the same date permitting service of these documents in this manner.
iv) On 20 March 2013, Skadden served an acknowledgment of service (ticking the box " I intend to contest this claim", as well as the box " I intend to dispute the court's jurisdiction").
v) On 21 March 2013, the Appellants filed an application notice seeking an order setting aside the orders of Cooke J and Andrew Smith J permitting service of documents at Skadden.
vi) The disclosure application was ultimately heard by Field J on 10 May 2013. Field J refused to set aside the ex parte orders of Cooke J and Andrew Smith J permitting service on Skadden. Pursuant to an order dated 23 May 2013, he ordered that the Appellants should provide the disclosure sought by Cruz City under section 37 (1) of the Senior Courts Act 1981. (The alternative basis for the application under section 44 of the 1996 Act had been abandoned by Cruz City.)
The Appellants' current appeal, in respect of which they have been given leave, is to set aside the order of Field J. They contend that:
i) Field J should not have dismissed...
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