Cyprus Popular Bank Public Company Ltd 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) v (1) Andreas Vgenopoulos
| Jurisdiction | England & Wales |
| Judge | Lord Justice McCombe,Lord Justice Holroyde,Lord Justice Flaux |
| Judgment Date | 12 January 2018 |
| Neutral Citation | [2018] EWCA Civ 1 |
| Docket Number | Case No: A2/2016/2810 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 January 2018 |
[2018] EWCA Civ 1
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MR JUSTICE PICKEN
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice McCombe
Lord Justice Flaux
and
Lord Justice Holroyde
Case No: A2/2016/2810
Mr Charles Samek QC and Mr James McWilliams (instructed by DLA Piper UK LLP) for the Appellant
Mr James Evans (instructed by Humphries Kerstetter LLP) for the Second to Fourth Respondents
Hearing date: Wednesday 13 December 2017
Judgment Approved
Introduction
The appellant appeals with the permission of Hamblen LJ against the Order of Picken J dated 22 June 2016. By that Order the judge made orders and declarations that: (i) the Judgment dated 23 May 2014 of the District Court of Nicosia, Cyprus (“the Judgment”) did not become immediately fully effective and enforceable by the appellant in England and Wales as a judgment of the High Court of Justice, Queen's Bench Division on the making of the Order of Master Leslie dated 26 February 2015 and would only become fully effective and enforceable on the final determination of the appeal against the Order of Master Leslie issued by the respondents on 22 April 2016; (ii) the appellant was prohibited from taking any “measures of enforcement” pursuant to and in reliance on paragraphs 1 and/or 4 of the Order of Master Leslie until the final determination of the appeal; and (iii) “measures of enforcement” include service of the Judgment and/or the Order of Master Leslie on, or notification or provision of the Judgment and/or the Order of Master Leslie to third parties to the present proceedings in order to give effect to the Judgment as a judgment of the High Court of Justice, Queen's Bench Division.
As the judge said at the outset of his judgment, the case thus raises two interesting and apparently novel questions: (i) whether, in the case of a worldwide freezing order obtained in another member state, here Cyprus, the effect of obtaining an Order under Article 38 of Council Regulation (EC) 44/2001 (“the Judgments Regulation”) such as was obtained from Master Leslie permitting the registration of that worldwide freezing order as a judgment of the High Court of Justice, Queen's Bench Division 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 within that time, on determination of the appeal; and (ii) 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 the worldwide freezing order to third parties or whether “measures of enforcement” are confined to processes in which the Court is involved in securing enforcement.
Factual background
The factual background is essentially not in dispute and can be stated as follows. The appellant is a registered Cypriot entity which until 2012 offered a full range of banking, insurance and financial services in Cyprus and abroad. Following the banking crisis in Cyprus, a Special Administrator was appointed and the appellant is now in a process called “resolution”. On 26 November 2012, the appellant issued a writ of summons in the District Court of Nicosia against the first three respondents and eight others, some of whom were its former officers, claiming breach of fiduciary duty, breach of trust, abuse of position, conflict of interest, conspiracy and negligence. On 29 April 2013, that writ was amended to add Marfin (the fourth respondent) as a defendant and the appellant made an ex parte application to the District Court seeking worldwide freezing orders and discovery orders against the then defendants. On 8 May 2013 a worldwide freezing order was made on an interim basis up to €3.79 billion in the case of the first and second respondents and €1.5 billion in the case of the third respondent. The order also prohibited Marfin from transferring assets to the first three respondents.
Applications were made by the first three respondents to set aside the proceedings and the worldwide freezing order which ultimately proved unsuccessful and, following an inter partes hearing, the District Court issued a final judgment making a final worldwide freezing order (which like the judge I will refer to as “the Cypriot Freezing Order”) which will remain in force until the completion of the proceedings in Cyprus. The order deals with each of the respondents separately and provides in relation to each of the first three respondents:
“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.”
In [7] of his judgment, Picken J recorded that the first respondent (who is now deceased) and Marfin were claimants in an ICSID arbitration brought by them against the Republic of Cyprus and that in his witness statement Dr Karatzenis, Chief Legal Counsel of Marfin, went on to suggest that the claims in that arbitration cover the same ground as that covered by the claims made by the appellant against the respondents in the proceedings before the District Court. He went on to suggest that the Cypriot proceedings had been pursued by the appellant, which he described as being state-owned and state-controlled, as part of an attempt by the Republic of Cyprus to “hamper” the respondents' 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. As the judge said, this was not accepted by the appellant in its evidence and, in any event, is not relevant to the present issues.
On 12 February 2015, the appellant issued its application to the High Court of Justice, Queen's Bench Division to register the Cypriot Freezing Order as a judgment of the English Court under Article 38 of the Judgments Regulation. The matter came before Master Leslie on paper and, although the application would normally have been dealt with without a hearing, he endorsed the Application Notice: “See me in Practice, if so advised. See Art 31 of EC Reg 44/2001”, as the judge said, a reference to the possibility of the appellant obtaining a domestic freezing order as a “protective measure” under Article 31 of the Judgments Regulation.
At the subsequent hearing on 26 February 2015, Master Leslie raised this point with Mr Charles Samek QC, counsel for the appellant, and asked what the effect would be if the Cypriot Freezing Order were registered. Mr Samek QC's response was: “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 accepted that he had jurisdiction to make the registration order, as was also accepted by the respondents before Picken J. Under Article 32 of the Judgments Regulation the definition of “judgment” is wide enough to encompass a worldwide freezing order made after an inter partes hearing and there is authority from the European Court of Justice to that effect: 61979CJ0125">Denilauler v SNC Couchet Frères 61979CJ0125"> [1980] ECR 1553.
The Order of Master Leslie was in standard form and provided 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...
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