Dar Al Arkan Real Estate Development Company v Al Refai

Hearing dates: 26 and 27 March 2014

I. Introduction

This appeal and cross-appeal against the Order of Mr Justice Andrew Smith dated 20 December 2013 concerns the extra-territorial reach of proceedings for civil contempt against the director of a foreign company which has instituted proceedings in this jurisdiction but has not complied with an order of the court where the director is a foreign national and outside the jurisdiction.

The appellant, Sheikh Abdullatif Abdullah Al Shelash ("Sheikh Abdullatif"), is the Managing Director of Dar Al Arkan Real Estate Development Company ("DAAR") and a director of Bank Alkhair BSC ("BA"), companies respectively incorporated in Saudi Arabia and Bahrain. The application for committal was brought against DAAR, BA and Sheikh Abdullatif by the respondent to this appeal, Kroll Associates UK Ltd ("Kroll"). It was brought after a without notice injunction obtained by DAAR and BA against it and a number of other persons was discharged by Andrew Smith J on 12 December 2012 ("the discharge judgment"). The judge discharged the injunction because he found that DAAR and BA had breached their duty to make full disclosure and had also failed to comply with an undertaking, reflected in the order, to preserve two hard drives and the data on them, and to deliver the hard drives to their then solicitors in London.1

On 20 December Andrew Smith J ordered 2 that proceedings against Sheikh Abdullatif are within the scope of CPR 81.4(1) and (3), and that service on him of the committal proceedings out of the jurisdiction is authorised by CPR 6.36 and PD 6B paragraph 3.1(3). These and other material provisions are set out in the appendix to this judgment. It suffices to state here that CPR 81.4(1) and (3) provide that, where a company is required by a judgment or order to do an act and does not do it within the time specified or disobeys a judgment or order not to do an act, the judgment or order may be enforced by an order for committal and "the committal order may be made against any director or other officer of that company or corporation". Gateway (3) of CPR PD6B requires: (i) the application notice to be "a claim form", (ii) there be a "real issue" between the applicant and the corporate defendants, and (iii) the director to be "a necessary or proper party" to the committal application against the corporate defendants. It is submitted on behalf of the appellant by Mr Béar QC, who did not appear below, that the judge erred in holding that

Mr Béar accepted, as he was bound to in the light of the decision of the House of Lords in Masri v Consolidated Contractors International (UK) Ltd and others (No. 4)[2009] UKHL 43, reported at [2010] 1 AC 90 (hereafter " Masri (No. 4)"), that the rule-making power in section 1 of the Civil Procedure Act 1997 for "rules of court…governing the practice and procedure to be followed in…the High Court…" allowed rules with an extra-territorial effect to be made. See the speech of Lord Mance, with whom the other members of the Judicial Committee agreed, at [11] – [14]. He, however, argued that the principle against the extra-territorial application of legislation means that the language used in CPR 81.4(1) cannot properly be construed to enable a committal order to be made against a foreign director who is not within the jurisdiction. He also submitted that the requirements of CPR 6.36 and gateway (3) were not met because the application was not "a claim" brought on a "claim form", there was no "real issue" between Kroll and DAAR and BA in respect of the committal application, and because Sheikh Abdullatif was not a necessary and/or proper party to the application because CPR 81.4(3) did not have extra-territorial application.

Kroll had originally proceeded against DAAR, BA and Sheikh Abdullatif claiming the courts of this jurisdiction have exclusive jurisdiction under Article 22(5) of Council Regulation (EC) No. 44/2001, on Jurisdiction and Recognition of Enforcement of Judgments in Civil and Commercial Matters ("the Brussels I Regulation") for which it is not necessary to obtain the permission of the court for service out of the jurisdiction: see CPR 6.33 and paragraph 3 of the Appendix to this judgment.Article 22(5) gives the courts of the Member State in which judgment "has been or is to be enforced" exclusive jurisdiction regardless of domicile "in proceedings concerned with the enforcement of judgments". On this, the judge accepted the submissions on behalf of Sheikh Abdullatif. He held that he was constrained by a decision of this court, which he considered to be per incuriam the Luxembourg jurisprudence, to make a declaration 3 that the court has no jurisdiction over Sheikh Abdullatif under Article 22(5). Kroll has cross-appealed against this part of the judge's order. Mr Graham QC on Kroll's behalf has also submitted that the court also had power to circumvent jurisdiction questions by dispensing with service of the committal application under CPR 81.10(5)(a) if it considered it just to do so.

I summarise the factual background in section II and the judgment below in section III. For the reasons I give in section IV I would not disturb the judge's order. As I would dismiss the appeal on the CPR 81.4(3) and Part 6 grounds, it is not necessary to decide the cross-appeal on either the Article 22(5) point or that concerning the power of the court to circumvent jurisdiction questions by dispensing with service. I make no observations on the latter ground but, in view of its importance, do so at [60] and [64] on the domicile aspect of the Article 22(5) point.

II. The factual background

I first summarise the relevant factual background. DAAR and BA considered that Majid Al-Sayed Bader Hasim Al Refai ("Mr Refai"), formerly Chief Executive Officer and Managing Director of BA, Kroll, an English company which provides business intelligence and investigatory services, and two others were carrying out a campaign of blackmail against them. The campaign was said to involve the creation of a website which exhibited a large number of internal documents belonging to DAAR and BA and text alleging corporate malpractice by those companies. DAAR and BA alleged that the information on the website had made it difficult for them to raise money for the repayment of "Sukuk" bonds compliant with Islamic law. On 19 June 2012 they issued proceedings in this jurisdiction claiming breach of confidence, defamation, conspiracy, and other economic torts arising out of the alleged campaign. They alleged that DAAR had suffered a loss of US$500 million and BA had suffered a loss of US$130 million.

Before the proceedings were brought, DAAR and BA had taken two steps. The first was successfully to apply under section 55 of the Data Protection Act 1998 for protection from criminal sanctions in respect of data which they said "may" constitute data protected against disclosure by section 1 of the Act, and which "may" have been procured unlawfully. They claimed that this data was on two hard drives sent to DAAR anonymously. Sheikh Abdullatif swore an affidavit stating that the material had not been requested by anyone employed by DAAR or BA, or obtained at their instigation. Secondly, DAAR and BA made the without notice application for interim injunctive relief to which I have referred. They did so to prevent the disclosure of confidential information and documents belonging to BA, and to prevent confidential information from being uploaded and displayed on the website.

At the hearing of the without notice application for injunctive relief and for continuing protection under the Data Protection Act before Popplewell J on 14 June 2012, the evidence included Sheikh Abdullatif's affidavit about how the hard drives had come into the possession of DAAR and BA. It also included statements that DAAR and BA had and would continue to put in place a regime to protect the original hard drives and the data, some of which was personal and privileged. At the hearing they gave an undertaking to "preserve and keep safe the original hard drives containing the material and delivered to [DAAR] as described [by Sheikh Abdullatif in his affidavit.]". This undertaking is recorded in paragraph 10.1 of the order. The evidence of Sheikh Abdullatif and of Dr Almajthoob, BA's Managing Director (Special Projects), which was before Popplewell J at that hearing is summarised in Andrew Smith J's "discharge judgment".4

The return date was on 27 June 2012. At that hearing Popplewell J made "the drives delivery order". He ordered DAAR and BA to deliver "as soon as reasonably practicable"...