Hardy Exploration & Production (India) Inc. v Government of India
| Jurisdiction | England & Wales |
| Judge | Peter MacDonald Eggers |
| Judgment Date | 25 July 2018 |
| Neutral Citation | [2018] EWHC 1916 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2017-000454 |
| Date | 25 July 2018 |
[2018] EWHC 1916 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice
Strand, London, WC2A 2LL
Peter MacDonald Eggers QC (Sitting as a Deputy Judge of the High Court)
Case No: CL-2017-000454
and
Dominic Kendrick QC and Jessica Sutherland (instructed by Volterra Fietta) for the Claimant
Nehali Shah (instructed by Arlingtons Sharmas) for the Defendant
Neil Kitchener QC and Eleanor Campbell (instructed by Cooke, Young & Keidan LLP) for the Third Party
Hearing dates: 14 and 15 June 2018
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Peter MacDonald Eggers QC:
Introduction
In 2013, the Claimant (“Hardy”) obtained an arbitration award (“the Award”) against the Defendant, the Government of India (“GOI”).
On 25th July 2017, on Hardy's application, the Court made an order for the enforcement of the Award (“the Enforcement Order”).
On 2nd February 2018, the GOI applied to set aside the Enforcement Order made by the Court in July 2017. The hearing of that application has been fixed to be heard in October 2018.
On 23rd February 2018, Hardy applied, without notice, for an Interim Third Party Debt Order (“the Interim Order”) pursuant to CPR Part 72. The Interim Order was made on 28th February 2018 by Master Kay QC on the premise that “ there is a debt due or accruing due by the third party to the judgment creditor”. The third party to whom the Interim Order was addressed was India Infrastructure Finance Company (UK) Limited (“IIFC (UK)”). The Interim Order required IIFC (UK) not to pay a debt it was said to owe to the GOI up to a limit of £70,528,107.04 unless the Court otherwise orders. If the Interim Order is made final, IIFC (UK) will be required to pay the debt to Hardy, and not to the GOI. The Interim Order was served on IIFC (UK) on 5th March 2018.
On 19th April 2018, IIFC (UK) applied for an order for the discharge of the Interim Order (the “Discharge Application”), pursuant to CPR rule 72.8(6), on the following independent grounds:
(1) Hardy did not give full and frank disclosure in its application for the Interim Order (Ground 1).
(2) The Court lacked jurisdiction to make the Interim Order and/or should not make a final order because the debt owed by IIFC (UK) is enforceable (and therefore situated) in India, and payment by IIFC (UK) pursuant to an order of the English Court will not discharge the debt as a matter of Indian law (Ground 2).
(3) The debt is immune from enforcement under the State Immunity Act 1978 (Ground 3).
(4) The debt owed by IIFC (UK) to the GOI was not “ due or accruing due” on the date the Interim Order was made or served (Ground 4).
On 11th May 2018, the Court ordered that the application for the discharge of the Interim Order be expedited, because of the potential prejudice to IIFC (UK).
As a result of the order for expedition, the hearing of the IIFC (UK)'s application to discharge the Interim Order was fixed to be heard on 14th June 2018.
On 8th June 2018, Hardy applied for an adjournment of the hearing of the Discharge Application, principally because earlier that week the GOI had served a certificate dated 5th June 2018 signed by the Deputy High Commissioner of India to the United Kingdom dealing with the purposes to which the moneys received by the GOI in respect of the debt owed by IIFC (UK) to the GOI would be used. This was relevant to the question of state immunity under section 13 of the State Immunity Act 1978. I refused the application for an adjournment, but ordered that only two of the four grounds of the Discharge Application be determined at the hearing on 14th June 2018, namely Grounds 2 and 4, and that the other two grounds (Grounds 1 and 3) be deferred. Ground 3 was concerned with the issue of state immunity and Ground 1 was concerned with an alleged non-disclosure (one allegation of which related to the question of state immunity).
Ground 2 is concerned with the jurisdiction of the Court to make a Third Party Debt Order and the location of the situs of the relevant debt, and the circumstances which the Court should take into account in deciding whether to make the Order. Ground 4 is concerned with an additional jurisdictional requirement, under CPR rule 72.2, that the relevant debt captured by the Third Party Debt Order be a “ debt due or accruing due” to the judgment debtor (in this case, the GOI).
This judgment is concerned only with Grounds 2 and 4. If either of these grounds is sustained, the Interim Third Party Debt Order must be discharged and no final order can be made.
Procedural background
On 2nd February 2013, Hardy obtained an arbitration award whose monetary terms are currently worth in excess of £70 million against the Defendant, the GOI, in a dispute relating to oil and gas exploration rights in Indian territorial waters.
On 25th July 2017, the Court made an order on Hardy's application for the enforcement of the Award against the GOI's assets in England and Wales, save for those not in use or in intended use for commercial purposes.
On 2nd February 2018, the GOI acknowledged service and applied to set aside the Enforcement Order. Hardy argued that the GOI's application on 2nd February 2018 was out of time. Accordingly, on 22nd February 2018, the GOI applied for an extension of time until the 2nd February 2018, for the making of the application to set aside the Enforcement Order (“the Extension Application”).
On 23rd February 2018, Hardy applied for the Interim Third Party Debt Order pursuant to CPR Part 72. This Interim Order was made on 28th February 2018 by Master Kay QC on the premise that “ there is a debt due or accruing due by the third party to the judgment creditor”, and required IIFC (UK) not to pay a debt it owes to the GOI up to £70,528,107.04 unless the Court otherwise orders. The Interim Order required that a hearing take place on 13th April 2018 at which the Court would consider whether the Interim Order should be made final. If a final order is made, such debt owed by IIFC (UK) will have to be paid, not to the GOI, but to Hardy. The Interim Order was served on IIFC (UK) on 5th March 2018.
By a consent order dated 22nd March 2018, it was ordered that Hardy should not take any steps to enforce the Award pursuant to the Enforcement Order pending the determination of the Extension Application.
On 11th April 2018, Mr Justice Bryan ordered that the hearing fixed by the Interim Order be adjourned to a date not less than seven days after the determination of the Extension Application.
On 19th April 2018, IIFC (UK) applied for an order for the discharge of the Interim Order. The grounds for the application for the discharge of the Interim Order are, as explained above: (1) Hardy did not give full and frank disclosure in its application for the Interim Order (Ground 1); (2) the English Court lacked jurisdiction to make the Interim Order and/or should not make a final order because the debt owed by IIFC (UK) is enforceable (and therefore situated) in India, and payment by the Third Party pursuant to an order of the English Court will not discharge the debt as a matter of Indian law (Ground 2); (3) the debt is immune from enforcement under the State Immunity Act 1978 (Ground 3); and (4) the debt owed by IIFC (UK) to the GOI was not “ due or accruing due” on the date the Interim Order was made (Ground 4).
On 1st May 2018, IIFC (UK) issued an application for a further order permitting the parties to rely on expert evidence of Indian law in relation to Ground 2 in support of its application for the discharge of the Interim Order. On 11th May 2018, I allowed this application and ordered the expedited hearing of the Discharge Application.
On 18th May 2018, Mrs Justice Moulder allowed the Extension Application and ordered that the enforcement of the Award be stayed pending the determination of the GOI's application to set aside the Enforcement Order.
The parties exchanged factual evidence, by way of witness statements, and experts' reports on Indian law in accordance with the Court's directions in respect of the Discharge Application. On 5th June 2018, the GOI served a certificate issued by the Deputy High Commissioner of India to the United Kingdom in connection with the use made by the GOI of the guarantee fees paid or to be paid by IIFC (UK) to the GOI. As a result of the service of that certificate outside the timetable laid down by the Court and the proximity of the expedited hearing of the Discharge Application, fixed to be heard on 14th June 2018, Hardy applied for an adjournment of that application. I refused the adjournment, but directed that only Grounds 2 and 4 be heard on 14th June 2018, and the hearing of Grounds 1 and 3 be deferred, if necessary.
I should point out that Hardy objected to the procedure whereby the third party applies to the Court for the discharge of the Interim Order before any hearing to determine whether the Interim Order should be made final, if the consequence is that the third party would be free to re-litigate the grounds of challenge to the Interim Order if that challenge fails. I did not understand IIFC (UK) or the GOI to argue the contrary. For the avoidance of doubt, I do not see any reason why a third party affected by an Interim Order cannot apply to the Court for the discharge of that Order. Further, the determination of the two grounds upon which IIFC (UK) applies to discharge the Interim Order and which are determined in this judgment will finally...
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