HRH Prince Hussam Bin Saud Bin Abdulaziz Al Saud v Mobile Telecommunications Company KSCP
| Jurisdiction | England & Wales |
| Judge | Mr Justice Roth |
| Judgment Date | 31 March 2022 |
| Neutral Citation | [2022] EWHC 744 (Ch) |
| Docket Number | Case No: CH-2021-000002 |
| Court | Chancery Division |
[2022] EWHC 744 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
Rolls Buildings, Fetter Lane
London, EC4A 1NL
THE HONOURABLE Mr Justice Roth
Case No: CH-2021-000002
John Wardell QC and Andrew Shaw (instructed by Millbank Solicitors) for the Appellant
Stephen Moverley Smith QC (instructed by Pillsbury Winthrop Shaw Pittman LLP) for the Respondent
Hearing date: 15 th March 2022
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.
THE HONOURABLE Mr Justice Roth
Introduction
This appeal concerns service of a creditor's bankruptcy petition out of the jurisdiction. The petition was presented on 21 February 2020. By his order of 14 December 2020, Deputy ICC Judge Schaffer refused an application to set aside permission to serve the petition out of the jurisdiction which had been granted, ex parte, by ICC Judge Jones on 17 March 2020. His reasons are set out in his full, unreserved judgment (the “Judgment”). Permission to appeal was refused on the papers but following an oral hearing renewing the application, Marcus Smith J granted permission to appeal on two of the eight grounds of appeal put forward.
The petitioning creditor is Mobile Telecommunications Company KSCP, a company based in Kuwait. The debtor is HRH Prince Hussam Bin Saud Bin Abdulaziz Al Saud, who is a member of the Saudi royal family and resident in Saudi Arabia. Like the Judge below, I shall refer to them for convenience as the Creditor and the Debtor.
The background to the petition can be shortly stated. The Creditor was the successful claimant in arbitration proceedings held in London under an agreement with a London arbitration clause. The total amount awarded to the Creditor was US$817 million.
No part of that sum has been paid. Instead, the Debtor revived proceedings in Saudi Arabia, where he is resident, to seek to undermine the arbitration award and avoid enforcement. That led to the Creditor obtaining an anti-suit injunction in the High Court requiring him to discontinue the Saudi proceedings within 7 days. He failed to do so and on 10 August 2018, Jacobs J held that the Debtor was in contempt of court and sentenced him to 12 months, imprisonment (from the date of his apprehension).
Various awards of costs have been made against the Debtor in those High Court proceedings that total £639,874.65. That sum was the subject of a statutory demand served on the Debtor, which forms the foundation of the bankruptcy petition.
Jurisdiction and the test for service out
The grounds of jurisdiction for a creditor's bankruptcy petition are set out in s. 265 of the Insolvency Act 1986 (“ IA 1986”). This provides, insofar as relevant:
“(1) A bankruptcy petition may be presented to the court under section 264(1)(a) only if –
(a) the centre of the debtor's main interests is in England and Wales, or
(ab) the centre of the debtor's main interests is in a member State (other than Denmark) and the debtor has an establishment in England and Wales, or
(b) the test in subsection (2) is met.
(2) The test is that –
(a) the debtor is domiciled in England and Wales, or
(b) at any time in the period of three years ending with the day on which the petition is presented, the debtor—
(i) has been ordinarily resident, or has had a place of residence, in England and Wales, or
(ii) has carried on business in England and Wales.”
The Creditor does not. The Creditor here relies on s. 265(2)(b)(i). It does not suggest that the Debtor has been ordinarily resident in England and Wales but contends the he had, at a time within the three years prior to the petition, a place of residence in England and Wales. The essential question in this appeal is whether the Judge applied the right test and criteria in upholding permission to serve out of the jurisdiction on this ground.
As I have stated, the decision under appeal concerns service out of the jurisdiction not the determination of the bankruptcy petition itself. Judge Schaffer, like Judge Jones, decided the question whether the Debtor had the requisite place of residence on the balance of probabilities: see the Judgment at [25] and [61]. However, I raised with Counsel the question whether that is the correct standard to apply in the light of the 2020 Insolvency Practice Direction (“PD”), which states at para 5.2:
“Subject to the court approving or directing otherwise, CPR Part 6 applies to the service of court documents both within and out of the jurisdiction.”
Sch 4 to Insolvency (England and Wales) Rules 2016 (“the Insolvency Rules”) makes clear that a bankruptcy petition is a court document for this purpose.
Both Mr Wardell QC for the Debtor and Mr Moverley Smith QC for the Creditor accepted that in the light of this the principles under CPR Part 6 apply to permission to serve out a bankruptcy petition. I think that must be correct. The 2020 Insolvency PD contrasts in this respect with the 2014 Insolvency PD, where para 6.7 stated:
“ CPR 6.36 and 6.37(1) do not apply in insolvency proceedings.”
Moreover, rule 7.51A of the Insolvency Rules had provided that CPR Part 6, paras 6.30 to 6.51 did not apply in insolvency proceedings. However, rule 7.51A has been revoked and both that revocation and the change in the 2020 Insolvency PD from the 2014 Insolvency PD are clearly deliberate.
In these circumstances, the parties agree that the approach which the Court must apply in determining whether the grounds of jurisdiction for service out are satisfied is that which applies under CPR Part 6, albeit that the grounds for a bankruptcy petition are those set out in s. 265 and not in PD 6B to the CPR.
It is well established that the standard of proof which has to be satisfied to show that the claim falls within one of the heads of jurisdiction is not the balance of probabilities but the lower standard of “a good arguable case”. This standard applies both where the issue going to jurisdiction will also be an issue at trial and where it will not be. The correct approach to determining those jurisdictional requirements has been the subject of recent consideration by the Supreme Court and the Court of Appeal. In Brownlie v Four Seasons Holdings Inc [2017] UKSC 80, Lord Sumption, referring to the explanation of “good arguable case” test in terms of finding that “one side has a better argument on the material available”, set out the position as follows, at [7]:
“What is meant is (i) that the claimant must supply a plausible evidential basis for the application of a relevant jurisdictional gateway; (ii) that if there is an issue of fact about it, or some other reason for doubting whether it applies, the Court must take a view on the material available if it can reliably do so; but (iii) the nature of the issue and the limitations of the material available at the interlocutory stage may be such that no reliable assessment can be made, in which case there is a good arguable case for the application of the gateway if there is a plausible (albeit contested) evidential basis for it.”
Those dicta were approved by the Supreme Court in Goldman Sachs International v Novo Banco SA [2018] UKSC 34.
The Court of Appeal has made observations on the operation of these three limbs in Kaefer Aislamientos SA v AMS Drilling Mexico SA [2019] EWCA Civ 10. Green LJ (with whose judgment Davis and Asplin LJJ agreed) said this with regard to limb (ii), at [78]:
“Limb (ii) is an instruction to the court to seek to overcome evidential difficulties and arrive at a conclusion if it “ reliably” can. It recognises that jurisdiction challenges are invariably interim and will be characterised by gaps in the evidence. The Court is not compelled to perform the impossible but, as any Judge will know, not every evidential lacuna or dispute is material or cannot be overcome. Limb (ii) is an instruction to use judicial common sense and pragmatism, not least because the exercise is intended to be one conducted with “ due despatch and without hearing oral evidence” ….”
That is accordingly the approach to be applied, which brings service out of the jurisdiction in insolvency proceeding in line with the principles applicable in other court proceedings.
The Judgment
The Judge had before him witness evidence for the Debtor comprising two witness statements by partners in different firms of solicitors, one acting for the Debtor and the other for the Debtor's family, and a very late witness statement, made the day before the hearing but which was admitted in evidence, from the Debtor's wife. The Creditor placed considerable reliance on a witness statement made by the Debtor's mother, Princess Noorah Bint Abdullah Fahad Al-Damir, dated 3 September 2018 in separate proceedings brought by the Creditor seeking charging orders on various London properties. There was no evidence at all from the Debtor himself, something which the Judge regarded as incomprehensible. The Judge commented, at [30]:
“It leaves a considerable evidential gap when there are issues as to visits, assets and dealings in this jurisdiction.”
There were four witness statements for the Creditor, all by a partner in its solicitors.
Parts of the Judgment are devoted to the allegation that there was a failure of full and frank disclosure by the Creditor in the ex parte application and the question whether the Debtor has assets in the jurisdiction. The Judge found against the Debtor on both those issues and they form no part of this appeal.
As regards place of residence, the Judge summarised very briefly...
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HRH Prince Hussam Bin Saud Bin Abdulaziz Al Saud v Mobile Telecommunications Company KSCP
...of the property. 35 The appeal came before Roth J in March 2022. The judge gave a written judgment (‘the Roth Judgment’) reported at [2022] EWHC 744 (Ch). In relation to ground (i), Roth J (at [26]) held that In re Brauch continued to retain its precedential effect, even though decided und......
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Insolvency Insights - Issue 10 | April 2022
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