ICICI Bank UK Plc v Diminco NV
| Jurisdiction | England & Wales |
| Judge | Mr Justice Popplewell |
| Judgment Date | 28 August 2014 |
| Neutral Citation | [2014] EWHC 3124 (Comm) |
| Docket Number | Case No: 2014-730 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 28 August 2014 |
[2014] EWHC 3124 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE COMMERCIAL COURT
Rolls Building
7 Rolls Buildings
Fetter Lane
London
EC4A 1NL
The Honourable Mr Justice Popplewell
Case No: 2014-730
MR Adam Solomon (instructed by DWF LLP) appeared on behalf of the Claimant
The Defendant did not appear and was not represented
Approved Judgment
This is the return date in an application which was for a worldwide freezing order, including an order for disclosure of assets worldwide, pursuant to section 25 of the Civil Jurisdiction and Judgments Act 1982 in aid of a claim made in Belgian proceedings. A worldwide freezing order was made inter partes by Eder J on 18 July 2014 without any asset disclosure provision. The freezing order was unusual in that the operative freezing provisions recited in the order were undertakings given to the Court by leading counsel who was then instructed by the Defendant.
The freezing order included reference to four identified bank accounts, held at banks in London, as assets falling within the scope of the freezing order. On 7 August 2014 Andrew Smith J made an order that the Defendant must file and serve any evidence upon which it intended to rely at this hearing by 4pm on 14 August 2014. The Defendant did not do so. Instead, it wrote a letter to the Court sent on the evening of 17 August in which it said:
"Diminco, after careful consideration, has decided not to serve any evidence in the English proceedings or to take any further active part in them. Diminco is already having to deal with proceedings in Belgium and elsewhere at the same time as managing its day-to-day business and simply does not have available the necessary management and legal resources to deal with yet further proceedings in England. Diminco proposes, nevertheless, to summarise in this letter its objections to the relief which your client (the Bank) is seeking in the English proceedings. Please ensure that this letter is shown to the Court at the hearing of any application which the bank may make."
Insofar as the letter then sought to put evidence before the court, I decline to take any account of it because the Defendant has failed to comply with the order of Andrew Smith J. In any event the letter recorded the Defendant's decision not to serve evidence or to play any active part. Nevertheless, it is right that I should take account of the two arguments advanced in the letter why the court should decline the relief sought by the Claimant. They are, first, that there is no evidence of a real risk of dissipation of assets; and, secondly, that it is inexpedient to grant relief against the Defendant, over which this Court has no territorial jurisdiction.
The Claimant, to whom I shall refer to as "the Bank", is an English bank. It is the wholly owned subsidiary of ICICI Bank Limited, one of the largest banks in India. ICICI Bank Limited operates in 19 countries around the world, either itself or through subsidiaries such as the Bank. In this case, ICICI Bank Limited's banking operations in Belgium are conducted by a branch of the Bank, and accordingly the relevant party to the Belgian proceedings, which I shall describe in a moment, is the Bank, operating through its branch in Antwerp. The Bank provides the services of a deposit-taking bank, and is authorised for those purposes in the United Kingdom by the relevant regulatory authorities. The Bank's branch in Belgium focuses on corporate banking and is located in the diamond district of Antwerp.
The Defendant is a distributer of diamonds based in Antwerp. It is a subsidiary of Digico Holdings Limited which is incorporated in Hong Kong and claims to be one of the largest integrated diamond and jewellery manufacturers and retailers in the world. Its directors include Mr Chetan Choksi, who is the managing director of the Defendant. The diamond trade is a global business, and Digico claims to operate in diamond distribution in eight countries, mainly USA, Japan, Hong Kong, China, India, UAE, Italy and Belgium. Its diamond distribution arm is operated through the Defendant as its subsidiary.
The Defendant does not appear to have substantial real property in Belgium. The operation of diamond distribution does not require substantial premises or a large workforce; the Defendant has approximately 11 employees and, according to the Bank's evidence, only about $100,000 worth of diamonds believed to be the property of the Defendant have so far been located in Belgium. They are to be found at a transport company and in four cardboard boxes stated to contain rough diamonds, the value of which is unclear, located at the offices of the Defendant.
Since December 2004 the Bank has provided working capital facilities to the Defendant through a series of facility agreements. The agreements were entered into in Belgium and governed by Belgian law, but written in English. The most recent amendment to the amount of the facility between the Bank and the Defendant dated 18 September 2007 raised the credit line to $25,000,000, which was drawn down in full by the Defendant. The Defendant's obligations under the facility agreement are guaranteed by Digico and Mr Choksi. The Bank's evidence is that from April 2010 onwards the Defendant started to default on its obligations under the facility agreement. Essentially the default was twofold: first, the Defendant failed to maintain sufficient securities and allowed the value of the diamonds pledged to the benefit of the Bank to fall below 111.11 per cent of the outstanding loan, in breach of the facility agreement as amended; and, secondly, the Defendant failed to pay interest on the outstanding loan. As regards the first failure, the Bank was first obliged to give the Defendant notice of its failure to comply, which it did by notice of default on 13 December 2011. No response was received to this correspondence, and on 27 January 2012 the bank declared that the amount of $25,000,000 plus interest was immediately due. Payment was also demanded from Digico and Mr Choksi pursuant to the guarantees. On 3 February 2012 the Defendant, together with Digico and Mr Choksi, responded, alleging that making the credit immediately due and payable would amount to a breach of contract. The Bank subsequently issued further notices of default on 17 July and 21 December 2012 and 13 February 2013. By 13 February 2013 the amount outstanding was US$25,721,088.14, to which I shall refer as "the debt".
In early 2013 the Defendant requested a new credit facility from the Bank. There were a number of discussions in relation to that possibility but the request was ultimately rejected once discussions ceased at the end of January 2014. On 10 February 2014 the Defendant, together with other parties which included Digico and Mr Choksi, brought a claim against the Bank in Belgium. By that claim the Defendant alleges that the Bank "created the impression that during negotiations an additional credit line would be granted". The Defendant also advanced a claim based on sums which were paid to the Bank by the Defendant pursuant to various derivative transactions between 2006 and 2008. The Bank brought a counterclaim in the Belgian proceedings against the Defendant for recovery of the debt.
On 28 and 29 April 2014 at an ex parte hearing the Belgian court granted permission for the Bank to attach immovable and moveable goods in the amount of US$25,644,503.84, to which I shall refer as "the attachment order". In giving its reasons, the Belgian court observed from the evidence adduced by the bank that it appeared prima facie that the Defendant was no longer fulfilling its obligations under the facility agreement. Those decisions were upheld at a hearing on notice on 5 June 2014. Following the attachment order being upheld, it was served on ten banks in Belgium. The information which was disclosed by those banks revealed that at only one of the banks were the Defendant's accounts in credit, and that only to the extent of some €2,600 in aggregate after setoffs. I am satisfied that the Bank has, putting it at its lowest, a good arguable case that the Defendant is indebted to it for the amount of the debt.
The relief sought in the original application, which has been modified in the course of oral argument before me in a way which I shall identify in a moment, was for a freezing order over the Defendant's assets worldwide, other than in Belgium, and for disclosure on affidavit of details of all the Defendant's assets worldwide exceeding £10,000 in value; and for a complete set of bank statements for all the Defendant's accounts at all banks worldwide from 13 December 2011 to date.
Risk of dissipation
The evidence establishes a clear and real risk of dissipation of assets in the absence of freezing order relief. The Defendant's latest published accounts, for the year ending 31 March 2013, disclose a turnover of just over US$300,000,000, yet its bank accounts in Belgium where it carried on business have been found to retain credit balances which in aggregate are no more than approximately €2,600. The Defendant has chosen not to provide evidence responding to or rebutting the evidence advanced by the Bank that the natural inference to be drawn is that moneys have been deliberately channelled through accounts outside Belgium to avoid the effect of the attachment order. Moreover, the Defendant's conduct in commencing the Belgian proceedings is suggestive of an attempt to avoid its obligations by improper tactical...
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