Integral Petroleum S.A v Petrogat FZE
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Moulder |
| Judgment Date | 17 October 2018 |
| Neutral Citation | [2018] EWHC 2686 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2018-000023 |
| Date | 17 October 2018 |
[2018] EWHC 2686 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice
Rolls Building
London, EC4A 1NL
Mrs Justice Moulder
Case No: CL-2018-000023
and
Guy Blackwood QC (instructed by Drukkers Solicitors & Vitaliy Kozachenko) ( Fortior Law S.A.) for the Claimant
Stephen Cogley QC and Edward Ho (instructed by Stephenson Harwood LLP) for the Defendants and Third Parties
Hearing dates: 18 and 19 September 2018
APPROVED JUDGMENT
This is the reserved judgment of the court on a jurisdictional challenge made pursuant to an application dated 14 June 2018. It arises out of an application by the claimant dated 30 April 2018 (the “Committal Application”) for the committal to prison of five individuals (together the “Third Parties”) which in turn arose out of an ex parte interim order initially made by Morgan J on 14 January 2018 against Petrogat FZE (“Petrogat”) and San Trade GmbH (“San Trade”) concerning delivery of a cargo of fuel oil.
By their application of 14 June 2018, the Third Parties apply for an order pursuant to CPR 11:
i) to set aside service of the Committal Application;
ii) to set aside the order of 1 May 2018 granting permission to serve the Committal Application by email; and
iii) a declaration that the English court has no jurisdiction to try the Committal Application.
Background
The claimant, Integral Petroleum S.A., is an oil and petroleum trading company based in Switzerland.
Petrogat is a trading company based in the UAE and San Trade is a company based in Germany. Of the Third Parties, Mr Klaus Sonnenberg is a German national who lives in Germany and is the sole director of San Trade. Mr Beisenov is a Kazakhstan national who lives in Kazakhstan and the UAE and is the sole director and registered owner of Petrogat. Ms Nadia Lobis is a Turkmen national who lives in Turkmenistan and is an operations manager of Petrogat. It is the claimant's case that she was in charge of implementing the instructions of Petrogat/San Trade to move the cargo to Iran. Mr Sanchouli is an Iranian national who lives in the UAE. It is the claimant's case that he controls Petrogat and is the owner of San Trade. Ms Sanchouli, his daughter, is also an Iranian national who lives in Iran and the UAE. She is not a director of either company but has powers of attorney to act for San Trade and Petrogat respectively.
The dispute arose out of a contract entered into between the claimant and Petrogat in September 2017 for the sale of medium sulphur fuel oil and low sulphur fuel oil. Petrogat's obligations were guaranteed by San Trade. The dispute first came before the courts as an urgent out of hours application pursuant to section 44 of the Arbitration Act 1996. Morgan J made an order directing Petrogat and San Trade to take no steps to direct delivery of the cargo of fuel oil then believed to be loaded on railway wagons in Turkmenistan to Iran. Morgan J further required the companies to provide a letter in this regard by noon on 14 January 2018.
The matter then came before HHJ Waksman QC on the return date, 26 January 2018, who continued the injunction until 2 February 2018 with an amendment to allow for the letter to be signed “forthwith”.
Following a hearing on 2 February 2018 before Popplewell J the application to continue the injunction was dismissed. Popplewell J found that there was a “very strong prima facie case” that the claimant had property in the cargo in 37 railcars. He was also satisfied that there was a “good arguable case” that there had been breaches of the orders, in particular in not providing the letter as required by Morgan J, in relation to cooperating with the Turkmen authorities to enable the cargo to go to Iran, and failing to sign the letter in its revised form as ordered by HHJ Waksman. However the best evidence before him was that of the 37 cars, 24 which were at the border had all crossed into Iran and a further eight had probably also gone such that the order sought would only have effect in relation to 5 or possibly 13 railcars. Popplewell J concluded that as matters stood before him, he did not regard the balance of convenience as being in favour of making the order which was sought.
On 30 April 2018 the claimant made the Committal Application seeking an order that the Third Parties be committed to prison for contempt of court. The claimant stated that the Third Parties as “owners and/or principals and/or directors” of Petrogat and San Trade caused and/or enabled and/or permitted the defendants to breach the orders of Morgan J and HHJ Waksman.
The claimant also applied for an order that the court dispense with personal service of the Committal Application and that if the claimant required permission, it have permission to serve the Committal Application out of the jurisdiction and in any event have permission to serve by alternative means.
It is accepted for the purposes of the application before me that the order of Popplewell J dated 1 May 2018 did not grant permission to serve the Committal Application out of the jurisdiction but did grant permission to serve by alternative means and dispensed with the need for personal service.
It is the Third Parties' case that the Committal Application has not been validly served because the claimant has not obtained permission to serve out of the jurisdiction.
Evidence
In support of their application, the Third Parties rely on a first affidavit of Mr Mark Lakin dated 14 June 2018. Mr Lakin is a solicitor in the firm of Stephenson Harwood Middle East LLP instructed on behalf of the Third Parties. Two further affidavits given by Mr Lakin have now been filed together with evidence from experts as to the law of Germany and the UAE.
The claimant relies on affidavits from Mr Kozachenko, an English solicitor having conduct of the matter on behalf of the claimant dated 27 April 2018, 10 July 2018, 27 July 2018 and 11 September 2018. The claimant has also obtained expert evidence as to German law and the laws of the UAE, from Professor Schnelle and Mr Azhari.
Issues
The issues which fall for determination are as follows:
i) Does Article 24(5) of Recast Brussels I Regulation no. 1215/2012 (“Brussels 1 Recast”) have the effect that the claimant did not require permission to serve the Committal Application out of the jurisdiction?
ii) If Article 24(5) does not apply, is it open to the court to grant permission for service out of the jurisdiction under CPR PD6B 3.1 ( 3) or (10)?
Does Article 24(5) of Brussels I Recast have the effect that the claimant did not require permission to serve the Committal Application out of the jurisdiction?
Article 24(5) provides:
“The following courts of a Member State shall have exclusive jurisdiction, regardless of the domicile of the parties:
…
(5) in proceedings concerned with the enforcement of judgments, the courts of the Member State in which the judgment has been or is to be enforced”
In summary it is the Third Parties' case that
i) Article 24 (5) does not apply to committal proceedings as they are not “proceedings concerned with the enforcement of judgments”;
ii) Article 24(5) only applies where the defendant is domiciled in a Member State and apart from Mr Sonnenberg, the Third Parties are not domiciled in a Member State.
iii) Article 24(5) only applies to civil and not criminal contempt proceedings and since the second, third and fifth Third Parties are not directors of the defendants, such proceedings against those Third Parties cannot be civil contempt proceedings.
I. Does Article 24 (5) apply to committal proceedings?
The first issue is whether the committal proceedings are concerned with the enforcement of “judgments”. Article 2 of Brussels I Recast defines “judgment” as
“ any judgment given by a court or tribunal of a Member State, whatever the judgment may be called, including a decree, order, decision or writ of execution, as well as a decision on the determination of costs or expenses by an officer of the court”. [Emphasis added]
Gross LJ in Vik v Deutsche Bank AG [2018] EWCA Civ 2011 observed (albeit obiter) at [80]:
“… given the width of the wording of Article 2(a), I would have struggled to see why the CPR 71 order was not a “judgment” falling within the meaning of that wording and would have been minded to agree with Teare J's reasoning, at [23] – [24].”
In his judgment in the court below ( Deutsche Bank AG v Sebastien Holdings Inc (No 2) [2017] EWHC 459 (Comm)) Teare J had considered an argument that notwithstanding the wide terms of Article 2, a Part 71 order was not within the extended definition of “judgment”. As set out in the judgment of Teare J, the submission derived from the Schlosser report which suggested that “the wide definition of “judgment” extended to any decision governing the legal relationship of parties but not to decisions which arranged the further conduct of proceedings”. In that case Teare J found that the Part 71 order was different in character from a procedural order for the giving of discovery and exchange of evidence to enable a dispute between parties as to their legal rights to be resolved. He concluded at [24] that it was an order “designed to ensure that effect was given to the court's final determination of the parties legal relationships” and there was “no reason to exclude the Part 71 order from the wide definition of “judgment” in Article 2”.
Teare J was dealing with a different kind of order, namely an order made after final judgment to enable that judgment to be enforced. In this...
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