Iranian Offshore Engineering and Construction Company v Dean Investment Holdings S.A. (formerly Dean International Trading S.A.) and eight others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Andrew Baker |
| Judgment Date | 22 October 2018 |
| Neutral Citation | [2018] EWHC 2759 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2016-000153 |
| Date | 22 October 2018 |
[2018] EWHC 2759 (Comm)
Mr Justice Andrew Baker
Case No: CL-2016-000153
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, Fetter Lane, London EC4A 1NL
Graham Dunning QC, Jern-Fei Ng QC and Adam Woolnough (instructed by Eversheds Sutherland LLP for the Claimant
Clara Johnson (instructed directly) for the Fifth & Sixth Defendants
( Sepanta International FZE and Reza Mostafavi Tabatabaei)
The other Defendants did not appear and were not represented
Hearing date: 15 October 2018
Judgment Approved
The trial of this action is listed for three Commercial Court weeks (12 days) commencing on 3 December 2018, with two days of pre-reading for the trial judge in the previous week. This judgment sets out my reasons for a ruling given at a pre-trial review hearing on 15 October 2018 concerning the import for the trial of the well-known rule, sometimes referred to as a ‘presumption’ or ‘evidential assumption’ of English law, stated, for example, as Rule 25(2) in Dicey, Morris & Collins, “ The Conflict of Laws” (15 th Ed.) and to which I shall therefore refer, for convenience, as ‘Rule 25(2)’.
Dicey Rule 25 is in the following, familiar terms:
(1) In any case to which foreign law applies, that law must be pleaded and proved as a fact to the satisfaction of the judge by expert evidence or sometimes by certain other means.
(2) In the absence of satisfactory evidence of foreign law, the court will apply English law to such a case.
The footnote to Rule 25(2) reads as follows: “This Rule was explicitly approved in Bumper Development Corp. v Commissioner of Police of the Metropolis [1991] 1 W.L.R. 1362, 1369 (CA). However, for qualifications to the absolute form of the Rule, see further below, para.9–026.”
Dicey para.9–025 states correctly that the burden of proving foreign law lies on the party who bases a claim or defence upon it and expresses the view that “ … it is better to abandon the terminology of presumption, and simply to say that where foreign law is not proved, the court applies English law.” A little care therefore must be taken when reading Dicey Rule 25(1), lest it be thought to suggest that whenever a claim is governed by foreign law, it is necessary for the claimant to plead and prove the material content of that law (or indeed, as a logically prior matter, to plead a case as to governing law at all). I am quite clear that is not the law.
The explanation of Rule 25(2) as simply a default rule, that where foreign law is not proved the court applies English law, is then the immediate context for the opening statement in para.9–026 that, “ Even so, there will still be cases in which the application of English law … will be just too strained or artificial to be appropriate.” A discussion follows of some examples taken from decided cases, the views being expressed that they “ do not yet offer precise guidance as to when this point will be reached” (para.9–026) and that “ … there are cases in which the default application of a rule of English law is simply too problematic to be appropriate, but that apart from the fact that the court should not ‘invent’ a rule of English law to be applied in default of proof of foreign law, no sharp line exists to define the limits of the principal that in default of sufficient proof, foreign law will be taken to be the same as English law” (para.9–029).
The discussion of Rule 25 concludes at para.9–030 with a suggestion that “ in cases where it would be wholly artificial to apply rules of English law to a claim governed by foreign law, a court may simply regard a party who has pleaded but failed to prove foreign law as having failed to establish his case without regard to the corresponding principle of English domestic law.”
The question that arose at the pre-trial review in this case was whether, on the statements of case and given the case management history in the proceedings, it was open to the fifth and sixth defendants to contend at trial that English law should not be applied by default under Rule 25(2). The purpose of the contention would be to defeat the claimant's claims against the fifth and sixth defendants. The argument, that is to say the proposed defence to the claims, would be that:
i) by English conflict of laws rules ( viz. under the Rome II Regulation), the claimant's claims are governed by Iranian law;
ii) it is inappropriate to apply English law by default under Rule 25(2);
iii) it is therefore for the claimant to (plead and) prove the principles of Iranian law that govern its claims;
iv) the claimant has not sought to do that, so its claims fail.
If that argument were available to the fifth and sixth defendants at trial, it would or might equally apply to others of the defendants (most of whom, or possibly all of whom, it is anticipated, will neither appear nor be represented at trial). The claimant's application, seeking essentially a ruling as to where it stands in respect of the availability of that argument, therefore extended to all defendants.
The argument arises in that stark form, extending the suggestion in Dicey para.9–030 from a case of pleading but failing to prove foreign law to a case of failing for not pleading foreign law, because:
i) the claimant's claims arise out of what it says was a fraud under which payments were made totalling US$87 million, supposedly for the purchase of a mobile offshore drilling rig;
ii) the claims pleaded against the fifth and sixth defendants allege that they (a) knowingly received sums that were caused by the seventh and eighth defendants to be paid away, in breach of fiduciary duties owed by those defendants to the claimant, (b) dishonestly assisted in breaches by the seventh and eighth defendants of fiduciary duties owed by them to the claimant, by causing, directing, procuring or participating in the division of the proceeds of the fraud, and/or (c) conspired with the other defendants to injure the claimant by unlawful means. The unlawful means said to have been involved in the alleged conspiracy are breaches of contract by the first defendant, inducement thereof by the fourth defendant, deceit by the fourth defendant and/or breaches of fiduciary duty by the seventh and eighth defendants (and associated knowing receipt or dishonest assistance by other defendants);
iii) those claims are pleaded by the claimant without any reference to Iranian law, or any plea as to applicable law;
iv) the fifth and sixth defendants' defence at para.1(d)(ii) complained that there had been no attempt to comply with any pre-action protocol and so “ reserve[d] the right to amend generally upon … [r]eceipt of appropriate advice regarding Iranian law”, and at para.5(a) averred that the claims, as alleged against the fifth and sixth defendants, arose from acts committed in Iran and the UAE, causing damage in Iran, so that the law applicable to those claims (and, it was said, to the claims against the seventh and eighth defendants) is Iranian law;
v) no consequence was pleaded to flow from the plea that the claims are governed by Iranian law;
vi) the fifth and sixth defendants did not plead a case as to the content of Iranian law nor (to date) have they sought to amend to add one;
vii) formally, the plea that the claimant's claims against the fifth and sixth defendants are governed by Iranian law was put in issue by the general joinder of issue in the claimant's reply, but since the first CMC in the case in June 2017 the claimant has made clear that (a) in fact, it would not dispute that in principle those claims are governed by Iranian law, but (b) it will say that is irrelevant, given Rule 25(2), since neither side pleads any Iranian law;
viii) none of the parties has to date sought permission for expert evidence as to Iranian law, and the case is prepared and ready for trial without any such evidence (subject to a few other case management matters, not touching the present issue, that were on the agenda for the pre-trial review).
In those circumstances, the claimant sought an order in substance confirming that Rule 25(2) would apply at trial, either as a case management ruling pursuant to the court's power inter alia to identify what issues need to be determined at trial and/or to exclude issues from consideration, or on the basis of a determinative ruling that whatever the precise scope of any exception or qualification to the Rule, it (the exception or qualification) was not engaged in the present case. As I explain below, I concluded that it was appropriate to grant the claimant relief broadly as sought, for reasons that are perhaps a blend of those two (case management and determinative ruling), subject to a proviso.
The claimant also suggested that the fifth and sixth defendants were precluded by an estoppel from disputing at trial the applicability of Rule 25(2). But this was said to arise out of the same considerations as were relied on for the requested case management ruling. I was unable to discern, at all events in the circumstances of this case, how there might be an estoppel if it were not appropriate, by reference to those considerations, to give the case management ruling sought, so the estoppel argument will not feature again in this judgment.
I was referred to a substantial number of authorities concerning Rule 25(2), but none decides what was to my mind the decisive point in the present case. My analysis is as follows:
i) It is not necessary for a claimant to plead the existence of, or an intention to rely at trial upon, Rule 25(2). It goes without saying that it will apply – otherwise it would...
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