Mercedes-Benz AG v Leiduck

JurisdictionUK Non-devolved
Judgment Date24 July 1995
Date24 July 1995
CourtPrivy Council
[PRIVY COUNCIL] MERCEDES BENZ A.G. Appellant and LEIDUCK Respondent [APPEAL FROM THE SUPREME COURT OF HONG KONG (APPELLATE JURISDICTION)] 1995 May 1, 2, 3; July 24 Lord Goff of Chieveley, Lord Mustill, Lord Slynn of Hadley, Lord Nicholls of Birkenhead and Lord Hoffmann

Injunction - Mareva injunction - Jurisdiction - Mareva injunction sought in aid of foreign proceedings having no connection with home territory - Defendant having assets within home territory - Whether service on defendant outside jurisdiction of writ claiming only Mareva relief permissible - R.S.C. (Hong Kong), Ord. 11, r. 1(1)(b)(m)

The first defendant, a German national, and a Monegasque company owned by him agreed to facilitate the sale in the Russian Federation of 10,000 vehicles manufactured by the plaintiff, a German corporation. The plaintiff advanced the company U.S.$20m. to finance the expenses of the operation on terms that it would be repaid with interest if the total price of the vehicles had not been remitted to the plaintiff by an agreed date. As security the company provided a promissory note for U.S. $20m. plus interest, and the first defendant added his personal guarantee by way of aval. The transaction did not proceed, the advance was not repaid and the note was dishonoured. The plaintiff commenced civil proceedings in Monaco against the first defendant in connection with the alleged misappropriation of the funds. On the plaintiff's application the court in Monaco attached the first defendant's assets in Monaco pending judgment but declined to extend the order to cover the first defendant's shares in the second defendant, a company registered in Hong Kong which the plaintiff alleged had received part of the misappropriated money. The plaintiff thereupon applied ex parte to the High Court of Hong Kong for a worldwide Mareva injunction restraining both defendants from dealing with any of their assets, including the first defendant's shares in the second defendant. The deputy judge granted the application on terms that the plaintiff issue a writ of summons against both defendants and gave leave for the first defendant to be served in Monaco, where he was in custody pending criminal investigations. The writ claimed against the first defendant moneys due under the aval, moneys had and received, damages for breach of fiduciary duty and an account; and against the second defendant restitution or repayment of moneys paid to it in breach of trust. The latter claim was later discontinued. The writ did not claim any injunctive relief.

On the first defendant's application to the High Court of Hong Kong to have the ex parte order discharged, on the ground that the court had no jurisdiction over him, the judge held that none of the claims set out in the writ fell within the court's power to permit service of proceedings out of the jurisdiction under Ord. 11, r. 1(1) of the Rules of the Supreme Court of Hong Kong, F1 which corresponded to English R.S.C., Ord. 11, r. 1(1).

He accordingly quashed the leave to serve and set aside the accompanying Mareva injunction. The Court of Appeal of Hong Kong dismissed the plaintiff's appeal against the judge's order, holding that even had the writ claimed Mareva relief, the court's jurisdiction under R.S.C., Ord. 11, r. 1(1)(b) and (m) would not have permitted service on the first defendant in Monaco, since an injunction sought under rule 1(1)(b) “ordering the defendant to do or refrain from doing anything within the jurisdiction” had to be part of a claim for substantive relief which could properly be tried in the courts of Hong Kong; and the provisions of rule 1(1)(m) permitting service of a writ “to enforce any judgment” could not be relied on before judgment had actually been obtained in Monaco.

On the plaintiff's appeal:—

Held, dismissing the appeal (Lord Nicholls of Birkenhead dissenting), that the purpose of the statutory enlargement of the court's territorial jurisdiction by Ord. 11, r. 1(1) was to authorise the service on a person not otherwise compellable to appear before the local court of a document commencing an action designed to ascertain substantive rights and requiring him to submit to the adjudication of that claim; that rule 1(1) did not therefore permit the service out of the jurisdiction of a writ claiming Mareva relief alone because a claim for such relief was not of that character; that rule 1(1)(b) was not to be construed literally without regard to the intent of the words used and was not intended to assert an extra-territorial jurisdiction based solely on the presence of assets within the territory; that a claim for Mareva relief did not fall within rule 1(1)(m) because it was not brought to enforce anything but merely to prepare the ground for a possible execution by different means in the future and there was, in any event, no judgment in existence to enforce; and that, accordingly, since the plaintiff had not made any claim for substantive relief which could properly be tried in Hong Kong, he could not compel the first defendant to appear before the Hong Kong court to contest the application for Mareva relief and there had been no power in the court to permit service of a writ claiming such relief (post, pp. 724H–725A, 727D–H, 729G–730C, 732F).

Siskina (Owners of cargo lately laden on board) v. Distos Compania Naviera S.A. (The Siskina) [1979] A.C. 210, H.L.(E.) applied.

X. v. Y. [1990] 1 Q.B. 220 not followed.

Decision of the Court of Appeal of Hong Kong [1995] 1 H.K.C. 448 affirmed.

The following cases are referred to in the judgments:

Beddow v. Beddow (1878) 9 Ch.D. 89

Bekhor (A.J.) & Co. Ltd. v. Bilton [1981] Q.B. 923; [1981] 2 W.L.R. 601; [1981] 2 All E.R. 565, C.A.

Bremer Vulkan Schiffbau und Maschinenfabrik v. South India Shipping Corporation Ltd. [1981] A.C. 909; [1981] 2 W.L.R. 141; [1981] 1 All E.R. 289, H.L.(E.)

British Airways Board v. Laker Airways Ltd. [1985] A.C. 58; [1984] 3 W.L.R. 413; [1984] 3 All E.R. 39, H.L.(E.)

Castanho v. Brown & Root (U.K.) Ltd. [1981] A.C. 557; [1980] 3 W.L.R. 991; [1981] 1 All E.R. 143, H.L.(E.)

Channel Tunnel Group Ltd. v. Balfour Beatty Construction Ltd. [1993] A.C. 334; [1993] 2 W.L.R. 262; [1993] 1 All E.R. 664, H.L.(E.)

Cretanor Maritime Co. Ltd. v. Irish Marine Management Ltd. [1978] 1 W.L.R. 966; [1978] 3 All E.R. 164, C.A.

Derby & Co. Ltd. v. Weldon (Nos. 3 and 4) [1990] Ch. 65; [1989] 2 W.L.R. 412; [1989] 1 All E.R. 1002, C.A.

G.A.F. Corporation v. Amchem Products Inc. [1975] 1 Lloyd's Rep. 601, C.A.

Haiti (Republic of) v. Duvalier [1990] 1 Q.B. 202; [1989] 2 W.L.R. 261; [1989] 1 All E.R. 456, C.A.

Iraqi Ministry of Defence v. Arcepey Shipping Co. S.A. [1981] Q.B. 65; [1980] 2 W.L.R. 488; [1980] 1 All E.R. 480

Johnson v. Taylor Bros. & Co. Ltd. [1920] A.C. 144, H.L.(E.)

Lister & Co. v. Stubbs (1890) 45 Ch.D. 1, C.A.

Mareva Compania Naviera S.A. v. International Bulkcarriers S.A. [1975] 2 Lloyd's Rep. 509; [1980] 1 All E.R. 213n., C.A.

North London Railway Co. v. Great Northern Railway Co. (1883) 11 Q.B.D. 30, C.A.

Norwich Pharmacal Co. v. Customs and Excise Commissioners [1974] A.C. 133; [1973] 3 W.L.R. 164; [1973] 2 All E.R. 943, H.L.(E.)

Owens Bank Ltd. v. Bracco [1992] 2 A.C. 443; [1992] 2 W.L.R. 621; [1992] 2 All E.R. 193, H.L.(E.)

P. v. Liverpool Daily Post and Echo Newspapers Plc. [1991] 2 A.C. 370; [1991] 2 W.L.R. 513; [1991] 1 All E.R. 622, H.L.(E.)

Patterson v. B.T.R. Engineering (Australia) Ltd. (1989) 18 N.S.W.L.R. 319

Rahman (Prince Abdul) bin Turki al Sudairy v. Abu-Taha [1980] 1 W.L.R. 1268; [1980] 3 All E.R. 409, C.A.

Rasu Maritima S.A. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (Government of the Republic of Indonesia intervening) (Pertamina) [1978] Q.B. 644; [1977] 3 W.L.R. 518; [1977] 3 All E.R. 324, C.A.

Rosler v. Hilbery [1925] Ch. 250, C.A.

Schibsby v. Westenholz (1870) L.R. 6 Q.B. 155

Siskina (Owners of cargo lately laden on board) v. Distos Compania Naviera S.A.(The Siskina) [1979] A.C. 210; [1977] 3 W.L.R. 818; [1977] 3 All E.R. 803, H.L.(E.)

South Carolina Insurance Co. v. Assurantie Maatschappij “De Zeven Provincien” N.V. [1987] A.C. 24; [1986] 3 W.L.R. 398; [1986] 3 All E.R. 487, H.L.(E.)

Veracruz Transportation Inc. v. V.C. Shipping Co. Inc. [1992] 1 Lloyd's Rep. 353, C.A.

Waterhouse v. Reid [1938] 1 K.B. 743; [1938] 1 All E.R. 235, C.A.

Williams v. Jones (1845) 13 M. & W. 628

X. v. Y. [1990] 1 Q.B. 220; [1989] 3 W.L.R. 910; [1989] 3 All E.R. 689

Zucker v. Tyndall Holdings Plc. [1992] 1 W.L.R. 1127; [1993] 1 All E.R. 124, C.A.

The following additional cases were cited in argument:

Banque Keyser Ullmann S.A. v. Skandia (U.K.) Insurance Co. Ltd. [1990] 1 Q.B. 665; [1989] 3 W.L.R. 25; [1989] 2 All E.R. 952, C.A.

Coxton Pte. Ltd. v. Milne (unreported), 20 December 1985, New South Wales

Nippon Yusen Kaisha v. Karageorgis [1975] 1 W.L.R. 1093; [1975] 3 All E.R. 282, C.A.

Seaconsar Far East Ltd. v. Bank Markazi Jomhouri Islami Iran [1994] 1 A.C. 438; [1993] 3 W.L.R. 756; [1993] 4 All E.R. 456, H.L.(E.)

Spiliada Maritime Corporation v. Cansulex Ltd. [1987] A.C. 460; [1986] 3 W.L.R. 972; [1986] 3 All E.R. 843, H.L.(E.)

Appeal (No. 18 of 1995) by the plaintiff, Mercedes Benz A.G., from the order of the Supreme Court of Hong Kong (Appellate Jurisdiction) (Nazareth V.P. and Litton J.A., Bokhary J.A. dissenting) upholding the judgment of Keith J. in the High Court of Hong Kong setting aside an ex parte order made by Deputy Judge Wilson on 29 April 1994 giving the plaintiff leave to serve proceedings on the first defendant, Herbert Heinz Horst Leiduck, in Monaco and granting a worldwide Mareva injunction against the first defendant and the second defendant, Intercontinental Resources Co. Ltd., a company incorporated in Hong Kong.

The facts are stated in the majority judgment of their Lordships.

Bernard Eder Q.C. and Nigel Eaton for the plaintiff.

Jonathan Sumption Q.C. and William Stone Q.C. (of the Hong Kong Bar) for the defendant.

Cur. adv. vult.

24 July. The majority...

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