Mercedes-Benz AG v Leiduck [PC]
| Jurisdiction | UK Non-devolved |
| Judge | Lord Goff of Chieveley,Lord Mustill,Lord Slynn of Hadley,Lord Nicholls of Birkenhead,Lord Nolan,Lord Hoffmann |
| Judgment Date | 24 July 1995 |
| Court | Privy Council |
| Date | 24 July 1995 |
Privy Council.
Lord Goff of Chieveley, Lord Mustill, Lord Slynn of Hadley, Lord Nicholls of Birkenhead, Lord Nolan and Lord Hoffmann
Bernard Eder QC and Nigel Eaton (instructed by Baker & McKenzie) for Mercedes.
Jonathon Sumption QC and William Stone QC (instructed by Pannone Pritchard Englefield) for the Leiduck.
The following cases were referred to in the judgment:
Al Sudairy (Prince-Abdul Rahman bin Turki) v Abu-Taha & AnorWLR [1980] 1 WLR 1268.
Beddow v BeddowELR (1887) 9 ChD 89.
Bekhor (AJ) & Co Ltd v BiltonELR [1981] QB 923.
Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corp LtdELR [1981] AC 909.
British Airways Board v Laker Airways Ltd & OrsELR [1984] QB 142; [1985] AC 58 (HL).
Castanho v Brown & Root (UK) Ltd & AnorELR [1981] AC 557.
Channel Tunnel Group Ltd & Anor v Balfour Beatty Construction Ltd & OrsELR [1993] AC 334.
Cretanor Maritime Co Ltd v Irish Marine Management LtdWLR [1978] 1 WLR 966.
Derby & Co Ltd & Ors v Weldon & Ors (No. 3 and 4)ELR [1990] Ch 65.
GAF Corp v Amchem Products IncUNK [1975] 1 Ll Rep 601.
Haiti (Republic of) & Ors v Duvalier & OrsELR [1990] 1 QB 202.
Iraqi Ministry of Defence & Ors v Arcepey Shipping Co SA & Anor (The Angel Bell')ELR [1981] QB 65.
Johnson v Taylor Bros & Co LtdELR [1920] AC 144.
Lister & Co v Stubbs (1890)45 ChD 1.
Mareva Compania Naviera SA v International Bulkcarriers SAUNK [1975] 2 Ll Rep 509.
North London Railway Co v Great Northern Railway CoELR (1883) 11 QBD 30.
Norwich Pharmacal Co & Ors v C & E CommrsELR [1974] AC 133.
Owens Bank Ltd v Bracco & AnorELR [1992] 2 AC 443.
Patterson v BTR Engineering (Aust) Ltd & Ors (1989) 18 NSWLR 319.
Pickering v Liverpool Post & Echo Newspapers plcELR [1991] 2 AC 370.
Rasu Maritima SA v Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (Government of the Republic of Indonesia intervening)ELR [1978] QB 644.
Rosler v HilberyELR [1925] Ch 250.
Schibsby v Westenholz & OrsENR (1870) 6 QB 155.
Siskina (Owners of the cargo lately laden on board) v Distos Compania Naviera SAELR [1979] AC 210.
South Carolina Insurance Co v Assurantie Maatschappij “De Zeven Provincien” NVELR [1987] AC 24.
Veracruz Transportation Inc v VC Shipping Co Inc & Den Norse Bank A/S (“The Veracruz I”)UNK [1992] 1 Ll Rep 353.
Waterhouse v ReidELR [1938] 1 KB 743.
Williams v JonesENR (1845) 13 M & W 628.
X v Y & AnorELR [1990] 1 QB 220.
Zucker & Ors v Tyndall Holdings plcWLR [1992] 1 WLR 1127.
Mareva injunction — Application for leave to serve out of jurisdiction — Whether court had power to grant leave where only ground for jurisdiction was the defendant's assets — Whether' enlargement of jurisdiction rules applied to Mareva injunction — Rules of the Supreme Court, 0. 11, r. 1.
This was an appeal from the Court of Appeal of Hong Kong which had dismissed an appeal from the High Court. The central issue was whether under RSC, 0. 11, r .1 the court could make an order granting leave for service of a claim only for a Mareva injunction out of the jurisdiction.
The plaintiff, a car manufacturing company, obtained on ex parte application an order granting leave to serve a Mareva injunction to restrain the two defendants from dealing with any of their assets within or without the jurisdiction. The supporting affidavit described an agreement between the plaintiff and the first defendant and the second defendant company registered in Monaco which belonged to the first defendant. The affidavit stated that the defendants had agreed to promote the sale of 10,000 of the plaintiffs vehicles to a customer in the Russian Federation. To finance the operation the plaintiff advanced US$20m to the defendants on the terms that if the transaction did not proceed by 31 December 1993 the advance was to be returned together with interest to the plaintiff. The second defendant issued a promissory note and the first defendant gave a personal guarantee. The transaction did not proceed, the promissory note and personal guarantee were dishonoured and the advance was not repaid. The plaintiff started civil proceedings in Monaco, where the first defendant was in custody. The Monaco court declined to attach the first defendant's assets in Hong Kong although it could attach his assets in Monaco. The day after the order had been granted the plaintiff issued a writ in the Supreme Court of Hong Kong against the first defendant and another of his companies registered in Hong Kong, which the plaintiff believed had benefited from the money that had been advanced. The writ did not claim an injunction, either final or interlocutory.
The plaintiff was granted by a deputy judge a Mareva injunction ex parte against the first defendant, who applied to have the order set aside. The application to set aside was granted by Keith J. The Court of Appeal of Hong Kong by a majority affirmed the order Keith J. The plaintiff appealed.
Held, dismissing the appeal (Lord Nicholls dissenting):
1. RSC, O. 11, r. 1(1) did not entitle the court to permit the service on a foreigner out of the jurisdiction of a writ claiming Mareva relief to freeze assets within the jurisdiction, pending the conclusion of proceedings brought against that person in a foreign jurisdiction, where there were no grounds for jurisdiction other than the presence of assets within the jurisdiction.
2. The intention of RSC, 0. 11 was to enlarge the courts' jurisdiction for service of originating documents which set in motion proceedings designed to ascertain rights justiciable within the jurisdiction and thereby enable them to be enforced through the medium of a judgment given by the court. A Mareva did not decide an issue of rights nor did it enforce rights once a judgment had been reached.
3. (Per Lord Nicholls dissenting) A claim for a Mareva injunction could have stood alone in an action, as a form of relief granted in anticipation of and to protect enforcement of a judgment yet to be obtained in other proceedings. Therefore if the writ was amended to include a claim for a Mareva injunction even if it contained nothing more it could have been issued and served on the first defendant in Hong Kong. Mareva relief was not interim relief for the purposes of 0. 11, r.1(1)(b).
(Delivered by Lord Mustill)
On 30 April 1994 Mercedes-Benz AG (“Mercedes”) commenced by writ an action in the Supreme Court of Hong Kong against two defendants, Mr H Leiduck and Intercontinental Resources Co Ltd (“ICR”). Mercedes is a German corporation. Mr Leiduck is the respondent to this appeal. He is a German citizen, and is the registered owner of almost the entire share capital of ICR, a company incorporated in Hong Kong. On the previous day Mercedes had obtained on an ex parte application an order granting leave to serve a Mareva injunction restraining both defendants from dealing with any of their assets within or without the jurisdiction, including in particular the shares in ICR. The affidavit which led the application gave an account of a transaction between Mercedes, Mr Leiduck and another of his companies, Intercontinental Resources SAM, (“IRSAM”) a corporation registered in Monaco. It was said that Mr Leiduck and IRSAM, acting on his behalf, had agreed to promote the sale of 10,000 vehicles manufactured by Mercedes to a customer in the Russian Federation. To finance the heavy expenses of this operation Mercedes advanced to IRSAM an amount of US$20m, on terms that if the total price of the vehicles had not been remitted to Mercedes by 31 December 1993 the advance would be returned, together with interest. By way of security IRSAM furnished a promissory note in favour of Mercedes for US$20m plus interest, and the respondent added his personal guarantee, by way of an “aval” endorsed on the note. According to the affidavit the transaction did not proceed, the advance was not repaid and the note was dishonoured. The respondent and IRSAM had misappropriated the money, and in particular had applied part of it for the benefit of ICR. In consequence Mercedes had started civil proceedings in Monaco against the respondent, but these would take some time to come to judgment. Meanwhile Mr Leiduck was in custody in Monaco, whilst criminal investigations were being carried out.
It is unnecessary to go into further details, and indeed undesirable, since it seems probable that the accuracy of the deponent's assertions will never be tested in the courts of Hong Kong. It is sufficient to say that after expressing the apprehension of Mercedes that the respondent was planning to transfer his shares in IRSAM, together with other assets, from Hong Kong to avoid any judgment that might be obtained against him, the deponent set out the grounds for contending that the court should grant leave to serve the intended writ out of the jurisdiction, and also grant a world-wide injunction restraining the respondent from disposing of his assets pending trial of their claims against him. Such an order is informally but conveniently referred to as a Mareva injunction. It is instructive to quote the grounds on which the deponent relied:
“I believe that the plaintiff has a good arguable case that the case is a proper one for service on the first defendant out of the jurisdiction under RSC 0.11, r. 1(1)(b). The plaintiff has a good cause of action recognised under Hong Kong law. The final order in that cause of action is likely to be made in the courts of Monaco. If, as I believe to be likely, the final order is made in the plaintiffs favour, the Hong Kong court will have jurisdiction over the first defendant under RSC O. 11, r. 1(1)(m) in an action to enforce such final order or it will be registrable under the bi-lateral arrangements for the reciprocal enforcement of judgments between Hong Kong and France. However, that may be rendered nugatory if the plaintiff cannot obtain interlocutory relief.
Further, the plaintiff claims against the second defendant, a Hong Kong company...
To continue reading
Request your trial
-
Martin S. Kenney Cc International Ltd Appellants v Ace Ltd Respondent to Appeal
... ... an action commenced by that document (applying the decision of the Privy Council in Mercedes Benz AG v Leiduck [1996] AC 284) and no such claim is made against either CCI or Mr Kenney in these ... ...
-
Cruz City 1 Mauritius Holdings v Unitech Ltd
...647. Linsen International Ltd v Humpuss Sea Transport Pte LtdUNK [2011] EWHC 2339 (Comm); [2011] 2 CLC 773. Mercedes-Benz AG v Leiduck [1995] CLC 1090; [1996] AC 284. Parbulk II A/S v PT Humpuss Intermoda Transportasi TBK (The Mahakam)UNK [2011] EWHC 3143 (Comm); [2011] 2 CLC 988. Peterson ......
-
National Justice Compania Naviera SA v Prudential Assurance Company Ltd ('The Ikarian Reefer' (No 2))
...(Case C-189/87) [1988] ECR 5565; [1990] 2 CEC 22 McFarlane v E E Caledonia Ltd (No. 2)WLR [1995] 1 WLR 366 Mercedes-Benz AG v Leiduck [1995] CLC 1090; [1996] AC 284 Murphy v Young & Co's Brewery plc [1997] CLC 469; [1997] 1 WLR 1591 Seismik Securitik AG v Sphere Drake InsuranceUNK (unreport......
-
C Inc. Plc v L [QBD (Comm)]
...509. Maudslay, Sons & Field, ReELR [1900] 1 Ch 602. Mercantile Group (Europe) AG v AiyelaELR [1994] QB 366. Mercedes-Benz AG v Leiduck [1995] CLC 1090; [1996] AC 284. Munster v CoxELR (1885) 10 App Cas 680. National Justice Compania Naviera SA v Prudential Insurance Co Ltd (“The Ikarian Ree......