Mulugeta Guadie Mengiste and Another v Endowment Fund for the Rehabilitation of Tigray and Others
| Jurisdiction | England & Wales |
| Judge | Lady Justice Arden,Lord Justice Davis |
| Judgment Date | 12 September 2017 |
| Neutral Citation | [2017] EWCA Civ 1326 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 September 2017 |
| Docket Number | Case No: A3/2014/4311 |
[2017] EWCA Civ 1326
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
CHANCERY DIVISION
THE HONOURABLE MR JUSTICE PETER SMITH
Royal Courts of Justice
Strand, London, WC2A 2LL
Lady Justice Arden
and
Lord Justice Davis
Case No: A3/2014/4311
Lance Ashworth QC (instructed by Howard Kennedy LLP) for the Appellants
Andrew Short QC and Oliver Assersohn (instructed by MS Legal) for the Respondents
Hearing dates: 28–29 June 2017
Approved Judgment
The issue on this appeal is whether Peter Smith J was wrong to refuse to lift a stay in these proceedings. The judge had imposed the stay in unusual circumstances for the reasons given in his judgment ("the stay judgment") in these proceedings on 22 March 2013 ( [2013] EWHC 599 (Ch)), from which no party appealed. The aim of the stay was to enable the appellants to take proceedings in the forum, Ethiopia, which was more obviously appropriate for determining the dispute between the parties. The anticipated proceedings in Ethiopia consisted of an application for the review of a previous judgment which the respondents had obtained against the appellants in litigation in Ethiopia ("the Ethiopian litigation") and which the appellants contended had been obtained by fraud. In the event the appellants were not successful on their application for a review in the Ethiopian litigation. That led them to apply to the judge to lift the stay he had imposed. By his order dated 11 December 2014, the judge refused to lift the stay and at the same time declined to vary an order he had made for the payment of costs on account.
The Ethiopian litigation
The parties to these proceedings were parties to a joint venture, the second respondent ("APF"), to manufacture pharmaceutical products in Ethiopia. The appellants owned 49% of the shares, and the first respondent ("EFFORT") 51%. The first appellant, Mr. Mengiste, was originally the general manager of APF. On 12 March 1998 he was replaced by Dr Asgedom. On 7 July 1998 Dr Asgedom authorised APF to bring the Ethiopian litigation against the appellants for repayment of the price of goods which the appellants had agreed to deliver to APF, together with other claims. The respondents among other things claim that the goods were paid for but not delivered. The respondents largely succeeded in the Ethiopian litigation. They obtained judgment and subsequently an order for the sale of the appellants' shareholding.
The facts in more detail
Mr Gebrue, a board member of EFFORT since 1995, was appointed chairman of APF in 1997, and he continued to hold that appointment until 2001. The appellants allege that Mr Gebrue was heavily involved in the Ethiopian litigation.
The Ethiopian litigation went to the Regional Supreme Court of Tigray ("the Tigray Supreme Court"), of which Judge Mehretab was a member. As all material times, Mr Gebrue was married to Judge Mehretab. There were some twenty-five instances in which Judge Mehretab was in some way involved in the Ethiopian litigation. For example, Judge Mehretab was a member of a three-judge panel which granted a freezing order against Mr Mengiste and the second appellant ("AIT") in 1998. The appellants contended that this order had ruined AIT's business. Again, Judge Mehretab was a member of a three-judge panel which on 17 November 1999 rejected the appellants' argument that the Ethiopian litigation was improperly constituted because Dr Asgedom lacked authority to initiate them.
Judge Mehretab did not, however, form part of the panel which on 1 January 2001 held that Mr Mengiste was responsible for not ensuring the delivery of the goods in issue. There was a further judgment against the appellants in January 2003.
In 2004, the appellants made an application for review of that judgment under Article 6 of the Civil Procedure Code of Ethiopia on the grounds that they had discovered new evidence. A panel of the Tigray Supreme Court, of which Judge Mehretab was a member, dismissed that application. Judge Mehretab then ceased to be involved in the Ethiopian litigation.
The appellants then on 16 April 2010 brought the present proceedings in the English courts. They alleged that the orders of the Ethiopian courts had been obtained by fraud and that their shareholding had been misappropriated. They now had an inventory, signed by Mr Teferie and one other, showing that the goods of the relevant description were at APF's factory. This inventory had not been in evidence in the Ethiopian litigation. The respondents applied for a stay on the grounds that this was not a convenient forum. All the parties were Ethiopian and the property involved was in Ethiopia. The parties' contractual relationship was governed by Ethiopian law and the allegedly wrongful acts took place in Ethiopia.
The appellants contended that they could not obtain a fair trial in Ethiopia. In the stay judgment, Peter Smith J decided to grant a stay of the English proceedings. He considered that the evidence about inability to obtain a fair trial in Ethiopia was not cogent. He did not consider that there was evidence of any general bias against the appellants. However, he accepted that there might be issues over the inventory and the participation of Judge Mehretab. The evidence showed that the appellants might be able to apply for a review of the judgments against them in Ethiopia. There was expert evidence that, following a prior case in Ethiopia, the Fissehaye case, such an application might be made even though a stipulated one-month time limit had been exceeded. The judge's judgment contemplated that, if the Ethiopian courts did not deal with a review application fairly, the appellants could apply to lift the stay.
So the claimants applied for a review of the judgment of the Ethiopian courts against them in Ethiopia.
Decisions of the Ethiopian courts on the appellants' application for review
The appellants made their application to the Tigray Supreme Court on 22 April 2013 under Article 6 of the Civil Procedure Code of Ethiopia ("CPC"), seeking a review of the Tigray Supreme Court's January 2001 and January 2003 judgments.
At the appellants' own request, it ruled that none of the documents from the London hearings (including the stay judgment) could be produced. The appellants relied on the newly-discovered inventory, the evidence of Mr Gebrue, given in the English proceedings, confirming his marriage to Judge Mehretab and also that Dr Asgedom had been appointed around March 1998, showing that the Ethiopian litigation had not been properly instituted due to lack of authority, and indicating that a memorandum of Dr Asgedom's appointment from 1997 might be a forgery, the evidence of a Mr Cantu, given in England, stating that the goods and training had been supplied, and the evidence of Mr Teferie, again given in the English proceedings, testifying that the equipment identified in the inventory report was installed earlier than the factory's official opening in 1997.
On 7 October 2013, the Tigray Supreme Court dismissed the appellants' review application. Relevant extracts from its judgment appear in Appendix 1 to this judgment. It held that Article 6 CPC was enacted to rectify a situation where judgment arose from a criminally tainted act, not to allow individuals to present evidence they failed to present first time around. In this case, the appellants had not shown a criminally tainted act, nor had they demonstrated or explained why they failed to produce the witnesses at first instance. In response to the appellant's arguments that the goods had been received, the Tigray Supreme Court concluded that the main issue below had not been whether such goods were received but who made the payment.
The Tigray Supreme Court also concluded that the appellants had been aware of Judge Mehretab's relationship at the time of trial, and they had not asked her to recuse herself then. Such an argument was, therefore, denied them now. In any case, had that application been made, it would not have been successful as Mr Gebrue had not been employed by APF at the time, and he and his wife did not discuss work; that there was not enough evidence to show a potential impartiality; and that Judge Mehretab did not have a major role in the decisions. Moreover, even if the evidence was new, it was not maliciously concealed by the respondents, and the evidence the respondents produced showing the appellants were aware of the relationship demonstrated the appellants had not exercised due diligence.
The appellants appealed to the Cassation Division of the Federal Supreme Court of Ethiopia, which also dismissed their case. Relevant extracts from the judgment appear in Appendix 2 to this judgment. The Cassation Division stated that they had reviewed documents from the English proceedings. They dismissed the appeal on 2 December 2013, publishing their reasons on 19 February 2014. The Cassation Division held that the evidence relied on, which was said to have been discovered during the London proceedings, was not "new evidence" within the meaning of Article 6. It did not demonstrate the 2001 and 2003 judgments of the Tigray Supreme Court were obtained through criminal or improper means, and was not "new" because it could have been obtained earlier with due diligence. Furthermore, even if it was new evidence, the time limit of one month allowed for making an application under Article 6 ought to start running from the date on which the appellants received a copy of such evidence from the High Court; and the application had been made after the one-month limitation period had expired. The appellants should have obtained a "judgment copy" or explained why they could...
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Appeal Dismissed: English Courts on Foreign Judgments
...INTRODUCTION In late 2017 the Court of Appeal handed down judgment in Mengiste v. Endowment Fund for the Rehabilitation of Tigray [2017] EWCA 1326 (Civ). The Court seized the opportunity to firmly espouse that the English courts will refuse to act as a supranational appellate court for appe......