Newsat Holdings Ltd and Others v Zani
| Jurisdiction | England & Wales |
| Judge | Mr Justice David Steel,MR JUSTICE DAVID STEEL |
| Judgment Date | 01 March 2006 |
| Neutral Citation | [2006] EWHC 342 (Comm) |
| Docket Number | Case No: 2005 FOLIO 504 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 01 March 2006 |
[2006] EWHC 342 (Comm)
MR JUSTICE DAVID STEEL
Case No: 2005 FOLIO 504
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Jeffrey Onions QC and Hannah Brown (instructed by 'Messrs Manches LLP) for the Claimants
David Lewis (instructed by Messrs Middleton Potts) for the Defendant
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
On 10 June 2005 Cooke J granted the Claimants ("Newsat"), on a without notice application, permission to serve the Defendant, Mr Charles Zani ("Zani"), out of the jurisdiction at his place of residence in the Philippines pursuant to CPR 6.20 (8) (a) (i.e. a claim in tort "where the damage was sustained within the jurisdiction") and (b) (i.e. a claim in tort "where the damage sustained resulted from an act committed within the jurisdiction"). Cooke J also granted a worldwide freezing order prohibiting Zani from dealing with or disposing of his assets up to a value of US $8.3 million.
The claim form and the freezing order were served on Zani in the Philippines on 27 June 2005. By an application notice dated 17 August 2005 under CPR 11 (1) and (6), Zani sought a declaration that the Court had no jurisdiction to hear the claim and an order setting aside the claim form, the granting of permission to serve out of the jurisdiction, the freezing order and the service of the claim form.
For the purposes of this application, it is common ground:
a) that Newsat has demonstrated a serious issue to be tried on the merits of the claim for the purposes of obtaining permission to serve out and a good arguable case for the purpose of the freezing order.
b) that England is the forum where the case may most suitably be tried in the interest of the parties and the ends of justice.
The application is pursued solely on the basis that Newsat has not demonstrated a good arguable case that the claim falls within either CPR 6.20 (8) (a) or (b). In summary, on this issue, Newsat contend that the Court has jurisdiction because fraudulent representations by Zani were communicated to them in London and acted on there. The primary theme of Zani's response is that no act was ever committed by him within the jurisdiction (indeed he had not been within the jurisdiction for many years) and that no damage was sustained by Newsat in the jurisdictions since all the wasted expenditure claimed by Newsat was settled by payment from bank accounts in Bermuda being the place of incorporation of the Newsat companies.
The nature of the Claimants' case is a claim for damages for losses incurred by them as a result of reliance upon fraudulent misrepresentations made to them by the Defendant (or by Seysat Limited a company controlled by him) relating to the quality of orbital slot rights held by the Seychelles Government at longitude 42.5° East. Since there is no challenge to the Claimants' contention there is a serious issue to be tried on the merits, I propose to summarise matters by reference to the Claimants' evidence. However, it must of course be emphasized that there is a wealth of evidence filed by the Defendant which contradicts the Claimants' account.
The parties
The Claimants are a group of companies formed in 2000 in Bermuda. There is no need for present purposes to distinguish between them. They were formed to exploit an apparent investment opportunity in relation to the orbital satellite slot owned by the Seychelles Republic.
The Claimants' case is that the management and control of Newsat was in London, where the business was predominantly run by two of its directors Markus Pedriks and Robert Wardrop. A third director, Jack Albert, carried out many of the operational activities of the company albeit pursuant to the instructions of Wardrop and Pedriks. The three directors had earlier established another Bermuda company, ISC, with a view to exploiting investment opportunities in regard to orbital slots registered by the Russian Federation.
Seysat Limited was a Seychelles company also formed for the purposes of exploiting the orbital slot rights held by the Seychelles Republic. It was owned by some 45% (later reduced to 20%) by the Republic and as to 55% (later increased to 80%) by an Anguillan company, Buy & Sell Trading Company Limited. The Defendant was the President of Seysat and was authorised by the Seychelles Government to carry out transactions on behalf of Seysat with a view to extracting the commercial benefits to be derived from the orbital slot rights. Zani was also the beneficial owner and alter ego of Buy & Sell Trading Company Limited.
The regulatory framework
The regulatory framework as regards satellite transmission can be briefly summarised. Geostationery satellites orbit the earth directly above the Equator at a height above the earth such that the satellite appears to be stationery in the sky when seen from the earth. The position of such satellites is measured in degrees East or West matching the degrees of longitude.
The regulation of geostationery satellite orbits is undertaken by the International Telecommunications Union ("ITU") which is part of the United Nations. Regulation is undertaken by means of a series of filings made pursuant to the Radio Regulations. Such filings can only be made with the ITU by or on behalf of a sovereign state recognised by the ITU.
The final step in obtaining a filing is notification to the ITU that a satellite in the relevant location has been "brought into use". This step must take place within 6 years of the original filing (subject to an automatic extension on application to the ITU of 3 years). Otherwise the filing expires.
An intermediate stage in the filing process gives rise to the priority of the network. This priority in turn give rise to a right to operate without harmful interference. Thus a process of co-ordination is embarked upon whereby administrators of neighbouring networks agree the steps needed to avoid interfering with the priority network. The final outcome is registration of the details of the fully co-ordinated network.
In accord with this regulative framework, the Republic of Seychelles made two filings with the ITU in relation to the orbital slot at 42.5° East – namely SEYSAT-1 and SEYSAT-1A.
SEYSAT-1 was fully co-ordinated by 3 May 2000. Although it had a small footprint, it had an early priority date of 11 September 1992. In contrast, SEYSAT-1A had an in-service due date of 5 March 2005 (including the 3 year extension). It also had a large footprint area. Although its own priority date was as late as 11 November 1996, the SEYSAT-1 priority date could be relied upon in co-ordination negotiations. These negotiations needed to be successfully accomplished with UAE as regards its EMARSAT-1F network at 44° East and with the Russian Federation as regard its EXPRESS -4 network at 40° East.
Initial agreement
In early 2000 Wardrop, in his capacity as director of ISC, became aware of the opportunity of purchasing a satellite from the Indonesian state owned communications department, together with the opportunity for acquiring the rights to the Seychelles slot. Following negotiations between ISC and Seysat, a meeting was held in the Seychelles between Mr Zani and Mr Albert.
At that meeting, it is the Claimants' case that Mr Zani made various representations to the effect that the filings in regard to SEYSAT-1 and SEYSAT-1A had been properly made on the basis of true and accurate information and were not open to challenge.
In reliance thereon ISC executed an orbital slot agreement whereby Seysat furnished an exclusive licence to ISC to operate satellites in the slot on all frequencies available in accordance with the ITU filings. The difficulty that arose on the Claimants' case is that the filing for SEYSAT-1 had not been properly made, a matter which it is contended, that Zani was fully aware of since he had been responsible for filing the false information.
The information filed was that a Gorizont satellite, which had been launched in January 1994, had been moved into the slot, its transponders had been turned on and it had carried transmissions on the C-band frequencies before 9 October 1999 (the in-service due date). However, the Claimants assert that the satellite used to bring the filing into use was an old Russian GALS-1 satellite which did not carry C-band traffic, was not in the slot until after 9 October and was probably not turned on.
The knock-on affect from the Claimants' perspective was that the Seychelles Government was unable to reach a co-ordination agreement with the Russian administration in relation to the neighbouring network EXPRESS-4.
New agreement
The Claimant companies were formed in October 2000 and it was agreed that a new agreement on substantially the same terms as the ISC orbital slot agreement would be entered into between between Newsat and Seysat. The thrust of the Claimants' complaint is the failure of the Defendant to correct the earlier representations when entering into the Newsat orbital slot agreement.
The new agreement was executed on 14 November 2000. This agreement had a Clause U:-
"The parties represent and warrant that their respective companies are…(ii) able to comply with the Agreement and are unaware of any information to the contrary of the intents of this agreement…(v) on the part of Seysat that it has been duly authorised by the Government of the Seychelles the right to grant the Slot Rights to Newsat-425 as provided for in this Agreement and...
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