Pakistan v Zardari

J U D G M E N T

I will ask Lord Justice Thomas to give the first judgment.

In March 2006 the claimant, the Islamic Republic of Pakistan, commenced proceedings against Mr Zardari and three Isle of Man companies which had been incorporated in 1995. The claim against Mr Zardari is that as the husband of Mrs Benazir Bhutto, who had been the Prime Minister for periods in the 1980s and 1990s, he had acquired a position of influence and, as a Senator or Member of the National Assembly and a Minister, a similar position in his own right; he used those positions to obtain bribes or commissions from contracts entered into on behalf of the Republic of Pakistan or its agencies. It was alleged by Pakistan that three Isle of Man companies were used as special purpose vehicles, formed by Mr Zardari and Mrs Bhutto to acquire the Rockwood Estate in Surrey concealing their identity, and that the purchase was funded by bribes or commissions which had been laundered through those companies. The Rockwood Estate was sold subsequently for £4.3 million and the liquidator of the Isle of Man companies stands possessed of £3.1 million within this jurisdiction, that sum being the net proceeds of sale. Pakistan claims it is entitled to that fund and that the defendants hold the interests in the property and proceeds as constructive trustees. They also seek an account.

On 3rd March 2006 the Islamic Republic of Pakistan applied to the Commercial Court for leave to serve the claim making those allegations out of the jurisdiction. That leave was granted by Cooke J.

On 24th April and 12th May 2006 the defendants respectively sought to set aside the service. That application came on for hearing before Lawrence Collins J (as he then was) in July, and in a judgment on 6th October 2006 he dismissed the applications of the defendants and refused to set aside service. He refused permission to appeal. The parties sought permission from this court. That application was refused on paper. That application has been renewed before us today by both Mr Zardari and the companies in very eloquent and concise submissions that have been put before the court.

The first issue, and that which has arisen most prominently in the submissions before us, relates to the issue of jurisdiction under CPR Part 6.20. It is clear that this is not a matter of discretion but a matter of determining whether the claim as set out in the pleadings (or as it ought to be framed in the pleadings) is within the specific heads set out in the CPR Part 6.20. Two particular heads were relied on before the learned judge: the head under subrule (10), which states “the whole subject matter of a claim relates to property located within the jurisdiction,” and the head under subrule (14) which applies to “a claim [that] is made for a remedy against the defendant as constructive trustee where the defendant's alleged liability arises out of acts committed within the jurisdiction.” It is common ground that it makes no difference on the facts of this particular case within which head of jurisdiction the claim can be brought, provided it can be brought within one of them.

The learned judge decided clearly that both heads of jurisdiction were made out and the claim fell within both. For my part I am prepared to accept that there is more doubt about the head under subrule (14), and therefore the argument before us has concentrated on the provisions of subrule (10).

The learned judge in his judgment decided at paragraphs 157 to 159 that the whole of the subject matter of the claim relates to property located within the jurisdiction. He considered in reaching that conclusion a decision of Lightman J in In re Banco Nacional de Cuba [2001] 1 WLR 2039 and the decision of Mann J in Shahar v Tsitsekkos [2004] EWHC 2659 (Ch), where this particular issue was considered at paragraphs 41 to 44 of Mann J's judgment.

The judge accepted that he should look at the...