The High Commissioner for Pakistan in the United Kingdom v Prince Mukarram Jah, His Exalted Highness the 8th Nizam of Hyderabad
| Jurisdiction | England & Wales |
| Judge | Mr Justice Marcus Smith |
| Judgment Date | 02 October 2019 |
| Neutral Citation | [2019] EWHC 2551 (Ch) |
| Court | Chancery Division |
| Docket Number | Claim No.: HC-2013-000211 |
| Date | 02 October 2019 |
and
and
[2019] EWHC 2551 (Ch)
THE HONOURABLE Mr Justice Marcus Smith
Claim No.: HC-2013-000211
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES (ChD)
BUSINESS LIST
Rolls Building
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
Mr Khawar Qureshi, QC and Mr Jonathan Brettler (instructed by Stephenson Harwood LLP) for the Claimant
Mr Hodge Malek, QC and Mr Jonathan McDonagh (instructed by Devonshires Solicitors LLP) for the Second and Third Defendants and Interpleader Claimants
Mr Timothy Otty, QC, Mr Harish Salve, SA, Ms Clare Reffin and Mr James Brightwell (instructed by TLT LLP) for the Fourth and Fifth Defendants and Interpleader Claimants
Mr Eason Rajah, QC and Ms Bryony Robinson (instructed by Withers LLP) for the Sixth Defendant and Interpleader Claimant The Seventh Defendant and the Defendant and Stakeholder did not appear and were not represented
Hearing dates: 10, 11, 12, 13, 17, 18, 19, 20 and 21 June 2019
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.
CONTENTS
| A. | INTRODUCTION | Para 1 | ||
| (1) | Overview | Para 1 | ||
| (2) | The parties | Para 15 | ||
| (3) | The issues | Para 16 | ||
| (a) | Pakistan's claims to be absolutely entitled to the Fund | Para 16 | ||
| (b) | The Princes' and India's contentions that the Fund was held on trust | Para 18 | ||
| (c) | Rahimtoola | Para 23 | ||
| (d) | The restitution claim | Para 24 | ||
| (e) | Pakistan's “public international law” defences | Para 27 | ||
| (4) | The structure of this Judgment | Para 28 | ||
| B. | THE EVIDENCE | Para 29 | ||
| (1) | Introduction | Para 29 | ||
| (2) | Witnesses of fact called to give evidence | Para 35 | ||
| (a) | Prince Muffakham | Para 35 | ||
| (b) | Shaharyar | Para 37 | ||
| (3) | Witness evidence given under Civil Evidence Act Notices | Para 40 | ||
| (4) | Documentary evidence | Para 43 | ||
| (a) | Disclosed documents | Para 43 | ||
| (b) | Public documents | Para 51 | ||
| (c) | The source of documents | Para 55 | ||
| (5) | Expert evidence | Para 56 | ||
| (6) | The factual narratives | Para 59 | ||
| (7) | My approach to the evidence | Para 60 | ||
| C. | HYDERABAD | Para 62 | ||
| (1) | Partition: India, Pakistan and Hyderabad | Para 62 | ||
| (2) | The position of Hyderabad in 1948 | Para 68 | ||
| (a) | Geography and religion | Para 68 | ||
| (b) | Approach of the United Kingdom | Para 69 | ||
| (c) | Approach of Nizam VII | Para 71 | ||
| (d) | The approach of India, as viewed by Nizam VII | Para 73 | ||
| (3) | Operation Polo | Para 74 | ||
| (4) | Accession of Hyderabad to India | Para 83 | ||
| D. | THE PAYMENT INTO THE RAHIMTOOLA ACCOUNT | Para 86 | ||
| (1) | Establishment of the Hyderabad Government Account | Para 86 | ||
| (2) | Establishment of the Second Account | Para 96 | ||
| (3) | Transfer of the balance of the Hyderabad State Bank Account to the Second Account | Para 100 | ||
| (4) | Special treatment of the Second Account | Para 103 | ||
| (5) | The Rahimtoola Account | Para 105 | ||
| (a) | Approach | Para 105 | ||
| (b) | The evidence | Para 106 | ||
| (i) | Communications dated 14 September 1948 | Para 106 | ||
| (ii) | Communications dated 15 September 1948 | Para 108 | ||
| (iii) | Rahimtoola's evidence | Para 111 | ||
| (iv) | Communications dated 16 September 1948 | Para 113 | ||
| (v) | Events of 20 September 1948 | Para 115 | ||
| (vi) | The Bank's views regarding the basis upon which the account was held | Para 118 | ||
| (c) | Findings | Para 121 | ||
| (i) | Introduction | Para 121 | ||
| (ii) | The evidence of Rahimtoola | Para 124 | ||
| (iii) | The 15 September letters | Para 126 | ||
| (iv) | My conclusions on the evidence | Para 130 | ||
| (6) | Attempts to freeze the accounts | Para 135 | ||
| E. | EVENTS POST-DATING THE TRANSFER | Para 147 | ||
| (1) | Introduction | (2) | Appointment of a new High Commissioner for Pakistan | Para 148 |
| (3) | The Ispahani letter | Para 150 | ||
| (4) | The 1954 Proceedings | Para 153 | ||
| (5) | The 1956 Assignment | Para 164 | ||
| (6) | Subsequent dealings | Para 167 | ||
| (a) | The Princes | Para 169 | ||
| (b) | India | Para 173 | ||
| (c) | Other interests | Para 174 | ||
| F. | THE ACTUAL AUTHORITY OF NIZAM VII AT THE TIME OF THE TRANSFER | Para 176 | ||
| (1) | Introduction: why the issue matters | Para 176 | ||
| (2) | Applicable law | Para 181 | ||
| (3) | Is the law of Hyderabad law that is recognised in the English courts? | Para 185 | ||
| (a) | The problem stated | Para 185 | ||
| (b) | The status of Hyderabad from 15 August 1947 until the conclusion of Operation Polo | Para 188 | ||
| (c) | The status of Hyderabad after Operation Polo | Para 193 | ||
| (4) | What is the law of Hyderabad on this point? | Para 197 | ||
| (5) | The authority of Moin as a Hyderabad Government official | Para 199 | ||
| G. | ABSOLUTE TRANSFER OF THE FUND: THE ARMS FOR MONEY ARGUMENT | Para 202 | ||
| (1) | Introduction | Para 202 | ||
| (2) | The provision of weapons in Pakistan and Hyderabad | Para 205 | ||
| (3) | Evidence of Hyderabad's involvement in the provision of weapons | Para 210 | ||
| (4) | Connection between the Transfer and the provision of weapons | Para 215 | ||
| (5) | Conclusion | Para 216 | ||
| H. | ABSOLUTE TRANSFER OF THE FUND: THE SAFEGUARDING ARGUMENT | Para 217 | ||
| (1) | Introduction | Para 217 | ||
| (2) | The facts | Para 220 | ||
| (a) | Approach | Para 220 | ||
| (b) | Authorisation by Nizam VII | Para 221 | ||
| (c) | Moin's intention | Para 231 | ||
| (i) | Introduction | Para 231 | ||
| (ii) | Issue estoppel | Para 233 | ||
| (iii) | The transfer | Para 239 | ||
| (d) | Rahimtoola's intention | Para 241 | ||
| (3) | The law | Para 243 | ||
| (a) | Introduction | Para 243 | ||
| (b) | Express trust | Para 244 | ||
| (i) | The three certainties | Para 244 | ||
| (ii) | Agency | Para 246 | ||
| (c) | Constructive trust | Para 248 | ||
| (i) | The law | Para 248 | ||
| (ii) | Constructive trust “of the first kind” generally | Para 250 | ||
| (iii) | A trustee de son tort | Para 251 | ||
| (d) | Resulting trust | Para 252 | ||
| (4) | The question of “choice” as to trustee and the Ispahani letter | Para 255 | ||
| (5) | An absolute interest in Pakistan | Para 258 | ||
| (6) | Conclusions | Para 259 | ||
| I. | NO TRUST IN ANY EVENT | Para 260 | ||
| (1) | Introduction | Para 260 | ||
| (2) | No trust relationship can arise as a matter of private law | Para 262 | ||
| (3) | A court should exercise caution when considering whether a trust arises in the case of sovereign states | Para 266 | ||
| J. | THE RESTITUTION CLAIM | Para 271 | ||
| (1) | Introduction | Para 271 | ||
| (2) | Pakistan's raising of the procedural bar of sovereign immunity prevented time running against any claimants to the Fund, which only began to run when the procedural bar was waived | Para 276 | ||
| (3) | Abuse of process in raising the limitation defence | Para 280 | ||
| (4) | Claim against the Bank | Para 286 | ||
| K. | FOREIGN ACT OF STATE DOCTRINE AND NON-JUSTICIABILITY | Para 292 | ||
| (1) | The nature of the Doctrine | Para 292 | ||
| (2) | Aspects of the Doctrine relied upon by Pakistan | Para 295 | ||
| (3) | Justiciability | Para 301 | ||
| (a) | The ambit of Pakistan's case | Para 301 | ||
| (b) | Partial non-justiciability | Para 303 | ||
| (c) | Non-justiciability: Rule 3 expanded | Para 306 | ||
| (i) | The ambit of Rule 3 | Para 306 | ||
| (ii) | The public policy exception | Para 307 | ||
| (iii) | Synthesis | Para 309 | ||
| (4) | Application in the present case | Para 313 | ||
| L. | ILLEGALITY | Para 315 | ||
| (1) | Introduction | Para 315 | ||
| (2) | Is illegality “analytically irrelevant”? | Para 319 | ||
| (3) | The significance of the settlement | Para 324 | ||
| (4) | Different types of illegality alleged by Pakistan | Para 327 | ||
| (a) | Introduction | Para 327 | ||
| (b) | Para 330 | |||
| (c) | The Standstill Agreement | Para 332 | ||
| (d) | The Charter of the United Nations | Para 334 | ||
| (5) | Overall conclusion | Para 339 | ||
| M. | CONCLUSIONS AND DISPOSITION | Para 340 | ||
| ANNEXES | ||||
| Annex 1 | GLOSSARY OF NAMES AND TERMS USED IN THE JUDGMENT | Para 1 fn 1 | ||
| Annex 2 | MAP SHOWING THE POSITION OF HYDERABAD IN 1948 | Para 68 | ||
| Annex 3 | TRANSACTIONS ON THE HYDERABAD STATE BANK ACCOUNT, THE SECOND ACCOUNT AND THE RAHIMTOOLA ACCOUNT | Para 91 | ||
| TABLES | ||||
| Table 1: Witness evidence given under Civil Evidence Act Notices | Para 40 | |||
| Table 2: Documents put in under Civil Evidence Act Notices | Para 46 |
A. INTRODUCTION
(1) Overview
. On 20 September 1948, Nawab Moin Nawaz Jung ( Moin) 1 caused the sum of £1,007,940 9s 0d to be transferred from an account of the Government of Hyderabad held at Westminster Bank (the Bank 2) to an account in the name of Habib Ibrahim Rahimtoola ( Rahimtoola), also at the Bank. I shall refer to this transaction as the Transfer. Until 17 September 1948, Moin had been Finance Minister and Minister for...
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