Walker International Holdings Ltd v Congo
| Jurisdiction | England & Wales |
| Judge | THE HON MR JUSTICE MORISON |
| Judgment Date | 06 December 2005 |
| Neutral Citation | [2005] EWHC 2813 (Comm) |
| Docket Number | Case No: 2000/1194 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 06 December 2005 |
[2005] EWHC 2813 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
The Hon Mr Justice Morison
Case No: 2000/1194
Mr Anthony Trace QC, Mr Richard Morgan and Mr Benjamin John (instructed by Allen & Overy LLP) for the Applicant
Mr Julian Flaux QC and Mr Simon Kerr (instructed by Russell-Cooke) for the Fininco and Jackson 31 Limited
Hearing dates: 11, 13, 18–21/07/05, 25–28/07/5, 3–4/10/05
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.
Morison J.:
Introduction
In this Judgment I shall call Walker International Holdings Limited 'Walker'; Republique Populaire du Congo 'Congo', Societe Nationale des Petroles du Congo 'SNPC'; Jackson 31 Limited 'Jackson'; and Financiere et Investissements Du Congo SA 'Fininco'.
By an arbitral Award made on 20 July 2000, Congo was ordered to pay Walker an amount in excess of FFr 100 million. On 30 October 2000, Master Miller ordered that Walker be at liberty to enforce the Award in the same manner as a judgment, and on 16 August 2001 judgment was entered against Congo for the Euro equivalent of the debt plus interest, and the costs of the arbitration.
The debt on which Walker sued arose out of a loan agreement made between Congo [the State] and a lender called Sadelmi Cogepi [whose rights were subsequently assigned to Walker]. Walker is one of a number of organisations which have bought debts due from the Congo at a substantial discount and are seeking to enforce their rights against Congo. There has been a steady stream of litigation relating to enforcement action in France, the Cayman Islands, the USA and in this jurisdiction. Congo is determined not to pay these debts and has taken steps to try and put its assets out of the reach of creditors such as Walker.
This case is slightly different from the other litigation in that it relates to shares ['the shares'] in a company, Jackson, which owns a property in London. Walker says that the shares which were acquired in the name of Fininco are truly shares which belong to Congo and can be made the subject of charging orders. Interim charging orders were made over the shares and property on 23 June 2003 and in the light of objections made by Fininco and Jackson, Master Miller, on 20 November 2003, made an order in the following terms:
"There be a trial of the issue as to whether the judgment debtor [Congo] is "interested beneficially" within the meaning of section 2 of the Charging Orders Act 1979 in either the share capital of [Jackson] or the property at 31 Sackville Street, London W1S 3 DZ."
This trial started on 11 July 2005; the last day of evidence was 28 July 2005 and closing submissions were made over two days at the beginning of October 2005. The following oral evidence was given:
(1) Mr Ikama, who was appointed to the Board of Fininco in September 2002, having previously been the financial adviser to the Chairman of SNPC, then Mr Itoua. He told me that he is still such an adviser to the present Chairman, Mr Gokana.
(2) Mr Sheehan, a director of Walker.
(3) M. Manseau called on behalf of Walker. His brief was to set out the steps which Walker had taken in France to enforce its arbitration award and judgment; "provide the background to the decision of the Paris Court of Appeal which held that SNPC was an emanation of the State" [Congo] and "to provide a summary of the financial arrangements put in place by [Congo] which are structured so as to thwart the legitimate attempts of creditors to enforce against assets of [Congo]."
(4) Professor Issa Sayegh, an expert on French and Congolese Law was called on behalf of Fininco who also expressed opinions on the Ohada Treaty.
(5) Professor Geraud de Geouffre de la Pradelle, an emeritus professor at the University of Paris who gave evidence of French and Congolese law on behalf of Walker.
(6) Sanford Saunders a partner in a Washington Law Firm, Greenberg Traurig LLP, called on behalf of Walker
(7) Madame Perrier, an accountant with PwC, France, who gave evidence principally about the arrangements for a compte courant as between parent and subsidiary, called on behalf of Fininco.
(8) Professor Dossou, who gave evidence on 'geopolitical' matters on behalf of Fininco. He is a most distinguished man: an international lawyer, a politician in his home state of Benin [where he stood as an unsuccessful Presidential candidate in 1991] and a participant in many major international events, including being a founder member of the African Association of International Law and a member of the MacBride Consultation Group at the Teheran talks with the Iranian authorities for the liberation of American hostages.
(9) Maitre Brudey, a barrister, and a member of the Brazzaville Bar, called on behalf of Walker.
(10) M. Bernard Hinfray, a French chartered accountant, who gave expert evidence, on behalf of Walker, in response to that of Madame Perrier.
(11) Mr Gary Kleiman, who gave evidence on geo political matters on behalf of Walker, in response to the evidence of Professor Dossou. Mr Kleiman is a consultant in his firm based in Washington which gives independent analysis and advice on developing and emerging economies and financial markets in many countries including Africa. His breadth of knowledge about the Congo was impressive.
There are some 60 files of paper material; and the parties' counsel, to whom I am grateful, provided the court with closing submissions in writing running to 100 pages for Walker, and for Fininco 75 pages.
I have to say that much of the evidence was of marginal relevance only to the issues which I must determine.
Summary of the parties' submissions
In essence, Walker's case is
(1) Congo and SNPC are to be regarded as one and the same thing or that SNPC is to be regarded as Congo's agent, nominee and trustee in all, or some of its dealings (including, at the very least its dealings in respect of the Shares) and that SNPC's assets are available for execution in satisfaction of the debt owed by Congo to Walker. In any event, it is contended that Fininco and Jackson are estopped from arguing to the contrary by virtue of the declaration of the Appeal Court in Paris [judgment dated 3 July 2003] and/or the order of the Grand Court of the Cayman Islands [dated 17 July 2003]. The judgment of the Cayman Islands Court has now been registered in this jurisdiction by virtue of an Order of Master Miller dated 22 July 2005. Congo and SNPC have been kept fully informed about this hearing and have elected to take no part.
(2) Fininco itself (or at the very least, Fininco's ownership of the Shares) is a sham, pretence, device, cipher or façade giving the appearance of ownership of the Shares by an independent third party but in reality leaving ownership in the hands of Congo/SNPC.
"Fininco is nothing but another example of [Congo's] use of corporate (and other) ownership structures conceived to retain ownership and control of [Congo's] assets in [Congo's] hands whilst giving the impression of genuine third party ownership as a way of secreting assets and frustrating creditors. Fininco is, accordingly, a sham or pretence and is, to all intents and purposes, to be equated with and treated as [Congo/SNPC] by another name." paragraph 16 of Walker's closing submissions.
(3) Alternatively, Fininco holds the Shares as a mere agent, nominee or trustee for Congo/SNPC.
(4) To the extent that it is necessary to assert it, Fininco is an emanation d'Etat of Congo/SNPC.
(5) Walker has been and is the victim of transactions and/or arrangements entered into, or participated in, by Congo/SNPC with the intention of placing assets of Congo/SNPC beyond the reach of creditors such as Walker and prejudicing the interests of such creditors within the meaning of section 423 of the Insolvency Act 1986. In such circumstances, pursuant to its wide powers under section 423(2) of the Act, the Court should grant relief.
In essence, the case for Fininco, as advanced on their behalf by Mr Julian Flaux QC is as follows:
(1) There is no basis for concluding that Fininco is a sham entity. On the contrary it is a separate corporate entity established according to Congolese Law and OHADA [Organisation pour l'Harmonisation en Afrique du Droit des Affaires'] with its own assets and operations. Fininco is "recognised as a corporate entity within the SNPC group, distinct from its parent not only by its own external auditors, Ernst & Young, but by the external auditors appointed to audit SNPC at the behest of the IMF, KPMG."
(2) To establish agency or nomineeship requires an intention that the particular purchase will be as agent or nominee. An examination of the purchase files relating to the acquisition of the shares and the property are inconsistent with Fininco being a mere nominee as opposed to purchasing for itself.
(3) Only if the court concluded that Fininco was a sham and was to be equated with SNPC would the Court need to consider whether SNPC and Congo are to be equated. As a matter of English Law the language used is whether the entity is an alter ego or organ of the State; mere State control will not suffice.
(4) The alternative case under section 423 of the Insolvency Act does not add anything to Walker's case "and should be rejected". The transaction in question has to be one to which the debtor...
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