| EXECUTION — Equitable execution — Appointment of receiver — Whether jurisdiction to appoint receiver of debt or income falling due in future —Whether applications for appointment of receiver in relation to foreign debts and ancillary orders proceedings relating to or concerned with enforcement — Whether “recourse to force …to ensure effective implementation of judgments”— Council Regulation (EC) No 44/2001, art 22(5)
Masri v Consolidated Contractors International UK Ltd and others (No 2) [2008] EWCA Civ 303; [2008] WLR (D) 97
CA: Ward LJ, Lord Neuberger of Abbotsbury and Lawrence Collins LJ: 4 April 2008
There was no reason why the court should not exercise a power to appoint a receiver by way of equitable execution over future receipts from a defined asset. Applications for the appointment of a receiver over foreign debts and ancillary orders did not constitute proceedings concerned with the enforcement of judgments within the meaning of article 22(5) of Council Regulation (EC) No 44/2001.
The Court of Appeal so stated, inter alia, when granting permission to appeal where required but dismissing the appeals of the fourth and fifth defendants, Consolidated Contractors International Company SAL (“CCIC”) and Consolidated Contractors (Oil & Gas) Company SAL (“CCOG”), from a decision of Gloster J in the Commercial Court of the Queen’s Bench Division on 20 December 2007 [2008] All ER (Comm) 305 (i) to appoint a receiver in relation to CCOG’s interest in revenues from the Masila Oil Concession in the Yemen; (ii) to make a freezing order restraining CCOG from disposing of its interest in the concession and from selling oil from the concession area otherwise than in the ordinary course of business; and (iii) to order CCOG and CCIC to make an affidavit of assets. CCOG appealed against the receivership order and sought permission to appeal against the freezing order, and both sought permission to appeal against the affidavit order, on the grounds, inter alia, that the court had no jurisdiction to make the orders.
Judgments on liability and quantum [2006] EWHC 1931 (Comm); [2007] EWHC 468 (Comm) had previously been given for the claimant, Mr Munib Masri, which had held, inter alia, CCIC and CCOG liable in multi-million dollar sums to the claimant for breach of a contract whereby they would pay him a percentage of the revenues of the concession.
LAWRENCE COLLINS LJ said that, applying, inter alia, Société Eram Shipping Co Ltd v Cie Internationale de Navigation [2004] 1 AC 260, the court, assuming it had in personam jurisdiction over CCOG, could make a receivership order by way of equitable execution in relation to foreign debts; and the judge had not exceeded the permissible limits of international jurisdiction. The English court ostensibly had in personam jurisdiction to make the ancillary orders by virtue of the submission by CCOG and CCIC to the jurisdiction in defending the case on its merits. However, the defendants had submitted that: (i) the receivership order application was “proceedings relating to enforcement” within art 22(5) of Council Regulation (EC) No 44/2001 because it was enforcement, and was concerned with the “dispossession” of the judgment debtor and, with the threat of contempt, the “recourse to force … in order to ensure the effective implementation of judgments” (see Reichert v Dresdner Bank AG [1992] ECR I-2149, para 27); (ii) the freezing order application was “proceedings concerned with enforcement” within art 22(5), and amounted to a “recourse to force … on movable property in order to ensure the effective implementation of judgments”; and (iii) the affidavit of assets was also a measure “concerned with enforcement”. Those submissions were rejected. Neither the receivership order nor the freezing order fell within art 22(5). First, art 22(5) was concerned with actual enforcement, and not with steps which might lead to enforcement; the receivership order did not dispossess the judgment debtor, nor did it amount to a recourse to force; and it was plain that what was contemplated in the article was actual execution. Second, there was no suggestion that execution might take place in a state to which Council Regulation (EC) No 44/2001 or the Lugano Convention applied, and the fact that it was not possible to identify a state where there might be actual execution underlined the inapplicability of art 22(5). The orders might pave the way for execution but they were not proceedings concerned with the enforcement of judgments. However, the defendants further submitted that a receiver could not be appointed over future debts or future income. An extensive review of authority, including Soinco SACI v Novokuznetsk Aluminium Plant [1998] QB 406, nevertheless confirmed that there was no binding authority that the jurisdiction was not available in relation to future income from a defined asset; and even if the jurisdiction had not been exercised before 1873 the court was not bound by pre-1873 practice to abstain from incremental change. There was no authority for the proposition that a remedy could now only be granted under s 37(1) of the Supreme Court Act 1981 if it could have been granted before 1873. There was no reason why in 2008 the court should not exercise a power to appoint a receiver by way of equitable execution over future receipts from a defined asset; nor was there any longer a rule, if there ever had been, that -an order could only be made in relation to property which was presently amenable to legal execution. In any event, there was no principle which prevented the development of existing authority to extend the remedy to the property which was the subject of the receivership order in this case.
LORD NEUBERGER OF ABBOTSBURY and WARD LJ agreed.
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