Bloom and others v Harms Offshore AHT “Taurus” GmbH & Co KG and another

[2009] EWCA Civ 632; [2009] WLR (D) 211

Where creditors had, in a foreign jurisdiction, attached certain property owned by a company in administration, the comity owed by the courts of different jurisdictions to each other would normally make it inappropriate for the municipal courts to grant injunctive relief affecting procedures in a court of foreign jurisdiction. However, due regard to certain relevant factors, such as the conduct of the creditors against whom the injunction was sought and the circumstances of the attachment, might justify the grant of an injunction.

The Court of Appeal so stated when giving its reasons for having on 20 May 2009 dismissed the appeal of the defendants, Harms Offshore AHT “Taurus” GmbH & Co KG and Harms Offshore AHT “Magnus” GmbH & Co KG, from a decision of Mr Robert Englehart QC, sitting as a deputy judge of the Chancery Division of the High Court (Companies Court) on 15 May 2009 upon the hearing of an application by the claimants, Alan Robert Bloom and three others, to grant a mandatory injunction requiring the defendants to use their best endeavours to procure the release of two ex parte orders of maritime attachment and garnishment made by the United States District Court for the Southern District of New York against the tangible and intangible assets of Oilexco North Sea Ltd (in administration)(“the company”), and the release of attachments effected by the orders. The deputy judge’s order also restrained the defendants from taking any steps in substantive proceedings commenced in New York seeking judgment for sums due to them from the company. The defendants were companies incorporated in Germany which, without notice to the joint administrators, and without informing the court that the company was in administration, had commenced proceedings in New York seeking sums due from the company by way of attachment and garnishment.

STANLEY BURNTON LJ said that it had long been established that the statutory prohibition against creditors bringing proceedings against a company being wound up by the court was not extra-territorial, i e it did not extend to proceedings brought in foreign courts:In re Oriental Steam Company, Ex p Scinde Railway Co (1874) LR 9 Ch App 557. However, although the statutory prohibition had been interpreted as confined to the jurisdiction of the domestic courts, the finding of a trust in the Scinde case resulted in an effective extra-territorial jurisdiction. It was doubtful whether the instant case of a company in administration could be distinguished from the position in the Scinde case of a company being compulsorily wound up, but it was unnecessary to determine that question since the jurisdiction of the Court of Appeal (i) was not restricted by the territoriality of the statutory provision, (ii) was not confined to the protection of the assets of a company that was being wound up, and (iii) was available to protect the assets of a company in administration. When protecting the assets of a company in administration, or those of a company in compulsory liquidation, the company assets were dealt with by an officer appointed by the court in accordance with statutory duties, and one of the duties of the administrator was to “take custody or control of all the property to which he thinks the company is entitled” (para 61, Sch B1 to the Insolvency Act 1986); and that clearly meant the company property both within and outside the jurisdiction. The creditors of a company in administration were entitled to have the company and its assets dealt with in accordance with the statutory scheme applicable to such companies, and in this context there was no material distinction between a compulsory winding-up and an administration: thus if the court had jurisdiction to protect the assets of a company being wound up by the court from foreign attachments and executions it had a similar jurisdiction in the case of a company in administration. The exercise of the jurisdiction would depend on the facts of each case and the court should exercise its powers so as to enable the administrators to exercise their statutory functions and to fulfil their statutory duties, so far as necessary in any particular case. Although the comity owed by the courts of different jurisdictions to each other would normally make it inappropriate for the court to grant injunctive relief affecting procedures in a court of foreign jurisdiction, in some cases, such as the instant case, regard to certain relevant factors, including the conduct of the creditors against whom the injunction had been sought and the circumstances of the attachment of the property of the company, which might be castigated as “vexatious and oppressive” or otherwise unfair and improper, justified the grant of an injunction.

SIR JOHN CHADWICK gave a concurring judgment.

WARD LJ agreed with both judgments.

Appearances: Elspeth Talbot Rice QC and Edward Cumming (instructed by Ince & Co) for the defendants.William Trower QC and Tom Smith (instructed by Herbert Smith LLP ) for the joint administrators and the company.