August 2014: EU Litigation Update

by Quinn Emanuel Urquhart & Sullivan, LLP
Contact

English Court of Appeal Confirms Extra-Territorial Reach of Contempt Proceedings Against Foreign Company Directors: Dar Al Arkan Real Estate Development Co. and Another v. Al Refai and Others [2014] EWCA (Civ.) 715, [2014] WLR (D) 239. In a recent decision, the English Court of Appeal has confirmed that the principle against extra-territorial application of legislation does not prevent a committal order being made against a foreign director of a foreign company which has not complied with an order of an English court, and that the English courts have jurisdiction to give permission for service of contempt proceedings out of the jurisdiction. The decision demonstrates that where a company is required by a judgment or order of the English court to take certain action but fails to do so within the time fixed by the judgment or order, or disobeys a judgment or order to refrain from certain action, a committal order may be made against any director or officer of that company even if they are domiciled outside of the jurisdiction.

In this case the Claimants—a Saudi company and a Bahraini bank—brought proceedings for breach of confidence and other torts against the Defendants in England, alleging that the Defendants were pursuing a campaign of blackmail against them. Before commencing proceedings, the Claimants applied ex parte for interim injunctive relief. At the injunction hearings, the Claimants gave undertakings, and were subject to a court order, for the preservation of certain computer hard drives and data. The Claimants were subsequently found to be in breach of those undertakings and the court order. In response, the Second Defendant, Kroll Associates UK Ltd, brought contempt proceedings against the Claimants and sought a committal order (under CPR Rule 81.4(3)) against Sheikh Abdullatif as director of both Claimants. Sheikh Abdullatif was not domiciled in an EU Member State, as he was resident in Saudi Arabia. He argued that (i) a committal application could not be made outside the jurisdiction; that (ii) the English courts had no jurisdiction to give permission for service of contempt proceedings out of the jurisdiction; and that (iii) Article 22(5) of the Brussels I Regulation, which confers exclusive jurisdiction on the courts of an EU Member State regardless of domicile in proceedings concerned with the enforcement of judgments, had no application in the present case.

On the first issue, the English Court of Appeal acknowledged the presumption against extra-territoriality, but also noted that the Civil Procedure Rule Committee had the power to make rules with extra-territorial reach. The key issue was therefore the legislative intention behind CPR 81.4(3). The English Court of Appeal held that the intention to give CPR 81.4(3) extra-territorial effect could be inferred from the need to control proceedings brought in England, the need to control participants in such proceedings, and the need to have a means of recourse to discipline companies in contempt of court because of the actions of their directors. The practicability of the enforcement of an order outside the jurisdiction was considered by the English Court of Appeal to be a factor which must be weighed when interpreting a civil procedure rule; however, in the circumstances of this case, it did not outweigh the overriding public interest in the enforcement of judgments, orders, and undertakings in private civil litigation.

With regard to the second issue, the judge at first instance took a pragmatic approach to service of the committal application outside the jurisdiction by other means, namely by granting permission for service in Saudi Arabia with retrospective effect and indicating that, had it been necessary, he would have dispensed with service. The Court of Appeal confirmed that an application for committal was proceeding within the meaning of CPR 6.2 and the application notice in respect of Sheikh Abdullatif qualified as a claim form under CPR 6.36, and therefore gateway (3) of paragraph 3.1(3) of Practice Direction 6B applied, because there was a “real issue” for the court to try and the director was “a necessary or proper party” to the committal application.

Given that the English Court of Appeal allowed the service of contempt proceedings out of the jurisdiction on the basis of CPR 81.4(3) and CPR 6, it did not need to decide the third issue with regard to the correct application of Article 22(5) of the Brussels I Regulation. The first instance judge held on this point that he was bound by the previous English Court of Appeal decision in Choudhary and Others v Bhattar and Others [2009] EWCA (Civ) 1176, [2009] WLR (D) 326, even though he concluded that decision was reached per incuriam (that is, mistaken). In Choudhary, the English Court of Appeal held that Article 22(5) had no application to a defendant not domiciled in an EU Member State. The judge therefore stated that it was not open to him to hold that notice of the committal application could be served on Sheikh Abdullatif under Article 22(5) of the Brussels I Regulation. While it was not necessary for the English Court of Appeal to decide the applicability of Article 22(5), it nonetheless considered it appropriate to express its view, having regard to the judge’s decision below and having heard full submissions on the point. The present English Court of Appeal found the reasoning of the judge at first instance compelling, in view of the jurisprudence of the European Court of Justice. Although this part of the judgment is expressed obiter and therefore does not resolve the Choudhary issue, it must now be doubted that the case is good law.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Quinn Emanuel Urquhart & Sullivan, LLP | Attorney Advertising

Written by:

Quinn Emanuel Urquhart & Sullivan, LLP
Contact
more
less

Quinn Emanuel Urquhart & Sullivan, LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.