In early October 2013, Kroll issued contempt proceedings against both Claimants (a listed Saudi Arabian property development company and a Bahraini based investment bank) and one of their senior executives (Sheikh Abdullatif) in its on-going litigation with the former. Kroll applied for a declaration that the Claimants are in contempt of court by reason of their breach of an order of the Court and undertaking given to the Court in June 2012, an order for committal against Sheikh Abdullatif for the Claimants’ contempt and a fine against the Claimants.
Sheikh Abdullatif challenged the jurisdiction of the English Court to order his imprisonment arguing among other things that:
- CPR 81.4(3) (which provides for the imprisonment of a senior officer for the company’s contempt) did not have extra-territorial effect and so could not apply to an officer of a company outside the jurisdiction;
- He was not a necessary or proper party to the contempt proceedings against the Claimants;
- The Court did not have jurisdiction pursuant to Article 22(5) of the Judgments Regulation because he was domiciled outside of the EU (relying on the decision of the Court of Appeal in Choudhary v Bhattar [2009] EWCA Civ 1176) and contempt proceedings did not fall within the scope of that provision.
The Claimants could not challenge the Court’s jurisdiction as they had submitted to its jurisdiction by suing Kroll in England.
In his detailed Judgment handed down on 20 December 2013, Mr Justice Andrew Smith dismissed the jurisdiction challenge. The Judge held, among other things, that:
(1) CPR 81.4(3) applied to officers of companies (whether English or foreign) resident or domiciled abroad, not least because otherwise the efficacy of many worldwide freezing orders and anti-suit injunctions would be compromised.
(2) Sheikh Abdullatif was a necessary and proper party to the contempt proceedings against the Claimants and England was the proper forum for those proceedings. He therefore granted permission to serve out under CPR Part 6.
(3) Article 22(5) of the Judgments Regulation covered contempt proceedings and an undertaking was a “judgment” within the meaning of that instrument. The Judge held thatChoudhary v Bhattar was decided per incuriam, as the relevant ECJ jurisprudence made clear that Article 22 covered parties domiciled outside the EU. However, the Judge held that as a matter of precedent he was obliged to follow Choudhary and hence found that Article 22 did not cover the contempt proceedings against Sheikh Abdullatif (although this did not affect his ultimate conclusion because he had granted permission to serve out under CPR Part 6).
The case is significant for considering the jurisdictional basis for contempt proceedings against directors and officers of foreign companies.
Mr Justice Andrew Smith’s Judgment can be found here.
Craig Orr QC, Nicholas Sloboda and Sophie Weber appeared for Kroll Associates (instructed by Slaughter and May).