When proceedings are in a matter which is not civil or commercial

This paragraph deals with hypothesis (G) from paragraph 31.08.

If the claim is not in respect of a civil or commercial matter, the Lugano Convention is wholly inapplicable to the claim for interim remedies, and the law is unaffected by any jurisdictional or other concerns. Section 25 of the 1982 Act, and the ordinary principles of English law which define the power of the court to grant a freezing injunction, or other interim remedies, will apply; and the more cautious principles of English law which apply when the relief is sought in the form of a worldwide freezing injunction will also apply.

When proceedings are before the courts of non-Lugano State

This paragraph deals with hypothesis (H) from paragraph 31.08.

If proceedings have been brought before the courts of a non-Lugano State, or before the courts of a State to which the 2005 Hague Convention does not apply, Section 25 of the 1982 Act, as amended and extended by order, still gives the English court authority to grant interim relief in respect of them. Jurisdiction over the respondent for the purpose of the application for relief will need to be established in accordance with English law: by service within the jurisdiction, or out of the jurisdiction under CPR rule 6.36 and the Practice Direction with the permission of the court.

The court will be required by Section 25(2) to consider whether its lack of substantive jurisdiction makes it inexpedient for it to make the order applied for; and in this context its consideration will be liable to be very different. The issues raised and partially discussed above in relation to Cuoghi will again be relevant. However, the proceedings in a non-Lugano State may be far away and very different indeed from proceedings with which an English court would be familiar, and may result in a judgment which may not be enforceable in England. The result is that the term ‘inexpedient’ is required to bear considerably more weight. The court may need to consider inexpediency as part of a jurisdictional enquiry, when considering permission to authorise service of the claim form out of the jurisdiction; it may need to consider it in a case where jurisdiction was established as of right and the critical question for the court is whether it should exercise its discretion to make the order.

Some guidance as to the correct approach to ‘expediency’ in this context was given in Refco Inc v Eastern Trading Co,'¹⁵ in which case proceedings were pending in the United States Federal Court in Illinois, to which court an application for corresponding relief could not be made.^[1] The Court of Appeal proceeded on the basis that, if it would have been appropriate to grant the freezing injunction were the substantive proceedings to have been brought in England, the court must ask whether the absence of substantive jurisdiction in the English court made it inexpedient to order relief after all. As the remedy would not have been granted had the substantive proceedings in Refco been brought in England, the further question did not arise for decision. The majority indicated that the inexpediency, the general approach to which had been explained in Cuoghi, would arise only if the foreign court, having the same powers (and exercised on similar principles) as in English law, had itself declined to grant corresponding relief. If by contrast the foreign court had declined to grant relief on the basis that it was for the English court, rather than for the foreign court, to make the order, and if there were no reason to suppose that the making of the order would interfere with the case management powers of the foreign court, it would not be inexpedient to grant the relief. If taken at full face value, the approach of the majority appears to be to lean in favour of making of the order unless it is demonstrated that the foreign judge will be bothered or affronted by it. This would surely take Cuoghi further than it was intended to go. It would have the potential to make England the presumptive^[2] relief-granting forum for the world, which, surely, cannot be right. The court did not deal with, and did not comment on, the distinct argument that it was inexpedient to grant the relief by reason of the allegedly sufficient fact that there was a contractual agreement not to do so.

In Motorola Credit Corp v Uzan (No 2), the court further assessed the nature of ‘expediency’, and dealt directly with an argument which had been made in earlier cases, namely that it was inexpedient to order an injunction in support of proceedings before a court which had no legal power to make such an order. In that case, the substantive proceedings in question were brought against four Turkish alleged fraudsters before the courts of the United States. The ink was barely dry on a decision of the Supreme Court of the United States which had held that the American Constitution prohibited the making of pre-judgment freezing orders. Yet it was held that this fundamental rule of American constitutional law had no impact on the question whether it was inexpedient to make the order which had been applied for from the English courts. The case was not to be seen as one in which the foreign court, seised on the merits, had made an evaluation and had decided that the order should not be made, but was instead a case in which it would welcome the assistance of the English courts. As suggested above, this is a challenging interpretation of a constitutional prohibition on such orders being made by an American court. What seemed to weigh with the English court was the view that, where a court in one country is dealing with an international fraud, courts elsewhere should go to the limit of their law to assist.

The court examined other aspects of the issue of expediency. It accepted that if a defendant were resident in England it would generally be expedient to make the order, but it also accepted that other connections, such as the substantial presence of land and other assets in England, would also be sufficient to show expediency in a case where the defendant’s residence was clearly shown to be in England. It accepted that it should not ignore the fact that a Turkish court had twice purported to grant an antisuit injunction against the proceedings taking place in the United States, though having said that it is hard to see what impact that fact really had; and it added that a court should be careful to avoid making orders which would needlessly increase the level of tension in litigation which had evidently been stormy.

The court came close to accepting^[3] that it would not be expedient to make an order in circumstances in which a judgment from the foreign court would not, as the court saw it, be capable of recognition or enforcement in England. This last point, which was clearly considered in Blue Holdings (1) Pte Ltd v United States' to be sound, seems correct: it is hard to see how it could be expedient to make an order in support of what would in due course, as a matter of English private international law, be a judgment which could never be enforced in England; it may be very different if the only reason why the foreign judgment would not be enforceable in England is because the respondent has no assets in England: in such a case the judgment is enforceable, even though it may not be possible to execute upon it. Taken all together, the decision demonstrates that expediency is a complex and subtle concept which allows a court to highlight certain aspects of it to reach a decision with which it feels comfortable.

If proceedings have not yet been instituted in the courts of a non-Lugano State, it is submitted that, though an English court will still have the power to grant interim remedies, it will be necessary, in all but egregious cases, to be rather more cautious, as the inexpediency of making an order cannot be tested by reference to what has emerged as the principal criterion: that is, by reference to what the primary court would think of the order being made by an English court.

• [1] [1999] 1 Lloyd's Rep 159. 2 It was said that a lawyer could not properly make it, and might be exposed to a personal costs order if he did. Since that decision, the US Supreme Court has held that Federal courts in the United States do not have power to grant an interlocutory injunction to restrain a defendant from disposing of its assets pending the determination of the action: Grupo Mexican» de Desarrollo SA v Alliance Bond Fund Inc 527 US 308 (1999), noted Collins (1999) 115 LQR 601. 3 There was no demonstrated risk of dissipation of assets. 4 Millett LJ, by contrast, focused on what the foreign court would have done, and took the view that if it would not have granted the relief even if the defendant and the assets had been within its territorial jurisdiction, that was a powerful indication of inexpediency, whether or not the foreign judge would be offended by the making of the English order. It is submitted that this is more faithful to the decision in Cuoghi than is the approach of the majority. 5 In Refco, because the assets to be affected by the injunction were located in England. 6 And see Ryan v Friction Dynamics Ltd, The Times, 14 June 2000; Sultan of Brunei Darussalam v Bolkiah, The Times, 5 September 2000.
• [2] A presumption rebuttable by evidence that the foreign court will be offended by the English court’s making of an order. 2 It may be questioned whether this would be a perception which would bring comfort to the United Kingdom banking industry, whose clients might well fear that maintaining too close a connection with England was a risky business. 3 [2003] EWCA Civ 752, [2004] 1 WLR 113. See further, (2003) 74 SYBIL 541. 4 Grupo Mexicano de Desarrollo SA v Alliance Bond Fund Inc 527 US 308 (1999). 5 By contrast, this was the analysis of the effect of proceedings in Russia in JSC 1'77? Bank v Skurikhin [2014] EWHC 2254 (QB), with the consequence that the injunction did not extend to assets in Russia, and in Belarus, China and Cuba (in relation to which the Russian court was taken to have jurisdiction but which it had declined to exercise). However, the judge was prepared to make the asset disclosure order applicable to assets in those countries, on the ground that there was no absolute requirement that the two orders marched in lockstep. The decision contrasts with that in ICICI Bank UK Pic v Diminco NV [2014] EWHC 3124 (Comm). 6 See the judgment, esp. at [119]. No doubt the court meant to say ‘allegations of international fraud'. But if there are only allegations, it is not clear why it is so necessary to assist one litigant at the expense of the other. It may be appropriate to be partisan after judgment on the merits, but one would suppose that it was necessary to be much more cautious beforehand. 7 Which appears to mean to make life difficult for the defendant. 8 This appears to be the first time a Turkish court has made such an order.
• [3] But the point was not really taken, and there appeared to be no real basis for it to be taken on the facts of the case. 2 [2014] EWCA Civ 1291, [2015] 1 All ER (Comm) 1. There may be exceptional cases, but the general position is now clear. 3 But where the foreign judgment will be enforceable, there is no problem. For a case in which the court accepts that a judgment may be enforceable, despite the suggestion that it is based on penal law (see Robb Evans v European Bank Ltd (2004) 61 NSWLR 75, and on which see [2004] LMCLQ 313), see US Securities and Exchange Commission v Manterfield [2009] EWCA Civ 27, [2010] 1 WLR 172, where the freezing order was made. 4 For illustration, Royal Bank of Scotland Pic v FAL Oil Co Ltd [2012] EWHC 3628, [2013] 1 Lloyd’s Rep 327; see also Ras Al Khaimah Investment Authority v Bestfort Development LLP [2017] EWCA Civ 1014, [2018] 1 WLR 1099. 5 JP Morgan Europe Ltd v Primacom AG [2005] EWHC 508 (Comm), [2005] 2 Lloyd’s Rep 665. 6 Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460. Where the stay is in admiralty proceedings, Section 26 of the 1982 Act provides a further, statutory, basis for a stay. 7 Arbitration Act 1996, Section 44. See also on this, and on the inapplicability, in this context, of the 1982 Act, Mobil Cerro Negro Ltd v Petroleos de Venezuela [2008] EWHC 532 (Comm), [2008] 1 Lloyd's Rep 684; ETI Euro Telecom International NV v Republic of Bolivia [2008] EWCA Civ 880, [2009] 1 WLR 665; Petrochemical Logistics Ltd v PSB Alpha AG [2020] EWHC 975 (Comm). 8 Arbitration Act 1996, Section 44.