Interim remedies when pending English proceedings are stayed
Where an English action is ordered to be stayed, whether under the Lugano Convention, or on the basis of forum non conveniens, or under the Arbitration Act 1996, any interim remedies which have been ordered may continue in force. Where the stay is discretionary, this is provided by the inherent power to make the stay conditional. Where the stay is mandatory, imposed under Section 9 of the Arbitration Act 1996, that Act allows interim relief to be obtained from the court in the case of urgency; if not, it may be obtained only with the permission of the arbitral tribunal or consent of the parties. According to Van Uden, the English court may be applied to on the footing that the case is one in which no Lugano State court has jurisdiction, and measures which fall within the scope of Article 31 may be ordered. But as the Arbitration Act
1996 serves to restrict the availability of such measures as a matter of English law, this adds nothing to the powers at the disposal of the court.
It has also been explained that the tactic of bringing local proceedings in order to obtain a freezing injunction, which is really sought in aid of proceedings in another jurisdiction, with the intention of then having the local proceedings stayed, is unobjectionable in those common law jurisdictions which have not legislated to confer the power to grant relief in aid of foreign proceedings. The general principle of encouraging international cooperation made the grant of such relief a proper exercise of discretion, and it was sensible to obtain such relief in the place where the respondent was resident and was amenable to measures of enforcement.[1]
Further points
The jurisdictional and quasi-jurisdictional rules examined above do not otherwise affect the substantive law specifying the conditions which limit the availability of the relief applied for, though, as has been seen, the discretionary factors associated with granting relief may have an impact on the exercise of any discretion to take jurisdiction.
It follows that if a freezing injunction is applied for, it will still be necessary, for example, to show that there is a well-founded fear that a respondent will dissipate his assets unless restrained, as this is a substantive limitation which is built into the remedy itself. And the same reasoning means such an injunction may not be obtained until a cause of action has arisen against the defendant. The limitation on the powers of the court is derived from Veracruz Transportation Ltd v VC Shipping,™ which defines the bounds of the remedy; it is unaffected by the legislative changes made to the jurisdictional competence of the English court. It may be argued that the limitation is itself unsound, and that, to the extent that it is derived from The Siskina' it is weakened by legislation which has undermined the basis for that decision. But such an argument would be fallacious, for it has nothing to do with the matters to which the legislation is directed.
Relief may also be obtained against a co-defendant against whom no cause of action is any longer alleged, and against whom the proceedings had been abandoned. There will be no jurisdictional hurdle in such a case, for the party against whom the orders were sought will have been a defendant to the action. Even if he had not been a defendant, and had been a mere third party, the orders could have been made possible by having him joined as a defendant. It appears to be sufficient that the party against whom the orders are sought has become mixed up in the efforts of the judgment debtor to frustrate or evade enforcement of the judgment, and that it would be just and convenient to make the order.[2] If it is necessary that the orders or injunction be incidental to and dependent upon the enforcement of a substantive right, that requirement was satisfied when the right was that of the judgment creditor to enforce his judgment against the judgment debtor, and the party against whom the order was sought had become mixed up in that enforcement process. This will be especially valuable when the beneficial ownership of assets appears to have been disguised by the devious or fraudulent behaviour of the judgment debtor.
- [1] Walsh v Deloitte & Touche Inc [2001] UK.PC 58, (2001) 59 WIR 30 (Bah). 2 [1992] 1 Lloyd’s Rep 353. 3 Cf Collins (1992) 108 LQR 175. 4 [1979] AC 210. 5 Mercantile Group (Europe) AG v Aiyela [1994] QB 366. 6 TSB Private Bank International SA v Chabra [1992] 1 WLR 231; see also Bullus v Bullus (1910) 102 LT 399; Aiglon Ltd v Gau Shan Co Ltd [1993] 1 Lloyd’s Rep 164; C Inc v L [2001] 2 Lloyd’s Rep 459; Cardile v LED Builders Pty Ltd (1999) 198 CLR 380. If necessary, service out will be permitted by CPR r. 6.36; CPR Pt 25 PD 25À, para. 1.2(3). And Section 25 of the 1982 Act is not expressed to be confined to cases which were brought in a foreign court and are still pending there. See generally, on the extent to which it is possible to obtain such orders against persons not party to the substantive claim, Devonshire [1996] LMCLQ 268, (2002) 118 LQR 124.
- [2] Cf Norwich Pharmacol Co v Customs & Excise Commissioners [1974] AC 133; Bankers Trust Co v Shapira [1980] 1 WLR 1274, and the cases mentioned in the previous note. 2 Mercantile Group (Europe) AG v Aiyela [1994] QB 366; C Inc v L [2001] 2 Lloyd's Rep 459. 3 [2008] EWCA Civ 876, [2009] 2 WLR 699, reversed on the construction of CPR Pt 71 without reference to European law: Masri v Consolidated Contractors International Co SAL (No 4) [2009] UKHL 43, [2010] 1 AC 90, with the result that such an order may not be applied for in relation to a person outside the territorial jurisdiction. There is, therefore, no role for Lugano Convention unless the person to be served is present within the jurisdiction but not domiciled in the United Kingdom. 4 Not least because of the absence of any mechanism for serving them with the application notice, though now see CPR r. 6.39; Masri v Consolidated Contractors International Co SAL (No 4) [2009] UKHL 43, [2010] 1 AC 90, reversing Masri v Consolidated Contractors International (UK) Ltd (No 4) [2008] EWCA Civ 876, [2009] 2 WLR 699, [57]. The question how one would serve process on the person to be summoned was also, therefore, not material, but the House of Lords specifically endorsed the view of Tomlinson J in Vital SA v Capri Marine Lt
