Factual and Procedural Background
This action was brought at common law to enforce three judgments obtained by the claimant, Company A, against the defendant, Defendant, in Turkey. On 6 December 2005, Company A obtained two orders from Judge Lawrence Collins: a worldwide freezing injunction over Defendant's assets up to US$46 million and an order for Defendant to provide information about his assets; and permission to serve proceedings and the freezing order out of jurisdiction. On 16 December 2005, another judge varied but substantially reimposed the freezing injunction.
Defendant applied to discharge these orders before Judge Lawrence Collins. The application succeeded in part: on 21 December 2006, the judge set aside permission to serve proceedings out of jurisdiction relating to two of the three judgments (dated 26 November 2001 and 11 June 2002) and discharged the freezing injunction. However, permission to serve out of jurisdiction was maintained for the third judgment dated 20 November 2001, valued at US$30 million.
Company A accepted that the two judgments for which permission was set aside were not final, contrary to earlier evidence. Defendant accepted there was a serious issue whether the third judgment was final. The initial applications were supported by affidavits describing the background and the timing of enforcement efforts, including that Company A only recently discovered Defendant had assets in the jurisdiction.
Defendant swore he had no assets in the jurisdiction. The judge held that if Company A needed to prove assets in the jurisdiction, the permission to serve out would be set aside, but ultimately found it was not necessary to establish this and refused to set aside permission to serve out in relation to the third judgment. The freezing injunction was discharged as no assets were found in the jurisdiction and disclosure had been made. Defendant was ordered to pay 75% of Company A's costs but failed to do so.
Defendant sought permission to appeal, initially refused, but later granted out of time by a higher court with directions for a stay pending the appeal.
Legal Issues Presented
- Whether the court had jurisdiction to permit service out of the jurisdiction under CPR 6.20(9) ("the jurisdiction point").
- If jurisdiction existed, whether permission to serve out should have been refused on the ground that the proceedings would serve no useful purpose ("the no useful purpose point").
- Whether the claim should be heard in the Cayman Islands rather than England and Wales ("the forum conveniens point").
Arguments of the Parties
Appellant's Arguments
- The court lacked jurisdiction to permit service out of jurisdiction because, under the proper construction of CPR 6.20(9), permission should only be granted if there are assets within England and Wales against which the judgment can be enforced or at least a real prospect of such assets.
- Even if jurisdiction existed, permission to serve out should be refused because the proceedings would serve no useful purpose, given Defendant’s lack of assets in the jurisdiction and the availability of proceedings in the Cayman Islands.
- The claim should be heard in the Cayman Islands rather than England and Wales, as the Cayman Islands is the more appropriate forum.
- Defendant also argued he has several substantive defences to the claim, including pending criminal proceedings and challenges to the fairness of the Turkish trial process.
Appellee's Arguments
- The wording of CPR 6.20(9) is unqualified and does not require the presence of assets within the jurisdiction to grant permission to serve out.
- It is not necessary to show assets at the time of application; permission may be granted based on a reasonable expectation or hope that assets may be found in the jurisdiction in the future.
- England is the proper forum to enforce the Turkish judgment because enforcement proceedings cannot be brought elsewhere.
- The English proceedings provide potential benefits, including the ability to examine Defendant about his assets and to enforce the judgment before limitation periods expire.
- Concerns about multiplicity of proceedings with the Cayman Islands can be managed through case management, and the possibility of benefit to Company A justifies the proceedings continuing in England.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| The Hagen [1908] P 189 |
Care in granting service out of jurisdiction; if doubt exists, it should be resolved in favor of the foreign defendant; full and fair disclosure required in ex parte applications. |
The court acknowledged the principle that discretion must be exercised carefully but found no ambiguity in CPR 6.20(9) to require restrictions on jurisdiction. |
| Societé Générale de Paris v Dreyfus Brothers |
Similar principles on jurisdiction and caution in service out of jurisdiction on foreigners. |
Supported the careful exercise of discretion but did not override the clear wording of the rule. |
| Insurance Corporation of Ireland v Strombus International Insurance Co [1985] 2 Lloyd's Rep 138 |
Service out should only be allowed if a "solid practical benefit" will result. |
The court accepted that the discretion should not be exercised automatically and that a legitimate benefit must be shown. |
| Re Compania Merabello San Nicholas SA [1973] Ch 75 and Re Latreefers Inc [2001 BCC 174 |
Winding up unregistered companies: no assets in jurisdiction required but reasonable possibility of benefit must exist. |
Used by analogy to support that a claimant must show reasonable expectation of benefit from proceedings. |
| Banco Nacional de Cuba v Cosmos Trading Corp [2000] BCC 910 |
Connection with jurisdiction must be sufficient and benefit to creditors reasonably expected. |
Referenced as an example where permission was refused due to minimal connection and no benefit. |
| Pritchett v English and Colony Syndicate [1899] 2 QB 428 and Godfrey v George [1896] 1 QB 48 |
Enforcement of judgments includes enforcement by action as if it were a judgment. |
Supported interpretation that enforcement can be by action even without assets present. |
| Societé Eram Shipping Co Ltd v Cie Internationale de Navigation [2004] 1 AC 260 |
Interpretation of jurisdictional rules with territorial limitations to avoid conflicts and double payments. |
The court distinguished this case, finding no need to imply territorial limitation into CPR 6.20(9). |
| President of the State of Equatorial Guinea v Logo Ltd [2006] EWCA Civ 1870 |
Principles on jurisdiction and enforcement of foreign judgments. |
Judge held Company A had a real prospect of success applying these principles. |
| In re International Tin Council [1987] Ch 419 |
Statutory language should not be given an overly broad literal meaning contrary to Parliament’s intention. |
Supported the principle that context matters in interpreting jurisdictional rules. |
Court's Reasoning and Analysis
The court began by construing CPR 6.20(9), which permits service out of the jurisdiction with the court’s permission to enforce a judgment or arbitral award. The court found the wording of the rule clear and unambiguous, rejecting the appellant’s submission that jurisdiction should be limited to cases where assets exist or are likely to exist in England and Wales. The court noted that the rule’s origin was to fill a gap where judgments could not be registered in England and that the draftsman did not impose an asset requirement. The court also observed that enforcement procedures under CPR Part 74 do not require assets within the jurisdiction.
The court acknowledged older case law cautioning against service out on foreign defendants without close connection to the jurisdiction but held that these principles relate to the exercise of discretion rather than the existence of jurisdiction. It emphasized that the rule is discretionary and that the court must consider whether it is just to grant permission, including whether the proceedings would serve a useful purpose.
Regarding the no useful purpose point, the court accepted that the claimant must show a good arguable case and a reasonable expectation of benefit from the proceedings, which need not be immediate or direct. The court found that Company A had a valid Turkish judgment against Defendant and that the limitation period for enforcement was approaching, making continuation of proceedings potentially beneficial. The court also found that the possibility of Defendant having or acquiring assets in England, or claims against others with assets in England, was a reasonable prospect.
On the forum conveniens point, the court held that England and Wales was the proper forum to bring the enforcement claim because enforcement proceedings cannot be brought elsewhere. The risk of multiplicity of proceedings with the Cayman Islands was to be managed by case management rather than by denying permission to serve out.
In sum, the court agreed with the judge below that permission to serve out should be granted, the freezing injunction discharged, and that the appeal should be dismissed.
Holding and Implications
The court GRANTED permission to appeal but DISMISSED the appeal.
The direct effect of this decision is that the permission to serve proceedings out of the jurisdiction to enforce the Turkish judgment dated 20 November 2001 remains in place, allowing Company A to continue enforcement proceedings in England and Wales. The freezing injunction was properly discharged given the absence of assets in the jurisdiction. The ruling clarifies that CPR 6.20(9) does not require the presence of assets within the jurisdiction to grant permission to serve out, but the court retains discretion to refuse permission if no useful purpose would be served. No new precedent was established beyond the application of existing principles to the facts.