Integral Petroleum SA v Petrogat FZE & Anor

Factual and Procedural Background

This opinion concerns a reserved judgment on a jurisdictional challenge arising from a committal application dated 30 April 2018, seeking the committal to prison of five individuals (the "Third Parties") related to alleged breaches of court orders concerning the delivery of a cargo of fuel oil. The underlying dispute originated from a contract for the sale of fuel oil between the claimant, an oil trading company based in Switzerland, and two companies, Company A (based in the UAE) and Company B (based in Germany). The initial court order was an ex parte interim injunction made on 14 January 2018, restraining Company A and Company B from directing delivery of the cargo to Iran.

Subsequent proceedings involved various injunction continuations and dismissals, with findings that there was a strong prima facie case of property interest and breaches of the injunctions. The committal application alleged that the Third Parties, as owners, principals, or directors of Company A and Company B, caused or permitted breaches of the court orders. The Third Parties challenged the court's jurisdiction and the validity of service of the committal application, contending that permission to serve out of jurisdiction had not been obtained.

Evidence was submitted by both parties, including affidavits from solicitors and expert evidence on the laws of Germany and the UAE. The court was tasked with determining whether the English court had jurisdiction to try the committal application and whether valid service had been effected.

Legal Issues Presented

1. Whether Article 24(5) of the Recast Brussels I Regulation (No. 1215/2012) precludes the need for permission to serve the committal application out of jurisdiction.
2. If Article 24(5) does not apply, whether the court can grant permission for service out of jurisdiction under CPR PD6B 3.1(3) or (10).

Arguments of the Parties

Third Parties' Arguments

• Article 24(5) does not apply to committal proceedings as they are not proceedings concerned with enforcement of judgments.
• Article 24(5) applies only where the defendant is domiciled in a Member State, and most Third Parties are not domiciled in a Member State.
• Article 24(5) applies only to civil contempt proceedings, and some Third Parties are not directors, so proceedings against them cannot be civil contempt.
• The term "director" in CPR 81.4 should be limited to de jure directors for reasons of legal certainty.
• Subparagraph (3)(a) of CPR PD6B is not satisfied because there is no real issue between the claimant and the defendant companies at the relevant time.
• The committal application was not properly served because permission to serve out of jurisdiction was not granted.

Claimant's Arguments

• Article 24(5) applies to committal proceedings as they are directly concerned with enforcement of court orders.
• The court should adopt a broad construction of CPR 81.4(3) to include de facto directors.
• The term "judgment" in CPR PD6B 3.1(10) should be interpreted broadly, including by reference to European jurisprudence.
• The gateway under CPR PD6B 3.1(3) applies because there is a real issue between the claimant and the defendant companies and the Third Parties are necessary and proper parties.
• De facto directors should be held responsible for contempt to ensure effective enforcement of court orders and uphold the public interest.

Table of Precedents Cited

Court's Reasoning and Analysis

The court first considered whether Article 24(5) of Brussels I Recast applied, concluding that committal proceedings are indeed "proceedings concerned with the enforcement of judgments" because they are coercive and punitive measures directly enforcing court orders. The court distinguished the facts from the European Court's narrower interpretation in Reichert and rejected the argument that Article 24(5) applies only to enforcement against property. The court found persuasive the obiter views in Dar Al Arkan and Vik supporting the application of Article 24(5) to committal proceedings.

On domicile, the court held that despite changes in wording in Brussels I Recast, the binding Court of Appeal decision in Choudhary requires Article 24(5) to be limited to defendants domiciled in a Member State. The court acknowledged persuasive arguments to the contrary but was bound by precedent.

The court then addressed whether the Second, Third, and Fifth Third Parties qualify as directors or officers under CPR 81.4, which affects the availability of jurisdictional gateways. It found that two Third Parties, Mr. Sanchouli and Ms. Sanchouli, should be regarded as de facto directors based on evidence of their control and involvement, while Ms. Lobis was not sufficiently involved to be considered a director or officer. The court applied English law principles on attribution rather than foreign law and rejected limiting the term "director" to de jure directors only, emphasizing public interest and the court's disciplinary powers.

Regarding permission to serve out of jurisdiction under CPR PD6B, the court rejected reliance on gateway (10) as the term "judgment" there does not include orders enforceable by committal. The court found gateway (3) applicable because there is a real issue between the claimant and the defendant companies, and the Third Parties are necessary and proper parties to the claim. The court rejected the argument that the absence of a continuing injunction negated the real issue or the applicability of the gateway.

Holding and Implications

The court held that Article 24(5) of Brussels I Recast applies to committal proceedings but only where the defendant is domiciled in a Member State. Since most Third Parties are not domiciled in a Member State, Article 24(5) does not confer jurisdiction in this case.

The court further held that the claimant has the better of the argument that the jurisdictional gateway under CPR PD6B 3.1(3) is available for service out of jurisdiction against the Third Parties who are de facto directors (excluding Ms. Lobis). The claimant cannot rely on CPR PD6B 3.1(10).

Consequently, the court concluded that the committal application may proceed against the Third Parties who are de facto directors, subject to valid service under the appropriate gateway. The decision clarifies the application of Brussels I Recast Article 24(5) to committal proceedings and affirms the scope of CPR 81.4 in attributing liability to de facto directors for contempt, reinforcing the court's ability to enforce orders against individuals controlling companies. No new precedent was set beyond the application of existing authorities.