Commercial Bank of Dubai v [1] 18 Elvaston Place Ltd
| Jurisdiction | British Virgin Islands |
| Judge | Jack, J |
| Judgment Date | 16 June 2020 |
| Judgment citation (vLex) | [2020] ECSC J0616-1 |
| Court | High Court (British Virgin Islands) |
| Docket Number | CLAIM NO. BVIHC (COM) 2020/0070 |
| Date | 16 June 2020 |
EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
(COMMERCIAL DIVISION)
CLAIM NO. BVIHC (COM) 2020/0070
Ms. Claire Goldstein and Mr. Christopher Pease of Harney Westwood & Riegels for the applicant
Mr. Tim Prudhoe and Mr. Mikhail Charles, instructed by Simonette Lewis LP for the first respondent
The second respondent did not appear but Mr. Richard Brown of Carey Olson made written submissions.
Jack, J [Ag.]: On 25 th May 2020 I granted a Black Swan injunction 1 ex parte against the defendants, both of which are BVI companies. The injunction was made in order to assist in the enforcement of a future judgment debt which the claimant bank was seeking to obtain in the courts of the United Arab Emirates
against a Mr. Khaleefa Butti Omair Yousif Almuhairi, who is generally known as “KBO”. The amount claimed is about US$245 millionOn 29 th March 2020 the Court of Appeal handed down its judgment in Broad Idea International Ltd v Convoy Collateral Ltd (“ Broad Idea (No 2)”). 2 The Court overruled Black Swan and held that only a legislative amendment (which they encouraged) could allow this Court to grant free-standing freezing injunctions in support of foreign court proceedings where no substantive claim was being made inside the jurisdiction.
The ordinary return date on the injunction is 18 th June 2020. However, since Broad Idea (No 2) went to the Court's jurisdiction, Ms. Goldstein very properly sought to bring the matter back before the Court sooner so that this discrete issue of jurisdiction could be dealt with. The first respondent was represented by Mr. Tim Prudhoe and Mr. Mikhail Charles of counsel; Mr. Richard Brown made written submissions on behalf of the second respondent.
I should say at once that, apart from the jurisdictional issue, I have not revisited the merits or otherwise of the order which I made on 25 th May. That will be a matter for the return date. The respondents have indicated that they have multiple objections to the order, including its substantive merits, the need for it in the light of a freezing order already obtained from the English High Court, the evidence (or lack of evidence) of KBO's ownership of either of the defendants and issues of non-disclosure. These points will all stand to be dealt with on the return date. Accordingly, I am considering solely jurisdiction and what consequential orders I should make if the Court has no jurisdiction.
This Court is a tribunal with unlimited jurisdiction. Thus, unless and until the order I made on 25 th May is discharged, it is binding on the parties to whom it is addressed. Breach is punishable as a contempt of court. The issue with which I am concerned is technically the power of the Court to make a Black Swan order
under section 24 of the Eastern Caribbean Supreme Court (Virgin Islands) Act, 3 which it is agreed is the only source for the Court's power to grant interlocutory injunctions. However, issues of the Court's powers are usually referred to as matters going to the Court's jurisdiction and this is the sense in which I shall use the wordIt was common ground between the parties that the effect of Broad Idea (No 2) was to overrule Black Swan. No one sought to argue that the overruling was not part of the ratio decidendi. I agree. The Court of Appeal determined three matters: first, that Black Swan was wrongly decided; second, that the defendant BVI company against which the Black Swan injunction was granted was not the “money box” of the majority shareholder against whom the substantive cause of action existed, so that the defendant could not be treated as his alter ego; and third, that there was no sufficient risk of dissipation. In the light of the second and third holdings, the first holding was not necessary to the Court of Appeal's decision. That, however, is not sufficient to render the Court of Appeal's first holding obiter. A judgment can have more than one ratio decidendi: see Sir Rupert Cross's arguments in Cross and Harris on Precedent in English Law. 4 The first holding in my judgment was part of the ratio.
There were three matters argued before me:
(a) Legislation to reverse Broad Idea (No 2) and give a statutory basis for Black Swan injunctions is imminent, so I should continue the injunctions pending the enactment of the amending Act.
(b) I should add KBO as an additional defendant, so that there was an anchor defendant against whom a substantive cause of action lay. This would mean all the elements for an ordinary Chabra injunction 5 were in place.
(c) I should stay any order discharging the Black Swan injunction pending a leapfrog appeal to the Privy Council.
Turning to the first point, Ms. Goldstein says that the Bar Council is urgently drafting legislation which is likely to be enacted rapidly. Mr. Prudhoe objected to her making this submission without formal evidence being adduced. On this, he is no doubt right. I am, however, well aware that the Commercial Court Users' Group has been debating proposals for an amending Act, because I, like Ellis and Wallbank JJ, have been invited to and have attended the Users' Group's meetings where these proposals have been discussed. I have not, however, played any rôle in formulating proposals or making amendments to the draft circulating of the suggested legislation. If it were necessary, it would be easy for Ms. Goldstein to adduce any evidence she needed.
In my judgment, there are two insuperable objections to continuing the injunction on this basis. The first is that, if the Court does not have jurisdiction to make a Black Swan injunction, it does not have the jurisdiction to do so. Now it is true that there are cases where the English Courts have taken the imminence of new legislation into account when deciding whether to grant injunctions. The most recent example is Re a Company (Injunction to Restrain Presentation of a Petition). 6 The judgment of Morgan J was handed down on 2 nd June 2020. The debtor tenant owed rent to the petitioning landlord. Under very recently enacted COVID-19 legislation in the United Kingdom, the debtor could not, during the pandemic, be evicted by process of law. However, that emergency legislation did not suspend a tenant's obligation to pay rent, so it was open to the petitioning creditor to serve a statutory demand for the outstanding rent and then issue a winding-up petition.
There is currently before the United Kingdom Parliament a Corporate Insolvency and Governance Bill. This is a Government Bill, the effect of which will be to
prevent the presentation of a winding-up petition against a company affected by the coronavirus lockdown. It is anticipated that the Bill will achieve Royal Asset by the end of this month. The judge held: 7“that when the court is deciding whether to grant relief and, in particular, relief which involves the court controlling or managing its own processes, that it can take into account its assessment of the likelihood of a change in the law which would be relevant to its decision.”
In deciding to grant the injunction, he relied on three earlier English cases: Hill v C A Parsons, 8 Sparks v Holland 9 and Travelodge Ltd v Prime Aesthetics Ltd. 10 The first was a decision of the Court of Appeal, which granted an injunction preventing the defendant employer dismissing the plaintiff employee in breach of contract. Now, there is no doubt that the English courts have the power to grant injunctions to prevent breach of contract. It is simply that the courts will not, and would not then, generally do so to enforce a contract of service between employer and employee. The Court of Appeal in exercising its discretion took into account the imminent coming into force of the Industrial Relations Act 1971, 11 which (a) would have given the plaintiff a right not to be unfairly dismissed and (b) would have prohibited the closed shop agreement with a trade union (to which the plaintiff did not belong) which was the true reason for his dismissal.
In all three cases, as in the case before Morgan J, there was no doubt that the Court had the jurisdiction to make the order in question. The imminence of fresh legislation was simply a matter to be taken into consideration when deciding whether to grant the injunction.
The current case is quite different. As a result of Broad Idea (No 2), this Court has no power to grant a Black Swan injunction. The fact that legislation might be
Even if I were wrong in that conclusion, there is at present insufficient evidence that legislation to amend the Supreme Court Act is imminent. The current position is that the Bar Council is keen for a Bill to be introduced. The Commercial Court Users' Group is drafting the proposed amendment. The drafting has not yet been finalised. The Attorney-General has not yet indicated his support for the draft currently being circulated. The matter has not been broached before the Cabinet. The Government have not yet indicated a view on whether it would support such legislation. No timetable for enacting the legislation exists, so far as I am aware. It may be many months...
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