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England and Wales Court of Appeal (Civil Division) Decisions
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Rafidain Bank & Ors v Saipem Spa & Ors [1994] EWCA Civ 18 (07 February 1994)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/1994/18.html
Cite as:
[1994] EWCA Civ 18
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JISCBAILII_CASE_TRUSTS
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BAILII Citation Number: [1994] EWCA Civ 18 |
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No. FC3 93/5357/B |
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
(ON APPEAL FROM THE HIGH COURT OF JUSTICE)
(CHANCERY DIVISION)
(THE VICE-CHANCELLOR)
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Royal Courts of Justice
Strand, London, W.C.2 |
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7th February 1994 |
B e f o r e :
LORD JUSTICE DILLON
LORD JUSTICE STUART-SMITH
and
LORD JUSTICE HOBHOUSE
____________________
RAFIDAIN BANK & Others
Appellants
-v-
SAIPEM SPA & Others
Respondents
____________________
Computer Aided Transcript of the Stenograph Notes of:
John Larking, Chancery House, Chancery Lane, London, WC2.
Telephone: 071 - 404 7464
Official Shorthand Writers to the Court
____________________
MR. D. SEROTA QC and MR. B. FREEDMAN (instructed by Messrs. Teacher Stern & Selby, London) appeared on behalf of the Appellants.
MR. R. POTTS Q.C. and MR. R. HILDYARD (instructed by Messrs. Freshfields, London) appeared on behalf of the Respondents.
J U D G M E N T
____________________
HTML VERSION OF JUDGMENT
____________________
Crown Copyright ©
LORD JUSTICE DILLON: The Court has before it an appeal by the Iraq State Company for Oil Projects ("SCOP"), and another state owned Iraqi organisation, against a decision of the Vice- Chancellor given on 12th June 1992. The respondents to the appeal are a number of companies, mainly Italian but one French, which carried out, before the Gulf War of 1990/early 1991, an engineering project laying the Iraq Trans Saudi Arabia pipeline.
At this particular stage of the hearing of the appeal we are concerned with an application by the appellants for leave to adduce further evidence.
It is common ground that the hearing before the Vice-Chancellor was a hearing on the merits and, consequently, it is necessary for the appellants to satisfy the three requirements under Ladd v. Marshall of which the first is that the evidence in question could not, by reasonable diligence, have been obtained for use in the court below.
The nature of the claim is that there is outstanding to the plaintiff respondents the last 2½% of retention money from the payments due to them in respect of the pipeline project. That is held in a bank in London under the terms of a trust agreement of February 1985 which is governed by English law. Under the terms of the contracts various clearance certificates had to be obtained before the money was to be released.
The claim of the respondent plaintiffs is that those clearance certificates were withheld when there was no justification for their being withheld. Obviously the situation was complicated in various ways by the Gulf War and the imposition of international sanctions against Iraq.
The general nature of the further evidence is that it is said that there were certain matters outstanding which would still need to be dealt with in Iraq before the clearance certificates should be issued. The clearance certificates were particularly concerned with possible tax liabilities in Iraq of the members of the respondents' consortium, possible Customs and Excise liabilities and possible liabilities to make social security payments.
The history of the matter is that these proceedings were commenced by the issue of an originating summons in the Chancery Division on 14th November 1991. It named four defendants, the third being the Iraq State Company for Oil Projects (SCOP), and the fourth being the State Oil Marketing Organisation of Iraq (SOMO). They are the two appellants. The first defendant is Rafidain Bank, an Iraqi bank which, as a result of the Gulf War, is now, so far as its branch in this country is concerned, in provisional liquidation. The second defendant is Banca Commerciale Italiana, an Italian bank in this country.
The monies in question were placed under the trust agreement with the 2nd defendant to the order of the 1st defendant. The 1st defendant's London address, which is the address for service on the first defendant in the trust agreement, was given also in the trust agreement as the address for service of proceedings on both the present appellants. They were, therefore, served within the jurisdiction at that address after the summons had been issued in November 1991.
It appears however, from the evidence that is before us, that a copy of the summons was actually received by SCOP in Iraq on 12th January 1992. In support of the summons a substantial number of affidavits were sworn on behalf of the plaintiffs. All but one of these were served on the Rafidain Bank in London on 15th January 1992.
SCOP, which is concerned far more than SOMO on these matters because SOMO merely provided the money under a financial arrangement between the appellants, is controlled by the Ministry of Oil in Iraq. It was necessary, under procedures set up at the beginning of 1991 in Iraq, which may have been directed to conserving foreign currency, for SCOP to make a report to the Ministry of Oil about this case as a case that was brought outside Iraq against SCOP. That was done by the 5th February 1992. I would infer that by that time SCOP would have received copies of the main affidavits which, by then, had been served on the Rafidain Bank so that they were able to explain to the Ministry of Oil what the proceedings were about.
The next step was for the Ministry of Oil to make a report on the case to the Legal Advisory Bureau was set up in Iraq and, more specifically, in Baghdad by the Council of Ministers of Iraq at the end of December 1991. The function of that Bureau is to study the documents of court cases raised outside Iraq against Ministries and state companies and organisations, to choose suitable lawyers for each case and settle the defence and supervise it until final determination. The report by the Ministry of Oil to the Bureau was not made until the 23rd March 1992.
The Bureau considered the report made by the Ministry of Oil and on 1st April it made a report to the Council of Ministers recommending that the proceedings be defended and an English solicitor be instructed. The Bureau is apparently attached to the Secretariat of the Council of Ministers in Baghdad. That recommendation was promptly accepted. However, it was necessary for English solicitors to be found. It is said that there were difficulties, at that stage fairly recently after the Gulf War, in finding English solicitors who were prepared to act on the instructions of the Legal Advisory Bureau in Baghdad, and who did not have conflicting interests because they were acting for other parties in other litigation. The upshot was that Mr. Rabinowitz, of Teacher Stern & Selby of Bedford Row, was approached on 23rd April and asked if he would be prepared to take the case. He endeavoured to find out something more about it from Messrs. Freshfields, who were the solicitors on the other side. Counsel made a further enquiry.
On 28th April Mr. Rabinowitz agreed to take the case. However he had, because of the international sanctions against Iraq, to get authority from the Sanctions Unit at the Department of Trade and Industry before he could act. He applied straight away on the 28th for permission to act. That was granted on the 7th May 1992.
At that stage Mr. Rabinowitz obtained copies of the affidavits which had been filed for the plaintiffs from Messrs. Freshfields. There would have been no point in his having those and incurring the expense of copying if he had not had the consent from the Sanctions Unit.
Having considered the affidavits, and obtained the necessary visa, he went to Amman on 18th May to meet the lawyers from the Legal Advisory Bureau and representatives of SCOP. But the proceedings had been fixed at the beginning of March to come on for hearing in the Chancery Division beginning on the 4th June 1992. It had been known to SCOP, through no doubt the Rafidain Bank, by the 9th March, that the case had been so fixed. It was obviously urgent that
Mr. Rabinowitz should know whether there was any evidence to be filed on behalf of SCOP.
As a result of going to Amman in May, he was able to file an affidavit setting out, on hearsay information, certain matters, but he was not able to put in any detailed evidence proving that there were reasons why any clearance would still be refused by the Iraqi authorities.
He had asked Freshfields to agree to an adjournment when he first accepted instructions but they had, not unnaturally in their clients' interests, declined to do so. It is plain that Mr. Rabinowitz and counsel then instructed by him took the view that an adjournment was unlikely to be granted and the decision was taken not to apply for an adjournment.
The rule is clear. Its object is to ensure that all the evidence which is obtainable with reasonable diligence should be before the Court when a case is decided on the merits.
There are the two other criteria of Ladd v. Marshall, but I need not trouble about them in the present case.
Mr. Serota says that it is necessary and right to consider only the position of SCOP itself and its lawyers, meaning particularly the solicitors instructed on the 28th April, when time was already short and consent to act from the Sanctions Unit was still to be granted.
As I see it, Mr. Rabinowitz gets his instructions from the Iraqi Legal Advisory Bureau, who were acting as the lawyers for SCOP from the time, at any rate, when the report was first sent to them notifying them of these proceedings. Beyond that, SCOP is a company, or other legal entity, which is entirely owned by the Ministry of Oil and it must have known of the Iraqi process for obtaining permission to contest a case.
We have, as I see it, considerable delay from the time when SCOP received the summons and affidavits until the time towards the end of March when the Ministry of Oil sent the case to the Legal Advisory Bureau. The Legal Advisory Bureau needed to get English solicitors to act as soon as it had received consent to proceed, but there does not seem to be any reason why it could not have taken the elementary step of making enquiries at that stage to see if there was any factual evidence available which would help a solicitor. It is not for the English solicitor to find the facts, but for the client or, in the context of a case like this, the client's Iraqi lawyer who is instructing the English solicitor, to produce the facts.
The result is that there was in my judgment unjustifiable delay which led to the answers to the obvious enquiries not being available at the time of the hearing which began on the 4th June.
Beyond that, however, there was no application for the case to be adjourned. Counsel could have explained to the court the difficulties in his and his instructing solicitor's position in that they had only come on the scene at the last moment and had taken the steps they had to get such information as they could put in, and they needed an adjournment to complete investigations which had been put in hand to see if there was further evidence material to the case.
There was, it would seem, an arguable case for seeking an adjournment. Proceedings by originating summons are designed to obtain, where possible, a speedy decision without the delays of the process to trial in proceedings commenced by writ. But there does not appear to be any reason why there was so much urgency that there could be no adjournment at all for further enquiries once solicitors had been properly instructed on behalf of SCOP.
Where there is a decision by a party to go ahead without seeking an adjournment to put in evidence, the Court is less ready to allow new evidence at a later stage because that smacks of enabling the party to have his cake and eat it at the earlier stage. It is not so much of a tactical benefit in this case as it is in some to have tried to get away with a case without seeking an adjournment, but it is a factor that the Court will bear in mind.
Taking into account both that, and the time that had elapsed after the affidavits must have been received in Iraq up to the 4th June, I am not satisfied that these appellants satisfy the first test in Ladd v. Marshall.
Accordingly, I would refuse the application to admit further evidence
LORD JUSTICE STUART-SMITH: I agree
LORD JUSTICE HOBHOUSE: I agree.
LORD JUSTICE DILLON: The application is refused.
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